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The north pays for the south, the poor pay for the rich

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Just days before the House of Commons faced a vote on Boris Johnson’s tax hike to fund social care, many of his own MPs were ready to rebel. Jake Berry, MP for Rossendale and Darwen, former minister for Northern Powerhouse and chairman of the Northern Research Group of Conservative MPs, which includes representatives from Red Wall ridings, was at the forefront of the Conservative opposition.

It doesn’t really seem reasonable to me that people who go to work in my own constituency in east Lancashire, probably with lower wages than in many other parts of the country, pay taxes to help people keep their homes in other parts of the country where house prices may be much higher, there said to Times one day before the plans are announced.

This fear that the poor would pay for the rich and that the north would pay for the south was shared by many critics of the proposed tax hike, on both sides of the House of Commons.

[See also:Who are the winners and losers of Boris Johnsons social care reforms?]

When announcing the plans, the Prime Minister tried to allay such concern over these injustices. Dividends will also be subject to the 1.25 percentage point tax hike, which would mainly affect the wealthiest people who have invested, and active retirees (who don’t pay national insurance) will pay the new tax on health care and social benefits.

These elements, among other political considerations, have made the plans swallowable by conservative critics for now, as the New statesmans Ailbhe Rea reported. This was evident in the rebellion of just five backbenchers who voted against the tax hike on September 8 (37 other Tory MPs abstained).

However, the exclusive analysis of the data by the New statesman, mapping the policy’s impact on England geographically, suggests Berry and his skeptical colleagues were right to be concerned. It looks like the south will benefit more from the changes than the Midlands and the north of England, with voters in the northeast particularly affected.

These schemes contradict the Johnson government’s push to rebalance the economy and reimburse Red Wall voters for lending it their votes in the December 2019 election, when voters in longtime Labor zones flocked to the Tories.

Like Berry wrote in theSun Before the plans are announced, Boris Johnson has promised to level up, but the rise in national insurance is stabilizing.

[See also:Why Tory MPs wont rebel over Boris Johnsons National Insurance hike]

Northern workers will lose more from national insurance hike

Workers in the North East of England, who tend to have lower incomes, will pay a lower amount of national insurance. But since the average household in the Northeast has lower disposable income, it will be more affected. An average increase of 174 in national insurance during the year is equivalent to a drop of just over 1 percent in disposable income.

On the other hand, workers in the south will lose proportionately less on average due to their generally higher wages and income from other assets. Those in the northeast will take 25% more hits than those in the southwest.

While Londoners will pay the most in absolute terms, Northerners will pay,proportionally, suffer the most from their disposable income

Average impact on disposable income of 1.25 percentage points Increase in national insurance, by region
Hover to explore

Map by Katharine Swindells

Breaking this down at the local authority level, it appears that a number of marginal or newer conservative constituencies are in more affected areas than the conservative southwest and southeast counties. For example, in County Durham and parts of Nottinghamshire, Lincolnshire and Cumbria.

In the Blackburn City Council area with Darwen, Lancashire, for example (the latter is represented by Berry himself), the average worker will pay an additional 145 per year in National Insurance at his average salary of 21,200: a stroke 1 percent of disposable income.

In contrast, in the south-eastern suburban Blue Wall town of Sevenoaks (whose parliamentary constituency has been conservative since 1924), where disposable income is higher due to higher wages and more assets such as apartment buildings. rental, the average worker will take a hit of just 0.6 percent.

How much will people in your area pay?

Average impact on disposable income of 1.25 percentage point Increase in National Insurance, by local authority
Hover to explore

Map by Katharine Swindells

Childcare costs are higher in London and the South East

The new tax policy aims to fix England’s welfare system. Some of the money raised from the tax will be used to cover a new lifetime limit of 86,000 on a person’s payments for their own care. Once the ceiling has been reached, the rest of the care costs are covered by the local authorities.

This cap, which applies from October 2023, means that more people living in areas with higher costs of care are likely to benefit from it, with the council paying a higher proportion of their care.

Care benefits tend to be more expensive in London and the south of England, which means that tax dollars will pay for more benefits in the south.

Higher care costs mean more people in the south are likely to benefit from the cap

Unit cost per week for all adult clients accessing long-term residential care, by local authority

Map by Michael goodier

Not only will southerners be more likely to benefit from the cap, but those who do are likely to see proportionately more of their assets protected as a result. This is because real estate prices in the south tend to be higher, so people’s homes are worth more; they have more to lose without a cap.

In contrast, those who live in the north will see more of their asset value spent on social care before they hit the cap, meaning many more could end up selling their homes.

Those in the south will see more of their assets protected by the care cap

Median total household wealth

Graph by Michael goodier

To mitigate this, along with a social protection ceiling, the government introduced a floor. Those with less than 20,000 will not have to pay the costs of their assets at all (but may owe their income), while those with between 20,000 and 100,000 will be means tested by their income. local council.

This will help more people in the north of the country, who have proportionately fewer assets. Analysis by the Resolution Foundation think tank found that only 29% of people aged 70 and over in the Northeast have enough assets to receive no state aid, compared to almost half of those in the Southwest .

That said, more than half of the people in the Northeast may still have to pay something out of their assets because of the means-tested element.

The Resolution Foundation said: The policy might not live up to its marketing, with people living in modest homes with few financial assets still having to charge for their homes if they need significant residential care.

[See also:Why Tory MPs didnt rebel over Boris Johnsons National Insurance hike]

Although the anxiety of the conservatives over these reforms has subsided for the moment, the geographical inequalities revealed by the New statesmanData analysis could soon haunt a government that bases its reputation on leveling the north.

Current support from Conservative MPs or reluctant acceptance of these plans could escalate into resentment against the party further. A Tory MP particularly familiar with local government policy and adult welfare continues to fret over the policy, fearing the political consequences across the line of young taxpayers bearing the burden of wealthy retirees in the labor force, and suspecting a sleight of hand that will mean most of the funding goes to the NHS instead of welfare itself.

Another, Dudley South MP Mike Wood,called the tax hike morally wrong, explaining that he only voted for it because the alternative, not to act, is much, much worse.

The party risks betraying its new voters by not respecting the promised fairer economic distribution, which its deputies may find out as their voters start paying this new tax in the next three years.

[See also:Boris Johnson is exploiting the publics misunderstanding of National Insurance]

Sources

1/ https://Google.com/

2/ https://www.newstatesman.com/politics/health/2021/09/boris-johnson-s-social-care-tax-rise-north-pays-south-poor-pay-rich

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