Health and Social Care Levy
Wednesday 8th September 2021
(2 years, 7 months ago)
Commons ChamberRead Full debate Health and Social Care Levy Act 2021 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
19:00 - The House divided: - Ayes: 243 / Noes: 335 - Question accordingly negatived.
19:14 - The House divided: - Ayes: 319 / Noes: 248 - Question accordingly agreed to.
Mr Deputy Speaker (Mr Nigel Evans)
I inform the House that Mr Speaker has selected amendment (c) in the name of the official Opposition. I remind the House that, under the terms of the business of the House order of today, the amendment will be moved formally at the end of debate.
The Financial Secretary to the Treasury (Jesse Norman)
I beg to move,
That provision may be made for, and in connection with, the following—
(a) the imposition of a tax on earnings and profits in respect of which national insurance contributions are payable, or would be payable if no restriction by reference to pensionable age were applicable, the proceeds of which are to be paid (together with any associated penalties or interest) to the Secretary of State towards the cost of health and social care but where expenses incurred in collecting the tax are to be deducted and paid instead into the Consolidated Fund, and
(b) increasing the rates of national insurance contributions for a temporary period ending when the tax becomes chargeable and applying the increases towards the cost of the National Health Service.
Supporting health and social care in the aftermath of a pandemic and amid the worst health crisis for 100 years, laying the long-term basis for social care for generations to come—there are few if any greater peacetime challenges for any Government, and that is why it is an honour to be opening this debate today.
As the House will know, yesterday the Prime Minister announced a plan to tackle the NHS backlog, put the adult social care system on a sustainable long-term footing and end the situation in which those who need help in their old age risk losing everything to pay for it. The Government’s plan will make a difference to the lives of millions of people across this country, and it will be funded with a record £36 billion investment into the NHS and social care.
Sir Desmond Swayne (New Forest West) (Con)
What estimate has the Minister made of the impact of these measures on the ease or indeed the difficulty of securing continuing NHS care?
Jesse Norman
That is an extraordinarily wide-ranging question, and there are many ways in which impacts could be assessed. My right hon. Friend will be aware that the Government will be bringing forward a social care Bill, and there will be a Budget at which this measure, fiscal measures in general and the wider consideration of the fiscal position will be considered. In the documents published in relation to today’s debate, there is of course a sustainability analysis of the impact of the measure on different parts of the country, by background and socioeconomic income, and there is also a substantial plan published by the Government in relation to the Health and Care Bill.
Several hon. Members rose—
Jesse Norman
If I may, I will just proceed a little bit further, and then I will be happy to give way.
In order to pay for a significant increase in spending in a responsible and fair way, the Government have announced a new 1.25% health and social care levy based on national insurance contributions. This Ways and Means motion enables the Government to introduce the levy and temporarily to increase national insurance contribution rates until it takes effect.
Jake Berry (Rossendale and Darwen) (Con)
Will my right hon. Friend tell the House how much the 1.25% increase in national insurance will cost the NHS on top of its current payroll?
Jesse Norman
My hon. Friend will be aware that public sector bodies have been adjusted for in the numbers that have been published, and therefore the numbers that have been published are net of the impact on the public sector.
John Redwood (Wokingham) (Con)
I understand that for a couple of years this tax revenue goes to the NHS, not to care, to get the waiting lists down. By how many will the waiting lists be reduced, and what is the plan for using this money to actually cut them?
Jesse Norman
Of course, it is impossible to say in advance what the impact will be, but I would direct my right hon. Friend to the remarks of the Institute for Fiscal Studies where it said that
“based on detailed analysis to be published later this week…this could be enough to meet the pandemic-related pressures on the NHS.”
I think that is a fairly—
Jesse Norman
No. I have already taken a few, and I will go on a bit further, if I may, and then I will take some more interventions. [Interruption.] Well, the hon. Gentleman has had a fairly substantial go at points of order already, and I welcome his later intervention.
The levy will apply UK-wide to taxpayers liable to class 1 employee and employer, class 1A, class 1B and class 4 self-employed NICs. However, it will not apply where taxpayers pay class 2 NICs or class 3 NICs. It will be introduced from April 2022, and then from April 2023 the levy will also apply to those working over the state pension age. As my hon. and right hon. Friends will understand, it takes time for Her Majesty’s Revenue and Customs to prepare its systems for such a major shift. That is why, in 2022-23, the levy will be delivered through a temporary increase in NICs rates of 1.25% for one year only. All revenues generated by this increase will be ring-fenced and paid to NHS England, NHS Scotland, NHS Wales and the equivalent in Northern Ireland.
Rachael Maskell (York Central) (Lab/Co-op)
Does the Minister not recognise the burden he is placing on small businesses, many of which the Government completely excluded and failed to support during the pandemic, in their now having to pay this extra levy, as opposed to making a fair taxation system that falls on those who can pay the most?
Jesse Norman
The hon. Lady will be aware that, because of the employment allowance, the bottom 40% of businesses will pay nothing and the next 40% will pay an average of £450. So this does not fall heavily on the bottom end of businesses, and of course it comes in a context in which the Government have provided over £400 billion of support to business and to the nation as a whole in the course of fighting the pandemic. In that sense it is, and it has been recognised to be by reputable independent commentators, a broad-based approach.
From April 2023, once HMRC systems have been updated, a formal legal surcharge of 1.25% will replace the temporary increase in NICs rates, which will return to their previous level. Again, this revenue will be ring-fenced in law for health and for social care only. As the Chancellor stated yesterday, this levy is no stealth tax. That is why the exact amount that each employee pays will also be visible as a separate line on their payslip. Finally, the levy will be administered by HMRC, and collected by the current reporting and collection procedures for NICs—pay-as-you-earn and income tax self-assessment.
Mr Clive Betts (Sheffield South East) (Lab)
I want to ask the Minister: how much money is actually going to get to local authorities to deliver social care at the frontline? Can I refer him to paragraph 36 of the Government’s document, which we got yesterday? It says that £5.4 billion in adult social care will be provided from this levy, but that will be spent on the reforms that are in the document. It also says that all the other pressures on social care that local authorities have now, demographic and otherwise, will be paid for from council tax and the social care precept, which is council tax by another name. So are we expecting the pressures on social care to be funded not from this document, but actually from further rises in council tax? Is that the honest situation?
Jesse Norman
I am grateful to the hon. Gentleman, and I am also very grateful to him for actually reading the document, which many of his colleagues may not have done, and he is absolutely right to draw attention to that section. What the levy does, of course, is to provide a very substantial form of funding for social care. The question of the capacity of local authorities, which is of course a matter of great interest to Government and an area that we have supported significantly in the last year or two, will be considered in the Budget in the normal course of things.
If I may, I will now set out why a levy based on national insurance is the best way to raise the funds needed for the Government’s plan for health and social care. The first reason is that there is already a clear precedent. Indeed, in 2003 the then Labour Government increased these same NICs rates by 1% specifically to put more funding into the NHS. Within the NICs system there is, as Members across the House will know, already a long-standing ring-fenced proportion of receipts directed to the NHS.
The second reason is that this is a fair method. Businesses will play their part. In fact, the largest 1% of businesses will contribute 70% of the revenue. However, existing NICs reliefs and allowances will also apply to the levy. That will mean, as I have said, that 40% of all businesses will not be affected due to the employment allowance. When it comes to individuals, those earning more will pay more. Conversely, at least 6.2 million people earning less than the NICs primary threshold will not pay the levy at all.
The third reason why a levy based on NICs is the right approach is that it has worked elsewhere. France, Germany and Japan have all increased social security contributions to fund social care provision. Finally, the question of how to fund health and social care is one that applies to a whole nation. NICs are set on a UK-wide basis, and the levy therefore provides a clear UK-wide solution.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Would the right hon. Gentleman put on the record for the House the consequentials for public bodies that are employers? They would normally be expected to pay this, but I understand there are some mitigations. Perhaps he could explain that, because in the time we have had we have not been able to get to the bottom of it.
Jesse Norman
The overall fiscal approach is set out in detail in the document that has already been referenced by the hon. Member for Sheffield South East (Mr Betts). We will be presenting a Bill in due course, which will have further explanatory notes and a tax information and impact note associated with it, and of course we have a Budget in which the wider fiscal position will become clear, so the House is not going to be short of information about how this will land.
Finally, if I may, I will just remind the House why this levy is so important. As the Prime Minister and the Chancellor set out yesterday, the levy will enable the Government to tackle the backlog in the NHS. It will provide a new, permanent way to pay for the Government’s reforms to social care, and it will allow the Government to fund our vision for the future of health and social care in this country over the longer term.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I thank the Minister for giving way. I have two points. He talks about the Government’s vision for health and social care, but with their obsession with outsourcing, that does not match the Scottish vision for health and social care. This is a devolved area. Why is the Minister not using tax, which the Scottish Government control? We have already been slagged for three years in this place for putting a penny on income tax bands to fund health and social care in Scotland. Why is he hitting Scottish taxpayers again, and taking power away from the Scottish Government?
Jesse Norman
Nothing could be further from the truth. All parts of the UK need a long-term solution to fund this health and social care position sustainably, including Scotland and the Scottish Government. Scotland’s own Audit Scotland has said that more money is needed in the Scottish social care system, and an independent review of adult social care said that more money needs to be provided. Of course, there is a Union dividend from that policy, in that Scotland, Wales and Northern Ireland will benefit by an average of 15% more than is generated by their residents. That is £300 million a year on average.
The Government have acknowledged that this policy involves a breach of the manifesto. They have done so directly, they have done so plainly, and they have done so honestly. But I would put it to the House that, in a deeper sense, this measure serves to redeem a promise and discharge an obligation. It is a profoundly Conservative thing to do, to provide for future generations without increasing our borrowing, without increasing spending, and in way that is sustainable and grips a nettle that for too many years has been ignored by the Labour party. With that in mind, I commend the motion to the House.
Rachel Reeves (Leeds West) (Lab)
There are two tests for the package announced yesterday. First, does it fix social care? Secondly, is it funded fairly? The answer to both those questions is no. It is a broken promise, it is unfair, and it is a tax on jobs. At the general election less than two years ago, the Prime Minister said to voters:
“Read my lips, we will not be raising taxes on income or VAT or national insurance.”
The Chancellor of the Exchequer—I am not sure where he is today—went further and solemnly said:
“Our plans are to cut taxes for the lowest paid through cutting national insurance.”
The Government have broken their legally binding promise on international development, they are breaking it again on the triple lock, and the country is now littered with Tory broken promises torn from the election manifestos of all Conservative Members—promises that they made to their constituents and their country. Promises used to count for something; today the Tory word, and guarantees from the Prime Minister, count for absolutely nothing at all.
Rachel Reeves
I will take an intervention from the hon. Gentleman, and perhaps he can tell us what he put on his election leaflets.
Paul Holmes
I thank the hon. Lady for giving way, and I remind her that the Conservative party won on the basis of its election manifesto, and the Labour party lost. In the interests of fairness and for the people of this country who voted for her party, will she outline to the House what the Labour party’s plan is to fix social care, because so far we have heard nothing?
Rachel Reeves
I will come on to that in a moment, but that sums it up. You went into the election with a set of promises, and now you are breaking them one by one.
Mr Deputy Speaker (Mr Nigel Evans)
Order—[Interruption.] Hon. Members should resume their seats. This is an emotionally charged debate—I fully appreciate that—but as Mr Speaker has pointed out, Members must not use the word “you” unless they are referring to the Chair. Please remember that.
Rachel Reeves
I will clarify: Conservative Members are breaking their promises one by one by one. The Government will claim that that is all down to the pandemic, but in March this year—a year into the pandemic—the Chancellor promised that national insurance would not go up. He said,
“this Government are not going to raise the rates of income tax, national insurance or VAT…Nobody’s take-home pay will be less than it is now”.—[Official Report, 3 March 2021; Vol. 690, c. 256.]
Another Tory promise up in flames. That was not before the pandemic; it was a year into it, and a matter of months later this bombshell on work to fund social care is a broken promise. It is unfair, and it is a tax on jobs.
Dame Angela Eagle (Wallasey) (Lab)
My hon. Friend is making the right sort of points. Government Members do not like it, but they need to listen to it. Does she agree that when the Prime Minister signed the guarantee on the tax lock in the 2019 general election campaign, he also told the country that he had an oven-ready plan for reforming social care, prior to the pandemic? He cannot have signed the tax lock, as well as having a plan for social care, if one of those things was not exactly true.
Rachel Reeves
I would go further than my hon. Friend: neither of those things were true, because the Government have no plan for social care and we have a tax increase. The sad truth at the heart of this so-called health and social care levy is that it will not deliver on social care for at least three years from now, and even then it is uncertain when the Government might allow some money to trickle down. Under the Prime Minister’s plan, many will still face the threat, as my right hon. and learned Friend the Leader of the Opposition set out today, of selling their home to fund care. Many of those with a house worth £186,000—that includes many constituents of Conservative Members—will still have to sell their home to fund £86,000, within the cap. That is before the costs of living in a care home. How does the Minister expect his constituents to pay for care without selling their home? I will happily take an intervention from him—
Rachel Reeves
Perhaps the hon. Member for Thirsk and Malton (Kevin Hollinrake) will explain what he put in his manifesto to his constituents.
Kevin Hollinrake
I was delighted to sit on the Housing, Communities and Local Government Committee—the Chair of the Committee is in his place now—during its joint inquiry with the Health and Social Care Committee. Some 24 Committee members, 12 of whom were Opposition Members, recommended a solution based on national insurance. The shadow Secretary of State for Health and Social Care also proposes a solution based on national insurance. Why does the hon. Lady now say that that is the wrong option, and what is her plan if it is the wrong option?
Rachel Reeves
We should be looking at all forms of income, not just income from people who go out to work. A landlord who rents out a number of properties will pay nothing, whereas his tenants in work will. That is not fair, and that is why we cannot support the motion this evening. The Minister told us three important things today.
Jesse Norman
The hon. Lady has accused the Government, who have published a plan, of having no plan, when in fact the Labour party has absolutely nothing to offer on this topic. On the question she raises, the Resolution Foundation said in its report that the cap will offer support that will recognise higher care costs in different parts of the country, and the increased generosity of the means test will have relatively more impact in lower-wealth regions, in the north-east and other parts of the country.
Rachel Reeves
With all respect to the Minister, I asked how he would suggest that one of his constituents with a house worth £186,000, and no other savings, will pay £86,000 for their care without selling their home. It is clear that he does not have an answer to that question, because there isn’t one.
Rachel Reeves
The Minister has had a chance and he did not manage it. I will take an intervention from my hon. Friend.
Chris Bryant
Seventy per cent. of my constituents own their own home. The average house price in my constituency is £98,000. My constituents on lower than average wages in the country will be asked to contribute more in national insurance. Is it not manifestly unfair that they will still have to find £86,000, and the only place they will find that is out of the £98,000, so as to fund millionaires in south-east England to pass on the whole of their inheritance to their children?
Rachel Reeves
My hon. Friend makes the point very well. People will still have to sell their homes to pay for care under these plans. There were three important points—
Rachel Reeves
I have already taken an intervention from the Minister, and he did not answer the question. [Interruption.] Okay, I will take the intervention on the basis that he answers the question that I and my hon. Friend the Member for Rhondda (Chris Bryant) have asked: how on earth does someone pay £86,000 when their house is worth £98,000 or £186,000? Let’s have the answer.
Jesse Norman
I am surprised that the hon. Lady did not recognise the point about geographic impact that I made in my last intervention, but let me just point out that the Government have published a Build Back Better plan, which contains specific case studies of the impact of this measure. That is where she should look for an answer to her question.
Rachel Reeves
The Minister is wasting the House’s time, because he is not answering the question.
There were three important points in the Minister’s opening speech. The first was that it is impossible to say what the impact of these proposals will be on waiting lists. The second was that spending for local authorities will be considered in the Budget. There is no detail at all about what money local authorities will get, and we are being asked to vote for a tax increase without a plan to fix social care. The third point the Minister made, in answer to the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), was that councils will pay this levy as employers, so they will face increased costs but without any guarantee that they will get additional money to fund care. This is not a plan to fix social care.
There is no plan for care workers, who were underpaid and undervalued before the pandemic—before being sent out on to the frontline by this Government without the personal protective equipment that they needed. Some £8 billion was cut from social care by Tory Governments in the years before the pandemic, ignoring the rising demand, with care workers paid less than they can live on. This Government are not interested in bringing employers and unions together for a positive plan for the future of social care. They are not interested in making the care sector a career of choice, with decent pay and conditions and proper investment in skills.
We know that half a million care workers are needed by 2030. There were 100,000 vacancies in social care before the pandemic. That is only set to increase, with the GMB predicting 170,000 vacancies for care workers by the end of the year—one in 10 jobs unfilled. Labour’s plans will prioritise older and disabled people, shifting the focus of support towards preventive early help, and our guiding principle will be “home first”, because that is what the overwhelming majority of people want.
Peter Kyle (Hove) (Lab)
Just a second ago at the Dispatch Box, the Minister referenced a plan. He was asked repeatedly by those on the Government Benches how this money will be spent, and in response to every one of their interventions he said, “Wait for the forthcoming White Paper. Wait for the forthcoming Bill.” Is this not the biggest blank cheque that this Government or any other have ever asked us to pay, and would it not be irresponsible for us to do so without their telling us how they are going to spend it?
Rachel Reeves
The truth is that the Tories are all tax and no strategy. When it comes to the NHS and social care, last year the public clapped them; this year the Tories tax them. There are far too many outstanding questions, with no detail published yesterday. What other tax rises on working people are set for further down the line, given that the Prime Minister refused to rule them out yesterday? Will council tax have to rise to make the sums add up? How will the Government relieve the burden on councils and care homes? Again, there was no detail on that yesterday, and there is no detail today.
Mike Padgham of the Independent Care Group said:
“It’s not clear how the money is going to…the front line.”
That means that providers will be squeezed, and working conditions and pay impacted. This just does not add up.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
We all recognise the significant crisis in the social care system, but is that not just another broken Conservative manifesto promise? They pledged to approach this in a manner of cross-party consensus. The manner in which they are bringing forward these out-of-the-blue taxation measures on some of the poorest working people in this country does nothing to build that consensus; it just broadens the gap that we know many families face in meeting the costs of social care.
Rachel Reeves
My hon. Friend is exactly right. The Conservatives walked out of cross-party talks in 2010, and despite offers from my hon. Friend the Member for Leicester West (Liz Kendall), they have never resumed.
So much for the plan; what does this mean for ordinary people funding it? The Chancellor’s tax on jobs does not just let down those needing care or working in the care sector; it is a tax on all those in work. As daily covid cases continue to climb, the only shielding that the Government are interested in is protecting the wealthiest few from paying more tax. As I said, a private landlord owning and renting out multiple properties will not pay a penny more, yet their hard-working tenants who work for a living will be hit hard. It is deeply unfair.
Catherine West (Hornsey and Wood Green) (Lab)
Does my hon. Friend agree that the question on everyone’s mind is, “When is my operation going to happen?” The Health Secretary does not seem to be able to answer that basic question. When will the waiting list be over? When will we stop having to wait for crucial operations?
Rachel Reeves
That is exactly the question that all our constituents ask, but as the Minister has failed to say today when the backlog will be cleared, we have to wonder whether this plan adds up, and when any money at all will be available for social care.
The incomes of working people just are not of interest to this Government. I asked the excellent staff of the Library to examine the impact on a typical worker in constituencies such as mine in Leeds West, the Minister’s in Hereford, and the Chancellor’s. Let us imagine that our worker is a new police constable—a single mum with two children, earning £26,000 a year. She rents her home in the private sector. She is eligible for universal credit. What have this Government done for her? [Interruption.] Hon. Members laugh, but they will not be laughing when constituents come to their surgeries and ask why this Government are taking money away from them.
Katherine Fletcher (South Ribble) (Con)
Will the hon. Lady give way?
Rachel Reeves
No, I think the hon. Lady should listen to this. What have this Government done for that worker and her family? The Chancellor has frozen her pay this year. The Chancellor has frozen her income tax personal allowance. The Chancellor is taking £20 a week away from her and her family in universal credit, and her council tax bill has gone up by £80. Now the Chancellor is coming back for more and asking for 1.25% of her income in national insurance. Why do this Government keep coming after the same people time after time, asking ordinary working-class people to pay more of their incomes?
If we add it up, the total cost to that worker and her kids—this is all of our constituents—will be an extra £1,234 next year. That is not just a one-off. Analysis from the New Economics Foundation shows that 2.5 million working households will be hit by the Tory double whammy of cuts to universal credit and an increase in their national insurance. Put that on your leaflets at the next election.
Rachel Reeves
I will give way to the hon. Lady. I will be interested to hear what she is going to say to her constituents at her surgery.
Katherine Fletcher
I would be interested if the hon. Lady would let us know at which point “massive global pandemic” appeared in any of the commitments made during the 2019 general election, and whether the Labour party would continue to have unfunded promises for which we would have to borrow from the market or whether they would continue to kick the can of a gnarly problem down the road. Constituents of mine have been worried about social care all summer. It is a problem that people have ducked for generations. We are doing it in a way we can afford.
Rachel Reeves
I am not sure what the constituents of South Ribble will make of that, but I know what they will think after seeing less money in their pay cheques time after time because of decisions by this Government. There are choices, and they are difficult ones. This Government are choosing to tax ordinary working-class people. Labour would ask those with the broadest shoulders—the wealthiest in our communities—to pay more. This Government make a different choice; they can justify that to their constituents.
Several hon. Members rose—
Mr Betts
I bring my hon. Friend back to paragraph 36, which I asked the Minister about, which seems absolutely key. There is no clear money coming from the levy to social care. That is what the Government said. I think the Minister said it would all be revealed in the spending review. Paragraph 36 states:
“The Government will ensure Local Authorities have access to sustainable funding for core budgets at the Spending Review. We expect demographic and unit cost pressures will be met through Council Tax, social care precept”.
On top of all the other hits that working families are going to get, can they expect an above-inflation rise in their council tax next year to pay for the Government’s failure to fund social care properly?
Rachel Reeves
I think many councils and the people who work for them and provide social care at a local level will be incredibly worried about what they are hearing from this Government, which is that council costs are going to go up while they are getting no additional money.
Rachel Reeves
I will give way again in a moment, but I have taken a lot of interventions—a lot more than the Minister.
In contrast, who has been shielded by the Chancellor? Which types of income will be paying no additional tax after today? They include those who get their income from financial assets, stocks and shares, sales of property, pension income, annuity income, interest income, property rental income and inheritance income. Well, fancy that. I do not doubt that the champagne glasses were clinking in Mayfair last night toasting the Chancellor, but not in Mansfield, not in Middlesbrough, not in South Ribble and not in Thirsk either. Some 95% of the revenue the Government plan to raise from this tax bombshell comes from employment. What a contrast.
Several hon. Members rose—
Rachel Reeves
Let me just make this point.
What a contrast. Yesterday, Amazon reported an additional £1.9 billion-worth of sales, but it is paying only £3.8 million more in corporation tax, with much of its profits diverted to Luxembourg. Yet with the changes announced yesterday, a graduate on a typical entry-level salary will now pay a marginal tax rate of almost 50%. And not a word from the Chancellor or any of his Ministers about any of that. Politics is about choices and there are other ways to raise this money. The Chancellor wants the country to believe that—[Interruption.] Sales on property or on financial assets such as stocks and shares—there are no additional taxes on people who get their incomes in that way, but plenty of additional taxes on ordinary working-class people.
The Chancellor wants the country to believe that this is the only way to do it, but the point is that it is not. The Prime Minister and the Chancellor have deliberately chosen to go after those who are working hard for their money. Labour understands—I understand—how hard people work for their wages. I do not believe that the Chancellor considers the lives of people outside this place in any detail before he takes decisions like this. The Government, as was mentioned earlier, are rushing this through without publishing a proper analysis of the impact on jobs, on different parts of the country and on different incomes. They are not even allowing proper amendments. Members will know that we are limited in how we can amend the motion this evening. That is why we have put forward what we can: an amendment calling for an assessment of this tax on jobs—an assessment that the Chancellor is unwilling to provide.
Several hon. Members rose—
Rachel Reeves
I will give way just twice more: to my hon. Friend the Member for Leeds North West (Alex Sobel) and then to the hon. Member for Sevenoaks (Laura Trott).
Alex Sobel (Leeds North West) (Lab/Co-op)
In my constituency and in my hon. Friend’s constituency next door, we have many people right at the start of their working lives paying, as she says, nearly 50% in tax after this change and very high rents in the private rented sector. They effectively have no disposable income. Their dreams of ever owning a home are being destroyed by Conservative Members. Does she not agree?
Rachel Reeves
My hon. Friend speaks well of what our constituents in Leeds North West and Leeds West will be facing with that double whammy of universal credit and the national insurance increase, in addition to the other tax increases from this Government. I will take a final intervention and then I will start to wind up.
Laura Trott (Sevenoaks) (Con)
I thank the hon. Lady for giving way. There is an obvious precedent for this national insurance rise to raise money for the national health service, which is from 2003. Were Labour wrong to raise national insurance for the national health service in 2003?
Rachel Reeves
We had a clear plan to bring down waiting lists, a plan that this Government are sorely lacking. The economic circumstances are different, too. The Government’s tax on jobs comes at the worst possible time. Businesses create jobs and will drive our recovery. Labour is a party that is pro-worker and proudly pro-business, too. I am proud of the decisions that the former Prime Minister and the former Chancellor made that brought down waiting lists to their lowest ever level—targets that have never been met under 11 years of Tory Government. We want business to succeed, to invest more, to employ more, to pay more and to create more wealth.
These are still precarious times, with many businesses in all our constituencies not yet back to full capacity and others considering how they are going to repay the loans taken on during the pandemic. What do the Chancellor and the Minister think the effect of this tax rise on jobs will be? That has not been set out. It could mean an attempted squeeze on wages and conditions, even higher prices for customers, or the scaling back of recruitment and growth plans. It will affect people and it will affect the Exchequer, too. It is a false economy. The Chancellor and the Minister do not need to take my word for it. The British Chambers of Commerce described it as:
“a drag anchor on jobs growth”
and believes it will
“dampen the entrepreneurial spirit needed to drive the recovery”.
Make UK says it is
“ill-timed as well as illogical”.
The CBI says that it
“will directly hurt a business’s ability to hire staff at a time when businesses have faced a torrid 18 months.”
The Federation of Small Businesses says that
“this increase will stifle recruitment, investment and efforts to upskill”.
They are joined by the trade unions. The TUC says it is wrong to hit young people and low-paid workers
“while leaving the wealthy untouched.”
We agree with businesses and we agree with our trades unions, too. They are right. This is a tax on jobs. It is a tax on the economic recovery and we will not support it.
Let us go back to the key questions that need answering. Will this plan deliver what is promised for our health and social care sectors? No. Will it clear the NHS backlog by the end of this Parliament? No—and the Health Secretary says no. Will it give social care the resources it needs for the next three years? [Hon. Members: “No.”] Is there a plan to reform social care? [Hon. Members: “No.”] Will it create more and better paid jobs in the economy? [Hon. Members: “No.”] Is it fair across the regions? [Hon. Members: “No.”] Will people be prevented from selling their homes to fund their care? [Hon. Members: “No.”] Will this tax bombshell help our economic recovery? No. Is it the last tax increase in this Parliament? No. This whole thing is unravelling. No wonder that Ministers are in a desperate rush to get it through. The Chancellor is absent today. Perhaps he has gone for a swim.
Covid has tested the people of our country like nothing else in any of our lifetimes. After the last year and a half the country deserves a much better future, a recovery that enhances and enriches all our lives and in all parts of the country. Social care is a huge challenge and there are other challenges coming too. We need to do things differently. Labour’s test is simple: does it fix the problem and does it do it in a fair way? The answer to both of those questions is no. That is why Labour will vote against this unfair, job-taxing, manifesto-shredding tax bombshell this evening.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. As Members can see from the Annunciator, there is a five-minute limit on all Back-Bench contributions. We will start with Mel Stride.
Mel Stride (Central Devon) (Con)
I rise to welcome, broadly, the motion. It seems to me that social care is one of those issues that parties of both colours have grappled with for many years, yet now we are at last at the point where a Government have the courage and are sensible enough to actually come forward with some realistic proposals. As to the breaking of manifesto commitments, no party ever wishes to do that, but listening to the Opposition it seems to me as if the global pandemic never occurred, as if the economy never shrank by the greatest level since 1709 during the great frost of that year, as if millions of jobs were never imperilled, and as if this Government never had to step in fiscally in a way that probably no Government outside wartime have ever had to do, and with such positive effects.
When it comes to the honesty or otherwise of what the Government have done, I think they have been upfront, very clear and very honest in making it clear that they have broken that commitment, unlike, I have to say, the less straightforward way in which, repeatedly in this debate, the Opposition and the shadow Chancellor have ducked the fundamental question: what is the Opposition’s alternative plan? In response to an intervention by my hon. Friend the Member for Sevenoaks (Laura Trott), the shadow Chancellor, when asked why Labour had supported an increase in national insurance in 2003, said, “Well, we had a plan.” I humbly remind her that that was 18 years ago. What we need to see now is a plan from the Opposition, as well as the criticism.
Chris Bryant
The right hon. Gentleman and I have known each other for a very long time. I just hope that he could explain to my constituents why it is right that practically everybody in the Rhondda would have to sell their home to meet the £86,000 cost, whereas next to nobody would have to do so in his constituency.
Mel Stride
First, the hon. Gentleman’s knowledge of my constituency is obviously rather deficient, because I expect that mine shares many characteristics in common with his. I do not dispute the fact that any major fiscal move, such as putting up national insurance and bringing in this levy in this manner, will have associated complexities and difficulties. My pledge to the House is that the Treasury Committee will, I am sure, after private discussion, decide that we wish to look more closely at a number of the issues that are being raised in this debate, including the one that he mentioned.
Let us be honest about the options that were available to the Treasury. How could we have squared the circle and funded £10 billion-plus a year? The first thing that the Treasury could have done is to seek to cut expenditure in other areas, yet I have no doubt that if it came forward with any proposals of that nature, the Opposition would have fiercely resisted that as austerity all over again. We have to understand that on the current projections, there are many unfunded commitments, including, for example, keeping our railways going, going for net zero, additional funding that will be needed for school catch-up and so on.
Peter Grant (Glenrothes) (SNP)
Given the right hon. Gentleman’s experience on the Treasury Committee, does he not agree that a tax hike of this scale could—if it was necessary—be much more fairly and equitably carried out if the tax burden was spread across a number of different taxes, rather than 100% of the burden being landed on one single, narrowly based tax?
Mel Stride
I will come back to the hon. Gentleman’s point, but let me just stick with the options. The second option was to lean into growth, to assume that we could grow our way out of this problem. We have just had a huge contraction of the economy. We are not yet back up to the pre-pandemic level, although the Bank of England thinks that we may arrive at that point some time towards the end of the year, and we have many headwinds to growth ahead of us, not least the bottlenecks in supply chains, the labour shortages that we have witnessed in certain areas, and many other issues.
The third thing that the Treasury could have done is to borrow more money, and that is probably what the Opposition would have done in this situation. Despite the fact that the Bank of England now seems to feel that there is more money—I suspect that the Office for Budget Responsibility will confirm that around the time of the Budget— because the economy is doing a bit better than we expected, probably to the tune of about £25 billion, it would be a very brave Chancellor who started to borrow yet more and more, knowing that one day it is possible that the markets might turn around and look at the United Kingdom and decide that they no longer have confidence to lend to us. That would be a very dark day.
Mel Stride
I will not, actually, because I am very low on time.
That is the sword of Damocles that hangs regularly over the head of our Chancellor, so that leads us to taxation. If we look at taxation and the amounts involved here, there are only three taxes that we could consider. About two thirds of all tax is raised through income tax, national insurance and VAT. We then ask ourselves, “What criteria are we going to apply to the tax measures to test whether they are the right ones or not?” There are at least two. One is that we should look after the least advantaged in our society—the lowest-paid—and the second is that we should look after those who are the youngest, who have borne the greatest brunt of the economic consequences of the pandemic.
Mel Stride
I will not—I am very short on time. We are looking to the younger generations, to some significant degree, to fund predominantly the needs of elderly people and social care. If we look at those taxes, income tax rises would have been very progressive—there is no doubt about that. We would have had to have about twice the level of increase that we are looking at with national insurance to have raised the same amount of money. I think we need—the Minister made this point—a UK-wide solution to this, not one based on income tax, where, of course, elements of income tax are devolved to other nations across the United Kingdom.
If we put up VAT, that would be hugely regressive, particularly at the level of income received rather than expenditure. That would therefore have been wrong. We are also up at 20%, I think—near the upper limit of where VAT should be, given the distortionary consequences of going further.
That inevitably leads us to national insurance, just what Labour was led to in 2003. The original proposal, it seems to me, failed both of my tests. If we just put up national insurance, it would have been regressive. It would have hit the poorest hardest, but what is right about the Chancellor’s approach is that he has extended it to those beyond the state retirement age and those receiving income by way of dividends. That critical move makes this, in general, the right approach.
There are many issues that the Committee will no doubt look at. One of them is that a regrettable consequence of the increase in the employer’s national insurance rate is that it will exacerbate the so-called “three people problem”, whereby the different tax treatment of the employed, the self-employed and those receiving income through their own company will be widened, with consequences for IR35. I am out of time, but I support this motion today.
Alison Thewliss (Glasgow Central) (SNP)
I would like to start by giving the UK Government some credit: they are absolute masters of illusion and deflection. Trying to get them to simply answer a question is like pinning jelly to a wall. Their Ministers are astonishingly unperturbed by going out to argue for policies that entirely contradict the cast-iron promises they made when they stood for election. We on the Scottish National party Benches are clear that raising national insurance is a blunt tool to fund social care, likely to disproportionately hit young people and lower earners. Our SNP amendment (a) would have forced the UK Tory Government to come clean on the distributional impact of this policy.
