Thank you for contacting me about the cost of living.
I understand anxiety over rising prices and inflation. I want to assure you that the Government will continue to listen and to ensure that the policies in place do help those who need it most.
I have made my ministerial colleagues aware of my constituents' concerns. A range of measures has been put in place, including the new three-part plan to help households with their energy bills during this challenging period.
Several external factors have driven inflationary pressures. In particular, shortages created by the reanimation of the global economy and global energy price spikes brought on by the inability of supply to keep up with demand and the Russian invasion of Ukraine. This has been particularly acute when it comes to the price of wholesale gas.
A rise in the National Living Wage will mean an extra £1,000 in the pockets of millions of people. The Government has also cut the Universal Credit taper rate and increased work allowances - which represent an effective tax cut for low-income working households in receipt of UC worth £2.2 billion in 2022-23.
Furthermore, the National Insurance personal threshold will rise further from £9,500 to £12,570 from July 2022. This will bring it in line with the equivalent Income Tax personal allowance and represents the largest increase in a personal tax threshold in British history, equivalent to a £6 billion tax cut for nearly 30 million workers and worth over £330 a year starting in July, across the entire UK. This represents the largest single personal tax cut in a decade.
The Health and Social Care Levy will be effectively introduced from April 2022 when NICs for working age employees, self-employed, and employers will increase by 1.25 percentage points. The Levy will be legislatively separated from 2023 when NICs rates will return to 2021-22 levels. Dividend tax rates will also be increased by 1.25 percentage points to fund the Plan for Health and Social Care.
I have ensured that ministerial colleagues are aware of my constituents' concerns about the introduction of the Health and Social Care Levy in the context of acute inflationary pressures.
Colleagues at the Treasury assure me that they viewed a broad-based tax base like Income Tax, VAT or NICs as the only viable means to raise the sums needed for such a significant investment in health and social care. The decision to base the Levy on NICs was made with the view that every individual should contribute according to their means, and that the cost of improving the health and social care systems should be shared between individuals and businesses. Successive governments have increased NICs to invest in the NHS, and the NICs system was set up to fund social security. The existing NICs ringfence for the NHS, established in 1948 and expanded in 2003, means that funds for health and social care will be clearly displayed on payslips. It is worth noting that France, Germany and Japan have all increased social security contributions to fund social care provision – the latter two with specific social care levies.
I will be working with my Parliamentary colleagues to ensure the Government continues to help ordinary households up and down the country as our economy continues to recover from the shock of Coronavirus.
Thank you again for taking the time to contact me.