The National Insurance (NI) threshold will increase from July under new plans unveiled by Chancellor Rishi Sunak today (23 March), but the social care levy will remain in place.
In his spring statement today, the Chancellor said the NI threshold would increase to £12,570 from July, which for a typical employee would be a saving of over £330 across the year.
However, there was no additional funding announced for general practice or the wider NHS.
Mr Sunak also said that the health and social care levy would stay in place as a ‘dedicated funding source’ solely for the ‘country’s top priority – the NHS and social care’.
He said ‘every penny’ of this fund, which was backed by MPs in September, will go towards health and care.
The commitment to the policy means that from April 2022, the health and social care levy will be collected through an increase in NI rates by 1.25%.
Justifying this decision, Mr Sunak said: ‘If it [the NI hike] goes, then so does the funding – and that funding is needed now. Especially as my right honourable friend the health secretary’s plans to reform healthcare will ensure every pound of taxpayer’s money is well spent.’
This comes after the Treasury doubled the NHS’s annual efficiency target to 2.2%, as part of a series of major cost cuts and a ‘crackdown’ on ‘wasteful spending’.
Alongside these pledges, the Chancellor today said that fuel duty for petrol and diesel would be cut by 5p per litre from 6pm this evening to help drivers across the UK with rising fuel costs.
Mr Sunak said: ‘This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century.
‘Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.’
Measures in the statement included:
- The NHS and social care levy will stay in place as a ‘dedicated’ funding source.
- Fuel duty has been cut by 5p per litre by this evening, and will remain in place for 12 months until March 2023.
- The NI threshold will rise by £3,000 meaning people will be able to earn £12,570 before they make an income tax or NI payment.
- The basic rate of income tax will be cut from 20p to 19p in the pound before the end of the current parliament in 2024.
- The apprenticeship levy is to be reviewed within a new tax plan.
- The household support fund will be doubled.
In response to the plan, chief executive of the NHS Confederation, Matthew Taylor, said: ‘Health leaders broadly welcomed the additional funding for health and social care in the Chancellor’s Budget last October and recognise the importance of putting this investment to best use but the world around us is very different now.
‘With inflation hitting 6.2% in February – the fastest rise for 30 years – and as fuel, energy and food costs surge, this will have significant impact on the NHS, seeing it being forced to pay out more in its bills, equipment and the wages of bank and agency staff.’
He added that staff members are increasingly concerned about how they will be hit by the cost-of-living crisis.
‘A concession has been made in the fuel duty but we need to see the Treasury go further to shield community-based healthcare staff from soaring prices at the pumps as they rely on their cars to see their patients, including those who are housebound,’ said Mr Taylor.
‘A lot is uncertain but as the cost-of-living impact bites the Chancellor must be live to the increased strain and pressure it will have on the NHS in his next Budget this autumn.’
Before the spring statement, NHS Providers also called on the Chancellor to do more to ‘shield’ community-based healthcare staff from ‘soaring prices’ or risk healthcare professionals who heavily rely on cars quitting ‘in droves’.
It comes after the BMA called on the Treasury to increase funding to clear the elective backlog by £5-7bn in England, 10% of which it said should go to general practice.