We would love to be able to amend the motion more broadly, but as the hon. Member for Rhondda (Chris Bryant) pointed out, we have limitations on our ability to do so this afternoon, which is hugely frustrating. Our amendment therefore covers the impact by age, because we know that young people will be affected worst; by income, because we know that national insurance is regressive and will hammer lower earners; by wealth, because those with unearned incomes stand to be the big winners and the key political motive here appears to be for the Tories to bail out their well-heeled voters against losing their inheritance; and by place of residence, because this is a UK tax for an English policy crisis and, within England, the Resolution Foundation is clear that this policy will benefit the south-east the most. It is of no surprise to me that the UK Tory Government’s national insurance hike and the “back of a fag packet” plan announced yesterday are already drawing criticism from all sides—from The Daily Telegraph, the Daily Mirror, the Cabinet and Back Benchers.
Joanna Cherry (Edinburgh South West) (SNP)
My hon. Friend is making a number of very important points. An anonymous member of the Cabinet is quoted in The Daily Telegraph as being very critical of this policy:
“If you get all your income from investments and property you don’t pay a penny but if you work your guts out for minimum wage you get clobbered.”
Can my hon. Friend hazard a guess as to what the Tories have against taxing unearned income?
Alison Thewliss
I would be very curious to know why that is. I was going to read out that very quote, because even three former Conservative leaders, including a former Prime Minister and three more former Chancellors, have spoken out against this move. To complete the quote that my hon. and learned Friend mentioned, this person, an anonymous member of the Conservative party, said:
“Putting up National Insurance would be morally, economically and politically wrong.”
They went on to say:
“After all that’s happened in the last 18 months they can’t seriously be thinking about a tax raid on supermarket workers and nurses so the children of Surrey homeowners can receive bigger inheritances.”
Well, yes indeed they are.
Dr Whitford
Is it not the case that the talk is about making life better for social care staff, but actually, they are exactly the people who will lose £1,000 a year in the universal credit cut and will now face this extra cost?
Alison Thewliss
My hon. Friend is absolutely right. They are the people who can least afford it and who have worked the hardest through this pandemic, who this Government should be thanking, not taxing.
We are being asked to vote today on measures that the Institute for Fiscal Studies has described as “better than doing nothing”, which is about as charitable an analysis as is possible of this policy.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
Will the hon. Lady give way?
Alison Thewliss
In a second. Very few people would dispute the need for action on health and social care in England. However, an increase to national insurance contributions is not the fairest way to go about it. I would be interested to know why the hon. Gentleman thinks it is fair for his constituents.
John Lamont
The hon. Lady made reference to the IFS. She will know that the IFS has noted that over the past 10 years the health spend in Scotland has grown by 1.2%, whereas in England it has grown by 3.6% on a like-for-like basis. Surely it is astonishing that she would vote against £1 billion of extra investment for Scotland’s NHS.
Alison Thewliss
What the hon. Gentleman fails to understand is that we are starting from very different points. He does not acknowledge that, and he does not understand it.
The response from equality and anti-poverty groups has been absolutely damning. The Women’s Budget Group has said:
“We believe there is a fairer way to fund social care. This is because, as they currently stand NICs are more regressive than income tax—with a lower threshold at which payments start, and a higher rate threshold beyond which employees pay a lower rate.”
The Resolution Foundation has described the policy as “generationally unfair”. Paul Johnson of the IFS has said:
“Remains the case pensioners will pay next to nothing for this social care package—overwhelmingly to be paid by working age employees”.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
There are many ways in which this policy could have been made progressive, one of which would have been to look at the upper threshold for national insurance, which has not been addressed. A young graduate will now have a marginal tax rate higher than a rich Conservative on the Government Benches.
Alison Thewliss
The hon. Gentleman makes an excellent point. For young people who have perhaps struggled through this year, who have graduated and who are going out into the world of work, it is a real hammer blow to their prospects.
Many families are already facing a historic £1,040 cut to their annual incomes and are staring down the barrel of impending cuts to universal credit and working tax credit. The Joseph Rowntree Foundation has described the new levy as adding “insult to injury”. The New Economics Foundation has calculated that 2.5 million working households will be affected by the £20 a week cut to universal credit and the increase in national insurance. On average, they will lose out by £1,290 in the next financial year. Working households are doing their very best to put food on the table and support their children, and this cruel UK Tory Government caw the legs from under them.
Alison Thewliss
If the hon. Gentleman can explain why that is fair to the families who have been working so hard, I will be glad to give way.
Mr Baker
I wonder whether the hon. Lady has popped out to the Vote Office and picked up the distributional analysis that the Government have published, which shows the impact across the deciles of income in this country: it just does not bear out what she is saying. I encourage anybody out there to pick up that analysis and have a look.
Alison Thewliss
I have seen a different analysis from the New Economics Foundation; I urge the hon. Gentleman to look at it, because it gives a very different picture from the one that the Government are presenting today, which is why we need more analysis of the policy before the Government go forward with it.
The policy will also have an impact on our recovery from the pandemic. Businesses, which have weathered such a challenging year, have spoken out against it in the strongest terms. The Federation of Small Businesses has called the national insurance hike
“anti-job, anti-small business, anti-start up”,
pointing out that the increase to national insurance will
“stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.”
Dame Angela Eagle
Is the hon. Lady worried that the Government appear to be increasing taxes at a far earlier stage of the economic recovery from the pandemic than similar economies?
Alison Thewliss
The hon. Lady is absolutely correct. The Government have learned nothing from the austerity that caused so much damage with the last crash. They are about to repeat their mistakes, and those on the lowest incomes will be hammered most, again.
The Institute of Directors has called the hike “political opportunism” and has highlighted the tax on dividends, which will hit sole traders and small company directors, many of whom were completely and unjustifiably excluded from UK Government support during the pandemic. It really does rub salt in the wounds.
Matt Rodda
I am grateful to the hon. Lady for giving way on that excellent point. In my constituency in Reading, many of the same families will be affected; she is wise to point that out, and I reiterate that point. It appears that the same very hard-working groups of people, many of whom are key workers or are with small businesses, are being affected disproportionately by this unfair tax rise. At the same time, it is not solving the fundamental problems with social care.
Alison Thewliss
Absolutely. It does nothing to resolve either issue, and it makes it all the harder for people who have suffered so hard during the pandemic and been excluded from support to get back on their feet and bring money back into the economy. It makes no economic sense whatever.
Of course, the unjust effect of the national insurance hike will be compounded in Scotland because the Prime Minister is proposing that Scottish tax contributions be used to fund England-only policies. My constituents and people across Scotland are generous people, and I am sure that very few of them would begrudge the principle of funding the NHS and fixing social care after the pandemic, if indeed they had any faith that this Government were capable of fixing anything. But as things stand, the Scots, Welsh and Northern Irish stand to be taxed twice: first for the health and social care system that they actually receive from their own Government, and then for the NHS and social care in England, for services that they do not have access to, where money more often than not appears to be squandered on dodgy contracts and cronyism scandals.
We know from the United Kingdom Internal Market Act 2020 and other Tory Brexit legislation that we cannot trust Government Members to respect our hard-won devolution. I am not reassured in the slightest by all the talk yesterday from the Prime Minister about directing money raised from the new levy into health and social care services in Scotland.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
The hon. Lady is making a very important point. Is she aware of any discussions having been held between Treasury Ministers and SNP Scottish Ministers or Labour Ministers in the Welsh Government? It seems to me that the British Government are using a UK-wide tax to fund English priorities.
Alison Thewliss
The hon. Gentleman is absolutely correct on that front. These are not our priorities; we already have these services in our own nations.
Several hon. Members rose—
Alison Thewliss
If Conservative Members will just calm down for a little minute, I will try to bring them in at some point. I want others to get in to make their speeches—gie’s peace.
It is not for the Prime Minister or anybody else in the UK Government to direct how devolved budgets are spent. The Ways and Means resolution ties the money to NHS Scotland, not to our democratically elected Scottish Parliament and Government—a further undermining of decision making, showing a lack of understanding of how services are provided in Scotland. We have had no assurance from the UK Tory Government about the extent of the Barnett consequentials that will be generated from the spending. I seek clarity on that today.
SNP Members cannot support measures that are so manifestly unfair to our constituents and whose financial consequences amount to a pig in a poke. The Resolution Foundation has pointed out that while health spending may go up, spending on other areas such as local government has gone down compared with pre-pandemic plans. [Interruption.] Local government, of course, provides a significant proportion of the social care that Tory Members, who would do better to wheesht and listen than to chat away in the corner, claim to care about.
Alison Thewliss
The hon. Gentleman has done more talking than listening in this place. It would be useful if he sat down.
The spending cuts will have an impact on Barnett consequentials. It would be just like this UK Tory Government to appear to give with one hand while picking Scotland’s pockets with the other. A new Tory poll tax that punishes those on the lowest incomes is being forced upon Scotland by a Government we did not vote for.
Alison Thewliss
If the hon. Gentleman wants to explain that to his constituents, I would be very glad to hear it.
Andrew Bowie
The hon. Lady is making a serious speech with lots of very pertinent points, many of which I disagree with, but the fact is that we have come to the crux. This action by the Government will actually deliver more than £1 billion of extra funding to Scotland’s national health service. The real reason SNP Members oppose the motion is that they would rather Scotland’s NHS were poorer than that Scotland benefited from being a part of this United Kingdom. That is the fact.
Alison Thewliss
We already spend more per head on the NHS than is spent in England. We already have better services in Scotland than in England. This policy is an entirely regressive form of taxation that does nothing for the hon. Gentleman’s constituents and does nothing for mine.
Dr Whitford
Scotland already spends 43% more per head on social care, which allows us to be the only nation that delivers free personal care and has extended it to people under 65. That was why we raised the extra 1p on tax, for which Scots are already paying and from which they are already gaining. That should be controlled by the Scottish Parliament.
Alison Thewliss
My hon. Friend speaks the absolute truth. There is a huge contrast between what the Government propose and what is already being delivered in Scotland.
Some have said, “What’s your alternative?” Well, fixing England’s social care crisis is not for the SNP to decide, quite frankly. Having heard evidence when I sat on the Select Committee on Communities and Local Government some years ago, I know that successive UK Governments have failed to act and have ignored the evidence as difficulties mounted. Now the Prime Minister has come to this House in haste, shamelessly using covid as cover.
Alison Thewliss
I will, because we served on the Communities and Local Government Committee together.
Kevin Hollinrake
I am very grateful. In respect of the sufficiency of Scottish social care budgets, there is now an 11-week wait in parts of Scotland for discharge from hospital into a care home. Is the hon. Lady honestly saying that she does not need extra resources for Scottish health and social care?
Alison Thewliss
The hon. Gentleman should look at the comparative figures in his own constituency. I am not saying for one second, and I would never say, that everything in Scotland is perfect, but we are making good progress on that, and we intend to make more progress.
The social care funding announced by the Government may in the end amount to as little as 20% raised by this tax hike, and not even for a few years. The British Association of Social Workers has said that this raises more questions than answers, and that it needs the funding for services right now, not at some point in the future. The early analysis across the board today demonstrates that the sheen is already coming off this policy. In contrast, the SNP has used its time in government to introduce health and social care integration, self-directed support and the Carers (Scotland) Act 2016. We have health and social care partnerships on the ground working away to deliver more integrated services to our constituents. Free personal care has been available in Scotland for adults aged 65 or over since 2002, extended in 2019—as was pointed out by my hon. Friend the Member for Central Ayrshire (Dr Whitford)—to people of all ages who require it. Yesterday the Scottish Government’s programme for government set out the timetable for establishing our national care service, the most significant public service reform since the creation of the NHS.
This is a Westminster power grab on devolved healthcare and the democratic institutions of Scotland, Wales and Northern Ireland. The Government are taxing our people to pay for their chaotic mishandling of health and social care in England. They are undermining our recovery by putting a tax in employers. They are punishing working people on low pay by cutting their universal credit and hiking taxes on their meagre wages. This is no Union dividend, as the Prime Minister likes to claim; it is a Union dead end, and the people of Scotland must have the choice to take the fastest road out of here to independence.
Jake Berry (Rossendale and Darwen) (Con)
Let me start by congratulating the Government on grappling with what I think is a very difficult issue—actually, it is probably “the” issue for our generation to deal with—of how we ensure that older people have dignity in their old age, and how we deal with an ageing population. However, I do not believe that the way in which we are proposing to do it, through national insurance contributions, is the correct way.
There are three reasons why I think this will be particularly damaging to areas such as the one that I represent. First, ours is an area with low incomes. The lower a person’s income, the more that person pays, as a proportion of that income, in national insurance contributions. The national insurance rate on incomes above £50,000—before these changes—is just 2%. So those on the lowest incomes pay the most proportionately in national insurance contributions.
Secondly, ours is an area with low property values. An £86,000 cap on contributions, or even a £100,000 asset floor, may be right for other parts of the country, but in my constituency, where the average property price is £170,000 or £180,000, by the time people hit that damping floor of £100,000, they would have had to pay the equivalent of 50% of their property value in care home fees.
Dehenna Davison (Bishop Auckland) (Con)
I thank my right hon. Friend for raising an important issue, with which I too have been grappling since yesterday’s announcement. Does he agree that it would be wonderful to hear from the Government that they may consider looking at regional disparities in house prices when setting the floor?
Jake Berry
What a brilliant suggestion—one that I was about to make myself. I think that the Government should think about both the £86,000 contribution and regional house prices when considering that damping floor.
Thirdly, ours is an area with historically high unemployment. National insurance, as we have all called it during election campaigns, is in fact a jobs tax. It is a disincentive to the creation of new jobs, and those already in work will see, for instance, pay rises suspended as the wage bill goes up for employers just for employing people in their businesses. That is why I think that national insurance is the wrong tax to use for the people in my constituency. They are hit just as hard by this appalling social care issue as people anywhere else, but, for us, I would have much preferred it if the Government had looked at income tax, which, as we heard from the Chair of the Treasury Select Committee himself—my right hon. Friend the Member for Central Devon (Mel Stride)— would be much less regressive.
Miriam Cates (Penistone and Stocksbridge) (Con)
My constituency has similar house prices, and I know that my constituents share these concerns. As for the point about income tax, the advantage of taking this tax from national insurance is that the cost is shared between workers and businesses, but smaller businesses will not pay, for reasons that the Minister has already given. Is this not a better way of sharing cost across business and employees, which will actually affect lower earners in our constituencies less than the income tax alternative?
Jake Berry
I thank my hon. Friend for making that point, but I do not agree with her. I do not think that we have to consign ourselves to one tax to deal with this issue. It is perfectly possible to put up income tax, which is a much fairer way of taxing people across the income scale, and, of course, picks up wealthy pensioners with very large pensions, picks up dividend income, and picks up rental income, which was mentioned from the Opposition Front Bench. It picks up all of our income, while at the same time allowing us to look at different ways to tax business. I have said before that I think we should have an online sales tax—an Amazon tax, as it is called—which the Treasury has previously said could release about £2 billion. That is not enough, but we could increase employers’ NI only, and we could increase corporation tax. This problem needs to be tackled with a cocktail of funding, not just one tax. But if we are to use just one tax, I do not believe that NI is the correct one.
Jake Berry
No, I will not. I have already given way twice.
I congratulate the Government on trying to look at some of the concerns that many colleagues in northern constituencies have about low income, high unemployment and low property values, and I congratulate them on raising the floor to £100,000. I think that that goes some way towards dealing with the issues that concern many of us, although, certainly from my point of view, it does not solve them.
What also concerns me greatly is that this tax is not actually a health and social care tax; it is a Trojan horse for an NHS tax. The Government themselves say that in the first few years of this tax, nigh on 100% of it will go towards supporting the NHS. That is quite right, in that the NHS does need more money, but if it is an NHS tax, which will be hypothecated and listed on pay slips, we should call it that, rather than calling it a health and social care tax.
When the time comes to move the money from the NHS to health and social care, what Government of any political hue are going to cut £12 billion from the NHS budget? If we create an NHS tax, we have an NHS tax forever. It will never go down; it can only go up. No party is ever going to stand at an election saying, “I’ve got a good idea. Vote for me—I will cut the NHS tax.” I think there is a huge danger for us in creating such a hypothecated tax and listing it on people’s pay slips. It is fundamentally un-Conservative, and in the long term it will massively damage the prospects of our party, because we will never outbid the Labour party in the arms race of an NHS tax.
As a Conservative, I believe that the way to fund public services better is to grow the economy, to make the cake bigger. This change makes the cake smaller, because it is a jobs tax—and not even that: those who live in a low-wage, low-property-price, high-unemployment economy will get a smaller slice of it at the end of the day. They will have both a smaller cake and a smaller slice.
I hope that the Government will take the opportunity to think again. I welcome the new money for the NHS, but throwing other people’s money down a bottomless pit does not become a good idea if we put the NHS logo next to it. If we are going to fund the NHS, if we are going to give it more money, before the Government ask the House and us as Members of Parliament to approve that, they should show us the plan. We cannot measure the NHS by what goes into it; we have to measure it by what comes out at the other end.
For those reasons, with a heavy heart, I will not be supporting the Government this evening.
Dame Angela Eagle (Wallasey) (Lab)
I look forward to seeing the right hon. Member for Rossendale and Darwen (Jake Berry) in the Division Lobby tonight. What we witnessed yesterday was a Budget in all but name. It was a Budget sprung on this House with minimal warning and leaked to friendly newspapers over the weekend, but with scant detail being made available to Members of this House in a statement full of the deliberate obfuscations that have come to define this most slippery and unreliable of Prime Ministers. And today the Government are attempting to bounce it through the House before their own Back Benchers rise up in revolt. Some things are abundantly clear, despite the Government’s attempted sleight of hand. This announcement cynically breaks a guarantee personally signed by the Prime Minister at the last election that he would not put national insurance contributions up. That was one of two solemn manifesto pledges that he tore up yesterday, which makes me ask why anyone should believe what any future Tory election pledge says, ever again.
While proclaiming that they are the party of low taxation, the Conservatives have ushered in the largest tax rise in generations and now preside over a country with the largest percentage tax take in peacetime, but it is not a fair tax system. It continues the shift in tax liabilities away from those who make their income from owning assets to those who work. It exacerbates the three-body problem with self-employment, encouraging evasion, and it leaves wealth largely unscathed. It will exacerbate the unfairness and inequality that scar our society and that have been highlighted by the covid pandemic’s unequal effect on the poor and vulnerable. This tax hike has been presented by the Government as an historic move to fix the social care system, but in reality it is nothing of the sort.
Dr Andrew Murrison (South West Wiltshire) (Con)
If the hon. Lady is so against this increase in national insurance contributions, why did she vote for one in 2003? Can she say what happened to NHS productivity as a result in the decade that succeeded it? I can, and it wasn’t pretty.
Dame Angela Eagle
We had the Wanless report, rising real wages and a buoyant economy, and we did a lot of work with civil society and communities before we introduced the rise. We did not just pull it out of a hat like a rabbit. It led to a 6% increase per year in funding for the NHS, not the 3.5% that this measure will lead to.
Sammy Wilson
The Member has outlined the effect on the vulnerable and on employment. Would she accept that this is going to affect young people hard as well? People who cannot afford to purchase a house are going to be taxed to ensure that people who have an asset are protected.
Dame Angela Eagle
The right hon. Gentleman makes an important point, especially given the effect on those young people who are having to repay their student loans, which takes their effective marginal tax rate close to 50%. We have to look at the fairness of that.
This is not a plan to reform social care. A mere 15% of the extra £36 billion raised in the next three years is earmarked for social care and the mechanisms by which that will be dispensed are unclear, but vital to any prospect of an improved outcome. Indeed, they are so unclear that the Minister could not give us any insight into them during his opening remarks. This new money will not be available until 2023 and it will therefore not help a single family struggling now with the catastrophic cost of paying for their loved ones to access social care. It is far from certain that the NHS will not simply swallow up all the money allocated from the tax increase to try to tackle the backlogs in the NHS caused by Government cuts and exacerbated by the effects of the covid pandemic.
This new money will not make up for the huge cuts that this Government have been responsible for making to the social care system in the past 11 years. Age Concern estimates that 1.5 million people in need of care have been denied it as a result of the 7.5% per head cut in funding that this Government have delivered since they were first elected in 2010. The burden has fallen on family members and unpaid carers, many of whom have had to put their lives on hold to deliver care to loved ones with little or no support. The huge cuts to local authorities over the same period have stretched the care system beyond breaking point, yet the Prime Minister had nothing to say about any of that yesterday.
Dame Angela Eagle
No, because I would run out of time.
This is not a plan for social care, even though the Prime Minister is claiming that it is. The system needs fundamental reform, but this is tinkering at the edges. A real reform of social care would involve wholesale change from top to bottom. It would deal with those who require care now, not ignore them and their needs as the Government have done. There is nothing for them in the Prime Minister’s announcement. A real reform would have a plan for care workers and their future, with training, career progression, decent pay and an end to zero-hours contracts, to low minimum wage remuneration, to 15-minute appointments with no pay for the time it takes to drive from one client to another and to fragmented contracts that wreck lives.
At the moment, there are 112,000 vacancies in the care sector, and staff turnover is 34% a year. That indicates the need for fundamental reform. The pay for working in an Amazon warehouse or a supermarket is higher than the pay for caring. Surely that is wrong. The covid pandemic and the shameful betrayal of care workers and those who require care, which unfolded during the first wave of covid-19, told us all we needed to know about the ramshackle nature of a system that this Government have allowed to teeter on the verge of collapse for the past 11 years.
The Prime Minister’s announcements are totally inadequate to the scale of the task, if there really is a plan to fix social care. All that those who work in care got out of his statement was a tax rise and no pay increase. Those trying to access care now got nothing. Those trying to provide domiciliary care were not even mentioned, and nor was the growing army of carers. Protecting the assets of those needing to access care for long periods is not a substitute for fundamental reform of the system; it is not a plan for social care. It is a sign that the Government are dodging a long overdue and necessary reform. The Prime Minister’s so-called plan breaks election promises. It is half-baked, inadequate and unjust.
Paul Bristow (Peterborough) (Con)
I rise as a member of the Health and Social Care Committee to support this measure today, and as I do so I would like to direct Members’ attention to my entry in the Register of Members’ Financial Interests. I sit on the Health and Social Care Committee, and only yesterday morning in the Committee we heard from two patients who talked clearly about the delays that they faced in accessing care in the NHS. The first was a lady called Shirley Cochrane, who sadly had an aggressive form of breast cancer. During her time on an NHS waiting list, waiting for treatment, she felt alone and said that she was not listened to and did not get the attention she needed. The second was a gentleman called James Wilkinson. He had myocarditis, a condition that I know a little bit about myself, having had that condition in the past. While waiting for aortic valve replacement surgery, he had the surgery cancelled three times.
We face an enormous challenge. In that same Committee, we heard from the Health Foundation, which talked about the enormous sums that would be needed to solve this backlog. It also talked about the number of consultants, NHS staff and nurses that would be needed to increase capacity in our NHS. Opposition Members need to understand that, if we are going to face up to the enormous challenge that our NHS and social care system is facing, it has to be paid for. It cannot just be borrowed. If they have a better way of paying for this, they need to outline it now.
When the lady from the Health Foundation was giving evidence to our Committee yesterday, she said that three things were needed to resolve the backlog. Those three things were more money, more capacity and a plan. I have been involved in health politics for 15 to 20 years, and every single review that I have seen the NHS conduct has said that it needs more money, more staff and a plan. That has happened under Labour Governments and under Conservative Governments. So if we are going to go ahead with this plan, which I support, we need to ensure that it goes with reform and innovation too.
Catherine West
With his wealth of experience in health politics, does the hon. Gentleman accept that we do not know, because the Secretary of State for Health and Social Care has not outlined it, how many of the people on waiting lists will actually be seen and dealt with, and that this is a bit of blank cheque?
Paul Bristow
We will not approach the backlog unless we have the money and capacity to fund it, and that needs to go hand in hand with what I said about innovation, new pathways and new ways of working. I remember talking to someone who told me that we had three years’ worth of innovation in the NHS in just three months because of the pandemic. New ways of working and new pathways were adopted.
Every time we talk about innovation in our NHS and new pathways—the accelerated access review, the “Innovation Health and Wealth” report and a new life sciences strategy all talk about innovation and new ways of doing things in our NHS. But those new ways of doing things need to be spread at pace and at scale. There is no excuse not to do it now. If it works in one part of the NHS, it will work in another. Culturally, the NHS needs to grasp the nettle and spread that innovation and new ways of doing things so that we can get productivity and outcomes for patients. Now is the time to do it.
Mr Betts
The Health and Social Care Committee, of which the hon. Gentleman is a member, estimated last autumn that there was a £3.9 billion funding gap in social care. I assume that he agreed with that report. Can he explain, therefore, how this levy will deliver £3.9 billion a year for social care? I have not seen any figures showing that at all.
Paul Bristow
Having no plan will not provide the £3.9 billion, and Labour Members have indicated today that there is no plan.
This is a significant tax increase. I am a Conservative, so I do not like tax increases, but I also understand that an enormous thing happened between the manifesto and now. There has been a global pandemic, and Labour Members seem to have missed that fact. We need to shorten waiting lists, we need to do something about it and we need to correct it.
Several hon. Members rose—
Paul Bristow
I have given way twice, and I would like to continue because I want to make another important point.
This tax, this levy, needs to be accompanied by reform. The Health and Care Bill is in Committee, and it is really important. The way incentives are geared within the system is one reason we can power through elective waiting lists. We pay for care through a system of tariffs. I urge Ministers and others to think carefully about how we pay for elective procedures in our NHS, because any system of tariffs needs to ensure that hospitals are paid properly for carrying out procedures. There need to be proper incentives for hospitals to carry out hip, knee, cataract and hernia operations, which are the majority of the backlog, as well as treating cancer, heart conditions and everything else. If we are not able to find the right levers within our NHS system to ensure that we power through those elective procedures, we will not be able to solve some of the more serious operations at the end.
Innovation tariffs, for example, would also help by encouraging new ways of doing things. We cannot have a system where, financially, trusts and our NHS are not incentivised to do the things they need to do to be more productive. They should not pursue short-term financial measures when we really need incentives to make sure that they do the right thing.
I will be marching through the lobby to support the Government today, because this is really important.
Jess Phillips (Birmingham, Yardley) (Lab)
Will the hon. Gentleman give way?
Paul Bristow
I have given way a few times.
We must grasp the nettle of NHS reform, backed with finance so that our NHS staff have the bandwidth to deal with the needed reform. That bandwidth is capacity and money. If that does not happen, we will borrow more and spend more in the long term and this ever-lasting round of more staff, more money and more plans will go on and on.
I urge hon. Members to support the Government’s motion today.
Mr Clive Betts (Sheffield South East) (Lab)
It is pretty obvious that there has been a major funding crisis in local government over the past 10 years. Local councils have had bigger cuts to their budgets than any other part of the public sector, around 30%.
Imran Hussain
My hon. Friend is right to highlight the importance of local government, unlike the Minister, who barely acknowledged its existence. Does he agree that the last decade of ideological austerity and cuts by this Government has meant that local government budgets have been slashed by up to 50%, directly contributing to this crisis?
Mr Betts
I have made my position clear on the extent to which local government has been unfairly cut compared with other parts of the public sector.
Across the piece, local councils of all political persuasions have done a brilliant job of protecting their communities over the past few years. They have done it by giving priority to social care, but that has still meant real-terms cuts due to the demographics, with more older people, with people with learning disabilities living longer and with increased costs and demand for children’s social care—demand for the latter two has gone up faster than the demand for elderly care over the past few years.
In protecting social care, there have still been real-terms cuts. There are 1 million more elderly people not getting care who would have received it in the past. Other services, such as parks, libraries, buses and highway safety, have all been cut by up to 50% in local authorities across the country. We are repeatedly asking our constituents to pay increased council tax, often for care services they are not receiving, when the services they do receive are being cut to shreds. That is the reality.
As representatives of both parties in the local government sector said to the Select Committee on Housing, Communities and Local Government, we cannot sort out the funding problems in local government without sorting out the funding problems in social care. That is the reality.
We are in the middle of a Select Committee inquiry, and we will be taking evidence from Ministers. I hope they will start to explain to us how the care plan will solve that problem. The Housing, Communities and Local Government Committee and the Health and Social Care Committee have received estimates that the funding gap for social care alone is between £2.5 billion and £4 billion a year, which does nothing to restore services to the level they should be at or to address the real problems of low pay, which will eventually destroy the service because it will not be able to recruit people as alternative jobs, such as at Amazon, pay so much more. That is simply the reality.
How much money will come from the levy? Paragraph 30 is the only bit that talks about money: £5.5 billion over three years. The gap is between £2.5 billion and £4 billion a year, yet we know the £5.5 billion has to fund: the cap and floor system, which will be at least half of it, maybe more; and the £500 million for workforce training, which is welcome. The money goes nowhere near funding the current gap, let alone bringing about any improvements or bringing people into the social care system who are currently excluded. It just does not do it.
The Government have said they will
“ensure local authorities have access to sustainable funding for core budgets at the spending review”.
All will be revealed in the spending review, but the key bit is that the Government say they expect
“demographic and unit cost pressures”
will be met
“through council tax, social care precept”.
We have had 5% council tax increases year on year, and a lot of it has been to fund social care, so we are going to get above-inflation council tax increases again, are we? If we say national insurance payments are regressive, council tax is now regressive, too. That is the reality.
Kevin Hollinrake
Yes, the hon. Gentleman is absolutely right. As always, he is making some very good points. I thoroughly enjoyed my time with him on the Select Committee.
We did two reports on social care, and we made a recommendation in 2018 to fund social care through the national insurance system. Does the hon. Gentleman still support that recommendation?
Mr Betts
Yes. However, may I just say to the hon. Gentleman that it was a slightly different recommendation from what the Government are proposing now? I have our report here, just by chance—I thought I might be asked the question. We talked about the rate at which national insurance would be paid—this was to cover the points that the right hon. Member for Rossendale and Darwen (Jake Berry) made about low-paid areas. We talked about paying right the way up the income scale. We talked about extending it to pensions and unearned income, and about it not being paid for by the under-40s, who have been really badly hit by this pandemic, and we ought to be doing our best to protect them. In paragraph 95, we also made the important point that people should not have to sell their homes to pay for social care and proposed instead
“that a specified additional amount of Inheritance Tax should be levied”.
We all agreed to that. That system is a lot fairer; people would pay according to the value of their home and it would not be that people in constituencies such as the right hon. Gentleman’s, where house prices are relatively low, end up paying a bigger percentage of the value of their home to fund care than people in areas with higher house prices. I stand by that recommendation. It is a different proposal from the one the Government are now putting forward.
I want to come back to the point for the Minister. There is a crisis in social care, and we have all got that; we all have constituents come to us begging for social care. They are really concerned about having to sell their home, but sometimes it is about not being able to get into a care home or get the care at home they need. Most social care should be delivered in the home where people live. The reality is that there simply is not a proposal in this so-called “plan” to give local authorities that money that is needed to both fund the existing gap and to extend social care to the many people who have been denied it because of the cuts in the past few years. Furthermore, the alternatives will be: bigger rises in council tax—the Government have almost signalled that in this report; or further devastating cuts to other services received by most of our constituents, who do not get social care but have to pay for it. This is a recipe for disaster. Eventually, when it works through, everyone will see that there is no plan for social care here, because there is no funding for social care that will deliver the sort of social care system we all want to see.
Sir Edward Leigh (Gainsborough) (Con)
For a low-tax Conservative, it is relatively easy to attack this measure—indeed, I could spend my entire five minutes doing so. I could quote the fates of previous conservative Governments, whether led by President George Bush in America or John Major here, who have put up taxes dramatically—John Major did so in a recession—and been punished at the polls. It is relatively easy to attack this measure but much more difficult to provide an alternative. The manifesto point need not be laboured. Labour produced a manifesto with all sorts of spending promises in 2005 and, arguably, they had more chance of foreseeing the global crash in the markets that followed during that Parliament than we ever had in foreseeing a pandemic. So I do not think the manifesto attack holds water.
I declare an interest, as it has always been a principle that once someone reaches pensionable age they get their state pension and do not go on paying national insurance contributions. Many people will feel aggrieved about the position on that; a constituent has written to me angrily saying, “I am 68. I stopped paying NICs at 65 and now you are asking me to pay them again.” That is a fair point, but this meets the challenge of, “Why should we subsidise pensioners at the same time as we are increasing NICs on the young?” Again, it is easy to attack but difficult to come up with an alternative.
The point about London and the south-east is an easy point of attack. Someone can buy a pleasant house in my constituency for less than £100,000 but that would not buy them a shoebox in London. Are we actually subsidising people who own million-pound houses in London? They can spend 30 years in a care home and can pay a very small proportion of that, because they can leave £900,000 to their children.
All these attacks can be made, but what is the alternative? That is what I ask the Labour party. They will not be a credible alternative Government unless they come up with a plan. I will happily give way to any Labour MP who says, “Right, I do not want to increase NICs. I shall increase income tax.”
Wera Hobhouse (Bath) (LD)
I am struggling to understand the argument made by those on the Government Benches. In 2016, £350 million per week was promised to the NHS once we left the European Union. We have left the EU, but what has happened to the £18 billion? Should the NHS not automatically expect that money, given that on 1 January we left the EU?
Sir Edward Leigh
It is very nice to be intervened on by somebody who has no chance of forming a Government.
