Boris Johnson has announced a 1.25% increase in National Insurance from April 2022 to address the funding crisis in the health and social care system.

The tax hike will raise around £10 billion, which will be spent on the NHS as it recovers from the Covid-19 pandemic as well as to help people avoid crippling adult social care costs.

Ministers, who had been largely kept in the dark about details of the proposals, were briefed during the first in-person Cabinet meeting held in Downing Street this year.

The Prime Minister’s official spokesman said: “The Cabinet agreed to the proposals set out.

“There was strong agreement that this is a long-standing issue, particularly on the social care side, which had been ducked for too long and which needed to be addressed.”

Mr Johnson, Chancellor Rishi Sunak and Health Secretary Sajid Javid updated Cabinet ministers on the package.

The spokesman said: “Cabinet agreed the challenges faced by our NHS and care sector are closely linked, and a lack of integration means people are often stuck in the wrong care setting.

“The Prime Minister highlighted that under the current care system, anyone with assets over £23,350 pays for their care in full, which can lead to spiralling costs with around one in seven people now paying over £100,000.

“The Prime Minister said that the changes he will announce today will fix this problem, which is causing chronic and unfair anxiety for millions of people up and down the country.”

Labour opposition to 1.25% National Insurance increase

Chancellor Rishi Sunak sidestepped questions from Labour on why the Government plans to break its manifesto promise by increasing National Insurance to pay for social care reforms.

Shadow chancellor Rachel Reeves said: “The Prime Minister and the Chancellor’s plans to increase National Insurance will hit workers and businesses hard at the worst possible time.”

She added: “Could the Chancellor explain why he is choosing a tax on jobs rather than on other forms of income?”

Mr Sunak focused his reply on saying there is no National Insurance payable by those employing people under the age of 21, no National Insurance payable on “most” apprentices up to the age of 25, “nor on people who are going to be employed in new freeports”.

He added: “Because of the steps these Conservative governments before and ours have made to the employment allowance, 40% of all small businesses pay no employers’ National Insurance at all.”

Ms Reeves said Mr Sunak’s previous pledge to cut taxes for the lowest paid by reducing National Insurance “is now in flames”, adding that Labour “cannot and would not support this Tory Government’s manifesto-breaking, economically damaging and unfair tax on jobs”.