Hampshire County Council health chief Liz Fairhurst welcomes National Insurance rise

THE government’s plans to increase National Insurance payments have been welcomed by Hampshire County Council's health chief despite critics' concerns about its impact on lower earners and struggling businesses.

On Tuesday Prime Minister Boris Johnson announced a 1.25% increase – from 12% to 13.25% – on National Insurance, which will come into effect in April next year, writes David George of the Local Democracy Reporting Service.

The move is a break from the Conservative Party’s manifesto commitment not to raise taxes, but Mr Johnson said the Covid-19 pandemic had forced his hand.

But while all have acknowledged the need to put more money into the social care sector, opponents have described the use of National Insurance tax as "morally backward" putting those on lower incomes at risk of poverty.

Cllr Liz Fairhurst, HCC cabinet member adult services and public health, says the extra social care funding was "desperately" needed.

She said: "I’m really pleased that we’re getting something to establish a sustainable long-term solution.

"The government had to do this and I think National Insurance was the only way to do it – income tax wasn’t the answer.

"This is the biggest expense for the county council and it’s not just older people that social care is for. It covers more than people realise, so the problems go much deeper than it first appears.

"I’m glad a decision has been reached and am keen to see the details of how we can take it forward."

However, the Hampshire Chamber of Commerce said the extra financial demand would add pressure to business emerging from the pandemic.

Director Peter Taylor said: “The need for well-funded health and social care provision is recognised. However, asking business to contribute through higher National Insurance contributions now fails to take account of the pressing need for business growth to provide economic stability and revenues for the public purse in the longer term.

"We are at a critical point in our emergence from the pandemic. Businesses are seeking support and encouragement to play their part in the recovery of the economy.

"Some have built up a significant debt burden and others face the end of government support from the furlough scheme at the end of this month.

"At a time when we are already seeing higher inflation, supply chain challenges and increasing staff costs in a number of sectors, the planned rise in contributions is an additional outlay which is unlikely to be welcomed by employers.”