I am afraid that all this talk of a wealth tax or a tax on dividends does not even begin to meet the problem. If we have a wealth tax, what happens in respect of two old-age pensioners who have almost no income and just have a capital asset? Is it fair—
Jake Berry
Does my right hon. Friend accept that this may be a fairer system if those in receipt of a pension but not working were asked to contribute to it in some way? Let us consider the position of people who are going to work in Tesco in Haslingden—it is in the constituency of my hon. Friend the Member for Hyndburn (Sara Britcliffe), but on the border with mine—and are struggling to buy school shoes for their kids or pay their mortgage. Why should they pay so that a relatively well-off pensioner does not have to?
Sir Edward Leigh
May I say to my right hon. Friend that he gave one of the best speeches this afternoon? It was thoughtful and incisive, and at least he is trying to develop an alternative argument. The Government—this is the problem with being in government—are faced with a crisis now and they have to find the money now. Regretfully, nobody has come up with a better plan than this. I am no toady to the Government, and I say to them that I do not think they can solve these problems by our constantly becoming a tax-and-spend party, as that is simply not going to wash.
We have been spending money like there is no tomorrow. I know there is a pandemic on, but the furlough scheme is riddled with corruption. I know from massive anecdotal evidence in my constituency that many companies are ripping us off left, right and centre. So the Government have to have more of a vision that they articulate: that we accept that there is a pandemic, that the NHS is in crisis and that we have to do something about care homes, but we do have a plan to control public spending. I know that the Chief Secretary agrees with me, but he may not want to leap to the Dispatch Box to say that now, especially as a reshuffle is imminent.
There are innovative solutions we can use to try to encourage people to take more control of their healthcare. John Major was hardly a fanatical right-wing Conservative, but he offered tax relief to pensioners who took out healthcare—we have never even considered that. The argument could be made that rather than having arbitrary limits such as £86,000, we could base this on the value of the house. So there are alternatives available.
I wish to articulate one thing before I sit down, and it relates to state insurance. I am trying to develop an alternative plan in the future. We know what Germany does and we know that it has an excellent system. Lord Lilley argued yesterday in a paper, and the Dilnot commission argued, that there is an alternative to all this. The Government dismiss private insurance straightaway. It is true that private insurance companies will not take over this burden alone, because they cannot foresee how many people will be very frail and stay in care homes for a long time. But why can we not have a system by which we underwrite private insurance? The state would offer insurance. Once someone is of pensionable age, they would enter the scheme. There would be a modest charge on their home, based on the value of the home. The premium, on average, would be covered by the Government, not by the person. On average, it would be £16,000 a year and it would be the covered by the Government, but that individual would have that peace of mind. That is an innovative scheme. It was suggested by the Dilnot commission. I do not understand why the Government have simply just ruled it out and said, “We have looked at private insurance and it simply will not wash.”
Many of us will be supporting the Government tonight—I know it is a bit of a cliché to say, “With a heavy heart”. We will be doing so because we recognise that the NHS is in crisis. However, we say to the Government: “When you just pump more and more money into a socialist construct like the NHS, you get lower and lower productivity. So we want to look at outcomes. We don’t want to just accept this argument that we are in an arms race with the Labour party, because they will always offer more than us.” So we want some answers from the Government on serious plans for the future and on controlling waste and low productivity in the NHS. We want to know how much of this money will actually go into the care home system. We can then vote for the Government with an easier conscience.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a pleasure to follow the right hon. Member for Gainsborough (Sir Edward Leigh), who made a thoughtful speech, but I have to take issue with him about the Labour Government pumping money into the NHS and it going nowhere. Which party set targets for things such as A&E waiting times and the reduction of waiting lists and achieved them while in government? The Labour party. Where the right hon. Gentleman and I agree—he is a former Chair of the Public Accounts Committee, and I have the honour of being the current Chair—is that it is vital that we measure the effectiveness of every pound of taxpayers’ money spent against delivery for citizens and taxpayers. This proposal fails woefully on that.
This is another headline from the Government with no detail attached. Parliament has been bounced, but even the Prime Minister’s party and Cabinet were not involved in the decisions about how the money is to be raised and what it will be spent on. It is clearly an announcement without a plan. There is no plan, other than to put money into the NHS for three years. We all recognise the need there, but the message is being deliberately muddled. Where is the plan for care workers? Nothing. Where is the plan for skills for care workers? Nothing.
Where is the plan for a stable market? There are 25,000 or so care providers or residential care properties in the UK, mostly small, private providers. Their market had been shaken to the core before covid, but covid has really wracked them hard, and there is no support, plan or promise—anything—for them. What about the money for local authorities? I completely associate myself with the remarks of my hon. Friend the Member for Sheffield South East (Mr Betts) earlier and a number of Conservatives yesterday, including my constituency neighbour, the hon. Member for Cities of London and Westminster (Nickie Aiken). There is also no plan on domiciliary care; more of us will receive care in the home than in institutions.
This proposal is about protecting the capital assets of the wealthiest. I am a London MP, and this proposal will protect a lot of people in London who are like me: a homeowner in London with a wealthy asset for whom £86,000 is a small percentage of the home I own. The right hon. Member for Rossendale and Darwen (Jake Berry) made an excellent speech highlighting the real challenge in this respect. I worry that the Government are using this proposal as another opportunity to try to buy votes in London for the next London mayoral election. Nothing seems to stop them in their ability to attack our London Mayor and try to buy people in. We have to make sure we have a policy for the whole country.
There are not even any targets for the NHS funding that is going in. The Minister came to the House and rattled through his speech at pace without answering any of these important questions. It is important that we tackle the NHS backlog, but with £12 billion a year on a base NHS budget of around £150 billion—of course, during the pandemic it has gone up by around £60 billion—that is still going to be a challenge. We need to make sure we are getting outcomes and we need to measure them. The Secretary of State for Health and Social Care himself admits that he does not know whether tackling the backlog will be possible in three years; I think it will be a huge challenge.
Let us look at the challenge on finances. By 2038, compared with 2018, there is a projected 90% increase in costs for adult social care for those aged 18 to 64 and a 106% increase in costs for adults over 65, so of course something needs to be done. The Public Accounts Committee has looked repeatedly at the social care market, of which the Department of Health and Social Care has responsibility for oversight. That includes looking at skills and the supply of places, but it has woefully failed—it has failed on drug prices and on making sure that the market and the workers in it are skilled up properly. Of course, there was also the woeful failure on personal protective equipment, where the Public Accounts Committee concluded, in—of course—a cross-party report, that care homes had been “thrown to the wolves” because of what happened.
The inequality really bites. As others have highlighted, wealthy pensioners on good private pensions will not pay an extra penny. That includes those who have retired early because of the Osborne pension reforms. Senior civil servants and so on who are able to retire at 55 on a full pension can then work again, and they may pay money on their new earnings but not on their pension. They are earning way more in their pension than the minimum wage and will not pay an extra penny from that.
In my constituency, we have more private renters than homeowners and more people who rent socially than either of those two options. They do not have assets that need to be protected; they need the insurance to get good social care. They do not have income from assets that they will ever benefit from. Of course, many of the people who do own their own homes have interest-only mortgages. A whole generation is coming through—generation rent—without an asset, worrying about whether they can afford to pay into a pension and unable to afford today’s rent. This proposal just hammers that generation to the benefit of people like me—as I move through my 50s towards retirement—who have an asset. This proposal does not work. There is no plan.
Sir Mike Penning (Hemel Hempstead) (Con)
This is a massively important debate on a subject that comes into our constituency surgeries every week—it has done since the day I came into this House, and did when I was working for Sir Teddy Taylor all those years ago. This is not new. What is new is a Government attempting to address it. I sat on the Opposition Front Bench for four and a half years as a shadow Health Minister. Previous Governments have looked at this issue and tried, but at the end of the day, to be really honest, Conservative and Labour Governments have kicked the can down the road. So for once, we are trying. Is it perfect? No, it is not going to be perfect. I will come in a moment to a couple of points that I agree with my colleagues on.
What we cannot do is keep borrowing. Markets are low; we can keep borrowing. We could go to that wonderful private finance initiative market that previous Labour Administrations went to and that we are still paying for now. Lord Darzi came up with a fantastic plan for how to deal with elective surgery in the market without having over-capacity in the NHS. The only problem was that contracts were issued that meant that these companies were being paid even though they were not doing the operations. So nothing is perfect and everybody wants to try.
It is very easy to be in opposition and throw the can across—that is what Oppositions do—but when the crunch comes, these are the hard decisions. I am a fiscal Conservative and a working-class Tory, so I love all this class rubbish that keeps being thrown across the Chamber. It is absolute, complete and utter tosh. At the end of the day, our constituents look to us for guidance and to try to solve their problems. They do not really care where we come from in life and what we end up doing; at the end of the day, that is what they want us to do.
Several hon. Members rose—
Sir Mike Penning
No, I am not doing to give way, because lots of other colleagues want to speak and every time I give way, I get an extra minute—and I have just lost half a minute by saying that.
We can say to ourselves, “Is this perfect?” No, it is not. Is this going to help? Yes, it is. Are more people going to pay more in taxation? Have we broken a manifesto commitment? Yes—and Governments in previous Administrations have done that for years, and that happens when the public expect us to act on something that has come literally out of the blue. What has come out of the blue? Covid. We have had to borrow unbelievable amounts of money to keep people’s, jobs, incomes and livelihoods going. We cannot keep doing that, so we have to turn around and say, “Is there a way?”
We heard from the Chair of the Treasury Committee that there are myriad other ways to deal with this issue. We have also heard the minutiae of how national insurance contributions come into it, but at the end of the day it seems that national insurance is probably the way to do it. I have one criticism. In my constituency, we still have more than 12,000 council properties. Many of those residents want to buy their property on right to buy. They cannot do so because the maximum discount means that the mortgage is still too large. Having just over an £80,000 cap is not fair nationally. It is really difficult if someone has a property below that level. In parts of the country, £86,000 will buy such a property, but in my constituency, that money would buy a quarter of a one-bedroom flat. That has to be wrong, so we need to look at how we address the issues that were raised by colleagues earlier.
I have one further thing to say. Frankly, anybody watching this debate, especially the earlier engagements, would have been disgusted by what they saw—partisanship, chips on the shoulder, class war, this war, that war. People do not give a monkey’s about that. They want us to come here and do a job, which is to help them and their loved ones. It is about time Opposition Members got off their butts and did it.
Nadia Whittome (Nottingham East) (Lab)
Yesterday, the Prime Minister said that universal social care would be too expensive. That is exactly what the Conservatives said about the NHS in 1945 when they voted against it 21 times. They have argued that since and they will do so again if given the chance, as we heard from the right hon. Member for Gainsborough (Sir Edward Leigh) who, just minutes ago, described the NHS as a “socialist construct”.
A universal need demands a universal and freely accessible solution. None of us knows with certainty what will happen in our lives. Through disability, illness and old age, many of us will come to rely on social care if we do not do so already. The care we receive should not be a lottery based on wealth and postcode. We should all have the security of knowing that there will be someone to look after us no matter what. The NHS is there for all of us if and when we need it from the cradle to the grave. It has long been time for the social care system to provide the same.
We need a national care service funded by progressive taxation, including a wealth tax. The Prime Minister’s plans could not be further from that. Even the free market Adam Smith Institute condemned them as “morally bankrupt”, saying that the Government was asking
“poorer workers to bail out millionaire property owners.”
That comes just weeks before the Chancellor will plunge hundreds of thousands of families into poverty with his universal credit cuts.
Mr Deputy Speaker, you would struggle to design a more unfair and economically illiterate social care policy if you tried. Less than £1 in every £6 of the money raised will go to social care in the first three years of the plan. It is a triple whammy that the Government are presenting us with today: nowhere near enough money; not ringfenced for social care; and low-paid workers are funding it.
Why is it that Amazon is paying only 7.5% of its income in tax while a graduate on a standard starting salary is expected to give up around 50%? Let us be clear what this is really about; it is about protecting the inheritances of the very wealthy. What is the Government’s excuse for raising taxes on struggling people and for breaking their manifesto pledge? It is covid-19. We have heard it again and again today. I have seen at first hand, as have my former colleagues in Nottingham, how social care was in crisis well before the pandemic, and this Government cannot use covid-19 as a cover for 11 years of Tory failings, and they cannot use it as an excuse to take money from those who have been on the frontline and not from the billionaires who have profited from the pandemic, increasing their wealth by more than a fifth.
When I use the word “plan”, I am being generous. This is not a plan. It does nothing to fix the system that is broken at its core. A constituent emailed me about her experience. She is a care worker in the community. Her wages have not increased for four years. She does not get any travel expenses, pension contributions or sick pay. She works extremely long hours to make ends meet and often earns less than the minimum wage once she factors in travel and expenses. At the same time, her mum is terminally ill and has been waiting for five weeks to get support. She wants to be with her mum in her final weeks, but she is doubtful that she will be able to afford to get time off. Sadly, disgracefully, her story is not unusual, because our social care system does not work for those who rely on it or for those who are employed in it.
Instead of grappling with these deep-rooted problems, this Government are yet again, as the right hon. Member for Hemel Hempstead (Sir Mike Penning) admitted, kicking the can down the road. Instead of giving our care workers the pay rise that they deserve—[Interruption.] Will Government Members be quiet while we talk about the service that care workers have given during the pandemic? They deserve a pay rise, but instead Members on the Government Benches will be voting tonight to make sure that care workers are paying so that their wealthy donors do not have to.
How much longer must my former colleagues in the care sector wait for change? How many more families will be consigned to poverty because their care worker mum brings home less than the minimum wage? How many more disabled and elderly people will be confined to their homes, unable to live the kind of life they want? Anything less than a national care service, funded by a tax on the wealthy, not low-paid—
Bim Afolami (Hitchin and Harpenden) (Con)
It is a pleasure to follow the hon. Member for Nottingham East (Nadia Whittome), but I must disagree with her that the Government are kicking the can down the road. We are doing precisely the opposite by trying to tackle what is a very difficult problem, as everybody has already described. As many Members have said, politics is about choices. Ultimately, the choice is this: either we put more money into the social care system and borrow extra; or we decide not to tackle the problem, and allow it to continue and continue. I wholeheartedly support the Government in trying to tackle what has been a very difficult problem for a very long time.
I thought it would be useful to address in my remarks some of the criticisms of the plan that need pushing back on rather strongly. Many speakers have said that it would be better to use income tax, not national insurance. I disagree, because national insurance is paid by both individuals and employers; it is a broader-based tax, which raises more money. And guess what? By having a broader-based tax, everybody is going to benefit. It is not bad to have a more broadly-based system, where everybody in the country is going to benefit.
Certain Opposition Members have said that a wealth tax on the wealthy, in and of itself, will somehow fix all the problems. I am afraid that we are dealing with billions of pounds—£12 billion, £13 billion or £14 billion—and no wealth tax in the world has been designed to yield anything like that amount, so that would not deal with the problem.
Many Members have suggested that this levy does not deal with social care at all. The point is that it deals with both health and social care; they are linked. Therefore, by accelerating money in the next 18 months to two years to deal with the backlogs that have developed in the health system due to covid, we actually help to deal with the social care problem. Then, as is very clear in the documents, from October 2023 more money will flow more directly into the social care system, so the levy deals with both these things.
It is worth addressing the point made by many colleagues on the Government Benches—including my constituency neighbour, my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning), and others—that this is somehow unfair because certain parts of the country, such as my own, have higher house prices and others have lower house prices. That is an observable fact. However, there are many problems with doing something much more complicated. First, it would be difficult somehow to change a system on the basis of fluctuating house prices in every county, region or district council. It is also difficult to come up with those differences when, yes, certain areas have higher house prices, but then there are also higher costs for social care in different parts of the country. It is much better to have a broad-based system that is broadly the same across the country, although I am in agreement with certain hon. Friends that the Government should look at all possible options in detail as we look to implement the tax.
I turn to the idea about which I have heard so much from Opposition Members: that this tax is somehow not progressive, but regressive. They think that if they keep repeating that, it will make it true. I took a look at companies. Let us think about big companies versus small companies. The smallest 40% of companies will pay nothing extra as a result of this measure. The next 40% will pay, on average, about £400 more. The smallest businesses are really not going to be paying a lot of national insurance.
Let us turn to individuals and consider the richest individuals. Somebody who earns a very high amount—let us say £1 million a year—will, by my maths, be paying £12,500 extra as a result of this measure. A basic rate taxpayer pays something like £3.40 a week. I am afraid to say to the Opposition that this is a progressive, fair and broad-based way of dealing with the problem.
In addition, we need to think about outcomes. Members on both sides of the House have made the fair point that the money, in and of itself, does not deal with the problem. Yes, we need better pay for carers. Yes, the system needs to be better. Yes, we need to be sure about what we are getting with the money. Yes, there needs to be reform. We should study all that, and work with the Government over the next few weeks and months as the White Paper comes out. I will be supporting the Government in the Lobby this evening.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I want to begin by congratulating the Government Whips on bulldozing this proposal through with such great haste. They have done their job today. They have prevented a Back-Bench rebellion. They have used their own Back Benchers as cannon fodder. It will not be the charlatan in No. 10 who pays the price for broken promises and tax rises that hit the young and the low-paid; it will be those Tory MPs hung out to dry: some of them unexpected victors in 2019, and some of them quite good MPs, but with small majorities. When the emails and the messages of complaint start flooding into their offices, and when the refusals ever to vote Tory again start to hit home, it will not be the occupant of No. 10 who has to suffer—he will have flitted on to his next fantasy—but those who are betraying the very people who voted for them. They will be left to pay the price.
Mark Fletcher (Bolsover) (Con)
I am very grateful for the hon. Gentleman’s concern about our future job prospects, but I would much rather be standing for a party that is willing to invest in the NHS, to be the party of the NHS, and to try to fix the problems in social care. I would much rather have those job prospects than be a Back-Bench Labour MP who stands for nothing, has no plan and has weak leadership.
Steve McCabe
Well, that was a wonderful intervention. The hon. Gentleman has not only been hung out to dry; he has been brainwashed in the process.
This is a measure built on deception. There was a promise of no tax rise or national insurance rises, yet this is a tax rise to hit young workers; to hit people who will never get the opportunity to buy a house; to hit the self-employed struggling to get back on their feet, many of them ignored by this Government during the pandemic; to hit employers struggling to get their businesses back on track who now face a tax on jobs; and to hit the low-paid battling to keep life and limb together who will end up subsidising others whose assets they can never hope to match.
Only last year, the Government were boasting about raising the national insurance threshold and now they are squeezing the very same people. What happened to the promise to raise the threshold to £12,500 by the end of this Parliament? This is money to pay for two things: first, to subsidise those who hope to inherit large properties from elderly relatives; and secondly, to cover for the disastrous cuts in the NHS over the period the Tories have been in office. Even on their own reckoning, only about £5.3 billion of this tax grab will ever make it to social care. We were promised that a plan was ready, that it was a priority, that the PM would get cracking within his first 100 days, and that it would fix the crisis in social care once and for all—none of it true.
Age UK estimates that there are about 1.5 million people in need of help with daily living who do not get it. This tax rise will not address those issues. It will not help people needing help with washing, dressing, eating and taking their medicines. This is a broken tax promise: a penalty for those who took a chance on voting Tory at the last election. On social care, it is a fiction and a deception from people whose promises will never again be given any credence.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I very much welcome the fact that the Government are taking action to properly fund social care and the NHS in this country. As my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) said, previous Governments and previous Prime Ministers have recognised the challenge of funding social care and the NHS, but it is this Prime Minister and this Government who are taking the brave step of bringing forward concrete proposals to address it.
We have heard much over the past few days and the past few hours from those on the Scottish National party Benches about how horrified they are by these proposals to increase funding for Scotland’s NHS. Astonishingly, they seem to oppose the billion pounds of extra funding that Scotland’s NHS will benefit from this year. It is astonishing. I just do not understand how they can possibly explain that to their constituents and justify such an irrational decision.
John Lamont
I am happy to hear from the hon. Member why she has made that choice.
Alison Thewliss
As the hon. Gentleman well knows and as has been made clear to him in the remarks I made, funding for the NHS is not the issue here; the issue is raising taxes disproportionately on the backs of his and my poorest constituents. I would be interested to hear what he will tell his constituents when they come to his surgery about it.
John Lamont
These proposals will result in Scotland’s NHS and services that our constituents use getting a billion pounds extra each year to help deal with the backlog of treatment, the GP shortages and the whole catalogue of other issues that Scotland’s NHS is dealing with. It is nonsense to pretend that social care is not an issue in Scotland as much as it is in the rest of the United Kingdom. Indeed, the SNP Scottish Government in Edinburgh has called for action on social care in the past. They have said that they intended to increase investment in social care in Scotland, but they have also been clear that their plans required extra resources. Their planned reforms
“can only be delivered with increased investment.”
Their independent review of adult social care said
“more money will need to be spent on adult social care over the long term.”
Further to that, Audit Scotland recognised that “more investment is needed”. The Scottish Government admitted in their August 2021 consultation that the proposals for a new national care service were not yet funded.
Dr Whitford
In Scotland, as I said earlier, we already spend 43% per head more on social care. If the hon. Gentleman is moaning about Scotland, he can perhaps imagine the problem here. Scotland has a plan: the Feeley review, the national care service, a human rights approach and extending free personal care and free provision to all home care. What we are not happy about is the idea that suddenly the Prime Minister will meddle in a completely devolved area of health and social care, and we will have the same outsourcing and fragmentation that England has struggled with since 2012.
John Lamont
Nothing in this plan undermines the devolution settlement. This plan provides our constituents with more investment for NHS services across Scotland. What the hon. Lady seems most upset about is this United Kingdom Government delivering that resource for something that the Scottish Government had previously asked for, and she admits that, which is frankly astonishing. It is beyond belief that the SNP opposes these proposals, which would raise much-needed extra resources for the NHS and the social care sector in Scotland. Scotland, Wales and Northern Ireland will benefit by an additional £2.2 billion a year as a result of the levy and an equivalent increase to dividend tax rates.
There is a clear Union dividend from this policy. Scotland, Wales and Northern Ireland, taken together, will benefit around 15% more than is generated from their residents, equivalent to around £300 million a year. The hon. Ladies and Gentlemen on the SNP Benches shake their heads. How on earth can they justify opposing this extra money coming into Scotland? Scotland will receive £1.1 billion in extra funding over the coming year.
We must ask why the SNP is so opposed to this extra money coming to Scotland and our NHS. That is certainly what my constituents in the Scottish borders are asking. They have witnessed the remarkable job that our NHS heroes have been doing during the covid-19 pandemic, but they also recognise the massive challenges now facing Scotland’s NHS: delayed operations, GPs under pressure, rural health services being withdrawn and waiting lists growing and growing. Yet, when offered extra funding from the UK Government to help address that and to tackle the social care crisis, the SNP says no. The SNP says no to extra funding for Scotland’s NHS.
John Lamont
The hon. Lady says “rubbish”. Should I say “rubbish” to my constituents who have had their operations delayed time and again and those who cannot get access to a GP in their surgery because of decisions made by the Scottish Government, who blame a lack of resource and repeatedly blame the UK Government for not funding them enough? Here we have it: £1 billion more coming to Scotland and the SNP says no. It is typical SNP grievance politics. It is not about solutions or making the lives of our constituents better; it is about grievance, grievance and more grievance. The NHS in all four parts of the UK needs significant investment to tackle the lasting effects that covid-19 has had on services and we must work as one United Kingdom to tackle the collective challenge.
It is also true that the SNP Scottish Government have not prioritised investment in the NHS during their time in office. As I referenced earlier, the IFS has noted that, in the last 10 years, spend on health in Scotland has increased by just 1.2% as a proportion of total expenditure compared with 3.6% in England on a like-for-like basis. Therefore, despite all the spin we hear from SNP Members, Scotland’s NHS needs this extra investment.
Some in the SNP have been complaining that the policy is some sort of attack on the devolution settlement. That is utter, utter nonsense. It is true that devolved Administrations will be required by law to spend their share of the revenue raised by the levy on health services in 2022-23 and, from April 2023, on health and social care services. It is also true that some elements of the new revenue will be spent directly by the UK Government for the benefit of all four nations, including on purchasing vaccines to help defeat the virus. However, there is no requirement for the Scottish Government to implement the same policies as the UK Government. The devolution settlement is protected. So the SNP is really going to oppose this extra funding coming to Scotland’s NHS and social care services.
I very much welcome the announcement. It has been a tough decision for the Prime Minister and the Government, but it is the right decision. More funding for our NHS and social care services should be welcomed by everyone in the House. It baffles me completely why the SNP so strongly opposes it.
Clive Efford (Eltham) (Lab)
This national insurance increase is a point of no return for the Tories. It is an unfair way to raise the money needed for our NHS and social care, with those who earn the least and the young paying for those who are already well off. It is the biggest single tax increase in 70 years, which will see the highest level of tax paid in the UK in peacetime, and as my hon. Friend the Member for Sheffield South East (Mr Betts) pointed out, the Government’s own document says there is more to come in council tax increases. We have already had increases and precepts imposed on council tax. When the Tories got caught out because they cut 20,000 police officers, they put a levy on council tax to pay for police officers and this year they put on a 3% levy—£600 million—to go into social care. They have had their hands in people’s pockets for several years now and they have not taken them out.
Let us be clear: the claim that the Tories are the party of low taxes and a small state is over. The argument in the future will be about how we invest in public services and how we value the workers who work in them. People earning as little £10,000 will pay the increase. People who can afford to pay more, such as hon. Members on these Benches, should not rely on them to pay increased taxes: they should be asked to pay their fair share. People who have to count every penny to survive on a daily basis—to buy food and to pay rent, travel costs and household bills—have to budget day by day to live and they will have to tighten their belts, but those of us on higher incomes who could pay more and whose lives will not be changed by this increase will not have to tighten our belts at all.
My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) pointed out one of the areas that will suffer most. It is those areas where the Tories talk about levelling up that will be the hardest hit by this tax increase. What of their local economies, with the tax the Government are taking out of those economies that will not be there to be spent in local businesses? There is no levelling up in this tax the Tories are imposing, and there will be less money to circulate in those economies. It is not fair that those people we clapped during covid—care workers, delivery workers, shop workers, postmen and postwomen, and many more who kept our economy going during difficult circumstances—will be asked to pay a disproportionate amount through this tax increase.
There is no going back for the Tories from this day forward. Whatever happened to the pledge the Prime Minister made in 2019 that no one would have to sell their home to pay for care and that he would co-operate across the House and discuss the way forward on how to deal with the issue of social care? That is yet another broken promise from this Prime Minister. If a person is property rich and cash poor, how are they going to be able to avoid having to sell their homes? The £86,000 is a Kensington cap. Outside London, in many areas the cap is far too high and will lead to people losing their homes.
There is no plan for social care in what the Government have announced so far. The Tories have behaved here today as if these problems had just been created and had just emerged because of the pandemic, but nothing could be further from the truth. The waiting list was 2 million before the pandemic hit, and they took £8 billion out of social care. Where was all the hand-wringing and all the concern about social care and the NHS back then? They are using the pandemic as cover for 10 years of cutting public services and underfunding our national health service. How are they going to explain to their constituents that they are being forced to pay this increase to pay for 10 years of Tory neglect?
Julie Marson (Hertford and Stortford) (Con)
I am sure that, like many constituents, many of us across this House have personal experience of the need for these measures. In my family, a much-loved family member sold her house during the time of the last Labour Government. I had another family member who had a bad back, but did not want to bother the NHS at the time; unfortunately, it was a lot more serious than that. We do not want that to continue indefinitely. Particularly after a pandemic—and this is why I asked my question to the Prime Minister earlier—we do not want people holding back their concerns and their needs from their GPs and the NHS, with this feeling that they should not bother them because it is under so much stress.
I am so pleased that the Government are grappling with these really long-term intractable problems. It is important and it has a real impact on our lives—all of our lives. But exceptional circumstances require exceptional measures and hard decisions. They are difficult decisions for all of us on the Government side of the House who believe—and our beliefs have not changed—that taxes should be as low as possible, that services should be available to all, but that the state should do as little as possible because people do things for themselves better than the state. There is no easy answer, and I welcome the difficult decisions that this Government are taking. To lead is to choose, and that is what we are doing—making difficult decisions.
I commend the comments of my right hon. Friend the Member for Central Devon (Mel Stride), the Chair of the Treasury Committee, who evaluated the alternatives. Alternatives such as austerity and spending cuts are not welcome and would also be criticised. There is increased borrowing. This Government put their hands around this nation during the pandemic and spent £400 billion to protect people’s jobs and livelihoods. However, increased borrowing also has a profound effect on the lives of individuals, because it has a profound effect on the economy and its future prospects. I absolutely reject the proposition that this is the end of conservatism, or that this means our principles have changed, because it does not. Because we are responsible, pragmatic, realistic, and willing to lead, I believe people will understand. If we say to people that there is a need and we are going to address it, but that there is no cost, they will know that is not true, nor is it honest.
As Conservative Members have said, we want innovation and a determination that the NHS does not become the insatiable beast that swallows up funds indefinitely, and we must keep a grip on that. It is important that that goes hand in hand with innovation and reorganisation to make this work, and to make it as efficient as possible for all people in this country, and across the United Kingdom.
I welcome these measures. They are not easy, but this is the job we are here to do, so I welcome the Government’s initiative and their implementation of them.
Mohammad Yasin (Bedford) (Lab)
Many who voted for Brexit in the hope of securing £350 million a week for the NHS, or who voted for the Conservative party in the belief that taxes would not be raised, must feel very disillusioned. Today, just nine months since leaving the EU, and after another Johnson broken promise, they are being taxed to pay for health and social care. In recent months, the Prime Minister has broken promises on the foreign aid budget, on his commitment that there would be no checks on goods moving between Great Britain and Northern Ireland, and on the triple lock on pensions. We all understand the impact of the pandemic, but it should not be used as a shield to mask the Prime Minister’s broken promises. His promise to fix social care once and for all predated the pandemic. Indeed, we have waited more than two years for the plan, which the Prime Minister promised the nation in his first speech was “already prepared”, to materialise.
The 2019 manifesto also committed the Conservatives to deliver a social care plan through consensus and with cross-party support. People are asking what happened to that consensus. Instead, the Prime Minister is pushing this grossly unfair tax through Parliament, allowing as little time as possible for proper scrutiny—the kind of scrutiny that improves legislation. Because of the Government’s woeful mishandling of the pandemic, allowing the NHS and care workers to face the biggest crisis in their history, with the NHS in the depleted state to which it was reduced after successive Tory Governments stripped £8 billion from the service, much more money is now needed for health and social care.
With waiting lists predicted to reach 13 million, even with this money it will take the health service years to catch up. The working public are now expected to stump up more money for Tory mismanagement of health and social care, and working-class and middle-class workers will bear the 10% national insurance tax hike. The Prime Minister’s plan boils down to this: using the taxes of young and low-paid workers without assets to protect the assets of wealthy people. Raising regressive national insurance, which takes money from the pockets of the lowest-paid workers, many of whom have been on the frontline of the pandemic, is not the way to fix our social care system. I hope that the Prime Minister will listen to the many rational voices in business and industry, including the British Chambers of Commerce, which said that his plan will be
“a drag anchor on jobs growth”
as firms emerge from the pandemic and furlough winds down.
We need a national and fair effort to deal with the crisis in social care, and a plan that goes far wider than just looking at funding. We need to address the recruitment and retention crisis in health and social care, which is the most urgent issue at present. It is vital that any long-term plans are included alongside immediate measures. We must properly value those in our health and social care workforce, not tax them to the hilt.
Lucy Allan (Telford) (Con)
I thank the Prime Minister, the Chancellor and the Secretary of State for Health and Social Care for bringing forward this proposal. It is a bold decision—a difficult decision—but it is the right decision at the right time.
Initially, I really struggled with this concept. When the Prime Minister stood up to deliver his statement yesterday, I did not expect to feel able to support it, but by the time he sat down, I could. That is not just because the PM has excellent rhetorical skills; it is down to the simple and obvious fact that most people want better health and care provision. Most people understand the challenges created by covid and the devastating impact on the NHS. Most people want to see money spent on the NHS, and they expect everybody to make a contribution—and so they should. Covid has brutally exposed what a fragile and struggling health and social care system we have, and yes, the enormous backlog of cases that has arisen must be tackled. Therefore, of course more cash is needed.
I fundamentally believe in incentivising and rewarding hard work, in allowing people to keep more of the money they earn, and that people know better than the state how to spend their own money. A low-tax economy is a buoyant economy, and I hope that when this is all over, we can revert to proper Conservative economic policy. Any MP would say that healthcare features uppermost in their inbox. The struggles to access a GP, the waiting lists, the cancelled operations, the waiting times in A&E and the quality of care are all raised with us day in, day out, and they have very human consequences.
It may be that this is more of an issue in Telford than elsewhere. We have a particularly challenged hospital trust and clinical commissioning group, and some very serious problems have arisen during my time as MP. The trust is now in special measures, it is facing a police investigation into maternity deaths, and there has been a constant revolving door of highly paid senior managers who do not seem to be able to grasp some of the challenges. We have a GP super-surgery with 60,000 patients that has long operated telephone triage. Even pre-covid, people could not get the phone answered, so they have no option but to go to A&E and face huge waits. It is fair to say that it is completely understandable that Telford residents will always put the NHS as their No. 1 concern. We have also had grand transformational schemes devised by hospital management to spend £600 million of Government money. They have had seven years of thinking about it, and they still have not been able to put a shovel in the ground.
