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Pay rises may sound good- but in reality, with NI and inflation on energy and food, our lower paid and key workers will be actually be worse off

by Jackie Porter on 26 October, 2021

Jackie says,’ With such high house prices and rental and travel costs in the district, the promise of a £9.50 minimum wage rings hollow. The private sector has to find this money too, but for the millions working and on Universal Credit, they’ll receive so little of every extra £1 they earn: it will be an insult’.
Public sector pay: NHS and social care workers to face £900m NI tax rise 
The Liberal Democrats have accused the government of giving with one hand and snatching away with the other on public sector pay, given the national insurance tax hike and worsening cost of living crisis.

Previous analysis by the House of Commons Library commissioned by the Liberal Democrats estimates that those working in health and social care will be faced with a tax hit of over £900 million due to the Conservative government’s manifesto-breaking hike to national insurance.

The research shows a nurse or midwife on an average salary would see their tax bill rise by £310 next year, care home workers would pay around £140 more and ambulance staff would face a £420 increase. The average NHS worker across all staff groups will pay £315 more a year.

Liberal Democrat Treasury Spokesperson Christine Jardine said:

“Our public sector workers have been on the frontline of the pandemic and deserve a fair pay rise. But under Conservative plans their incomes will be squeezed by tax hikes and the cost of living crisis, which risks wiping out this pay rise before it even reaches people’s pockets.

“Our NHS and care home heroes face a £900 million tax grab due to Boris Johnson’s broken promise on raising national insurance.

“It shows that on public sector pay, the Conservatives are giving with one hand and snatching away with the other.”

ENDSNotes to EditorPlease see full research from the Commons Library below.Estimate of the additional tax that NHS and social care workers will have to pay as a result of the National Insurance rise The NICs increase is expected to raise around £16.4 billion per year. Based on HMRC’s ready reckoner, around 45% of this additional revenue is from the increase to employee NICs (and the inclusion of the earnings of employees over state pension age). So, roughly £7.4 billion is directly from employees.HMRC estimates that the “health and social work” industry contributes around 12% of UK aggregate pay (of people paid through the Pay As You Earn (PAYE) system where their pay is reported through the Real Time Information (RTI) system). We can, therefore, estimate that employees in health and social work will pay around £900 million of the additional NICs (12% of £7.4 billion is around £900 million).  This estimate does not include any self-employed in the health and social work industry. The estimate assumes that each industry has the same proportion of people with pay below the threshold at which NICs is paid. It also assumes that the additional 1.25% NICs for employers will not be passed to employees through lower earnings.
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