I have never been one to believe that throwing cash at a problem will provide a solution. We have a duty to ensure that taxpayers’ money is spent wisely, and that waste and bureaucracy are stripped out. We need to make clear that what we are approving today is no blank cheque and that we expect trusts, CCGs and their management to work to put patient care and the patient experience first. That has been lacking. I know that from my experience and my constituents’ experience. They are so often treated as a nuisance or with contempt. That must stop, and this money will help that to happen. I want my constituents to have far, far better patient care than they currently receive and I know they want to see extra cash spent. They will expect improvements, and I caution that this is not the time to be removing the A&E or other local services from Telford.
The motion before us today is a much-needed first step that I welcome fully. I congratulate my right hon. Friends the Prime Minister, the Chancellor and the Health Secretary for being bold, for being ambitious for our future and for being willing to embrace the big challenges that others have failed to seize. They have my full support, and I hope that all Members on the Government Benches will also be able to support our leaders.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
When I first heard that the Prime Minister was going to come forward with a plan for social care, to tell the truth I am so desperate for any improvement in social care that I even considered voting for it. Even until yesterday I would have considered voting for it. As the details came out, however, I was not only disappointed but completely devastated, as will be many of my constituents. Not only does the plan fail to deal with any of the real issues in social care, which I will come on to in a second, but it is actually just a tax hike pretending to deal with health and social care. In reality, at the beginning it is not even linked to that, and later on there is some vague promise that it might trickle down to social care if we are lucky.
This is a tax rise that will hit the youngest, the poorest and the hardest working in our communities the hardest. It exacerbates the crisis in intergenerational justice that we have in our society at the moment. Far too many young people feel that the ladder is being whipped up behind them by an older political generation that is currently in power. I think that is sometimes unfair, because actually the issue is class-based and wealth-based, but this will exacerbate that feeling. A young graduate with student loans will be paying a marginal tax rate of almost 50%, which is more than many people on £90,000 and vastly more than someone whose earnings are from property, shares or other forms of wealth.
There are other options. The Government had other options. They could, of course, have lifted the lower rate of national insurance into the higher rate. Most people do not realise—most hard-working people, of course, do not earn £50,000 or more—that those earning more than £50,000 pay only 2% national insurance. That could easily have been made 12%, or now included the additional for everyone. That would have provided £14 billion in one stroke and not affected any hard-working person in our country. It would have already raised more than this non-existent plan. They could have looked at a wealth tax for people who have wealth higher than £5 million, an amendment that I and other colleagues tabled for today; capital gains reform to bring it in line with income tax, for example; or making inheritance tax fair so it is based on what you receive, not necessarily on what you give, so that those in large families can receive a fair amount while ensuring that everyone pays their contribution.
None of those options were considered. Why? Because this Conservative party is paid for by developers, landlords and the very people this tax will not touch. It is a party not of capitalism, but of extraction: extracting the wealth from hard-working people and small and medium-sized businesses, and redistributing it to landlords and capitalists who work in the stock market and in the City, not in the factories that run our country.
Dr Andrew Murrison
I always listen very carefully to what the hon. Gentleman has to say. Why, then, does he think that Gordon Brown did something remarkably similar to what my right hon. and hon. Friends are proposing—on that occasion, in 2003—for exactly the same reason: to raise the spend on our national health service and care services? Was he wrong?
Lloyd Russell-Moyle
Because then, wages were growing and the economy and working people were doing better, and now they are not. We are coming out of a pandemic. Everyone has suffered and suddenly putting a tax on small and medium-sized businesses and on working people is the very last thing we need to do.
This is also about the lack of a plan for social care. There is no plan for social care. In fact, we have been asked for a begging bowl, but we have not really been told how the money is going to be spent. How are we going to recruit social care workers, who are currently paid miserable wages for 15-minute appointments and no travel time? How are we going to reform the sector so that is not fragmented between people? How is this going to improve someone’s grandmother’s care home or someone’s brother’s care worker? It is not, because this does not deal with that fragmentation, it does not integrate social care into the NHS, which we desperately need, and it does not relieve the burden on councils. At the moment, the truth is that council tax has to subsidise social care time and again. People complain about the roads, their parks or youth services being shut, but the reality is that it is because the Government have not dealt with funding social care properly. They have put the burden on councils and council tax, which was never designed for social care, and this does not deal with that fundamental problem. When people complain about their bins or potholes, I say to them, “It is not your council’s fault. It is the fault of this Government, failing to deal with that drain on your council.”
This levy will not aid us one bit to close the gap that has been growing. That gap will continue to grow under this Government. So holding my nose and desperately sad, I will unfortunately be voting against this, not because I think that we need no action, but because this action is the worst of all worlds.
Mr Steve Baker (Wycombe) (Con)
I want to begin by thinking through what Labour would do if it were in power. [Interruption.] I am very grateful that the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) has just outlined some of the things that he might do. If I understand the Labour Front Benchers correctly, I think they suggested that they would use stamp duty or various transaction taxes on assets. I am grateful that Ministers are here, because I think that they know, as I know, that there is no way that the money needed would be raised—[Interruption.] I am grateful that the Minister says, “Correct”. It says in the document that not enough money would be raised from stamp duty and transaction taxes on assets. It is fanciful, and the hon. Gentleman’s proposals are likewise, I am afraid.
We would need to change one of the big taxes. Would Labour Members put up VAT from 20%? Of course they would not because it is regressive. It is a bad idea. It is already too high and it already hits everyone, so they would not put up VAT. Would they put up income tax? I think they would get the same advice that these Ministers have had from the same officials. I think they might be advised that we are already in a position where income tax is rather too dependent on the decisions of a small number of top earners. This is the sort of evidence we have had at the Treasury Committee for a very long time, so I think that we would find that, actually, they were not able to put up income tax.
So where would that leave Labour? That would leave it with the big tax that has always, as the document points out, been used to fund health and social care: national insurance contributions. I think that Ministers, if they were from Labour, would be presented with a distributional analysis like the one I have here, which our Ministers have. Labour Ministers would look at it and see that actually, distributionally, it is really only the top two deciles who are net losers. Deciles from the bottom through to No. 8 are either gaining or, in the case of the eighth decile, right there in net overall, neither gaining nor losing. I think that what Labour would do if it was in power is what it did last time it was in power and needed money for the NHS: it would put up national insurance contributions.
My constituents in Wycombe are very reasonable people. While knocking on doors in Marlow Bottom just last Saturday, I discovered constituents who recognise that we have suffered an enormous pandemic that has done so much to damage the public finances and people’s lives, as other hon. Members have said. But where are we going? That is the second point that I want to touch on. This is what I think Labour would do in power, and that is the problem—sorry, Ministers.
If we look, as I am sure colleagues have done, at the future debt trajectory for the United Kingdom produced by the Office for Budget Responsibility, we can see that our public finances are in an unsustainable state. I could easily give quotations—they are in my pocket—but if I recall correctly, the OBR’s 2018 report describes debt getting to about 260% by about 2057 and says something like, “Of course, policy would have to change by then.” I have always taken that to be a euphemism for “Of course, we would have to default on our age-related spending promises.” That is the consistent finding of the Office for Budget Responsibility on our long-term public finances. Sooner or later—in all our lifetimes, hopefully—we will find that the state cannot afford the promises that it has made to older people.
That is the problem that we face today. It is not about the national insurance contribution rise planned today, which I believe is a levy that the Labour party would adopt if it were in power; the problem is that we have no better ideas than putting up taxes to raise more money for public services.
Mr Peter Bone (Wellingborough) (Con)
My hon. Friend makes the powerful point that this is what Labour would do in power. Why are we doing it as Conservatives?
Mr Baker
That is the fundamental problem that I face today, because I believe that this is just the beginning of the generational crisis of our inability to fund the promises that have been made progressively for more than 100 years, since the National Insurance Act 1911. I have talked about it ad nauseam, particularly in relation to a Bank for International Settlements paper that sets out charts showing that all western welfare states, and indeed Japan, are in the same boat. Some of the cuts to age-related spending that would need to be made to balance the books are just implausible.
We are in a dreadful position. Historically, when this country has been in a dreadful position economically and socially and on a trajectory towards ruin, there has proven to be only one party capable of rescuing the situation, and of course it is the Conservative party. At some stage in our lifetime, the Conservative party will have to rediscover what it stands for, because I have to say that at the moment we keep doing things we hate because we feel that we must.
My hon. Friend the Minister for Covid Vaccine Deployment stood at the Dispatch Box today and explained that vaccine passports go against his instincts and those of my right hon. Friend the Prime Minister; at one point I think he said that they went against everything that he stood for. We have heard hon. Members say—there are quotes on the internet from former Ministers and Cabinet members—that they hate raising taxes, but do not see how they cannot vote for it. Tonight, colleagues will say, with a good heart, “I just must,” because we all know that we cannot let NHS waiting lists get to where they are going as a result of the pandemic. Well, I know that too, but this I also know: we are going to have to do things differently.
We have to rediscover our confidence as free market Conservatives and the radical reforming zeal of the 2010 Parliament and the big society. We have to show people that we can secure a bright, prosperous and free future that provides for their needs in their old age, but without coming back to higher taxes every time there is a squeeze on the public finances. Down that road is ruin. We all know that eventually socialists run out of other people’s money.
I am sorry, Ministers, but I cannot vote with the Government tonight. Some of us have to be seen to stand for another path.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Peter Grant is next, and then the time limit will be reduced to four minutes.
Peter Grant (Glenrothes) (SNP)
I am pleased to contribute to this debate. As I listened to the hon. Member for Wycombe (Mr Baker) just now, the words that kept going through my mind were “Union dividend, Union dividend”—we are tied to a nation whose public finances are in a mess, unsustainable and in a dreadful state.
Before I come on to the regressive nature of the Government’s proposal, I want to touch on just how far it falls short of the promises that the Prime Minister and others made in order to get elected. They have claimed that they have a plan to reform social care in England. It is obviously not for me to dictate what that plan should be, but if they have one, perhaps the Minister will tell us what changes, if any, there will be in the balance of resources between the NHS and social care. What changes, if any, will there be to the arrangements to manage each individual’s needs as they make the transition from health to social care? What changes, if any, will there be to the balance in the provision of care for the elderly between residential and non-residential? What changes, if any, are planned to the balance of responsibility between the state and the family?
There are no easy or right or wrong answers to any of those questions, but although I do not have the answers, I know that there are questions. The Prime Minister does not. I do not believe the Prime Minister even recognises that any one of those questions must be faced up to before he can claim to have a plan, or even the first hint of a plan, to deal with the position that we have, or some of us have, in social care.
The second major problem is that, even if the crisis in social care in England could be fixed with money alone, this proposal would not deliver anywhere near enough, and most of the “not enough” is not going to social care. A lot of it will go to benefit the families of some care recipients—some, but not all; and guess which some?—leaving precious little to actually improve the service. To claim that anyone voting against this tax hike today is voting against meaningful improvements to social care is simply untrue, and those who are preparing to make those claims on their Twitter accounts know that what they are about to tweet is not true.
I am in favour of increased funding for our health and social care services. If necessary, I will support fair and progressive tax increases to fund them, and I will pay my share of those taxes quite happily. However, I will not support this proposal, because it is not fair and it is not progressive. It discriminates against younger people with average incomes in favour of older people with much higher incomes. It discriminates against people who earn their money through their own hard work in favour of people who earn their money through the simple fact of having had plenty of it to begin with. It discriminates against my constituents in Glenrothes and Central Fife and in favour of those in places such as the Prime Minister's constituency, where, according to the Government’s own statistics, the average income per person is nearly £10,000 a year higher than what my constituents have to get by on.
The Government have claimed—we have heard this in a number of Conservative contributions—that they already know which of the UK’s nations will contribute most to this tax hike, and which will benefit most. They have claimed to have conducted an analysis which shows that it is not regressive in terms of different income groups. Although our SNP amendment was not selected, I expect to see the Government honour the spirit of that amendment, not by the end of the year but by the end of the week. I expect them to publish the analysis that we have asked for—or is this another case of their claiming to have all the information until they are asked for it, when we suddenly discover that it does not exist?
The final substantial objection to the Government's proposal is that it is designed to grab powers away from the democratically elected Governments of three of the partners in this Union, and place them in the hands of a Prime Minister who has no mandate to do this even in England. I have no issue with anyone allocating additional resources to Scotland, but I have a big issue with signing up to a regressive tax hike with no guarantee whatsoever that the Barnett consequentials will not be siphoned off as a result of some later Budget decision. Any guarantees that we get from the Government today will be as worthless as the promises that they made in their manifesto in 2019.
Let me be clear: the SNP will continue to honour its manifesto commitments. Any Barnett consequentials coming to Scotland as a result of increased spending on health or social care in England will be passed on in full to health and social care services in Scotland. But within that overarching guarantee, who do the Government think has the mandate to decide exactly how Scotland’s health and social care funding is allocated? I doubt that there is a single person, even on the Tory Benches, who honestly thinks it is right to assume that, because a particular way of allocating funding might be right in England, it is automatically right in the other three UK nations, where health and social care are organised in a completely different way. There is all the difference in the world between allocating funding to be used in a way that honours the Scottish Government’s manifesto promises, and decisions being foisted on us in a failed attempt to cover up the fact that the British Government do not keep their promises, to the electorate or to anyone else.
If one of the Prime Minister’s heroes had been here today, he might well have observed that never had so many promises been broken in such a short time to the detriment of so many and to the benefit of so few.
Laura Trott (Sevenoaks) (Con)
This area of social care has not had a happy history in respect of political point scoring, and, unfortunately, we have seen plenty of that today on the Opposition Benches. However, it is unacceptable for us to play Russian roulette with people’s life savings when it comes to social care. One in seven people are going to be affected by this. Just because their loved one died of dementia rather than cancer, their life savings are being entirely wiped out. That is not right, but it is right that we are doing something about it, and I am glad that we are seeing some element of cross-party consensus on the model. It is the Dilnot model, and the Health and Social Committee, of which I am a member, put it forward as a proposal. It was supported by the Liberal Democrats when we were in government with them, and to a degree, I think, by the Labour party. So at least we are moving forward slightly in that regard. The real question now is how we pay for this. There has been a lot of confected indignation on the other side of the House to cover up a lack of a plan. National insurance is imperfect in many ways, but, as Tony Blair said:
“If we want sustained investment in the NHS over a period of time, we are going to have to pay for it.”
He suggested that national insurance was the fairest and best way to do it. I agree with him, even if members of his own party do not seem to. Paul Johnson from the Institute for Fiscal Studies says that
“overall much needed reforms to social care are being introduced and unavoidable pressures on the NHS are being funded through a broad based and broadly progressive tax increase. That is better than doing nothing.”
It is incumbent on Opposition Members to really look at themselves and to understand whether they think real change is needed. If it is, they need to come up with a better alternative. Otherwise, they need to walk through the Lobby with Members on this side of the House who are taking difficult decisions on behalf of our constituents. These are not easy decisions. They are not decisions that can be explained away by saying that we are not doing this in a broad-based way when we are, or by making things up about this not being progressive when it is. We are taking these difficult decisions because that is what the Conservatives do in a moment of crisis.
My colleague on the Select Committee, my hon. Friend the Member for Peterborough (Paul Bristow), was right to say that reform was needed. This is an awful lot of money that we are putting into a system that is very broken. A third of social care staff leave every year and there are 120,000 vacancies in the sector. We will need to up the quality of provision and to inspect it properly. We will need to ensure that the integrated care services that are being put in place are assessed by the Care Quality Commission. We will also need to ensure that local government is held to account on the standards of care that it provides. These are all important reforms. We need to ensure that social care is truly part of the NHS, so that a nurse can take a year to go and work in the care service and then come back into a hospital. These reforms will all be necessary to ensure that we deliver on our high ambitions for change. We are taking steps to make that change. We will ensure that the options available to families are of high quality and that they will not take away their life savings. We are taking difficult decisions, and the Opposition need to look at themselves and decide whether they are doing the same.
Karin Smyth (Bristol South) (Lab)
For too long, successive Governments of all stripes have failed to grasp the nettle on social care reform. In fact, we have mostly failed to acknowledge that there was a nettle at all. That is largely because this burden overwhelmingly falls on women, and our voices have been silent. I will not rehearse all the debates that we have had, but this is this time to start something better.
When he came into office, the Prime Minister promised that he had “a plan” to fix social care in England. It is now clear that he did not. But—I say this with all sincerity—he has since started one, and he has brought it to this place at some political risk. This is worthy of a sliver of credit in itself. But having brought these plans forward, we now need an honest and thorough debate here and across the country about their merits and deficiencies. Yesterday I said that the Prime Minister may have broken the dam, and he looked slightly confused. That is because he thinks he has now fixed the problem. The trio of the Prime Minister, the Chancellor and the Health Secretary looked very comfortable with themselves yesterday. They are very wealthy men. They seem to have heard something, but this has not fixed it. They need to understand that behind the dam there is a torrent of questions, costings and aspirations, none of which the Government seem prepared to acknowledge.
This motion does not represent a sustainable plan. Instead, what we have is a shoddy push to nod through these changes without even paying lip service to the scrutiny that they need. Millions of families are hoping for something else, and we must not give them false hope. That would be cruel and unnecessary. There is only one longer-term solution that we will need to inch our way towards in the coming months and years, and that is a universal system based on the same NHS principles of fair taxation based on the ability to pay and according to need. Crucially, like the last Labour Government, we need to start moving people with us on the journey to that solution. Pitting people and generations against each other and talking solely about tax rises is a narrative that is now infecting our debate. It needs to stop.
Today is my birthday—[Hon. Members: “Hear, hear!”] Very kind. I was once in my 20s, and my message to young people is that they will get older. A young woman talked movingly on the BBC yesterday about her struggles with social care, and she said that everyone is one accident away from social care. We have to remake the social contract for a new generation.
Reform is too late for my mother, who is in her 80s, and it is too late for me in my mid-ish 50s. It cannot be too late for my children, which is what I need to explain to them, rather than talking of generational warfare.
On the smoke and mirrors around the NHS settlement, I spent most of my career in NHS management and I was part of the great improvement in health services under the last Labour Government. If we are really going to start delivering on this, it will require a massive clinical and managerial effort to transform the legacy of the pandemic and austerity in the health service, and to change those waiting lists.
Politicians like to talk nicely to managers in private conferences and then take pot shots at them the rest of the time, but clearing the waiting lists is a massive managerial and clinical challenge. The clerical and clinical validation of that list to help people move through the care system will be a massive task, and they need support.
The Prime Minister has a majority of 80 MPs. It is in his gift to deliver a policy that could truly stand the test of time. Having bitten the bullet and picked the fight, he seems determined to squander the opportunity with the solution before us today. I urge him and the Government to think again. He should seek to build the consensus that could exist in this House on doing something truly lasting after the terrible pandemic we have all been through.
Jane Hunt (Loughborough) (Con)
The question of how to deal with the worsening social care problem has been put off for too long. Indeed, the Labour party shunned its responsibility when in government and refused to make the difficult decisions to put social care on a sustainable footing.
Peter from Loughborough said in an email to me that it is
“long overdue to try and fix the social care problem. Governments of both parties have pushed this into the long grass time after time and it cannot be put off forever.”
The Conservative manifesto pledged to build cross-party consensus on an answer to solve the problem. Clearly, this has not been possible. It has therefore been left to this Government to make the tough decisions, which I know the Prime Minister has not made lightly as the Conservatives are the party of low tax.
Dr Whitford
I welcome the hon. Lady’s reference to the aim to create cross-party consensus. We have heard that said repeatedly. I am the health and social care spokesperson for the SNP, and the Labour spokesperson and I did not receive so much as an email. To say that consensus could not have been built is wrong. It could have been built, and we could have had discussions before yesterday.
Jane Hunt
That is not my understanding. Maybe it is the case, I am not sure. [Interruption.] Forgive me if it is the case.
The Government have made proposals to raise much-needed funds to deliver on important commitments such as upskilling the social care workforce, strengthening the adult social care system, tackling the elective backlog in the NHS as it recovers from covid-19, funding a 3% pay rise for our fantastic nurses and implementing a cap on adult social care costs. These aims all have widespread support across the country.
I could mention many cases that have been referred to me over the years of elderly people who are afraid to come out of hospital because they know they are not well enough to live independently but are afraid to move into the care system because of the cost.
In yesterday’s speech on social care costs, the Prime Minister said:
“from October 2023 no one starting care will pay more than £86,000 over their lifetime, and no one with assets of less than £20,000 will have to make any contribution from their savings or housing wealth—up from £14,000 today.”—[Official Report, 7 September 2021; Vol. 700, c. 155.]
The Office for National Statistics states that between 2014 and 2016, the most up-to-date figures I can find, the average inheritance was £11,000 per person, which fits in well with what we are trying to develop so that people are enabled to leave something for their family.
Finally, alongside this additional funding, we need to look at the overall finances and management of the NHS to identify where savings can be made, so that money is put where it is needed most—frontline services. That is particularly true in respect of waste generally. For example, GP statistics show that 173,165 people did not attend their appointment last year, costing £5.1 billion. Those are some of the things we need to look at. However, I will support this measure tonight, for the reasons I have set out.
Richard Thomson (Gordon) (SNP)
It is a standard trope from Conservative Members that public services in general, or the performance of the Scottish Government in particular, in some way fall short of what happens at Westminster. We heard earlier from the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), who seemed to spend more time complaining about the Scottish National party than he did talking about the NHS and social care.
Despite some of the Damascene conversions that have clearly taken place among Conservative Members overnight, a number of truths and realities in this debate should make for deeply uncomfortable feelings among Conservative Members. By levying this tax, they are not only breaking a manifesto pledge not to increase NI and increasing the tax burden disproportionately on the youngest and least well-off, but doing so in order to play catch-up with the health and social care landscape in Scotland.
I listened carefully to yesterday’s statement and intently to Conservative Members talking earnestly about the need for health and social care integration. I even listened carefully to that call when it came from Members who had, in ministerial office, been in a position to do something to drive that integration agenda forwards. What was startling for me was the gradual revelation throughout the course of the statement that there was no plan. There was no planned assessment of impact or plan for how the moneys raised would make their way through the NHS and ultimately to social care. Leaving aside the unfairness of the means by which these moneys are to be raised and the Prime Minister’s utterly bogus rhetoric about “Union dividends”, we are being asked to applaud the scale of the inputs without any thought having been given to the nature of the outputs. Clearly, in their desperation to do something about this, the Government have decided that a tax is the best form of defence.
It is also clear that in England at least this debate is not even in the foothills of where it needs to be about its health and social care integration. In Scotland, we embarked on that journey several years ago. There is some irony in the fact that on the day the UK Government finally announced their plan to lace up their running shoes on this, the Scottish Government in Edinburgh were announcing in their “Programme for Government” plans to go beyond health and social care integration and forge ahead with a national care service.
What this measure reveals most of all is the mismatch between policy and resources, and the shortcomings of the fiscal settlement for devolution. We saw that through the pandemic. We still do not know whether this is to be Barnettised or hypothecated. We do not know how much is to come to health and social care, and by what means. The answers to those questions matter, because if the devolved settlement is to be respected, the spending decisions should be taken by the Government who are directly elected and directly accountable to Scottish voters. The suspicion has to be, given the lack of detail on that, that this is yet another power grab, with the UK borrowing and claiming that borrowing as the so-called “Union dividend”.
In the time I have left, let me say that the most iniquitous aspect of all is the impact that this move has on the lowest earners in society, the youngest in society and those who have least in the way of assets of their own. They are being asked to forgo their earnings, for an objective with which few can quibble, in order to protect the assets of those who already have the most. This Government have removed the freedom of movement for young people across Europe, are seeking to disenfranchise them at the ballot box and now expect them to pay for a social settlement that few have the means to do and few can expect to benefit from. This is no country for young people at the moment.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
It is an honour to follow the hon. Member for Gordon (Richard Thomson), although I did not always agree with what he said.
I have spoken in this place on multiple occasions about the need for a long-term plan that addresses social care in this country, so I welcome the Government’s solution. I have direct experience of the problem of social care funding: prior to being elected to this place, I was the finance leader of a large upper-tier authority and we spent more than two thirds of our budget on social care provision, so I am all too aware of local government upper-tier authorities’ issues with funding social care and the challenge that the Government have faced in addressing the issue.
As we continue the recovery from the covid-19 pandemic and learn its lessons, it is clear that we can no longer ignore social care. By introducing this reform to social care after decades of inaction, we will change the lives of thousands of families who are struggling to afford quality care and having to make difficult decisions in the most vulnerable of circumstances. In finally addressing this long-standing issue, we will improve the quality and availability of social care for those who most need it, while ensuring that it is most affordable and helping to relieve the continuous pressure on the NHS.
We now cannot ignore the backlog created by the heroic work of our NHS in rightly prioritising the treatment of covid-19 patients. I welcome the Government’s plan to address the backlog immediately through the new health and social care levy, which will allow us to increase hospital capacity to 110% and create 9 million new appointments. I am sure I am not alone when I say that many of my constituents have contacted me to express concerns about hospital waiting times, and I know that colleagues from all parties will have constituents who are pleased to hear about the Government’s commitment to solving this problem through the levy.
Fundamentally, I am a low-tax Conservative, but as the Chairman of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride), said earlier in the debate, the Government have few levers with which to address this issue. As the Prime Minister said yesterday, a global pandemic was in nobody’s plans. The £407 billion that the Government have spent to support businesses and families has been vital to keep people safe and the economy afloat during these really difficult times.
We should focus on the impact, not just on the additional resources. The necessity of our response to the global pandemic has brought many changes in the way things are done in this country. I hope that, along with the increased resources, there will be increased ambition to do things bigger, better, quicker and more efficiently, rather than just continually chucking money at things. The extensive support schemes offered by my Government were never intended to continue indefinitely. As we emerge from the pandemic, it is right that we look at real-world funding options for the reforms that are so clearly necessary.
Christine Jardine (Edinburgh West) (LD)
Like, I am sure, many people on both sides of the House, I came here today desperate to support a plan that would see investment in a system that has been set up to provide care not just for us and all our loved ones but for everyone in this country. This is a problem that we all want to see fixed for the 1.5 million people who are not receiving the care they deserve; for the staff who work long hours, underpaid, with 120,000 jobs left unfilled; for the unpaid carers; for those caught in the backlog of NHS waiting lists that threatens every day to deny them life-saving treatment in time; and for all of us who might one day need the system that we were brought up to believe was there from cradle to grave. It is therefore a huge disappointment that this so-called plan does not do any of that.
What we have is not a strategy that will fix our NHS and social care—the long-awaited oven-ready plan that the Prime Minister promised us on the steps of Downing Street. Perhaps it would now be more appropriate to talk about the naughty step and to consider what this so-called plan will mean for the young people, the lowest-paid and the small businesses that will be hit hardest, because this is a tax hike for the low-paid and young people, which the Government promised there would not be.
Where is the carefully costed, detailed plan of what will be spent on the NHS backlog and invested in our social care system? One must not be funded at the cost of the other. There is a better way to deliver for a social care system that was already in crisis before the pandemic—and that is not an excuse for the broken manifesto promises of 2019. This is a system that was already in crisis and already in need of investment.
Liberal Democrats have repeatedly called on the Government to hold cross-party talks to find some consensus on the best plan to fix social care. The Government have had plenty of time. We know that it can be done. When the Liberal Democrats were in government, we built a cross-party agreement through the Dilnot commission, as mentioned by the right hon. Member for Gainsborough (Sir Edward Leigh), and the Care Act 2014, based on the values of the NHS. We legislated for it, but after the 2015 election, the Conservatives ripped it up. Instead, they are now pressing ahead with a scheme that places a huge burden on low earners and small businesses. Has it completely escaped their notice that many of those who will be hit hardest by this tax hike are the frontline NHS and social care workers?
Then there are the other public sector workers—police and fire officers. As for business, this comes at the worst possible time. When, as the Federation of Small Businesses points out, firms are still struggling, trying to recover from the impact of the pandemic, what do the Government do? They end support, stop furlough and then hit them with another bill, while many of them are struggling to get out from under the debt that the pandemic has created. Added to that, so many families are now facing a cut in universal credit.
It is abundantly clear to me and to the Liberal Democrats that this Government, this Prime Minister and this Chancellor are out of touch with ordinary families, small businesses, frontline health and care staff and what they face on a daily basis. As I have said, the pandemic is no excuse for breaking promises. This is a moment in our history when the people in this country most need a Government on whom they can depend and who are as good as their word.
What about the people whom this so-called plan is supposed to help? Where is the respect, beyond that for a certain proportion of the population? We will all start paying for this new arrangement in April 2022, but it will not come into effect until October 2023. What about the people who are in care now or who will enter care in the intervening 18 months? As for the cap, £86,000 is still a lot of money. This country deserves better.
Mrs Natalie Elphicke (Dover) (Con)
I welcome the Government’s commitment to this investment to speed through the backlog that we have had since the pandemic and to invest in social care. For too long, social care has been left in the “too difficult to solve” box. Well, we come here to do the hard things as well as the easier, and that is what this Government are doing.
In spite of the warm words that have been spoken by Opposition Members, it is absolutely clear to anyone listening today or yesterday that, whatever is proposed, they will oppose it to the extent of even voting against people getting urgent NHS treatment or care.
The proposal of additional money comes on top of unprecedented investment in the NHS, approaching £40 billion by 2023-24, but today’s welcome further boost for the backlog and social care does need paying for. No one on the Conservative Benches likes tax rises, and I certainly do not. It is essential to look at the burden of taxes overall and to commit to reducing that over time. None the less, I recognise and accept that, if we fail to take the tough decisions now, the longer-term economic consequences will be even greater in the future.
Along with these changes, I hope that my right hon. Friends on the Front Bench will consider how we can move away from the burden on council tax with a social care precept and make sure that we continue to modernise and make every pound and penny count on the frontline.
I would like to take a moment to reflect on what that NHS investment through successive Conservative Governments has meant for the people of Dover and Deal. It has meant that we have: a brand new state of the art hospital, the Buckland Hospital; a groundbreaking Harmonia dementia village, the first of its type in the entire country, which has been delayed by the pandemic but is now expected to be open in the spring next year; a pilot centre for a new approach to wounds at the Queen Victoria Memorial Hospital at Deal; a new training centre for GPs and nurses in east Kent, serving our entire area; and even a new dentist provision. The market is also responding to this investment and commitment to healthcare and to the people of our country, with older people’s housing being built by McCarthy Stone in the centre of Dover at this very time. However, the pandemic backlog is causing real distress, as is the failure to grasp the nettle of social care. I see that in my inbox, as we all do. I therefore strongly welcome this funding, this new approach and this commitment to tackle the issue.
The hon. Member for Leeds West (Rachel Reeves) asked about election leaflets. Well, in mine I committed to better healthcare, and I know that it is this Government who are funding and delivering that for the people of Dover and Deal.
Janet Daby (Lewisham East) (Lab)
We have heard—mainly from Opposition Members—about the grave issues with and concerns about this NHS tax, which will be detrimental and cause more hardship, especially to young people and poorer people in our society. We have heard about the cuts to local authorities and universal credit, and now the increase in national insurance, which will hit poorer people in our society. How can that be right?
Let me turn my focus to the Government’s progressing efforts to privatise the NHS. NHS privatisation has been a creeping threat for the past decade. The Government make a song and dance about valuing the NHS every election time. This includes their broken promises to build 40 new hospitals and to spend £350 million on the NHS every week if we left the European Union. The Prime Minister has consistently pulled the wool over the trusting public’s eyes, abusing their loyalty to the country’s most beloved asset. He is fixated on the pandemic, yet somehow the Government seem to have amnesia. There were extensive waiting lists at record high levels even before the pandemic. Those levels are even higher now. The Tories cut 17,000 beds from the NHS before the pandemic struck. The way that the Government are betraying and misleading the nation is astonishing.
Two constituents recently wrote to me about their dismay at the way in which the Government are dismantling the health service, and I have to agree. The Government have exploited the chaos of the pandemic to advance their agenda of privatisation with minimal public knowledge. There has been more outsourcing of NHS services to private companies. Public money is spent on contracts, rather than being spent directly on the NHS.
Should the Health and Care Bill pass as written, in April we will enter a new phase, where the NHS will be broken down into dozens of smaller units that will have private companies on their boards, including American health insurance companies seeking only profit. The deputy chair of the British Medical Association wrote last year:
“rather than finding a moment of clarity in this crisis to reinvest in a publicly provided health service and build for a better future, the Government has doubled down on its failures, choosing to throw huge amounts of money at scores of private firms…rather than rebuilding the health and care system and empowering those with the greatest expertise.”
What we are left with is a fragmented healthcare system that is a skeleton of what it once was, with workers underpaid and exhausted, and social care neglected.
Now the Prime Minister wants all taxpayers, including the most financially insecure, to pay for his mistakes—this Government’s mistakes. It is shameful. It is a betrayal of the NHS and a betrayal of the British people, and it is something that the Opposition will certainly not accept.
Gareth Johnson (Dartford) (Con)
I welcome the extra funding that is going into tackling the backlog of cases in the NHS. Dartford has been particularly badly hit, with Darent Valley Hospital this week having perhaps its busiest week in many years as it tries to deal with the backlog. I ask the Treasury team, working with their colleagues in the Department of Health, to ensure that the extra money that will be invested in the national health service gets through the treacle of bureaucracy that can quite often affect extra funding for the national health service, so that it can reach the frontline without being siphoned off in various directions on its way through. I welcome the fact that the Government have had the courage to deal with this issue. We can argue about whether the plans are the correct plans, and whether we are funding them in the right way or the wrong way, but it would not be a very wise argument to say that we should carry on kicking this can down the road. It is very welcome that we are confronting this problem head on and dealing with the issue.
It is slightly surprising that we have not seen much support from Labour. I could help my hon. Friend the Member for Wycombe (Mr Baker) in understanding what the Labour party’s plan would have been had they been in power for the past 11 years. The Labour party had a plan for how to deal with social care in its 2015 manifesto, which says that extra public funds were needed, which I think we all accept, that a cap on contributions to social care should be imposed, and, crucially, that it could be funded by a social care levy. That was the position the Labour party took in 2015. It was so happy with that policy that it had it again for its manifesto in the 2017 general election. So that is exactly how the Labour party would have approached this situation: with a social care levy. That is what is proposed by the Government, and it is therefore slightly surprising that we have not seen more support. As my hon. Friend said, we saw Gordon Brown come to the Dispatch Box in a Budget and increase national insurance by 1%. He did not mention it in his Budget speech—we all found out about it in the Red Book afterwards—but that was his approach then.
We have consistently seen the Labour party supporting exactly what the Government are proposing to do today, but instead of Labour Members supporting it, we have received the class attacks referenced by my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning). That shows that they have learned nothing from the last few general elections. They have learned nothing from their experiences of dealing with working-class people. They do not understand that working-class people actually have aspirations—aspirations to own their own house and to save some money where they can, and not to have that house, and everything else, pretty much, that they own taken away from them if they happen to need social care at the end of their lives. It is trying to ensure that those aspirations are met that has ensured that the Conservative party has made far more progress with working-class people than the Labour party, which has simply lost contact and lost connection with the people that it used to serve. I am therefore surprised that Labour Members are not supporting this, and they should perhaps reflect on that decision. I again pay tribute to the Government for having the courage to deal with one of the most difficult issues that faces British politics today.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I am pleased to follow the hon. Member for Dartford (Gareth Johnson), because I do welcome the fact that this debate is happening and that there is an attempt to find a solution to something that absolutely has been kicked down the road. However, I am very disappointed that despite the rhetoric there was no attempt at cross-party contact or to achieve consensus and agree a long-term solution.
I also feel that this proposal is regressive. It will hit lower-paid people, including the key workers we were clapping for just 18 months ago. It will hit the younger generation, who have been hit from multiple directions and will not have the benefits that we have been lucky enough to have in our lifetimes. It will stifle recovery because it is simply a tax on jobs. Like previous social security cuts driven by Tory austerity, it will take money out of local economies and remove spending power. That means increasing poverty—the single biggest driver of ill-health.
In Scotland, that will impact on our aim to have a wellbeing recovery from covid. That is why we object to this measure and why we object to the Prime Minister saying that he will direct how the spending is used. Income tax would have been a fairer method. It is paid by wealthy pensioners, as I will probably be in a few years’ time. It is paid more by people who earn more. It does not hit wealth, but there other taxes that could have been used to do that. The Scottish Government already took action in 2018 by adding a penny to all our tax bands so that we had more money for health and social care. We do not just provide free prescriptions; we are the only UK nation that provides free personal care, and in 2019, that was extended to those in need below the age of 65. That is something to which other nations within the UK should be aspiring. It allows people to stay at home and to have greater independence, and that is how we should be looking on it. The Feeley review, which the Scottish Government commissioned, asks us to turn it around, to stop seeing social care as a burden and instead to see it as a way of allowing the people affected, whether due to disability or age, to still be part of our society.
We object to the undermining of devolution, because it is the Scottish Parliament that has responsibility for the strategy of health and social care. Our health and social care landscape is quite different. Not only do we have free personal care; we also still have a unified, public NHS. We have been integrating with social care since 2013, so to say that suddenly we will hand that control over to the Prime Minister—I am sorry, but that will not wash. The national care service proposal from the Feeley review recognises that we already pay the living wage and we pay for overnight sleepovers. What we actually need for social care in all four nations is to develop social care as a career, so that people stay there and commit to it. It is not just a job that someone does until they can get on the checkout at Tesco. It is a simple fact that above all other careers, care is delivered by people, for people. That is where any plan should start. If there is focus on the workforce, we may end up with a care service that we can be proud of and that will deliver for all constituents.
Sir Robert Syms (Poole) (Con)
Political parties in this country set out with manifestos at general elections with a general intent to try to implement them. There is usually a number of rules. If a party thinks it will win, it has the shortest manifesto possible, and if a party is in opposition, it will usually have an endless manifesto with lots of promises to try to attract people. The truth of the matter is that what comes along is events, and a pragmatic, sensible Government have to respond to events.
We have had one big event, the pandemic. Nobody said, “You didn’t have the furlough in the manifesto”, because how could we have foreseen that? The jobs of 7 million, 8 million, 9 million people were protected to get through the pandemic. Nobody said, “You cannot give grants”, or, “You cannot spend £400 billion.” We live in a funny country where the Prime Minister can spend £400 billion getting us through a pandemic, but God forbid he try to put wallpaper up in his flat in Downing Street, which of course the Cabinet Office would not pay for.
The reality is that the Government have been pragmatic and sensible, and the consequence of the pandemic is that we have a higher debt level, and that changes the parameters of what the party that is governing can do. We want to implement our manifesto promises dealing with care. We need to get the backlog of the NHS down. Many people in my constituency have been quiet, waiting for their operation and their opportunity to get back to normal, and we need to give them support. That is what we are trying to do.
The simple truth is that we are in a different world from the one we had in 2019. This Government are treating the world as it is, and that means tough decisions and unpopular decisions. I would not be surprised if we fell behind in the opinion polls, but the reality is that we are doing what the British people expect us to do, which is to govern and deal with the problems we face. I support this Government, not because I agree with everything that they do, but because I am proud of the fact that they take tough decisions. That is what Governments are meant to do. They are meant to take challenges head on.
We are dealing with the NHS backlog. Who can tell how quickly we will get it shifted? Of course we need more staff, but we are seeing in figures out recently that the backlog is already starting to fall. Let us hope it is cleared quickly. We are starting to deal with some of the care issues. Is this proposal a silver bullet for dealing with them all? No, it is not. Is it enough money? I wonder, because there is a list of Government priorities that may mean some funds may be diverted before they get to care. The Government are trying their best to deal with people’s concerns.
We all have constituents whose parents have worked hard all their life to buy a home; we see the unlucky ones when mum or dad has Alzheimer’s and goes into a home and they see the proceeds of a life’s work disappear. If that person is in a home next to someone fully funded by a local authority, it is quite right and proper that we should pay at least some regard to their hard work and recognise the things they did not have—perhaps holidays or horseracing or gambling—because they wanted to buy a home.
The Government are roughly on the right track. I hope that we will get back to a more tax-cutting agenda as the years roll by. I am very hopeful for the deficit this year because we are growing quite rapidly, we seem to be getting control of spending and we have had to take some tough decisions with tax. I am confident that when we come to face the British people, I will hold my head up high because we are tackling the issues that my constituents care about.
Jim Shannon (Strangford) (DUP)
We are all aware that the NHS is the pride of the UK, and we are similarly aware that there is a grim possibility that it may become our biggest loss. I am therefore very much focused on health issues. That loss would be because of historical underfunding as well as the unseen pressures that covid has placed on every facet of the NHS, from dentists, physios and surgeons to waiting lists, assessments and operations.
I will not take the path of some others and seek to score political points because that is not what I am about. I am will think of the constituent who, at the age of 53, came to my office almost immobilised having waited four years for a hip replacement. I will think of the parents desperate to get respite for their disabled children. I will think of the mums watching their daughters—and increasingly their sons—who are killing themselves with eating disorders and cannot get the help that is needed. I do not want to score points, but I do want to get it right.
There are rightful questions about who will bear the brunt of what is undoubtedly a necessary evil. My real fear is that for small businesses who in recent years have taken on the burden of paying statutory sick pay to staff, increased wages under the minimum wage and are paying more to ship their products to Northern Ireland due to the disgraceful Northern Ireland protocol, what seems like a small increase may put them off hiring that new staff member. That is a real concern, and when that is weighed along with fact that big businesses with their expensive accountants can find a loophole to prevent them from paying what they can well afford, it seems that the middle class will again be the ones feeling the squeeze. I therefore share the concerns of my right hon. Friend the Member for East Antrim (Sammy Wilson), who highlighted the unfair nature of this blanket tax.
Whatever method is used to raise money—I need this to be heard clearly—this money cannot be diverted by way of the Barnett consequential to any other Department, as moneys have been in the past. We need to reform our health and social care or we will lose the NHS, but, in Northern Ireland, the funding make-up means that funding cannot be ring-fenced. As my right hon. Friend said:
“Northern Ireland will benefit by about £420 million per year by this increase in National Insurance but there is no indication that the Executive”—
the Northern Ireland Executive—
“will be required to spend it on the purpose for which it was raised since the Government cannot ringfence money”.
Before the debate, I spoke to the Minister for Care to seek assurances, and she will seek those assurances from the Treasury. Since the relevant Minister is not here at the moment, I put these questions to the acting Ministers on the Front Bench. Can that money for Northern Ireland be ring-fenced? Will all future moneys that come to Northern Ireland for this purpose also be ring-fenced? That is what we need to know. We cannot have a system whereby—as has happened on multiple occasions—this salvation funding for the NHS is used for putting, for instance, an Irish language or Ulster Scots sign up on a street. How do we ensure that the money goes on reform and is not used by others to promote their political goals and aspirations?
We undoubtedly need to take the bull by the horns and swallow the pill for the increase. However, we will never be forgiven if in five years’ time we are still in the same position. What guarantees do we have that the sacrifice of every single employed person, every single pensioner and every single business owner will bring about the necessary change and not be lost in the ether of politics at Stormont? Many are willing to make the sacrifice for care—not anything else—and we need binding legislation in place for us to believe that any guarantee given will not be waylaid by political machinations.
The future of the NHS is worth the change to legislation. Let us get it done. I want to see something happen from which we can all benefit across the whole United Kingdom, and I need that to happen for us in Northern Ireland.
Dr Andrew Murrison (South West Wiltshire) (Con)
May I congratulate the Government on dealing with unfinished business? Since 1948, we have pooled our risk for the management of the consequences of poor health except for things such as dementia and the general frailty that for some of us attends old age. This could be a historic moment in which we sort that out, and I will most certainly be enthusiastically supporting the Government tonight. It is grossly unfair that certain conditions should be excluded from our provision, and I am so hopeful that this will finally, after 70 years, complete the job begun by our predecessors.
I am disappointed that Labour Members should have taken the line they have, because I recall their doing something really rather similar in 2003 with national insurance contributions, presumably because Gordon Brown and Tony Blair at that time decided this broad-based tax was the fairest and most equitable way of dealing with this and, crucially, of raising significant amounts of money. We can debate whether the money was then well spent, and the statistics and figures suggest that that was not the case at least for the rest of that decade, and productivity in the NHS only started picking up in the following decade. Nevertheless, in raising sufficient funds for spending on something we all agree is vital, Gordon Brown and Tony Blair made the right call in 2003, and I find it dispiriting, saddening and disheartening that Opposition Front Benchers should on this occasion decide, for their own purposes, not to support it.
Jess Phillips (Birmingham, Yardley) (Lab)
I notice from the right hon. Member’s entry in the Register of Members’ Financial Interests that he makes income via rentals, as many people in this House do. Does he think it is fair that, in what has been presented to us today, rental income for landlords is completely not within the remit of any take for this levy, so there will be care workers in South West Wiltshire who are paying this on the income they make being care workers while it will not be paid by landlords with rental income?
Dr Murrison
I am grateful for that intervention, because additional rate taxpayers, who I think make up about 2% of taxpayers in this country, will be paying a fifth of the whole receipts for this measure and 14% of taxpayers will be providing half of it. That is progressive, which is presumably why Gordon Brown and Tony Blair, all those years ago, decided to levy this on national insurance. I am extremely grateful to the hon. Member for raising and underscoring that point.
However, I do have some concerns, as Ministers would expect me to have. One of those concerns was expressed by our right hon. Friend the Member for Rossendale and Darwen (Jake Berry), which is that this is a one-way tax, because there is no way that in the future we are ever going to attack a tax hypothecated to health and social care. In some eyes it represents a flawed tax, since as Conservatives we of course always want to remove as little money as possible from the pockets of all of our constituents.
There is also a traditional disconnect in healthcare between money in and services out. We found that in 2003, and the challenge for the Government today, which I am fully confident they are up for, is to turn the money they have announced yesterday and today into the output we so badly need, and which indeed is vital if we are to turn this around in two years’ time and use this money for social care.
There is some concern about the extent to which the money that has been announced for this will distort the social care market, and I would be interested in Ministers’ views on that. Will the industry load hotel costs, and will it front-load charges up to the £86,000 cap? How will that incentivise the domiciliary care market, which could turn out to be extremely positive? How will it affect the current 40% cross-subsidy from fee payers to local government-funded customers? How can it grow a vibrant insurance product market that will cover the delta—the £20,000 to £100,000 difference—and what will be done with actuaries and underwriters to that end?
Can I finish by saying that all of this depends on improving productivity in the national health service? It is a challenge that has evaded many over seven decades, but one that must be grasped if we are to complete this and ensure that we do indeed set the foundations—and I am confident we will—for proper social care. We need, for example, to drive down sickness absence, which is very high in the national health service. We need more service work to be done by professions allied to medicine. We need more artificial intelligence, data analysis and robotics. We need to crack down on variations in healthcare and to have zero tolerance for practitioners who diverge from it. We need to cut treatments and procedures of marginal benefit. We need early switching to generics. We must stop the revolving door between social care and the acute sector—something I am afraid the industry exploits to its advantage. Over time we must revisit the disastrous doctors’ contracts that I am afraid have meant, over the past several years, that people like me at the peak of our powers are retiring early or going part time, grossly reducing productivity in our national health service.
Zarah Sultana (Coventry South) (Lab)
Over the course of the pandemic the UK has amassed a record number of billionaires—171. Their wealth has rocketed by more than £106 billion and in total now stands just shy of £600 billion, up nearly 25% since May 2020. It is safe to say that the super-rich class has not had financial worries over the past 18 months. Unlike millions of people across the country, they do not have to worry about putting food on the table, paying the rent, or the cost of caring for elderly relatives. One might think that instead of hitting the living standards of our heroic key workers, that super-rich class would be asked to pay more when the NHS and social care system is in desperate need of funding, but that is not how it is under a Conservative Government.
This national insurance hike will hit low-paid and young workers the hardest, while doing absolutely nothing to tax the wealth of the super-rich. It will cost a band 5 nurse in Coventry more than £250, and the marginal tax rate of a recent graduate, once student loan repayments are included, will now be close to 50%. That is another attack on the living standards of the working class and the young, from a party that for 11 years has let the rents of my generation soar, as student debt rockets and wages stagnate. That does not come in isolation. Next month the Conservative party plans to cut universal credit by £20 a week—the biggest overnight social security cut in the history of the welfare state. That move will push 500,000 working-class people into poverty.
Yesterday, the Conservative party announced that it would break the triple lock on pensions, robbing retirees of nearly £350 a year at a time when pensioner poverty is already at a 15-year high. This Government are hammering working-class people, raising taxes on workers while cutting their safety net, and doing nothing to rein in the vast wealth of the super-rich. They pretend they are one nation, but today they show that they only represent one class—that of billionaire donors, super-rich property developers, big landlords and fossil fuel barons. Yes, the NHS and the social care system desperately need more funding. Our care system needs to be transformed into a national care service, modelled on our amazing NHS and free at the point of use for all, but that must be funded by a wealth tax on the super-rich, not by an income tax on the poor.
Anne Marie Morris (Newton Abbot) (Con)
There is, without doubt, agreement across the House that funding is necessary for health and social care. The challenge is in how we fund that, how we spend it, and how we ensure that the Government are held accountable for their promises. I will not repeat the powerful words of my right hon. Friend the Member for Rossendale and Darwen (Jake Berry) and my hon. Friend the Member for Wycombe (Mr Baker). They spoke truth to power, and I hope the Government were listening. They raised a second issue—indeed, this has been raised by others: is there a proper plan? We have a document; it is called “the plan”. For me, a plan is something that sets out clearly not just ambition—that is there aplenty—but specifically what will be done, when it will be done by, who will be doing it, and how the Government in this case, and the NHS, will be held accountable. What will be the reporting mechanism? I fear I see none of that. If I am asking taxpayers to pay a very substantial sum, I think that is the least we owe them.
Under this proposal, 80% of the pot will go to the NHS backlog and 20% to social care, which will be split between sorting out the woeful provision that we have now and the cap. I suggest that our priorities here are wrong. Yes, there is a backlog, but social care should not be second class. It should not be dealt with second, after the backlog is fixed; it needs fixing now. To be honest, to talk about fixing the mechanism by which we share the cost between state and individual as the priority seems wrong. If we do not have a social care system that actually delivers, there is nothing to pay for, and there is nothing to debate about how we fund it. I believe that the Government must change that priority.
What, then, could the Government do? With regard to the backlog, they could look not just at longer-term plans—we do not have time for that when it comes to recruitment—but at how we are going to get retired doctors and overseas-qualified doctors back. The Government could do that; they could change the bureaucracy that stopped that happening during the pandemic. They could look at how we can change the way we work flexibly across the different specialisms. That can be done, it has to be done, and it should be the focus.
The Government will not like this, but we also need to look at the immigration rules. I know that there are already exemptions for highly skilled doctors and nurses, but we need more than that across the whole health sector, and that help will come only through immigration. What about targets? Constituents deserve to have specific targets set. We need to know how those are going to be triaged according to need, as I assume they will be, and how they will be reported on.
Then we have social care—what are we going to do there? Can we really afford to wait for a White Paper? No, I do not think we can, but what could we do? We could legislate now. We could mandate proper pay—pay that is fair for the quality of work and the professionalism provided. We could develop a proper, professional system. We could fund local government properly. We could police the quality of the commissioning, as we might under the new Health and Care Bill, which is going through Parliament. Again, we could change the immigration rules, and we could also look at properly supporting carers who are looking after relatives at home, removing extra burden on the NHS.
All this is possible, but without a plan and without accountability, how can we look the taxpayer in the eye and say, “If you pay, we will deliver”?
Catherine West (Hornsey and Wood Green) (Lab)
There were many elements of the speech by the hon. Member for Newton Abbot (Anne Marie Morris) that I wholeheartedly agreed with, on the definition of good social care and in particular the reporting mechanism for the money that is raised as a result of our decision tonight. She made some very important points.
I want briefly to say what an unusual first week back it has been. Yesterday, we debated the Elections Bill and basically voted on compulsory ID cards. I feel that is very much against the grain of who we are. It has always been nice to know that we can pop out to the shops or down to the polling station without photo ID, and I think that some of the things we debated yesterday about photo ID go against that very liberal notion of who we are.
Likewise, we had the debate about compulsory vaccinations. Again, I feel that there is something very illiberal in that, particularly in forcing certain people, in certain workplace conditions, to do it. I feel that that is another essential debate about who we are. I am the daughter of complete Anglophiles; I grew up with “This is England” on the coffee table at home. Sometimes I feel that we have forgotten who we are.
In 2009, the satisfaction rate for the NHS was 80%, the overall best figure ever since the measure was introduced in 1983. When this Government came in in 2010, that started to drop, and it has now dropped by more than 16%. We know that the waiting list is up to 13 million, but as the hon. Member for Newton Abbot said, we have no recording mechanism and no mechanism for knowing exactly what the money will go on. That point was very well made.
We also know that the Federation of Small Businesses has real concerns that the measure might stifle recruitment right now. The TUC is very worried about young people and their employment prospects, questioning whether this is the right moment, when we do not know whether the recovery is sustainable. I am bitterly disappointed as a vice-chair of the Local Government Association and a former council leader—I know there is one on the Government Benches—that nothing has been spelled out on how we are going to help struggling councils. All of this could very well go straight into a waiting list. There are no targets and there is no promise, so I worry that local government will be ripped off and that the £3.9 billion gap will never be filled.
The measure is coming forward at a time when we know the people who will feel its impact the most, as the right hon. Member for Rossendale and Darwen (Jake Berry) said, happen to be in that care system. The irony is that they will have to pay even more to work in a failing system, where many are not paid the living wage. Many councils cannot afford to pay the extra living wage, which makes such a huge difference to that workforce. I am sure those on the Treasury Front Bench will make those deliberations when they have a chance. I am sure they have been working on this all summer, but it does feel a bit rushed—
Carla Lockhart (Upper Bann) (DUP)
I thank my hon. Friend for giving way and I agree with much of what she has said to date. She may or may not know that in Northern Ireland today a leading gas supplier announced a 35% price increase. That will put significant financial pressure, particularly on the—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am not sure whether the hon. Lady has been in for much of the debate, but it is important that interventions are very short because there are a lot of people who have put down to speak who may not get in.
Carla Lockhart
That will put significant pressure on the low paid and the squeezed middle. Does she agree that the increase in national insurance contributions on top of that will have an impact on them, even making—
Catherine West
Thank you, Madam Deputy Speaker. The hon. Member for Upper Bann (Carla Lockhart) is making a really important point about the unknowables. We do not know by how much our gas and electricity bills will go up in the next year. We do not know whether firms will take fright and stop hiring people. One thing we do know is that council tax will go up, because there was nothing in the announcement for councils. We know a few things are not going to get better. We know a few things could get better and might not get better. It does seem to be a bit of a risky move.
In conclusion, we have had a very strange return to Parliament. Sometimes I get very surprised by the Government. I think sometimes Ministers do, too. I hope there is urgent work between the Ministry of Housing, Communities and Local Government, the Department of Health and Social Care, and the Treasury to really make this work. It is likely to go through. I do not think there are quite enough rebels like the right hon. Member for Rossendale and Darwen—he is shaking his head. Please try to make it work. In taking such a risky decision right now, we can at least get the dividend of people being better cared for, getting through the backlog and helping our constituents to be able to see GPs when they wish to.
Dehenna Davison (Bishop Auckland) (Con)
I know there have been partisan words flying across the Chamber today, but one thing that unites everyone across the House is a commitment to try to tackle the issue of social care so that our children are still not having to deal with it in generations to come. I would like to start by thanking all our NHS workers who have been a part of tackling the really difficult challenge over the past 18 months. Their dedication to fighting covid, keeping us safe and keeping the NHS working at this difficult time must be commended by us all. I also want to thank our care workers. I have to mention my cousin Natalie and my great aunt Elaine, who have been fantastic, working throughout the pandemic. I have said it now. They will be watching at home.
I am really proud that, after years of it being kicked down the road, it is the Conservative party that is finally grasping this issue and saying that we are going to tackle social care. To some extent it has been disappointing to hear Labour criticise with no viable alternative. I want to try to be more constructive. One of my concerns is about the speed at which these proposals have been presented to us. We know that urgency is needed to tackle this issue. In a sense, it is fantastic that the Government want to act swiftly, but having seen these proposals only yesterday, we have had limited time to scrutinise them effectively and to consult our constituents and find out what their concerns are about these proposals, and to feed that into Government. I really hope that Government will engage with us as this passes through to the next legislative stages.
The speech that really struck me today was from my right hon. Friend the Member for Rossendale and Darwen (Jake Berry). I kind of wish I could copy and paste his speech and turn it into my own, because it really did address many of the points that I wanted to make. The first one I want to touch on is the relativity of house prices and how the maximum floor for care will have an impact. My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) made a decent point about needing a simple system, but unfortunately, when looking at that limit and relative house prices in areas such as my Bishop Auckland constituency, where the average house price is about £120,000, seeing constituents potentially lose a huge percentage of their only asset—an asset that they have worked their entire lives for to pass on to their children—is something that I am finding incredibly hard to justify, when people in other areas of the country who have worked equally hard would lose a much smaller percentage of that asset.
It is good, however, to see the floor lifted from £23,000 to £100,000. That is to be commended, but still, there is an issue about the ultra-wealthy who will also have the cost of their care capped, and who can afford to pay more than the £86,000. I hope that that will be addressed. I also have concerns about national insurance being used as the tool for this, like many other colleagues who have spoken today.
My main concern is the fact that we have not had a great deal of time to consider these proposals and to consider alternatives, as my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) said. The article by Peter Lilley proposing a state-backed optional insurance system not only is a free market approach to tackling this, backed up by the state, which is well needed, but goes to the Conservative principle of personal responsibility that I think every Government Member supports.
A quote by Mike DeWine, the former Governor of Ohio and a US Senator, struck me:
“Governing is about making tough decisions, but it’s also about figuring out a better way to do things.”
I am so proud that the Government are making this tough decision. I hope that by working together, we can find that better way of delivering on our social care pledge, but unfortunately, for the reasons I have highlighted today, I will be abstaining on this today. However, I will work alongside colleagues to try to make it the best it can be for all our constituents, for the country and to ensure that our economy can bounce back in the best possible way.
Sam Tarry (Ilford South) (Lab)
I find it incredibly ironic that the Government scrapped the chance today to debate the removal of the universal credit uplift—perhaps because they did not want to be exposed for taking money away from the some of the poorest in society—to instead offer up a debate about disproportionately hitting some of the lowest-paid people in our country.
The double whammy of a national insurance hike and a universal credit cut shows the complete disdain that the Government have for the working population. Far from being the supposed party of aspiration, they seem to be nothing more than they have always been— the party of the 1%—and they are not even trying to hide it with this regressive tax grab. Instead of sitting in front of the House today to front up this disastrous decision, the Chancellor seems to have gone AWOL. Maybe he spent the day in Sherwood forest as a reverse Robin Hood, robbing the poor to give money to the rich.
As we have repeatedly heard from so many people in the House today, a staggering 2.5 million families across the country will be hit by this huge national insurance tax rise as well as the £20-a-week cut to universal credit. In constituencies such as mine, which has people who are among the lowest paid in the country, this devastating news will mean that in many cases, people will be pushed further below the poverty line. What do the Government have to say to those people or to the struggling small and medium-sized enterprises and businesses that have battled through the pandemic? What am I supposed to say to the people in my constituency—the public sector workers—who have been hit by wave after wave of pay freezes, and now the Government want to hit them again with a national insurance increase? What about those families who are already stretched to breaking point, who will now be forced to sell their homes and plunder their life savings to pay for the £86,000 of social care? The silence from the Government on that point in particular today has been deafening.
This week, the TUC made it crystal clear that it is completely unacceptable to hit the young and low-paid workers while leaving the wealthy untouched. It cannot be right that 95% of this tax bombshell comes from those in employment. Let us be absolutely clear: this is, unfortunately, a tax on jobs and on our economic recovery from the pandemic.
It is incredible how ruthless the ideology of the Conservatives can be, yet when the facts are staring them in the face and it makes financial sense, the Tories simply cannot countenance taxing their own. It is very simple and I will spell it out very clearly: those with the broadest shoulders should bear the greatest responsibility. Even the ultra free marketeers on the Government Benches have voiced concerns about the policy.
We need to consider more progressive taxation measures, such as a wealth tax to ensure that the wealthiest pay their fair share. Let us be really clear about what has happened in the past 18 months: Britain has created a record number of millionaires and billionaires during the coronavirus pandemic. Their wealth has surged—the combined wealth of billionaires in this country grew more than 20%. Instead of raiding the pockets of the lowest paid and of small and medium-sized enterprises, who may struggle to afford it, why are the Government not closing the tax loopholes and targeting the tax havens?
We also need an assessment of the impact on jobs, but we have not heard about it from the Government today and so far they have resolutely refused to do one. We need jobs to get out of this crisis into growth and get more tax coming in. We also need a full, comprehensive social care plan that is properly and fairly funded and integrated with the NHS; a system that looks after everyone in our country from cradle to grave; and, most importantly, a proposal that does not pit one generation against another that is less wealthy. The plan is unjust and badly timed, and it will not fix the social care crisis.
Mark Fletcher (Bolsover) (Con)
It is a pleasure to follow the hon. Member for Ilford South (Sam Tarry), if only because he asked what we would say to the people in his constituency who have been struggling. It seems a strange time to ask that question when the Government have just spent £400 billion helping individuals and businesses through a tremendous crisis, keeping the show on the road and making sure that our economy can recover, that jobs grow and that we have a way of life we can continue with. I feel that the timing of his points was somewhat ill-judged.
It has been interesting to be in the Chamber today, because we seem to have covered all the reasons that we should not do something. It seems that all the ways in which we are doing something are imperfect. I feel we have captured the political paralysis that has surrounded social care over the past couple of decades. It is incredibly difficult to do anything in this area, because it requires tough choices and a punt into the dark that may or may not work—we can never be sure.
We often speak in this Chamber as if we are certain, as if we are positive and as if we know where things will go, but sometimes we have to say, “We think this is the best way forward and we hope it works.” To acknowledge that the Prime Minister and the Government are doing something today on the NHS backlog and on social care is to admire their bravery. To govern is to choose, and that is what the Prime Minister is doing.
We have heard some tremendous speeches about the alternatives to taxation or to systems, but we have been having this debate for so long. When I look my suffering constituents in the eye or when they come to our surgeries and say that the system does not work, we cannot sit there and say, “Okay, but I’m going to engage in an academic exercise for another decade until we find perfection.” Sometimes we have to acknowledge that the best way forward is to take a chance.
Today is a massive step in the right direction. We are investing £12 billion per year over the next three years to try to ensure that any damage done by the global pandemic to our NHS is no longer a problem and that we can reach 110% capacity. We are also grasping the nettle of social care reform. However, there is an intriguing paragraph in the health and social care plan: paragraph 9, which states that
“the Government will ensure this money is well spent and goes to frontline care in England, increasing efficiencies and using reforms to drive up productivity.”
I think that there is an acknowledgment, particularly among Conservative Members, that NHS funding cannot go on becoming a black hole. There is a need to ensure that outcomes and productivity are improved. Look at the lessons of the pandemic, particularly from the Nightingale hospitals, which went up in 10 days through the combination of logistical support from the Ministry of Defence and the NHS—it was unprecedented.
We saw in the vaccine roll-out that when we bring additional expertise into the NHS, we can achieve amazing things.
My “nudge” today is that I do not think we can continue to assume that more and more money will solve the problems that we have. Equally, however, I will not look my constituents in the eye and say, “I did not try.” However tough some of the decisions are that we have to take, I will back our Prime Minister and I will back our Government, because our constituents need to see our country get better, and that is what we are trying to achieve.
Ben Everitt (Milton Keynes North) (Con)
It is a pleasure to follow my hon. Friend the Member for Bolsover (Mark Fletcher), who made a typically thoughtful and energetic contribution. There was much to agree with there.
My hon. Friend the Member for Bishop Auckland (Dehenna Davison) quoted the words, “To lead is to choose”, and here we have no easy choices. Indeed, in our job we often have tough days in the office, and nights when we lose sleep thinking about a vote, a decision, the options and the choices that we have in front of us. However, in this speech I am going to look on the bright side. I am going to try to be optimistic, and pull out the good things from the situation and the hard choices that we face. One good thing is that owing to the timing of this, I only lost one night’s sleep, but I am going to be very positive about the policy itself as well. I am going to choose three things that I want to improve, and I am glad that the Chief Secretary to the Treasury is here to listen. Those three things are how the revenue is raised, the quantum and the period over which it is spent, and how it is spent.
There are never any good options for raising taxes, but I happen to think that raising taxes on having a job should possibly be at the bottom of the list when we look at new areas of income. We have spent billions on furlough, keeping people in jobs. That has been borrowed from future generations, and will be paid back. We have kept people in jobs. We have kept the economy going. We have kept the show on the road. We have avoided the economic death spiral of mass unemployment while we have all these additional rising pressures on spending on public services, including, of course, social care—the very problem that we are here to fix. There are, I think, other less bad options. My right hon. Friend the Member for Rossendale and Darwen (Jake Berry) suggested a cocktail of taxes and levies. Normally, I instinctively avoid complexity in taxation—
Ben Everitt
No—not cocktails!
We have to recognise that the simple option is not always the right one, and I look forward to the debates that will follow as this policy evolves.
As for the quantum and the period over which the revenue is spent, I must ask whether it is enough to fix the care sector. The hon. Member for Sheffield South East (Mr Betts), the Chairman of the Housing, Communities and Local Government Committee, referred to the previous report of the Health and Social Care Committee, which required an additional £3.6 billion for the sector. Are we going to get that, and is it going to go through at the right time? We need to solve the broken economics of running a care home, which mean that providers must fund the services off the back of private clients to subsidise the clients who are referred by local authorities. I think we need a big conversation about that as well.
Let us turn to how the money is spent. The additional funding must be supported by meaningful reform. We must address the issue of funding allocation, and the allocation of responsibility within the sector. Currently, the system is set up to incentivise referrals. The system is split between local authorities, care providers and the NHS.
Dehenna Davison
Does my hon. Friend agree that we need a wide spread of provision to ensure that we have the best possible outcomes for social care patients?
Ben Everitt
Absolutely. We need more providers in the market, but the market needs to be functioning for that to take place.
My hon. Friend made a very good point earlier about another aspect of how the money is spent. The £86,000 cap needs to be met and tweaked with a regional house price element to recognise the fact that houses are worth more in some areas than in others.
In conclusion, I will vote for this. Our job in this place is to make good laws, and we need to do that at every stage. This is a tricky problem. The Government are right to grasp the nettle and reform social care. The fundamental problem that we face is that the assumptions that we are basing our entire welfare system on were made in the 1940s when people went into work in their teens, retired when they were 60 and lived until they were about 65. Now, they are living much longer lives and retiring earlier. That is the funding issue that we face.
Madam Deputy Speaker (Dame Rosie Winterton)
I must gently point out that colleagues may think that they are helping each other out by making interventions, but at this stage they are going to prevent other colleagues from getting in.
Mike Wood (Dudley South) (Con)
My hon. Friend the Member for Bolsover (Mark Fletcher) rightly said that to govern is to choose. One of the reasons for the result of the last general election was that voters knew that this Government were more likely to make the difficult choices that were needed. The choices we have to make are not always between the good and the perfect. Many of them involve choosing the less bad option. As a Conservative, I believe that raising taxes is certainly a bad option. It clearly breaches a manifesto pledge, and it is both economically and morally wrong. It is economically wrong because higher taxes will dampen growth and prosperity in the longer term, and it is morally wrong because it means taking money away from those who have worked hard, to be spent elsewhere. That needs to be kept to a minimum.
However, if raising taxation is a bad option, surely the alternative—not acting—is far, far worse. Not acting would mean allowing the backlogs that have built up in the NHS through the pandemic to continue. That would put people’s early diagnoses at risk and delay treatments further, clearly endangering lives. It would mean not reforming social care, despite there being almost universal agreement that that reform is long overdue. Government after Government have promised to take this on, to reform social care and to put it on a sustainable footing financially. There have been endless reviews, but each time they have ended up in the “too difficult” box.
How many of us can go for a week without getting an email from a constituent about social care, whether it is about the quality of social care, access to social care, top-up fees, their ability to pay or the fear that they will have to sell everything they have worked hard and saved for all their life? That is why something needs to be done. If we agree that action is needed and that we need more money to be spent on the NHS to clear the backlog and reform social care, the only decision we have to take is how we pay for it.
In the long term, borrowing to pay for this is not a sensible option. There are very few taxes that can raise anything like enough money to meet the challenges we face. Of course this could be put on VAT, but that is clearly a much more regressive option that would place a disproportionate burden on the least well off. There have been various fanciful ideas from some Opposition Back Benchers that basically suggested that someone else should pay for it, or that there was a hidden pot of money that could be raided. It is not there! The fairest way is to have a levy on national insurance contributions, sharing the cost between employees, employers, the self-employed and those who get income from dividends, so that those who earn more pay more.
I think the shadow Chancellor suggested that this could be funded by charges on the sale of land, property and shares, but the truth is that combined revenues from all stamp duties on land, property and shares comes to about £15 billion, which is nothing like enough to pay for what is needed. So national insurance is the fairest option. Gordon Brown was right, on this one occasion, that it is the most regressive option—
Huw Merriman (Bexhill and Battle) (Con)
It has been a pleasure for us to sit here for the past four hours and exercise by seeking to catch your eye, Madam Deputy Speaker, no doubt contributing towards alleviating our future social care needs.
In the next 20 years the population of England alone will increase by 10%. The number of over-75s in England will increase by 60%, which is an extra 2.7 million people. In 2020-21 there were 1.9 million inquiries for social care in England. The system is creaking. A third of my constituents are over the age of 65.
This tells us that we need to act now, and I applaud the Government for taking decisive action now. I have concerns about the action we are taking, but we need to act now and the Government are acting now.
I have three concerns about this particular measure. First, we have a health and social care levy that will, in its initial existence, go towards health. I am concerned about when we take that money out of the NHS and put it into social care. We know how difficult it was to convince people that a temporary lift to universal credit was just temporary. How on earth are we going to challenge the equivalents of Marcus Rashford when it comes to the NHS and persuade people that it is not a cut but was always the plan for a period of time before moving the money into social care? There does not seem to be any guarantee on that, and I am concerned that it will be politically difficult for any Government to do so.
Secondly, I am concerned about the intergenerational unfairness that could be seen in this measure. Along with others here in the Chamber, I have advocated a measure that looks for retired people who have a nest egg to pay more for the service they use, rather than expecting the younger cohort, through national insurance, to have to pay for it when they do not have a home of their own.
The German model was built because of the regional imbalances of reunification, and the Germans considered this model and made a provision that everybody would pay in, workers and employers—the retired had to pay both parts—and no one would have to pay more than €138 a month. That took the political heat out of the system, and it uses the private insurance market for delivery. People are incentivised to look after their parents in their own home, and they can take money from the insurance fund to do so. I would like to look further at that model.
If that does not work for the more catastrophic situations, what about the noble Lord Lilley’s proposal of taking a charge against the property, so that a premium is paid out—he estimated about £16,000—and on death the charge is released from the sale of the property?
Both plans look more towards the people using the service having to pay into it. Those who are older would see the fairness of that, because it is their children and grandchildren who have to pay the national insurance.
Thirdly, I am concerned about the overall tax take. We will have to rein in public spending, as this has to stop. We need to allocate money towards the NHS with strict criteria on where it will be spent, because it cannot be right that a 27-year-old graduate who is paying back their tuition fees is seeing 42% of their pay go towards tax. That is not what Conservatives set out to do; we set out to give people the opportunity to build dreams.
That said, we need to act now and I recognise that the health service needs an injection of funding. I will be supporting the Government, but I want to see my three proposals developed before it is too late.
Richard Fuller (North East Bedfordshire) (Con)
Like my hon. Friend the Member for Bexhill and Battle (Huw Merriman), the Chair of the Select Committee on Transport, I will be supporting the Government on this measure. In so doing, I will be breaking a pledge in the Conservative party manifesto at the last general election. That is not done lightly, and I do it for two mean reasons.
First, the £400 billion cost of covid has created a gap in the country’s balance sheet that cannot be ignored or wished away. It has to be dealt with, and it is fiscally responsible for the Government to produce today’s measures. Secondly, as hon. Members have said, we have deliberated on the reform of social care for more than a decade, with every day of delay creating more risks for families. I want reform, and it is best done by this Government at this time.
However, there will be consequences from these increases in tax rates—they will hold the economy back. Public services require a thriving economy to fund them. In turn, a thriving economy requires people to be inspired to create, take risks, invest capital, make profits and grow their businesses, skills and talent. As Conservatives, this is something we understand. It is capitalism and competitive markets that deliver. I would like to hear a little more from our Government about how good the power of free markets is and a little less boasting about the latest ways in which they are spending taxpayers’ money.
With taxation rates already at highs for the past 60 years, for Conservative Members to describe themselves as “low-tax Conservatives” means that they need to be supporting efforts to reduce public expenditure. Every departmental Minister should right now, ahead of the Budget, be raising the bar for investment decisions and casting out those projects that fall short. Each Minister should be taking an axe not just to obvious waste and inefficiency, but to meaningful slices of expenditure that reflect an over-bloated state rather than an essential public need. That applies to all Departments, including the Department of Health and Social Care.
The NHS is a great hallmark of British society, but it is not a religion. It is an organisation of people to achieve a social purpose. As an MP, my role—our role—is not to deify the NHS but to hold it to account for its effectiveness in achieving that social purpose. It is so dispiriting when taxpayer funding for healthcare is increased and the immediate response of those in positions of knowledge or responsibility in our health services is to say that the funding is not enough. It is dispiriting and it is irresponsible to the taxpayer. It is not acceptable that the leadership of the NHS shies away from even the most modest of productivity targets. It is not right that, by the British Medical Association’s own calculations, more than half—70,000—of the 134,000 people involved in general practice are non-clinical administrators, and yet so many of my constituents find it so hard to get an appointment.
I wish to see reform of social care that eliminates the excessive cost risk for families. I recognise that a private insurance market for these risks cannot exist without significant state intervention and that, for a period at least, taxpayer support is required as care services are reformed. As of today, we have promises but not guarantees for reform. I am placing considerable faith in these reforms being implemented by 2023. The Government and the NHS must deliver.
Jack Brereton (Stoke-on-Trent South) (Con)
Increasing taxes is not something I take lightly, and it goes against much of my belief, and of many Conservative Members, in the need for a low-tax, high-wage economy. But the realities we now face of increased pressures on our health and care system mean we cannot stand still; we must invest more in these services. Hundreds in Stoke-on-Trent South have contacted me previously about the need for more investment in social care and the challenges they face in accessing healthcare and medical treatment. I am not willing to go on ignoring these calls. For far too long—decades—social care has been starved of the real investment it needs.
No decision to invest more to the scale required is going to be easy, and money must come from somewhere. What we have arrived at is probably the least-worst option. The approach taken will ensure that this burden is spread as broadly as possible, so that all those with earned income streams must contribute, and protections are in place to protect those on lowest incomes. I also welcome the suggestions in the guidance that health services, local authorities and other public services will be compensated for these additional costs, as I know there was significant concern about the potential implications for these services of those additional costs.
If we are to put this huge investment into improving health and social care, we must also see reforms that are needed to ensure that money goes directly to the frontline of improving services in Stoke-on-Trent. We must see a further integration of services so that patients are truly put first, with all local health and care partners fully committed to delivering the improvements needed, supporting one another to reduce pressures and ensuring that people receive the right healthcare at the right time. We must also see the money spent better, cutting out waste and outdated practices where they exist.
I hope that the Health and Care Bill passes through Parliament as swiftly as possible to bring about vital reforms. Investment must be about the creation of a better funding model for social care that improves quality and reduces the burden on families. I also want Ministers to focus on ensuring that we develop the insurance market to help to protect those whose property values are on the lower end of the scale, such as people in Stoke-on-Trent, because we need to make sure that people in such properties receive the same protection as those in other parts of the country.
We must also address the huge issues we are seeing in access to health treatments and GP services, which have dramatically worsened during the pandemic. It is not good enough that my constituents in Stoke-on-Trent South have to wait inordinately long times for the treatment they need and cannot get GP appointments. We must tackle the backlog at the Royal Stoke and get primary care fully back to pre-pandemic levels. But we need to go further. Social care is a key part of addressing the pressures, but so is primary care, which must be properly invested in. We must see the development of new integrated healthcare hubs in north Staffordshire, including the development of the second phase of the new Longton health centre in my constituency, the first phase of which will open in the next few weeks.
The improvement of both social care and primary care will mean that secondary care is better supported, ending the scenes of services overwhelmed that we see frequently today at our local hospitals. In north Staffordshire, our health services face wider challenges because of the legacies of the burdens caused by Labour’s PFI disaster, and the hospital was not built to the capacity needed. Many such pressures continue, and although much progress has been made, we must continue to see the level of investment that we need in health services in Stoke-on-Trent.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is a pleasure to follow my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton). I absolutely agree with him that the Government’s proposal is probably the least worst option.
When it comes to this debate, I feel saddest for the many constituents who have come up to me in recent years and said, “When it comes to the big issues—the issues of national interest—why is it that you lot can’t work together and come up with a solution?” Clearly, this issue is of huge national interest and has been debated in this House many times over recent decades. I have been involved in debates dozens of times in the six years I have been here. I blame colleagues from either side of the House—from both the Labour and Conservative parties. Whether it is the “death tax” or the “dementia tax”, people have come forward with proposals only to be rubbished by the other side for political purposes.
The reality is that this issue is one of many challenges that we are going to face over the next few decades. According to the Office for Budget Responsibility, if we do not change our tax system, our debt-to-GDP ratio will be 400% of GDP by 2060, because of pension, healthcare and social care costs. We must sort out this issue on a cross-party basis so that we have a long-term solution.
The reality is that we have had cross-party consensus. As I have said several times in the past couple of days, I have taken part in two Select Committee inquiries on the issue, the most recent a joint inquiry by the Health and Social Care Committee and the Housing, Communities and Local Government Committee. There were 24 Members on those two Select Committees, 12 of whom were from the Opposition Benches, and we strongly recommended a solution based on national insurance. We can of course argue about some of the detail of the national insurance proposal, which has been changed in some positive ways over recent days, but simply to dismiss it out of hand for political purposes is irresponsible. I understand that the shadow Minister for social care, the hon. Member for Leicester West (Liz Kendall), has also proposed a solution based on national insurance. It does not make sense simply to say for political purposes that the proposal is wrong—
Bridget Phillipson (Houghton and Sunderland South) (Lab)
indicated dissent.
Kevin Hollinrake
The shadow Minister on the Front Bench can shake her head, but that is the reality behind the proposal. The Chair of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), said clearly that he still supported a solution based on national insurance.
I agree with my hon. Friend the Member for Stoke-on-Trent South that this solution is the least worst option, but we can develop better solutions down the line. I agree with my hon. Friend the Member for Bexhill and Battle (Huw Merriman) that the German solution is better. In Germany, they came together across party lines, based on the national interest, to solve this issue. It was very similar in respect of employer and employee. The key benefit of the German solution is that when a person comes to be defined as in need of care, instead of the local authority allocating care, they can choose to take a monthly cash payment, so they can pay a relative, a neighbour or whoever to care for them. A person can be cared for by the people who know them the best, who understand them the best and love them the most, which must be better than some of the stories that we hear about care providers who give a pretty poor service, with a 15-minute package now and then.
This must be a better solution, but I have one concern. I understand why the scheme has been brought forward like this, using national insurance. It is because it is quick and easy, and we need the money today, but the concern is about hypothecation, which many Members have mentioned. This was a social care levy, but already some of it is going to the health service. That is our understanding at the start. Hypothecated taxes simply do not work, and we see that time and again. It would be better to develop this into a proper social insurance system with not-for-profit providers, so that it does not go into the private sector, but instead the money could be paid in on a proper hypothecated basis to deal with the long-term problem of social care.
Angela Richardson (Guildford) (Con)
It is a pleasure to follow a typically well-informed speech from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake).
I stood for election to be a Member of this Parliament because I want to be part of a party and Government who strive to improve the lives of all of our constituents. I am Conservative because I believe in being pragmatic and realistic, not stuck in ideological thinking, but willing to find solutions to seemingly intractable problems and, more importantly, making sure that those solutions are fit for the times in which we find ourselves. As other hon. Friends have mentioned, I will not shy away from making difficult decisions, which our constituents elect us to take.
When Labour was in power, it failed to fix the roof when the sun was shining. Now the pandemic has clouded our bright skies, but we are determined to grip this issue and to fix the social care crisis once and for all, as we promised. What are we promising to do with the NHS and social care levy? This £12 billion average annual investment over the next three years means that we will invest the largest amount of any Government to upskill the social care workforce, strengthen the adult social care system, tackle the elective backlog in the NHS as it recovers from coronavirus, fund nurses a 3% pay rise as the independent pay review body recommended, build resilience for future pandemics, ensure that the NHS has the resources it needs throughout this Parliament, and, finally, implement a Dilnot solution to cap social care costs.
In addition, we promised to deliver 50,000 more nurses, 50 million more GP appointments and build 40 new hospitals. The Conservatives are the party of the NHS and it is frankly unbelievable that the Labour party will not vote this evening to give the NHS the funding that it needs.
This £36 billion investment to reform the NHS and social care is a responsible, fair and necessary plan. Many of my constituents in Guildford, Cranleigh and our villages will be feeling a sense of relief today for the genuine anxiety they feel. We know that the pandemic has created an enormous backlog in the NHS, with more than 300,000 now having waited over a year for non-urgent care. We know that our constituents have wanted a plan for social care for decades, as many colleagues have mentioned today. Importantly, we know that our constituents understand fairness, which is why I will be supporting the Government today.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow my hon. Friend the Member for Guildford (Angela Richardson), who set out her position very clearly.
I have to say that this is the first time in all my time in Parliament that a Ways and Means motion has been debated all day. It seems to me that this has been more like a general debate on the NHS and social care. I remind the House that Parliament says:
“A ways and means resolution is needed to authorise the creation, extension or increase of taxes or other charges…Ways and means motions are most commonly put to the House for agreement immediately after second reading”.
In other words, there is a Bill that we discuss; it is laid out there. There should have been a social care Bill. We should have had that Bill and been able to debate the principle of it and then immediately afterwards voted on the Ways and Means, but we have got this mixed up with giving more money to the national health service.
A Ways and Means motion to increase a tax in order to pay more money to the health service is quite acceptable. I mean, we are creating a new tax. The motion today does not refer to 1.5% or to how much will be spent on social care. It just says that we are bringing in a new tax. We are doing that, though, without having the detail. If this was a Budget, the Chancellor would stand up and make a powerful speech, and there would be an immense amount of applause on that day for what he said. People would then read the Red Book, for five days they would unpick the Budget, and then we would vote on the Ways and Means motion.
I am very unhappy with today’s procedure. Although I support the idea of more money for the NHS and I have no objection to it being done through national insurance, I absolutely object to saying that this has anything to do with the Health and Care Bill, because that has not been through the House. Social care should be paid for separately. We should have the Bill and debate it, it should go through Committee stage and through the Lords, and then it should be paid for. I have no idea which clever-clogs in No. 10 thought it was a great idea to mix these two things up. Social care is one of the most important things—if not the most important—that this House will have to decide on. It should be done separately and properly.
The Opposition should be working with us. They have scored so many political points today. My hon. Friend the Member for Milton Keynes North (Ben Everitt) said it: last night was one of those nights when we do not sleep because we are worrying about how to vote. Should I vote for this because I want to support the Prime Minister? Should I vote against it because I do not agree with the principle? Or should I do nothing because I think it is a good idea and a bad idea at the same time, because the Government have mixed the two things up? I will make my decision after having listened to the shadow Minister and the Minister; as of now, I have no idea what I am going to do tonight.
Miriam Cates (Penistone and Stocksbridge) (Con)
It is an honour to follow my hon. Friend the Member for Wellingborough (Mr Bone).
I am in absolutely no doubt that we need to raise the money to enable the NHS to recover from the pandemic. It would be wrong to raise this money through more borrowing. We should not expect our children and grandchildren to settle the debt at some time in the future; we need a plan to pay for it now.
The criticisms of this motion come not so much from the fact that the Government are choosing to raise the money, but more from the way in which it is being raised. Those criticisms centre around one concept: the idea of fairness. As we have heard in this debate, fairness is extremely important for Conservatives. If the Government are to be the force for good that they should be, we need to ensure that our policies are as fair as possible—that benefits and costs fall in a fair and equitable way across the population. I accept that there is some unfairness around using national insurance to raise the levy, but in order to raise the cash required, we must use a broad-based tax. A VAT rise would have a disproportionate impact on those with low incomes and using income tax would not incur a contribution from businesses. Of course, businesses very much benefit from health and social care, as huge numbers of people would have to leave the workforce if those services did not exist.
On reflection, I think that using national insurance to raise this levy is a fair way to proceed, especially given that my right hon. Friend the Chancellor has made sure that dividends and working people of pensionable age are included. I support the motion today because we have to acknowledge that politics is not about striving for perfect solutions. It is about finding the best solutions possible within the financial, practical and moral constraints that bind us all. However, although the money raised through this motion will be a start, it will not be enough.
We have to accept that health and care costs are many times higher now than they once were. I echo the comments of my hon. Friends the Members for Wycombe (Mr Baker) and for Milton Keynes North (Ben Everitt) on this point. When the welfare state was born, life expectancy was about 65. Many people left school in their early teens and entered the workplace. In the 1940s, an individual might well spend fewer than 20 years of their lives not working. Now people can spend more than 40 years of their life not working. Simply put, during our working lives we must now pay a lot more —double, or perhaps more—in taxation, pension contributions and insurance to fund our decades of economic inactivity. We cannot escape that fact.
So in raising any additional money in future we must be far-sighted, inventive, creative and look to other countries, as other hon. Members have said. In addition to taxation, we could look to build on the success of our automatic enrolment model for workplace pensions or consider some form of contributory insurance scheme. But we must also be clear that there are alternatives to ever-increasing bills for health and social care, so I hope to see extensive consideration of local, community and capability approaches in the White Paper. We must not forget the crucial role of the family. How can we help families to look after their own relatives’ wealth for longer and with appropriate support?
I acknowledge and understand that there are criticisms of this motion, but doing nothing is not an option. When it comes to finding a pragmatic solution to such a difficult and urgent issue, I am convinced that this is a fair approach for now.
Richard Drax (South Dorset) (Con)
I totally sympathise with those on the Front Bench and I have huge respect for the Treasury Minister who is in his place, but I am concerned, as a Conservative, at the direction of travel. As we have heard, taxes are at their highest for 60 or 70 years—and this under a Conservative Government. For me, and I think for many of us and people around the country too, the alarm bells are ringing. I do not like being bounced into this decision. I think someone mentioned sleepless nights. Well, we will not have any because the decision is being made tonight, having been told about it only 48 hours earlier, and we still need to hear a lot more from the Government about how this is all going to work.
My hon. Friend the Member for Wycombe (Mr Baker) talked about the lack of money as our population gets older and the continual demands on the public sector increase. He is absolutely right. We cannot go on just spending the taxpayer’s money willy-nilly. This is not our money. It is money earned by people working their socks off to provide for their family, their friends, their employees and for the health and prosperity of this country, and we cannot abuse that.
I entirely support what my right hon. Friend the Member for Rossendale and Darwen (Jake Berry) said, in a superb speech, when he referred to a Trojan horse. If I can paraphrase, we, as Conservatives, are introducing a new tax that will never, ever be withdrawn because, come election time, we would have to say, “Okay, remember everybody—that was a one-off tax, so it is now going and billions of pounds are being withdrawn from the national health service.” I think I can see where the Opposition will go with that and what will appear on their literature in 2024.
With regard to promises made in manifestos, can we not think just a little more carefully about what we say? No one could have predicted the pandemic—I am deeply sympathetic to the Government on that point, because of course we could not. But perhaps we should say that we aim to do something rather than that we promise to do something, because circumstances change, and when one Government take over from another they change the whole thing anyway, and then, if we win again, we have to change it once more.
Throwing money into the national health service black hole is not the solution. The sad fact is that parties of all colours over many years have failed to tackle the NHS issue. We need radical reform both of the NHS and, of course, social care. I am not saying that we should change the care free at the point of delivery—not at all; I am saying that there is plenty of room for reform. Most of those I have spoken to who work in it absolutely agree. It is a matter of political courage to actually get on and do it.
We are Conservatives. A pandemic, appalling though it is, creates opportunities. Where is the vision of the Singapore-style, low-tax economy attracting the world’s best to this country to generate the wealth and prosperity that we need? To generate the revenue we need, we lower taxes—that is proven. We do not raise them, because if we do, all we do is damage our economy and have less money to spend on the things we need, like social care and the NHS.
Tom Hunt (Ipswich) (Con)
One thing that concerns me is that I saw some polling earlier this week showing that only about 25% of the population know that social care has to be paid for. That in itself is something we need to address through a certain level of engagement. If a lot of the people who are dismissing and opposing the national insurance rise truly understood and comprehended the devastating consequences of out-of-control social care costs, they might think differently.
Where are we right now? We are in a situation where we have spent £400 billion since the start of the pandemic. We have waiting lists growing and spiralling out of control as a result of the pandemic. We all have constituents who are waiting in pain for hip and knee replacements and more serious operations. We have constituents, including mine, who are not able to see their GP face to face and all the consequences of that. That needs to be addressed urgently. My constituents should be able to see their GP face to face when they need to do that.
We are in this appalling situation, and I take issue with the dismissive way that Opposition Members have spoken about many of the individuals who could benefit from the social care cap, referring to them all as millionaires in Surrey. The people I know who have been clobbered by social care bills are not millionaires in Surrey; they are people who have worked hard their entire life, paid tax on what they earned and at the end of their life, they have something to show for it. It is not just bricks and mortar; it is a home that they love and that they raised their kids in. Not unreasonably, they want to pass that on to their kids. When their mental and physical health is deteriorating, to see everything they have worked hard for whittled away in a matter of years is utterly depressing and morally wrong. I am proud to support a cap that addresses that, and I make no apology for doing so.
In terms of the manifesto point, I stood on a manifesto—we all did—and there was a pandemic straight after we had the election. This is an extraordinary situation, and probably nothing has happened since the second world war that has had such a dramatic effect on cost and spend. We spent £400 billion. People make this inaccurate comparison with George H.W. Bush and “read my lips”. Over the summer, I had a few days off, and I read a very long book about George H.W. Bush. He did not have a pandemic happen a year after he stood for election. It just simply did not happen. It is like writing a manifesto in 1938 and then realising that thousands of Spitfires have to be built because the second world war is starting. The money has to be raised somehow, and to say, “We cannot possibly do that, because we cannot change the manifesto we stood on a year ago”, would be absolutely absurd.
What are we dealing with right now? We are dealing with a situation where we have a cap of £86,000. We need to know more. We need to know more particularly about those with £20,000 to £100,000 and how their care costs will be subsidised. We understand that the councils will help with that. I need to know more about how that will work in practice. I sympathise with my hon. Friend the Member for Bishop Auckland (Dehenna Davison) and others who represent areas with hard-working constituents where house prices are very different from those in London. We need to know more about that.
Ultimately, we have seen the Prime Minister speak on this issue, and we have seen his passion. He is right to be passionate about this. The easy thing for him to do would be to use the pandemic as an excuse to push this issue into the long grass, but he has not done that. He has done the difficult thing and grasped the nettle. I am proud that he is our leader and our Prime Minister. He is doing that. What else was in the manifesto? Sorting out social care. No one should suggest we push that into the long grass. The Labour party does not want to decrease international aid, it wants us to make the universal credit increase permanent and it wants us to spend £16 billion on this and that. Labour never says no to a pay increase. I know what will be in my manifesto: you voted against—
Dr Kieran Mullan (Crewe and Nantwich) (Con)
I begin by joining others in applauding this Government for finally tackling the social injustice of catastrophic care costs. Yet again, a Conservative Government are taking the difficult decisions that others have avoided. My remarks today will focus on fairness and the nature of health and social care demand.
First, on fairness, somehow the political debate in this country—fuelled by those on the Opposition Benches—focuses on fairness as only one thing: the need for the better off to pay more. That is definitely an important element of fairness in society, and we see that with these proposals, with the top 14% of earners paying half of this new levy. It is not the only measure of fairness, however. The other important way to decide whether a society is fair is to think about what someone gets back compared with what they put in. We do not talk enough about the fact that a small number of people pay many, many times over what they get back and that some people pay almost nothing and get everything paid for by others. Hon. Members on both sides of the House have talked about the challenge for those on low incomes and the proportion that will be taken from their income by a tax rise, but it works both ways. Those same people, relative to what they put in, get a lot back when they seek health and social care services.
A person from a middle-income family could pay significant amounts in tax over many decades and buy their home but then see that home and nearly every penny of what they saved taken off them to pay for social care. They could live next door to someone who has paid perhaps no tax or a low rate of tax and gets everything paid for them. They end up in exactly the same boat, with nothing to show for what they saved, despite the huge difference in what they put in through taxes. That is simply not fair. In this case, people on lower incomes will continue to benefit from essentially free social care; they are just being asked to contribute a little bit more, and inevitably a little bit more will be spent on them. That is fairness, too.
I turn to demand for health and social care, and a point that perhaps will not be popular on my side of the House. I am a Conservative and do not want the Government to pay for everything on behalf of everybody, but the facts of health and social care spending are fundamentally different from those of other areas of spending. In real terms, what it costs to run an education system, prison service or public transport should be broadly stable—if anything, it might go down—but every time we treat someone successfully in the NHS, one of two things happens. Either the condition becomes chronic or comes back and we have to treat them again or, if it does not come back, they live longer and become ill with another condition. That is an unalterable reality, and it will happen more and more as we improve our healthcare services.
A heart attack is a good example. We have improved enormously the number of lives we save when someone has a heart attack, but that means more people live with chronic heart conditions that result from their heart attack, or they may live longer and end up with another condition—perhaps cancer or dementia—and we have to pay for that on top. [Interruption.] I join Opposition Members in saying that that is not a bad thing. We have not failed because we have spent more money on people’s health and social care. It is not a negative—we are providing a greater public benefit—but ultimately, over time, even if we tackle all the inefficiencies and challenges in healthcare spending we see in the NHS and get all those things right, we will still need to spend more on health and social care. That is why I welcome the proposal.
We need to start separating the discussion on tax and spend for health and social care from that on other areas of public spending, and the step we are taking to create some hypothecation, which is similar to that seen in other countries through insurance, does that. People can therefore understand that we have not failed because we have spent more and that we all need to spend more to ensure that we get the continued public benefit of living longer, with health and social care supporting us to do that, so that we can spend more time with our friends and families.
I will support the motion and encourage Members on both sides of the House to engage more thoroughly with the challenges of rising costs in health and social care. This is not just about waste, efficiency and all these other things; it is actually in the nature of delivering better health and social care for a population.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
The key issue for me is not so much with raising the funds—there are no perfect solutions for that—but with the spending of them. I am more than happy to look my constituents in the eye and say “I voted to raise taxes” if I can demonstrate that we have something to show for it. Those of us with a local government background will know that the social care sector has been crying out for a sustainable financial settlement for at least two decades.
The fair access criteria that were implemented by a Labour Government in 2003 precipitated a financial crisis in a sector that was already under pressure by removing local authority discretion over services and failing to provide the funding for the new model, and charging policies and council tax precepts have proved unable to bridge that gap. As a chairman of a social services committee in those days, I looked my local residents in the eye while imposing Labour’s charging policy for social care on them, so I welcome the Government’s courage in bringing forward a proposal that looks both realistic and workable.
Ben Everitt
Does my hon. Friend, with his local government background, think that this policy will fit within a wider local government finance reform agenda?
David Simmonds
My hon. Friend is absolutely correct to highlight that wider reform agenda. I know we are anticipating more detailed proposals from the Government in due course, but it is clear, as he will know from his local government experience, that if we in this House are serious about fixing social care—much of which is not about the elderly, but about working with adults and children with disabilities—we must learn the lessons from the sector of several decades of change.
First, we must reflect on the lessons of the better care fund, which taught us that councils have been the efficient delivery partner. Even when the sole focus has been to relieve pressure on the NHS, councils have been much more efficient on the whole in using those funds. We must avoid, as many Members have said, that convenient political mistake of allowing all the money to disappear into an NHS black hole with nothing to show for it. However, having learned the lessons of the better care fund, we have to ensure that those additional national insurance costs do not consume the extra funding. I have heard Ministers’ assurances about this, but the care sector has heard many times of new funding that has been cancelled out by deductions from other budgets, so we need absolute clarity that this will find its way to the frontline.
The second point I would like to highlight is that this does not just affect the elderly. About two thirds of social care costs are for working age adults and children, and the NHS is barely involved in many of those cases. However, the costs can be eye-wateringly high, so we need to make sure that as we direct those funds, as my hon. Friends have highlighted, they are getting to where they are required.
The third lesson, which has been mentioned by a couple of Members, is about how the market responds. We have a thriving market for social care in this country, including charities, the private sector and local authorities. We know many of those organisations will see the £86,000 as a very tempting target: the sooner someone spends their £86,000, the sooner the state steps in. We need to ensure that we have learned the lessons of what has happened with the involvement of some businesses, particularly in the children’s social care sector, and make sure this is not seen as simply an opportunity to rip off the taxpayer.
Finally, may I urge Ministers to review the operation of the fair access criteria and the rules that underpin them? The rule of provide for one and provide for all, which was clarified by a subsequent judicial review for the London Borough of Harrow, forced the retrenchment of local authorities in adult social care towards serving only the most critical needs of people in our constituencies.
Mark Fletcher
My hon. Friend is giving an excellent speech. One thing he has touched on, but perhaps not expanded on, is the efficiencies that local government has found. Are there any particular lessons that he thinks are relevant to the NHS as we move forward?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. We really are pushed for time, and this is not fair on those who are winding up.
David Simmonds
Concluding rapidly, Madam Deputy Speaker, that is a very important point. We need to recognise, as many constituents are surprised to discover, that as a matter of law very strict eligibility criteria restrict what they can access. We need to ensure, as we reform the sector, that we free up local authorities to use these resources to meet the demographic challenges.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is customary when closing a debate to say that we have had a good debate, and indeed we have, but what has been most striking is how inadequate a basis it has been for a change of this magnitude to the tax system of our country. I intend to come back to that point.
We have heard a number of extremely sharp and insightful contributions, including from my hon. Friends the Members for Wallasey (Dame Angela Eagle) and for Nottingham East (Nadia Whittome), who talked very powerfully about how what has been set out does nothing to improve the working conditions facing social care workers, many of whom will now themselves be facing a tax rise. I would just like to say that it is wonderful to see my hon. Friend the Member for Nottingham East back in her place in this House.
We have heard contributions from the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), and the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), who asked very important questions of Ministers. We did not get answers to those questions, and I hope the Chief Secretary will address the really important points that were raised. I will touch on those a little later.
We also heard from my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe), for Eltham (Clive Efford), for Bedford (Mohammad Yasin), for Brighton, Kemptown (Lloyd Russell-Moyle), for Bristol South (Karin Smyth), for Lewisham East (Janet Daby) and for Hornsey and Wood Green (Catherine West). They covered a range of different points, but they were all clear that this does not represent a proper plan for the NHS or for social care. It is, instead, a broken promise. Two and a half million working households will be hit by the Tory double whammy of cuts to universal credit and an increase in national insurance.
Understandably, I have focused on contributions from Labour Members, and I am sad that, except for a few Conservative Members—notably the right hon. Member for Rossendale and Darwen (Jake Berry)—many of those who bravely stated their reservations over the weekend to the Sunday newspapers have been strangely silent this evening. I hoped we might have heard from whichever Tory MP said that putting up national insurance would be “morally and economically wrong”, and that:
“It kicks in at a low level…If you get all your income from investments and property you don’t pay a penny, but if you work your guts out for minimum wage you get clobbered.”
I could not agree more.
Kevin Hollinrake
That point about rental income has been made on a number of occasions. If someone holds their properties in a limited company and they take their profits through dividends, those dividends are taxed to include the social care levy. Will the hon. Lady put the record straight and accept that that is the case?
Bridget Phillipson
It is ludicrous that a landlord will be paying not a single penny more, but their tenants—many of them perhaps working in the NHS or social care—are about to be clobbered by a tax rise. Some 95% of what is to be raised from this measure will come from working people and businesses. What the hon. Gentleman says is simply not right. I understand that one former Cabinet Minister used perhaps more colourful language this afternoon, and I will not test your patience, Madam Deputy Speaker, by repeating exactly what they said. Safe to say, however, that he or she is not a fan of this Tory tax hike.
It is usual for major fiscal events in the House to be timetabled in advance. Indeed, this week the Chancellor put us all on notice of a comprehensive spending review and an autumn Budget at the end of next month. It is also usual for major fiscal events to be accompanied by independent and thorough scrutiny by the Office for Budget Responsibility. It is usual for those forecasts to be published alongside the Government’s plans, so that all Members of the House can understand, in detail, what they are voting for and how it will affect the public finances, the livelihoods of our constituents and the success of the economy.
The OBR’s typically thorough work back in March produced a report with more than 130 charts and tables, but the flimsy document produced by the Government yesterday had just three. I recall when some Government Members were sticklers for the rights of this House, and sticklers for procedure and proper time to debate and consider changes that will have a huge impact on our society and the shape of our economy. It seems that those days are long gone. The change we are being asked to vote through tonight is not being introduced in this extraordinary form because that is right for the country. The House knows that. It is because it is the right approach for the Prime Minister: announcement on Tuesday, vote on Wednesday, and perhaps a reshuffle later this week—Back-Bench rebellion averted. That is no way to run a country.
Let us be clear about what is happening. This House is being asked to approve, with almost no notice, an extra £11.4 billion of taxation on workers and businesses, and an extra £600 million of dividend taxes—95% of the new revenue is to come from taxing jobs and earnings. When this Government need income, they do not turn first to those with assets, stocks and shares and property, or to those with the broadest shoulders who can afford a little more. No, they turn to working people: to those who work hard to earn their income, and their employers. They break a solemn promise that every Government Member made to the people of this country. That is a choice, and it is not a choice that the Labour party would make.
Two other major questions emerge from the contributions today. Where is the Government’s actual plan? We need a real plan for social care, not a few numbered paragraphs and a handful of case studies. Labour’s priority would be to give older and disabled people the chance to live the life they choose, shifting the focus of support towards prevention and early help. Let us not forget in this place that around half of the social care budget supports working-age adults with disabilities. They are far too often overlooked in discussions about social care, and the Government’s announcement does nothing for them.
Alongside a strong and skilled social care workforce, Labour would deliver a new deal for care workers to create a well-motivated and properly rewarded workforce, with clear support for unpaid carers—the very people who got us through the last 18 months, whom we clapped and claimed to care about. There is absolutely no sign of that plan here today or in the documents published yesterday. The document that the Government published yesterday is strikingly poor on the practicalities of delivery, not just for social care but for our NHS too.
Our national health service was chronically overstretched long before the pandemic hit. We entered the pandemic with over 100,000 vacancies. By March this year, there were 5 million people on waiting lists for NHS treatment—waiting longer for cancer care, longer for vital surgery, longer for mental health support. What we have been given today is not a plan; it is the promise—another promise—of a plan to follow. The Minister could not even tell us what the impact would be on waiting times. He could not tell us what it meant for local authorities on the frontline. He could not give us details of how public sector bodies are expected to meet the cost. It is not a plan; it is just a tax rise.
Much of today’s debate has focused on whether it is the right sort of tax rise. Sometimes it is easy to focus on the fiscal aspects and forget the economic aspects. Our recovery is still fragile. Businesses are under enormous pressure. We all know it; many are yet to fully reopen, and many are not yet operating at full capacity. Yet the Chancellor has been putting up council tax, he is slashing universal credit, he is freezing income tax thresholds—he is sucking demand out of our economy at the worst possible time.
The shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), set out powerfully what these measures mean for working people, but this is a series of hammer blows for firms, too. Small businesses, struggling to get back on track after a terrible 18 months, have been clear, in the words of the Federation of Small Businesses, that this is “precisely the wrong moment” to be putting up the cost of taking on and retaining staff. The FSB estimates that these changes could mean an extra 50,000 people out of work.
This is the wrong process to agree the wrong tax at the wrong time. It will not deliver what is promised for our health and social care sectors. The Health Secretary cannot even tell us whether it will clear the NHS backlog in this Parliament. It will not give social care the resources it needs in the next three years. There is not a plan for reform of social care. This tax rise will not create more and better-paid jobs in the wider economy, it is not fair across the regions, it will not end people having to sell their homes to fund their care, and it will not help our economic recovery. The Prime Minister cannot even guarantee that it is the last unfair tax rise of this Parliament. Tonight, we are not voting for a plan to fix social care. There isn’t one. We are voting on the third Tory tax rise on working people, and we will oppose it.
The Chief Secretary to the Treasury (Steve Barclay)
Let me first thank hon. and right hon. Members for their thoughtful and constructive contributions to today’s debate.
Yesterday, the Prime Minister set out a series of necessary steps to tackle the covid backlogs, reform adult social care and bring the health and social care system closer together on a long-term, sustainable footing. As the House well knows, the pandemic has put unprecedented pressure on the NHS. The number of patients waiting for elective surgery and routine treatment in England is now at a record high of 5.5 million. If left unchecked, that could reach 13 million, an issue of concern across the House. At the same time, this country is facing a long-standing challenge to the social care system. Typically, around one in seven must pay over £100,000 for care, with bills falling indiscriminately on some of the sickest and most vulnerable in society.
The Government’s response, the plan we have debated today, means an investment of £36 billion in the health and social care system over the next three years. Patients across the country will benefit from the biggest catch-up programme in the history of the NHS. The social care system will finally be reformed, ending unpredictable and catastrophic care costs faced by thousands and making the system fairer for all. I gently say to the shadow Chief Secretary to the Treasury, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), who said a moment ago that this is not the right time, that many times in this House people have highlighted the urgency of acting both on the covid backlog and on social care.
Jake Berry
My right hon. Friend has helpfully said that one in seven—I believe that is what he said—people currently in the care system pay over £100,000. Could he just say in absolute numbers how many that is, in any given year or period he chooses? If he does not have the information with him tonight or cannot get it from the Box, can he write to me with that information and put a copy in the House of Commons Library before we have our next debate?
Steve Barclay
I am glad my right hon. Friend highlights that point. Let me address it in two ways, because it goes to the crux of his remarks in the debate. We have set out, as was referred to even by critics of the Government, the illustrative analysis of the impact of this from a distributional point of view, with lower-income households being the largest net beneficiaries. We have also said that we will say more on that, because it will evolve by 2023, when those of state age who are working come within scope. Obviously, the distributional analysis will change.
Let me take head on my right hon. Friend’s central concern, which was that his constituents in Rossendale and Darwen, because of lower housing costs, will be disproportionately impacted. First, if one looks at London, the Evening Standard, for example, is concerned that 14% will pay the lion’s share of the cost because that is where the highest concentration of higher tax payers are. For his constituents, one key aspect of the reform is that, through the cap, it ends the unpredictability of costs. If I look at the north-east of England, the Resolution Foundation found that only 29% of individuals aged over 70 have sufficient eligible assets that they will not receive any state support. The point is that the uplifting in the means test, which my right hon. Friend the Chancellor set out, again benefits those parts of the country he was championing.
Steve Barclay
I have just given way and addressed my right hon. Friend’s points head on. Let me, in turn, address head on the points raised by the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves).
In the shadow Chancellor’s speech, she said that she opposed the levy despite, as a number of Members pointed out, the previous Labour Government taking a similar approach in 2002-03, because she supports taxing wealth. The problem with that is that only a broad-based tax base, such as income tax, VAT or national insurance contributions, can raise the sums needed for such a significant investment. Again, that was a point made by critics of the Government, including my good friend, my hon. Friend the Member for Wycombe (Mr Baker). It could not be raised by taxes on wealth. Currently £6 billion is raised from inheritance tax, £8.7 billion from capital gains tax and £12.3 billion from property transaction tax. Indeed, that case was demolished by the Chair of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride), as well as by my hon. Friends the Members for Dudley South (Mike Wood) and for Thirsk and Malton (Kevin Hollinrake), who highlighted that to raise the revenue required requires a broad-based approach.
Peter Grant
On the subject of cases being demolished, one of the cases that the right hon. Gentleman’s colleagues have made great deal of play of today is that of the fictional Yusuf in the Government’s own document. According to the Government, Yusuf’s care home costs are £700 a week. They claim that under the current system they would have had to spend £293,000 before they reached the current cap. The Minister will be aware—I hope he can count—that in order to spend £293,000 at £700 a week—
Madam Deputy Speaker (Dame Rosie Winterton)
I would like the hon. Gentleman to put his question.
Peter Grant
What percentage of people going into a care home have any chance of still being alive in nine years’ time?
Steve Barclay
One of the features of the Dilnot proposals—Dilnot has been very frank about this—is that his costs ramp up over time. That is why the initial funding is £5.4 billion, but obviously, the social care element will increase. I will come to the case put forward by SNP Members, who seem bizarrely not to want the Union dividend that is offered and to not be seeking that additional funding. Let me finish on the Opposition amendment—
Steve Barclay
I will come to the points on devolution and happily give way at that stage, but let me just deal with the Opposition amendment, which requests a distributional impact assessment. As we have covered, that has been set out today. The Government have already published a document on the impact of our health and social care plan on households, looking at the impact of the new spending and the levy, with a full distributional analysis being published at the Budget and spending review.
As for the impact on businesses, businesses will play their part in funding this plan. However, existing national insurance contribution reliefs and allowances will also apply to the levy. This means that 40% of all businesses will not be affected due to the employment allowance, and it allows eligible employees to reduce their national insurance liability by up to £4,000. Again, that point was brought out by my right hon. Friend the Member for South West Wiltshire (Dr Murrison), who highlighted the impact on business and the fact that businesses, with 1% of the highest turnover, will cover 70% of the cost.
Mr Betts
I think the right hon. Gentleman probably knows which point I am going to raise. I am very interested in the impact on local authorities. Out of the £36 billion that will be raised over three years, how much extra money will go to local authorities after the costs of the “cap and floor” system have been taken into account? How much extra money over three years will go to local authorities out of the £36 billion?
Steve Barclay
I listened very closely to the hon. Gentleman’s speech, because he is a very informed and knowledgeable commentator on these issues. He rightly pointed to paragraph 36, where we are being very clear about the role in terms of demographic and unit pressure. As he well knows, part of the discussion at a spending review is to look at local government pressures in the round. That is in the context that local authorities are getting an additional £2.2 billion of funding. I remind the House, in terms of the adult social care flexibility that was allowed for councils this year, that out of the 152 local authorities, less than two thirds actually used that flexibility. That is part of looking at these issues in context.
Let me come to the central point put forward by the Scottish National party, which was very well demolished by my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont). All parts of the United Kingdom need a long-term solution to fund health and social care. The Scottish Government’s independent review of adult social care recently noted—[Interruption.] I am quoting from their own review. I thought they would want to hear that. It stated that
“Scotland’s ageing demography means that more money will need to be spent on adult social care over the long term”—
and its recommendations to the Scottish Government are that this would
“require a long-term and substantial uplift in adult social care funding.”
In fact, in 2002, John Swinney said that a 1% increase was
“progressive taxation…required to invest in the health service in Scotland”.—[Scottish Parliament Official Report, 18 April 2002; c. 8005.]
Alison Thewliss
Does the right hon. Gentleman accept that that was 18 years ago and that things have changed? Since that time, national insurance has not been reformed in any way to protect the poorest, as income tax has been.
Steve Barclay
Obviously, what SNP Members regard as progressive has changed. The point is that if they disagree with this, they can adjust their Barnett consequentials, spend that and reprioritise their spending accordingly. Indeed, likewise, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—I hold him in great affection and he speaks very powerfully in the Chamber—said that these are “English priorities”. Clearing the covid backlog and addressing the challenges of social care are not English priorities. They are United Kingdom priorities, they are this Government’s priorities, and they are the people’s priorities.
This levy will enable the biggest catch-up initiative in the history of the NHS, a comprehensive long-term solution to the social care challenge and a significant long-term investment that will directly improve people’s lives.
Those are things that I think my hon. Friend the Member for Wellingborough (Mr Bone) values, and I hope he will support them.
The Prime Minister said yesterday:
“You can’t fix the covid backlogs without giving the NHS the money it needs; you can’t fix the NHS without fixing social care; you can’t fix social care without removing the fear of losing everything to pay for social care”.—[Official Report, 7 September 2021; Vol. 700, c. 155.]
This plan addresses those problems. I commend it to the House.
Health and Social Care Levy Bill
Tuesday 14th September 2021
(2 years, 7 months ago)
Commons ChamberRead Full debate Health and Social Care Levy Act 2021 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 14 September 2021 - (14 Sep 2021)
17:04 - The House divided: - Ayes: 249 / Noes: 327 - Question accordingly negatived.
17:17 - The House divided: - Ayes: 317 / Noes: 256 - Question accordingly agreed to.
Madam Deputy Speaker (Dame Rosie Winterton)
The reasoned amendment in the name of the Leader of the Opposition has been selected.
The Chief Secretary to the Treasury (Steve Barclay)
I beg to move, That the Bill be now read a Second time.
Last week the Prime Minister announced a plan to tackle the NHS backlog, put the adult social care system on a sustainable long-term footing, and end the situation in which those who need help in their old age risk losing everything to pay for it. The Government’s plan will make an extraordinary difference to the lives of millions of people across the country, and it will be funded with a record £36 billion investment in the NHS and social care. In order to pay for a significant increase in spending in a responsible and fair way, the Bill introduces a new 1.25% health and social care levy based on national insurance contributions.
Mr John Baron (Basildon and Billericay) (Con)
We need to give credit where it is due, and the Government are absolutely right to try to grasp this nettle, but many of us are concerned about the haste with which it is being done. Does my right hon. Friend think it is a good idea to raise taxes on jobs ineffectively, and risk choking off an economic recovery before we have even got to know the details of the social care reforms?
Steve Barclay
My hon. Friend, and good friend, has raised two connected points. The first was dealt with earlier in points of order: it is the will of the House that decides the timings of debates, and the Chair addressed that point. As for the second, we discussed it at length during last week’s ways and means debate. We discussed the wider purpose in dealing with the consequences of covid and the backlog in care that needs to be tackled, but we also discussed grasping the nettle in relation to the long-term challenges surrounding social care—challenges that the House has debated repeatedly over many years.
The levy will apply UK-wide to taxpayers liable for class 1 employee and employer, class 1A, class 1B and class 4 self-employed national insurance contributions. However, it will not apply where taxpayers pay class 2 or class 3 NICs. It will be introduced in April 2022, and from April 2023 it will also apply to those working over the state pension age. As my right hon. and hon. Friends will understand, it takes time for Her Majesty’s Revenue and Customs to prepare its systems for such a major shift. That is why, as set out in clause 5, in 2022-23 the levy will be delivered through a temporary increase in NICs rates of 1.25% for one year only.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Secretary of State agree that in principle hypothecation is to be avoided, and that what we should be doing is defining what spending is financially desirable and economically effective, and then asking a separate question: what is a socially equitable and effective tax regime? Those are two different issues, but we are smashing them together, and we do not even know what we are spending the money on. This is farcical, and it is being done in a mad rush.
Steve Barclay
There is a precedent in the form of what the hon. Gentleman’s party did in 2002-03. I do not think it is fair for him to say it is farcical to do something which was done by the Government whom he supported. He has opened up a much wider question about hypothecation, on which many a former Treasury official has commented, and I think that that is a separate debate; but there is a precedent for the use of national insurance in the way that my right hon. Friend the Chancellor has set out.
Let me stress that all revenues generated by this increase will be ring-fenced and paid not just to the NHS in England, but to NHS Scotland, NHS Wales, and the equivalent in Northern Ireland.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
I have a great deal of sympathy with what my right hon. Friend is saying, and I think the Government deserve considerable credit for grasping this nettle at last, but may I ask for an assurance? When the charge has been introduced, will he ensure that every six months a Treasury Minister comes to the House and tells us what results are being achieved—what money has been raised through the levy and what results have been delivered; in other words, what additional treatment has been achieved—so that we can see and show our constituents why it was right to raise this levy and what they are getting for the money?
Steve Barclay
As a former Chief Whip, my right hon. Friend knows better than most that it is for the House to decide which Ministers come to the House and provide updates. Obviously, in respect of regular fiscal events and others—[Interruption.] It is. The right hon. Member for Leicester South (Jonathan Ashworth) chunters from a sedentary position, but through urgent questions and other such devices it is always for the House to decide which Ministers come here and, of course, there are regular events such as Treasury and other departmental questions. [Interruption.] He chunters but, as I have said, there are many procedures through which updates—[Interruption.] The procedures to which I referred.
Under clause 2, this revenue will be ring-fenced for health and for social care—
Steve Barclay
I will make a little progress. I have taken a number of interventions, including one from my right hon. Friend.
Existing NICs reliefs and allowances will also apply to the levy. That will mean that 40% of all businesses will not be affected owing to the employment allowance. When it comes to individuals, those earning more will pay more. Indeed, the top 14 per cent. of taxpayers will pay about half the revenues. Conversely, at least 6.2 million people earning less than the NICs primary threshold will not pay the levy at all.
Steve Barclay
I am sure that the hon. Lady rises to welcome the progressive nature of that measure.
Catherine West
Does the Secretary of State accept that, if 40% of businesses or employers are not affected, the other 60% therefore will be? What assessment has the Treasury made of the number of jobs that employers will not create because of, apart from anything else, the introduction of this measure at a time when the recovery from covid is fragile?
Steve Barclay
It is not just that the first 40% will not pay anything, as my right hon. Friend the Chancellor mentioned. The next 40% will pay less than 1% of their wage bill, and indeed 70% of the employer contribution comes from just 1% of business. To some extent, the hon. Lady’s point was also picked up by the Monetary Policy Committee in its evidence to the Treasury Committee, when it said, “You should not ignore one half of the policy announcement.” Of course, one needs to look at the spending implications of the measures, not just—
Steve Brine (Winchester) (Con)
In my experience of being a Minister at the Department of Health—with my right hon. Friend, indeed—Treasury Ministers do not like to spend billions of pounds without knowing exactly what they are getting for their money, and rightly so: it is our constituents’ money. We know that there is a very carefully worked out plan that the Secretary of State for Health and Social Care has agreed with the NHS for the catch-up programme. Will the Minister help us to see that published, so that we as representatives can hold the NHS to account for the money that this levy is raising and our constituents are therefore spending?
Steve Barclay
I could probably go slightly further—Chief Secretaries do not like to spend, not necessarily just on any particular area of Government policy—but my hon. Friend is absolutely right about the importance of delivery and how the money is spent, particularly the £8 billion allocated to electives catch-up. Just yesterday I was at a meeting in No. 10 with the leadership of the NHS, discussing that issue with the chief executive of NHS England and other senior health leaders. I know that it is an issue of concern to a number of Members, but ultimately it is an issue of concern throughout the House, because through our constituency surgeries we see the consequence of the backlog in terms of electives. That is, I think, an area of common ground.
Christine Jardine (Edinburgh West) (LD)
Will the Minister give way?
Christine Jardine
The Minister has made the point that we see the impact in our constituencies. Yes, we do, but we are also seeing the impact in our constituencies of the pandemic on business. What would the Minister say to the Federation of Small Businesses, which, notwithstanding what he has just said, believes that
“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished”?
The FSB sees this as a jobs tax, and we will see that impact in our constituencies as well.
Steve Barclay
First, in order to meet the quantum of spend, one needs a broad-based tax. That is a point that my hon. Friend the Member for Wycombe (Mr Baker), who is not in his place, raised in the debate last week. Secondly, I would point to the more than £400 billion—[Interruption.] I do not know why SNP Members are laughing at £400 billion of support. I do not think that this is a point of difference. I think we can all agree across the House that there has been huge fiscal support across the UK through the broad shoulders of the United Kingdom to support business, at a cost of £400 billion to businesses, public services and individuals, and that has a consequence. Most of the business leaders I speak to recognise that, and recognise that the backlog in the NHS needs to be dealt with. I would add the further point that those businesses benefit from the NHS clearing its backlog because it is members of staff in those businesses that are affected.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
What analysis has been undertaken of the long-term sustainability of this policy, which targets working-age people at a time of an ageing population? There will be 10 million extra pensioners within 20 years, which means that the pool of people who are paying in is shrinking in relative terms while demand is increasing.
Steve Barclay
Again, this is why, as is standard practice, my right hon. Friend the Financial Secretary to the Treasury has published the tax information and impact note on the tax change. Of course, that will be dynamic because it will interact with the fiscal forecast that the Office for Budget Responsibility will set out alongside the Budget on 27 October. So that is dealt with in the normal way for measures such as this—
Steve Barclay
I want to make some progress, and I have already given way once to the hon. Member for Swansea West (Geraint Davies).
Let me remind the House why this levy is necessary. As the Prime Minister and the Chancellor have said, the levy will enable the Government to provide additional funding to the NHS so that it can recover from the pandemic. Senior NHS leaders have made it clear that, without additional financial support, we will not properly be able to address the significant backlog in the national health service. However, it is going to take time to get everyone the care they need. In addition, our social care plan will create a dramatically expanded safety net for people in their later life. This means that, instead of individuals having to bear the financial risk of catastrophic care costs themselves, we as a country are deciding to share more of that risk collectively.
Munira Wilson (Twickenham) (LD)
Could the right hon. Gentleman explain to people up and down the country who are either in receipt of care now or will need to start care between now and October 2023 and are facing catastrophic care costs what they are meant to do? Does he accept that there will be a massive cliff edge? Lots of people will try to avoid coming forward for care in the months before October 2023, and there will then be a massive surge. How do the Government plan to deal with that?
Steve Barclay
In a number of ways. First, this fiscal support is not in isolation. There is £33.9 billion of additional support going into the core NHS budget over the five years of the long-term plan. That has had a significant impact. On top of that, significant covid support has gone into the NHS. One of the points that came out of the debate on the ways and means last Wednesday was the interrelated nature of the impact on the NHS and on social care. That is why it is right that we are gripping this issue, but it is alongside the wider financial support that the Treasury has offered.
Several hon. Members rose—
Steve Barclay
Given that we need to progress on to Committee, I shall just point out that this is a permanent new role for the Government and a structural increase in the size of the British state. We therefore need a permanent new way to pay for it. The only alternative would be to borrow indefinitely, but that would clearly be the wrong course of action when our national debt is already at the highest it has been in peacetime. Borrowing even more today would just mean higher taxes in the future.
Richard Drax (South Dorset) (Con)
With money tight, did the Treasury support the appointment of, I think, 43 new executives on £270,000 a year to check where all this money is going?
Steve Barclay
I think one needs to see whether these are roles that are driving efficiency and creating savings elsewhere, or whether they are viewed in isolation. That is why one needs to understand the workforce as a whole, where there are overlaps within the NHS but, above all, how we deliver reform, which is something I know that the Secretary of State for Health and Social Care is passionately committed to doing. That relates to the point that was rightly raised by my hon. Friend the Member for Winchester (Steve Brine) on the delivery of reform in order to maximise the value for money of the spend that the levy will unlock.
Finally, we need to fund our vision for the future of health and social care in this country over the longer term. As the Prime Minister said, with proper funding, we can not only tackle the NHS backlog and expand the social care safety net but afford the nurses’ pay rise, invest in the best equipment and prepare for the next pandemic. We can provide the largest investment ever to upskill social care workers and build the modern, more efficient health service the British public deserve.
Clive Efford (Eltham) (Lab)
It seems to me that we are spending this money twice, so can the Minister tell the House specifically how much will go into the NHS from this increase and how much will go into social care? What I am hearing from him is that we are going to deal with the backlog, which will take us back to pre-pandemic levels. That will leave us with a 2 million waiting list, so can he tell us specifically how much is going into the NHS and how much is going into social care?
Steve Barclay
Of the £36 billion, £5.4 billion is going to adult social care, with the rest going into the NHS or through Barnett. That is over three years.
Dame Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend think that the Government could consider different bands for frontline staff in the NHS and management staff in the NHS, to get away from the concern that so many of my constituents have that any pay rises in the NHS will be taken up by managers over frontline operators?
Steve Barclay
In the public sector pay agreement that we reached, we accepted the recommendations of the independent pay review body. That is why we decided on 3% and why the NHS was treated differently from other areas of the public sector such as the police and teachers. This recognised the importance of those frontline workers and it was why those under the threshold of £24,000 were carved out. This recognises the point that my right hon. Friend has raised.
In conclusion, this levy will enable the Government to tackle the backlog in the NHS. It will provide a new permanent way to pay for the Government’s reforms to social care and it will allow the Government to fund our vision for the future of health and social care in this country over the long term. I commend the Bill to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
Before I call the shadow Minister, I should say that there will be a six-minute limit on Back-Bench speeches to start with. If anybody wishes to speak, they should catch my eye, and to do that it is important to keep standing. If colleagues have not put in to speak but wish to do so, it would be helpful to let me know. They will have to have been here from the beginning of the debate, and they will be expected to be here for the wind-ups, which will start at approximately 4.45. Bearing all that in mind, I now call the shadow Minister, James Murray.
James Murray (Ealing North) (Lab/Co-op)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House declines to give a Second Reading to the Health and Social Care Levy Bill because, notwithstanding the need to increase funding for health and social care, the Bill raises money for an approach announced by the Government that fails to set out a plan to fix the crisis in social care, improve pay and conditions for social care workers, or clear the NHS waiting list backlog by the end of this Parliament, while breaking the Prime Minister’s promise that no one will have to sell their home to pay for care; because it lacks a guarantee that Parliament will vote on a social care plan before spending the money it raises; and because it breaks the Government’s promise not to increase National Insurance, raising taxes on employment that will disproportionately hit working families, young people, those on low and middle incomes and businesses trying to create more jobs in the wider economy, whilst leaving income from other sources untouched.”
Today, the Government are pushing through a new tax on working people and their jobs. All scrutiny by the House of Commons of the Government’s manifesto-breaking plans has been squeezed into a single day. As Conservative Members have said, we have just a few hours of scrutiny on this entire Bill, just one week after the Government first revealed their intentions. Why the sudden rush? The truth is that the Prime Minister and the Chancellor are desperate to avoid giving their own side enough time to push back. They want to make sure that, by the time it sinks in with their own MPs what a mistake this tax rise is, it will be too late for their Back Benchers to mount any opposition.
Perhaps it is also sinking in with Conservative Back Benchers that the Prime Minister and the Chancellor are pushing through these plans for a tax rise without having a plan for social care. If we are to believe the Prime Minister, and there is absolutely no reason why we should, he had a plan for social care two years ago. We are still waiting to see it. All we have today is a tax rise for working people and for businesses that are creating jobs.
Catherine West
Does my hon. Friend agree that these problems began in 2010? The NHS’s satisfaction rate in 2009 was 80%, and now it is way lower. In fact, they might have got rid of all the satisfaction surveys so that we do not know what people really think.
James Murray
My hon. Friend makes an important point about the Conservative Government’s impact on the national health service over the last decade, running it into the ground and leaving it in such a state when the covid pandemic hit.
As my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, said last week:
“There are two tests for the package announced yesterday. First, does it fix social care? Secondly, is it funded fairly?”—[Official Report, 8 September 2021; Vol. 700, c. 327.]
Looking at the Bill, it is clearer than ever that the answer to both those questions remains a resounding no.
Gary Sambrook (Birmingham, Northfield) (Con)
On the basis of those two tests, which tax would the hon. Gentleman increase to pay for social care?
James Murray
We are clear that taxes will have to rise to pay for social care, but we are also clear that this increase in national insurance contributions is not the way to raise the money fairly. When it comes to funding the NHS, social care and all our public services, we are clear that those with the broadest shoulders should be asked to contribute more.
This five-page Bill contains nothing at all about a plan to fix social care; it does not even mention a plan. Put simply, there is no guarantee that a plan for social care will be in place even when the levy comes into force.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I was going to pose this question to the Minister, but he would not take my intervention. Last week I was told by the insurance arm of a major bank that the Government are actively encouraging it to produce insurance products specifically for health and social care. Is my hon. Friend as concerned as I am not only about who is encouraging such developments but about what it means for the acceleration of privatisation not only in social care but in the health service?
James Murray
My hon. Friend makes us think about what we have read recently about what the hon. Member for Yeovil (Mr Fysh) has been saying about a rebate from this tax for those who take out private insurance. Make no mistake, that is a slippery slope towards a two-tier healthcare system.
Dr Andrew Murrison (South West Wiltshire) (Con)
The hon. Gentleman has been speaking for some time, but he has not said what taxes he would raise. Why was it okay for Labour to raise national insurance to pay for healthcare in 2003, when there was not a pandemic and we did not have the scale of social care need that we have today? If it was right then, why is it not right now?
James Murray
The right hon. Gentleman speaks about a tax rise 20 years ago, following a decade of wage growth, and it came with a plan for how the money would be invested. In stark contrast, this Government’s tax rise hits working people after a decade of stagnating wages, after we have been hit by a global pandemic and after years during which where people get their money from has changed. Above all, the Conservatives’ tax rise comes with no promise that it will clear the NHS waiting list backlog in this Parliament and no promise that any money will be seen by the social care sector.
Despite all that has been said, there is no guarantee in the Bill that social care will benefit from the Government’s tax rise. In fact, the Bill explicitly rules out any money going towards social care in the first year, and there is nothing to guarantee that a single penny of this new levy will ever go into the social care sector.
The Association of Directors of Adult Social Services realises this, and it said on Monday that
“it is not clear that there is any new money for adult social care to help improve care and support from April 1st next year… It will not add a single minute of extra care and support, or improve the quality of life for older people, disabled people and unpaid carers.”
As the association rightly points out, this could leave councils with no option other than to raise council tax. Indeed, the Government have admitted that they expect councils to cover increasing need and rising costs. Despite £8 billion having been cut from local council care budgets by a decade of Conservative Government, there is no money for councils that need it now.
In truth, this levy does not set out to fix the crisis in social care. It seeks only to be a political fix for the Prime Minister. I suspect Conservative Members know that, and I suspect the Prime Minister is noticing that his attempt at a political fix is quickly becoming a political headache.
Although some Conservative Members may be worried about how to explain to their constituents that they have broken their manifesto promise and still failed to fix social care, others have a different agenda. The hon. Member for Yeovil, as I mentioned earlier, has been reported as saying that he wants people with private social care insurance to get a rebate from the new tax. As my right hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary has said, this looks very much like a “slippery slope” towards a two-tier healthcare system and privatisation.
Mr Marcus Fysh (Yeovil) (Con)
My comments have been misreported. The origins of the Labour movement and the Liberal movement are in trade unions, co-operatives and friendly societies that came together to look after each other. What I am suggesting is that we get money into such systems to help people look after and pay for themselves in older age. There are myriad ways in which the system can be made much more progressive, and I am on their side in trying to make this more progressive than it is at the moment.
James Murray
As the hon. Gentleman is on our side, I look forward to him joining us in the Lobby this evening.
Will the Chief Secretary to the Treasury or the Financial Secretary to the Treasury put it unequivocally on the record that no rebate from the health and social care levy for those with private insurance will ever be entertained? A two-tier healthcare system is the very last thing we need. What the social care sector desperately needs is guaranteed funding and a plan to transform the sector. This Bill delivers neither.
Craig Mackinlay (South Thanet) (Con)
The hon. Gentleman is talking about a two-tier system. Is he saying that the millions of people in the public sector and the not-for-profit sector who have auto-enrolled pensions are rather daft to have a sensible pot under their own name, with the flexibility that it brings? Are you calling millions of taxpayers daft?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. The hon. Gentleman is experienced enough to know that he should not speak directly to another Member.
James Murray
The hon. Member for South Thanet (Craig Mackinlay) knows full well that his question is not relevant to this discussion. We are talking about the NHS and the social care system, and we need reassurance from Ministers that they will not entertain a two-tier healthcare system on the back of comments made by Conservative Members.
We need to transform social care into the service that people want, need and deserve, which is why our plan for social care would include: enshrining the principle of home first; making a fundamental shift in the focus of support towards prevention and early intervention; getting care workers the pay, terms and conditions they deserve—at the very least, a real living wage of £10 an hour—while transforming training to improve the quality of care; and, crucially, making sure that England’s 11 million unpaid family carers get proper information, advice, breaks and the workplace flexibility they need to balance work and caring responsibilities.
Of course, today we are not discussing how to transform social care. We are debating a Bill that introduces a tax rise that may never go towards helping social care, and one that is raised on the backs of working people and businesses that are creating jobs.
Dame Andrea Leadsom (South Northamptonshire) (Con)
What would the hon. Gentleman do about the backlog of 5 million people, as a result of covid, waiting for procedures and operations in the NHS? Does he not want that backlog to be dealt with?
James Murray
The right hon. Lady raises points about the backlog in the NHS. We have had 10 years of a Conservative Government, of whom she has been a key part. She is responsible for the backlog, along with all her colleagues on the Conservative Benches. They should take some responsibility for the mess they have caused.
We know that social care desperately needs more funding, but are the Government raising taxes for those with large portfolios of stocks and shares? No. Are they increasing taxes on landlords who rent out multiple properties? No. Are they going further to tackle large online multinationals that shift their profits overseas? No. The Government have gone for a tax rise on working people and businesses creating jobs.
Last week, the Government tried to soften the blow by claiming that their tax plans are fair because this tax rise on working people is accompanied by a tax rise on dividends. So where is the tax rise on dividends? The Government’s proposal documents last week admitted that that might be legislated for in the next Finance Bill, and indeed there is nothing on raising taxes on dividends in the Bill in front of us today. They are pulling out the stops to increase taxes on working people as quickly as possible, ramming this legislation through in one day, but when it comes to dividends and a tax that the Prime Minister acknowledged last week would affect
“better-off business owners and investors”—[Official Report, 7 September 2021; Vol. 700, c. 154.]
suddenly there is no rush. Let us not fall for the claim that the dividend tax rise will make the Government’s proposals fair. The dividend tax—if it ever happens; we have only the Prime Minister’s word for that, after all— would raise only 5% of the total revenue. Some 95% of the tax bill would land on employment.
If we want to understand the impact of this tax rise on people and their jobs, let us start by looking at the Government’s own view. Their own tax information and impact note on this tax rise was signed off personally by the Financial Secretary to the Treasury and published on 9 September—curiously, this was a couple of days after the Government’s proposals were announced. It says in no uncertain terms:
"There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
Five years ago, the Prime Minister’s predecessor began her time in office claiming to be an ally for people who are “just about managing”. Now we have the Government’s own report admitting that they are the ones who will suffer.
The report is blunt too about the impact of this tax rise on businesses. It makes it clear:
“Behavioural effects are likely to be large, and these will include...business decisions around wage bills and recruitment.”
It is there in the Government's own analysis: this will be a tax blow to jobs and wages. Others agree, with the chair of the Federation of Small Businesses saying last week:
“Breaking a manifesto promise by increasing National Insurance Contributions just at the moment when firms are struggling to get back on their feet would be devastating for small businesses and the local communities they serve...If this hike happens, fewer jobs will be created by the UK’s small business community over the crucial months ahead.”
The British Chambers of Commerce agrees, warning:
“A rise in National Insurance Contributions would represent a hammer blow to jobs growth at this crucial point in the UK's economic recovery.”
The CBI president said:
“National Insurance increase will directly hurt a business’s ability to hire staff, at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages.”
Do the Financial Secretary and the Chief Secretary think the Federation of Small Businesses, the British Chambers of Commerce and the CBI are all wrong? Perhaps the Financial Secretary will get up to tell me the answer to that. [Interruption.] Sorry, I thought the Financial Secretary was keen to get to his feet to respond to my question. He does not want to, no. He does not want to answer whether he thinks the FSB, the BCC and the CBI are all wrong. Do other Members from his party think they are wrong?
James Murray
Perhaps the hon. Gentleman would like to intervene to answer that question.
Andrew Griffith
I am just wondering whether the hon. Gentleman’s tax primer in low corporate taxes has enlightened him with any ideas of his own as to how his party would propose to fund this. The proposal on the table is a broad-based tax. How would he fund this?
James Murray
We have been absolutely clear that when it comes to funding the NHS and social care, those with the broadest shoulders should pay the most. The idea that this is a “broad-based” tax rise is completely wrong. The hon. Gentleman knows that, we know that and the British public know that. I note that when he got to his feet, he did not answer the question as to whether he thought the FSB, the BCC and the CBI are all wrong. Next time another Conservative Member gets to their feet, I would like to hear their answer to that. I would also like to know whether they think TUC general secretary Frances O’Grady was wrong when she said last week:
“We know social care needs extra funding. But the prime minister is raiding the pockets of low-paid workers, while leaving the wealthy barely touched.”
That is the fundamental unfairness at the heart of this Government’s tax rise.
The Prime Minister and Chancellor are desperate to pretend this is the only way to raise the money, but that simply is not true. A fairer approach would see funding for the NHS, social care and all our public services borne by those with the broadest shoulders—this would include those with incomes from large financial assets, multiple rental properties, and other income from wealth contributing more. But they have not been considered by this Government, who would prefer to hit workers instead.
This Government are landing a tax rise, which they claim will go toward social care, on low-paid social care workers themselves. The truth is that this is a tax on working people and their jobs. This tax rise tells us nothing about how the Government plan to fix social care, but it tells us everything we need to know about the instincts of the Tories when they are in power. That is why it is wrong. That is why we will be voting against this Bill. And that is why Conservative MPs would do well to join us tonight if, come the next election, they want to be able to look their constituents in the eye.
Jeremy Hunt (South West Surrey) (Con)
Select Committee Chairs have to hold the Government to account, but just occasionally they also have to hold the other parties to account. I am afraid that today is one of those days, because the opposition of the parties on the Benches opposite to this Bill does not bear any scrutiny at all. That is not just because Gordon Brown proposed an increase in national insurance in 2002 to fund the NHS or because senior members of those parties have supported NI as a way of funding the social care system as recently as three years ago; it is because for more than a decade the parties opposite have argued, with some justification, that more money needs to go into the health and care, and this Bill will add £12 billion every year into our health and care system. That is more than any wealth tax would generate—to my knowledge, it is more than any of them have been arguing—and it is more progressive than using plain NI, because it is progressive between the generations. That is because, for the first time, working pensioners will be paying this tax, as well as people who pay dividends.
I may not make friends on my side of the House either, because while I commend the courage of a Conservative Prime Minister and a Conservative Chancellor, supported by his team, in doing what we find extremely difficult, for the right reasons—increasing taxes—I fear that if what we have done so far is tough, what is to come will be tougher still. I say that because if you put your hands into people’s pockets and take money out of them, and they do not see visible improvements in the services they receive, they get very angry indeed.
Steve Brine
Will my right hon. Friend use his position on the Select Committee and his vast experience to scrutinise this plan, which I mentioned to the Minister but which I know the Secretary of State has agreed with NHS England and me, as to how exactly they are going to spend every penny of our constituents’ money on this catch-up programme? Will my right hon. Friend’s Select Committee scrutinise that for us?
Jeremy Hunt
As it happens, we are currently conducting an inquiry into how to deal with the covid backlog, so I commit to my hon. Friend, with whom I so enjoyed working at the Department of Health and Social Care, that we will certainly do that.
Clive Efford
I have heard what the former Secretary of State has said about the record on social care, but can he explain what he did to try to prevent the Conservative Government from taking £8 billion out of social care?
Jeremy Hunt
First, we passed the Care Act 2014, which put in place the legislative foundations for the proposals that we are now going to fund. Secondly, I happen to agree with the hon. Gentleman: the social care system has needed more money for some time. That is why it is so extraordinary that his party is to vote against this Bill.
If we are going to take £12 billion a year out of people’s pockets, we need to avoid falling into three traps—and I say this as someone who has fallen into more traps in this policy area than anyone else in this House. The first trap that we need to be careful of is the workforce. If we put an extra £8 billion into the NHS but we do not have £8 billion-worth of additional doctors and nurses to do the extra treatments, the risk is that that money will hit the ground without touching the sides. That is why we need a workforce plan.
The Health Foundation says that the backlog will require 4,000 more doctors and 18,000 more nurses, but we have not had any workforce plan from the DHSC. I suspect that in the short term we will have to relax all the immigration requirements for doctors and nurses. That will not be great for developing countries, but it may well be our only choice. In the medium term, the best suggestion is what my Select Committee and many others have proposed: we should give Health Education England the statutory responsibility to produce independent workforce estimates and create a discipline, a bit like the OBR does for Budgets, to make sure that we are training enough doctors and nurses. That is the first trap.
Jeremy Hunt
I will make some progress, if I may.
The second trap is that we must not inadvertently sleepwalk into another Mid Staffs. People forget that when Mid Staffs happened, NHS budgets were actually going up. There was huge pressure to reduce waiting times and that ended up creating a targets culture in which numbers matter more than people. We have to be very careful that we do not make the same mistake again. I know that my right hon. Friend the Chief Secretary to the Treasury, who worked with me at the Department of Health and Social Care, understands that because of his commitment to patient safety.
The third trap involves social care funding. Although the settlement we are discussing is generous, if we are honest, in the next three years social care will not actually get as much money as it needs. The truth is that there is a risk that the NHS will continue to gobble up the lion’s share after that, which is why it is essential to ring-fence the amount of money that goes to social care after those three years.
Jeremy Hunt
I am going to make some progress, if I may.
Finally, let me say this. We, as Conservatives, criticised the Labour party in the 2000s for pouring money into the NHS without a proper plan. We were wrong to say that the NHS did not need more money, but we were right to say that there needed to be a proper plan. We must learn the lessons of history; that is the least we can do for frontline workers in the NHS and care system.
Alison Thewliss (Glasgow Central) (SNP)
To start where the right hon. Member for South West Surrey (Jeremy Hunt) left off, in the Bill before us this afternoon we have the lack of a proper plan. We have a means of raising taxes, but absolutely no detail whatsoever on how the money is to be spent.
Let me start with a useful note sent round by the Hansard Society, which says:
“Parliament’s scrutiny of financial matters is generally poor, and the treatment of the new Health and Social Care Levy demonstrates many of the worst aspects of both the financial and legislative scrutiny processes: acting at speed with insufficient policy detail available for MPs to consider; important constitutional questions brushed aside; and broad powers delegated to Ministers with a lack of clarity about how they are to be used in future.”
I agree with every single word of that.
Scrutiny and accountability are absolutely key to this issue, because we have been presented with a huge additional spending commitment but no detail whatsoever as to how it will actually be spent on the other side. I know that there are Conservative Members who are extremely nervous about this levy; far be it from me to agree with them, but I am right to agree with them on that, because we do not know how this money is going to be spent. People are incredibly nervous that health and social care will be at the back of the queue when the money is to be spent.
As the hon. Member for Basildon and Billericay (Mr Baron) pointed out earlier, we are considering this Bill in unseemly haste. Is this to do with the election cycle, testing the loyalty of Government Back Benchers or making sure that people are loyal in the run-up to any reshuffle? We cannot see the real reason for this haste. If we could wait, we could see a little more detail as to exactly why we have to proceed in this way. There is also a difficulty in scrutinising the spending of the levy because it is outwith the usual estimates process and the usual Budget process. We cannot have any real clarity in that respect.
Most worryingly of all, the Government have—as they have done in so many different ways—taken back control only to give all the power back to themselves and their cronies. A lot of the work in respect of the Bill will be done through regulations. Clause 4 gives the Government very wide scope to make regulations on this matter later, which means we will lose all sense of scrutiny from this place. It will all go to civil servants rather than to Parliament. That is entirely undemocratic and wrong. Yet again, there is a wide-ranging power grab from this place and in respect of our job as Members of Parliament here. I cannot see the justification for that in the Bill; it would be interesting to hear why Ministers intend to do that.
We on the SNP Benches demand urgent clarity about every penny of Barnett consequentials that will be given to the devolved Administrations. In line with our manifesto, any additional money that Scotland gets will be spent on health and social care, but there must be no attempt by the UK Government to sell Scotland short by clawing back our share through cuts in other devolved policy areas. It would be just like Government colleagues to give money with one hand while pinching money out of our back pocket with the other. The UK Government must give urgent assurances that we will get every penny we are due—as should Wales and Northern Ireland.
Last week, the Secretary of State for Health and Social Care told “Good Morning Scotland” that, ultimately, it will be for the Scottish Government to decide how the money raised is spent, but that is not what the Prime Minister said. In his statement last week, he said:
“Although Scotland, Wales and Northern Ireland have their own systems, we will direct money raised through the levy to their health and social care services.”—[Official Report, 7 September 2021; Vol. 700, c. 154.]
To direct money would be to override the devolved settlement. It would override our Scottish Parliament and our Scottish Government. It is also unclear where it is intended that that money should go. Will it go to NHS Scotland or to the health boards, the integration joint boards or the health and social care partnerships that sit underneath? Will the formula by which funding is distributed in Scotland be disrupted?
We need certainty as to how the money will be spent, and the Bill currently does not give that. All the Bill says is that money will be paid
“in such shares as between health care and social care, and in such shares as between England, Wales, Scotland and Northern Ireland, as the Treasury may determine.”
That means more power for Treasury Ministers, which I am sure they will enjoy having, but less power for this Parliament and even less power for the devolved institutions. It is their right to know how that money is to come to them and how it is spent. We should not get one penny less than we were due.
Many analysts have pointed out that other parts of devolved spending have been cut because of, for example, the Barnett consequentials of the cuts to local government or to justice. Such cuts mean that we get less money coming through, even if the Government like to pretend, through things such as this levy, that there will be more. It is unclear in the documentation published by the Government exactly what the Barnett consequentials will look like. Their plan for social care says that the Barnett consequentials will be £2.1 billion in 2022-23, drop to £1.7 billion in 2023-24 and be £1.9 billion in 2024-25. If the money that comes is going to jump about by such significant amounts over those years, we will not know exactly how things are going to look, what the certainty is and how we can plan. The Scottish Government deserve certainty so that they can plan for services.
Let me highlight some of our other major issues with the proposals, which are a tax on the poorest working people in this country. They are completely unjustifiable on that basis. The levy is disproportionate and unfair. There is a bit of brass neck from Government Members: they howled when Scotland put money on income tax—a progressive system in which those at the wealthier end of things paid a little more into our system for our services in Scotland. They said it was terrible and awful, yet today there is not a peep out of them to complain about the lack of progressive taxation and the fact that Scotland will have to pay for England’s social care crisis, which is completely unjustifiable. This is also a tax on jobs and the recovery. Reflecting on the ONS figures that show that the recovery is now stalling, the Federation of Small Businesses says that this tax on jobs will mean 50,000 more people becoming unemployed. That is 50,000 people losing their jobs as a result of this Government’s incompetence in taxing jobs and the recovery. We really could not make this up. From every angle that we approach this tax, it makes absolutely no sense whatsoever.
I will talk in greater detail about our amendments when we come to the Committee stage, but my reflection for now is that we have Scottish taxpayers paying for England’s health and social care crisis, and an undermining of devolution in Scotland, Wales and Northern Ireland and of the services that our Parliaments are democratically elected to provide.
Christine Jardine
Can the hon. Lady explain how Scottish taxpayers, of which I am one, are paying for this levy? I am confused by the thinking. We either agree with the fairness of the levy or we do not. In Scotland, we would get more than we paid in, so I am confused by her thinking.
Alison Thewliss
The point is that we do not know what we will get out of this. We do not know because it is not clear in the documentation that has been provided. We also do not know what will happen on the other side of that equation—money in other devolved areas could be whipped away from us at our expense. Organisations such as the British Association of Social Workers have pointed out that cuts to local government will fundamentally undermine the social care provision in England. Authorities will not receive anything for three years, which will also have an impact on the money that we have to spend in Scotland.
These moves tax the poorest. They come at the same time as £20 a week is being removed from universal credit. Some 2.5 million people across the UK will be affected by both of those policies at a time when they can least afford it. The tax on jobs will stifle the recovery. Rather than being a Union dividend as Ministers like to try to claim, this is a Union dead end.
Madam Deputy Speaker (Dame Rosie Winterton)
In order to try to get everybody in, I will reduce the time limit to five minutes, and I have been able to warn the next speakers of that. If people do not get in, let me remind them that there is a Committee stage to follow and they might like to bear that in mind.
Mr Marcus Fysh (Yeovil) (Con)
I will not speak for long now because I want to speak at the Committee stage later on.
We all want better health and social care and we understand that that comes with a cost. I am concerned that the plan does not make sufficient provision for allowing the discharge of patients from hospital into social care, which will be so critical when it comes to dealing with the backlog of cases. I want to work with the Government on trying to find ways of getting more money into social care earlier. We will get more money through the health provision for supporting the health needs of patients in residential care, but that is not the same thing. In the meantime, our adult social care system is creaking, with 30% more demand than there was before the pandemic. Many local government leaders are very worried about where they will find the money in the meantime to pay for this.
I rise to speak in support of those who will be affected by this national insurance rise. As we have heard, it is very broad based, but it is not the most progressive way to deal with this matter. I do not like the fact that this is the choice that we have made. It is wrong to be raising taxes at this point, particularly taxes on jobs and employment, when both are so central to spending in the economy. It is ordinary people having the confidence to go out and spend money that makes the most difference to our economic performance. At the end of the day, it is that economic performance that will grow the other tax revenue lines and it is those tax revenue lines that will make the most difference to how much money that we, as a nation, have to spend on these massively important priorities.
I want to compliment the Government, and the Prime Minister personally, for raising the issue of adult social care to the top of the national agenda, because they are absolutely right that we do need to sort this matter out. I also stand here for the people in that system now who are being short-changed in one way or another, whether it is on the services or on the way that the financing occurs. We need to work together, across the House if possible, to find innovative new ways of creating a long-term plan to get that service operating better.
John Redwood
Does my hon. Friend share my surprise that the Treasury can be precise in saying that it needs £12 billion from a new tax when it overstated the budget deficit by £90 billion last year, which shows that it does not have a clue about how much money will come in anyway?
Mr Fysh
My right hon. Friend makes a good point. Yes, it would have been great to have had more detailed context of where we can get to in this economic recovery so that we could know where we were in terms of revenue before we make such momentous changes that affect the aspirations and potential of so many people within the economy. We also need to look at whether this measure will increase costs and cost pressures within the system that we are trying to help. Many local authorities outsource provision of social care to private contractors, and these private businesses will be very much affected by these plans for the tax. We have also heard that the plan will mean that private providers cannot cross-subsidise their state provision of residential care places with private places, which could risk taking capacity out of the system at exactly the wrong moment when we want to get health and social care operating correctly. There are ways of making this measure more intergenerationally fair and I look forward to trying to work with the Government on different and innovative ways of doing that.
Going back to my original point, I think that we marry in haste and repent at leisure. Let me be clear that I am not referring to my own marriage; it is a very successful one and I love my wife dearly. None the less, it would have been much better to have had more time to think about all the ramifications of this Bill and the associated plan. I hope the Government will engage positively with our ideas about how we can evolve things whatever the outcome today.
Dame Margaret Hodge (Barking) (Lab)
I hope that the hon. Member for Yeovil (Mr Fysh) will join the Opposition in the Lobby tonight given what he has just said in his contribution.
We should give credit where it is due. We are starting a debate not on whether we can rescue our broken health and social care services, but on how we do so. These services were damaged not just by covid, but by a decade of savage cuts. Tragically, the Government are flinging away this once-in-a-lifetime opportunity to do something that will endure, that will tackle the underlying problems facing these critical services, and that will be fair to us all—whatever our age, wherever we live and whatever our income.
These shambolic proposals will not meet the needs of the elderly and disabled who depend on social care. They will not properly protect our NHS. They will further ravage struggling local authorities, and the tax proposals are needlessly regressive.
I wish to focus on the tax. The health and social care levy is an unfair hike that will hit younger working people the hardest.
Taiwo Owatemi (Coventry North West) (Lab)
Does my right hon. Friend agree that it is completely unfair that a graduate nurse who works a night shift as an Uber driver now faces a £12,500 tax hike over their working life due to this new levy? That is the reality facing many of my constituents. It is high time that we start calling this measure what it is. This is not a social care levy; this is the workers’ tax.
Dame Margaret Hodge
My hon. Friend makes the point very powerfully. I was going to illustrate it more generally by saying that families whose personal allowance will be frozen, such as the one she mentioned, and who lose the £20 a week from universal credit cuts—the very families that the Government proclaim they want to level up—will suffer.
Do not just listen to me. I am going to re-quote the quotation that my hon. Friend the Member for Ealing North (James Murray) used in his excellent speech. Listen to what the Government’s tax authority, HMRC, says:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
Is that what the Government really want?
Half the revenue will be paid by people who are under 45, most of whom will be hit by a 10% rise in NICs. That is regressive. National insurance kicks in at a lower level of earnings than income tax. That is regressive. The self-employed pay a lower rate. That is regressive. Income from assets such as rent from property remain untouched. That is regressive. And squirreled away in the policy document, the Government say that they expect that
“demographic and unit cost pressures will be met through council tax…and long-term efficiencies.”
That means further cuts and a hidden hike of the outdated council tax—a tax that hits those in Barking and Dagenham harder than those in Kensington and Chelsea. That is also regressive.
I am rather tired of being told by the Government that there is no alternative. There are plenty. For a Government committed to fairness between individuals, fairness between generations and fairness between income secured through wealth as well as work, there is a raft of better ways to fund health and social care. Put a penny on income tax and equalise rates for dividend and income tax: £13 billion. Equalise capital gains and income tax rates: £14 billion. Or, as suggested by academics Advani, Summers and others, plug the unfair gaps in national insurance by extending it in full—not just the levy, but all of it—to all investment income and working pensioners: £12 billion. If we scrapped the upper earnings limit and equalised the rates of NICs paid between high and low earners, we would not just raise enough to meet roughly the same amount as the Government propose; we could cut the main rate of NICs by 1.25 percentage points.
This unfair plan is simply not fit for purpose. The numbers do not stack up. The poor will pay for the rich. The young will pay for the old. The struggling tenant will pay for the wealthy landlord. The asset-poor worker will pay for the asset-rich retiree. Make no mistake: these are political choices—choices that fail working people, fail our NHS and fail those in desperate need of quality social care. I cannot support them.
Madam Deputy Speaker (Dame Rosie Winterton)
Obviously we have had one or two interventions along the way, so after the next speaker I shall reduce the time limit to four minutes, but I think that it should be fairly consistent from then on.
Paul Bristow (Peterborough) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests. As a member of the Health and Social Care Committee, I rise to support the Bill and to argue that the money raised by this levy be spent well. I commend my right hon. Friend the Member for South West Surrey (Jeremy Hunt) on his chairmanship of the Committee, in which we are conducting those lessons-learnt inquiries to ensure that our money is spent well. I want to mention three areas; if we focused on them, we could ensure that this money is spent well and get the desired outcomes.
The first is capacity in the acute sector. It is clear that the NHS needs to strike a long-term deal with the independent sector to try to power through the backlog of elective procedures. We are talking about hips and knees, hernias and cataract operations. I read and hear reports, with alarm, that the independent sector capacity that the NHS has bought is being underused—or, if it is not being underused yet, there is a fear that it may well be—because of ideological reasons that the independent sector should not be used and we should be funnelling all these procedures into the NHS. If we do not use the independent sector, we will not have the desired outcomes. We cannot let ideology dictate, as this will ensure that people are left in pain for longer and do not have the right quality of life. We need to ensure that the independent sector is used to its full capacity, so that we can get through this elective backlog.
Similarly, we need to ensure that initiatives such as “Getting It Right First Time”, or GIRFT, are used properly. The NHS has spent money, resources and experts’ time on understanding which procedures work at high volume and low risk. We should use the lessons learnt from GIRFT to deal with the elective backlog. Let us not reinvent the wheel, but let us ensure that we do learn those lessons. Ultimately, these are usually minimally invasive techniques and technologies for procedures that can be done as day surgery, and this will ensure that we power through the backlog and get the elective procedure waiting list under control.
The second issue that the Health and Social Care Committee has heard about is the importance of the diagnostic sector. In the past, I think the NHS has been guilty of focusing on the treatment of conditions, rather than on prevention. If we get the early diagnosis correct and invest in diagnostics technology, we can find out who is at risk of suffering from cancer, heart disease and other long-term conditions before they present at an acute level. It is really important that we invest in that sort of technology, so that we can save money in the long term.
Finally, let me turn to innovation in our NHS in general. I have worked in health politics, if you like, for 20 years. As I said last week, there is a cultural aversion to the private sector, technology and innovation in our NHS. That aversion may be at the margins, but it is at least having an impact, and it needs to be dealt with straight away. If we do not adopt innovation—new technologies, pathways and ways of doing things—we are not going to ensure that this money is spent well.
I would challenge that something that should come out of the health service reforms that we are looking to introduce is the appointment of an innovation officer, or someone who is responsible for innovation in every NHS trust. Let us make it their job. I welcome the fact that we are at last beginning to ensure that the NHS will have a degree of accountability again, and that politicians will have the ability to challenge NHS trust managers to ensure that this money is spent well. One way to do that is by having an innovation officer who is responsible for reform and innovation, ensuring that new pathways are adopted and this money is spent well. If we do not, we could be here again in three or four years’ time, and the money that we want to transfer to social care in due course could have been gobbled up by the NHS, which my right hon. Friend the Member for South West Surrey said was a real risk.
As far as I am concerned, those are the three real challenges: acute capacity; investment in diagnostic capability; and ensuring that innovation is properly recognised in our NHS.
Mick Whitley (Birkenhead) (Lab)
I draw the attention of the House to my entry in the Register of Members’ Financial Interests.
More than two years ago, the Prime Minister promised that he had a plan to fix our country’s broken social care system. It was something that my constituents in Birkenhead so desperately needed—from the elderly people denied the most basic right of dignity in old age, to the dedicated but overworked carers earning less than the minimum wage and forced to turn to universal credit just to get by.
After a decade of brutal austerity measures and chronic Tory mismanagement, there is absolutely no doubt that we need a funding settlement for social care, but the Prime Minister’s announcement last week will have provided no relief to the people I have the privilege of representing. Instead of asking those with the broadest shoulders to contribute just a little bit more, the Government are intent on pursuing an utterly regressive tax on hard-working families and British businesses. Charities working on the ground in my constituency predict that the impending cut to universal credit, coupled with soaring energy bills, will force another 6,500 people living in the Wirral into poverty. Now, many of those families will be bracing themselves to lose even more in increased national insurance contributions, while the very wealthiest in our society are left untouched.
Not only will this tax bombshell make it even harder for thousands of my constituents to make ends meet; it will also deal a devastating hammer blow to many of the small and independent businesses that play such a precious role in the life of our town. It will cost jobs and dangerously undermine a very fragile economy. Let us be clear: this tax hike makes a mockery of the Government’s promises to level up and build back better.
We do need solutions to the crisis in social care, but these proposals just are not fair or credible.
John Redwood (Wokingham) (Con)
I urge the Government to think again about the health plans. On the Treasury figures, this year the health budget in the public sector overall is £230 billion—£64 billion higher than the 2019-20 budget pre-pandemic. I understand that there were lots of one-off and special costs in setting up and dealing with procedures for tackling the pandemic, and I, like everybody else, am very grateful for the work that went in from health staff and experts. But that cost will drop away, so what happens to that money when it is no longer pre-empted by the special costs of the pandemic, and can it not be applied?
I hope the Government will listen to the Chairman of the Health Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt), about the need for a manpower plan, because if we wish to clear the backlogs it is quite obvious that more nurses and doctors are going to have to carry out more treatments and procedures. Some of that will be possible through reallocation and improved working of the staff we already have, but a lot of it will require additional recruitment.
I am also very worried about the lack of a detailed social care plan, particularly for my own area of Wokingham. We have a large number of self-payers at the moment. How could I be sure that if we went for this levy scheme, which is still not properly detailed, sufficient money would come from it to a local authority like Wokingham, already under enormous pressure on its social care budget?
I am very suspicious of hypothecated levies. It is particularly dangerous to hypothecate a levy that is a tiny fraction of the budget one is trying to improve. That will give some people the misleading impression that the social care levy will pay for social care, whereas, on the numbers, the levy would be able to match under one fifth of the total public social care budget. Pitted against the huge numbers for the NHS and wider public health budget, that is just over 4% of the total, so it is a very insignificant amount in relation to the huge sums we are already talking about for the health budgets. However, it is a big sum of money when it is broken down and becomes a tax burden on people on quite modest incomes and those struggling in self-employment or trying to get their little businesses going. The last thing they need, when we need rapid growth and a faster recovery, is a tax rise.
The economy does not need sandbagging with austerity economics; it needs promoting for faster growth. It is still below the levels of output before the pandemic hit. Up until this point, the Treasury has been magnificent in making an avalanche of money available to get us through a most difficult time. We have got away with it. It has been borrowed at very close to zero interest. In these unique circumstances, it was possible to take extraordinary monetary measures that one would not normally be able to rely on and would not want to, and I am very grateful that that was done.
I say to the Government: it is too soon to start braking the economy. The growth rate almost disappeared in the last month. I am hoping it is going to look a bit better in the next month or two when we get more opening. But before the economy is completely opened up, and people have stabilised their businesses and repaired some of the balance sheet damage that the pandemic measures did, is not the right time to take money off them. We need more spending power, not less; more demand, not less. If the Government back that, the revenues will come tumbling in to a much greater extent than if we put rates up. Do they not understand that they were £90 billion wrong last year because there was more recovery than expected? They are already £26 billion under this year because there was a fast recovery in the first few months. Do not kill the recovery and you will get the money.
Helen Hayes (Dulwich and West Norwood) (Lab)
I rise to speak as a co-chair of the all-party parliamentary group on adult social care. Since the Prime Minister’s statement last week, I have been in touch with a number of members of the APPG’s working group, which has very wide membership from across the social care sector. There is absolute consensus that the Prime Minister’s plans simply do not deliver for social care. The first clue to this was the total absence of meaningful reference to social care in the Prime Minister’s statement itself. He did not say anything about the importance of adult social care or acknowledge the diversity of the sector and the need to fund care for both working-age adults and older people, nor did he pay any tribute to the hard work and sacrifice of social care workers during the pandemic or to the vital importance of their role.
The social care sector sees through this plan. Our NHS and social care are both in desperate need of additional funding now. Funding one and pretending that that will help the other is an insult to a social care sector full of brilliant, dedicated, highly skilled staff that has been brought to its knees by this Government’s neglect and complacency.
The Prime Minister’s proposals fail to make any commitment to a pay rise for social care staff. One of the members of the APPG working group, not-for-profit care provider Community Integrated Care, recently commissioned a benchmarking exercise to assess the value of social care work compared with other related professions such as healthcare assistant roles in the NHS. Its report, entitled “Unfair To Care”, found that the skills and tasks required by a social care worker employed in a care home were on a par with those of a level 3 healthcare assistant working in the NHS. The healthcare assistant receives a renumeration package worth £30,000 a year, but the social care worker receives just £17,000 on average. The social care sector has 114,000 unfilled vacancies at present—and is it any wonder when there is no parity for social care workers, and when in many parts of the country you can earn more working at the local supermarket than you can caring for our most precious loved ones?
Instead of committing to a pay increase, the Government are penalising the very care workers who are the backbone of social care, hitting them with a national insurance increase and many also with a £1,000 cut to their universal credit. How do the Government think this is in any way fair? Social care workers are not the only valued public servants who will face the punitive consequences of this Bill. Teachers, classroom assistants, social workers, prison officers, youth workers and many others will all face a cut in their take-home pay as a consequence of this wrong-headed plan.
This Government inexplicably persist in ignoring the need for real and fundamental social care reform. The Health and Care Bill proposes to integrate health and social care without reforming social care, failing to give proper voice to the sector or place it on a sustainable footing for the long term, and this Bill raises revenue without specifying how, when or where it will be spent. The Government must also acknowledge the diversity and fragmentation of the social care system, the need for a clear and comprehensive regulatory framework that includes supported living, and the need for a much greater voice for people who rely on social care and much more co-production of support services.
It is deeply regrettable that the Government have chosen to ignore decades of cross-party work on social care. They have chosen to ignore a constructive and serious piece of work by the Housing, Communities and Local Government Committee in 2018 in favour of their own ill-considered and half-baked plan. Social care and our NHS both desperately need additional funding, but this Bill delivers no firm commitment to the social care sector. It is an insult to dedicated social care workers across the country, and I will be voting against it tonight.
Ruth Edwards (Rushcliffe) (Con)
It started with a series of bizarre reports from my grandmother. My grandfather had started to put on his coat in the middle of the night and insist on going for a walk. She found plates of cheese in the airing cupboard, instead of the fridge. It was not long before he needed constant residential care for the last four years of his life. I have always thought that dementia is one of life’s cruellest diseases, both for the sufferer and their family. The reality is that you lose your loved one long before they actually die.
Sufferers of dementia and their families have their lives turned on end, sometimes in quite short spaces of time. The last thing they need is uncertainty and financial worries to add to that. Here in the UK, we have an ageing population—and with that come complex, long-term physical and mental health conditions—which means that the length of time people may require care if they are hit by dementia or similar conditions later in life is increasing, as are the numbers of people needing that care.
It is an urgent problem, yet for decades, Governments of all parties have pushed the issue down the road or to one side. Our health service and councils across the country have started to see the impacts of this increase in demand without an increase in ring-fenced resources. I am therefore glad to see the Government tackling this head on, both with the social care levy set out in this Bill and the planned White Paper in the autumn. Only through a system that encourages long-term planning for social care will we achieve a sustainable care sector.
Like with pensions, we should be thinking about care provision, planning and taking responsibility for that provision from the start of our working lives. We need to change the culture around how we talk and think about care, and this Bill is the first plank of that new platform. It has been written in a way that means that people on higher salaries will pay more. It is also the first part of a broader new care settlement that, as my hon. Friend the Member for Peterborough (Paul Bristow) said, must see reform and innovation throughout the NHS and our social care system, and proper integration between the two, if it is to have public support.
Raising taxes is not something I take lightly, but the public know we have just been through the most unprecedented 18 months in more than half a century. Those on the Opposition Front Bench have criticised the Government for taking two years to put forward a plan. They have taken 24 years, and they still have no plan, unless we are counting the broad shoulders tax, which I am sure we all look forward to hearing more details on. Will it be a tax on income, on assets or on literal shoulders? I wait to see.
Words are easy; decisions are hard. That is why the public voted this Government into office: to make those tough decisions and plan for the long term. That is what we are doing today.
Christine Jardine (Edinburgh West) (LD)
I do not believe there can be many issues on which this House is more intent than ensuring the future of our national health service and social care for the good of every person in this country, but sadly this Government, who have procrastinated over every possible thing for the past two years, instead of taking time to consider this properly are bouncing Parliament into a hurried decision—a decision that has met with condemnation across the country. It is a proposal that the Federation of Small Businesses has described as a “jobs tax”, which the British Chambers of Commerce has described as an “anchor” on jobs growth, and which the Confederation of British Industry has said
“will directly hurt a business’s ability to hire staff at a time when businesses have faced a torrid 18 months”.
But it is much worse than a job tax—it is a tax on nurses, who on average will pay an extra £270 a year. It is a tax on our teachers, police and care home workers—the very same people who have kept the country going throughout this pandemic. It is a tax that will disproportionately hit low earners, at a time when families are already seeing their income squeezed by the pandemic. This is the worst possible time to be hitting families and businesses with a crippling and unfair tax hike. Instead of boosting hiring and spending, it will damage confidence and investment. The Government are not only breaking their promise to the electorate; they risk breaking the backbone of our economy.
Instead of rushing us into this, the Government could have taken the time to have cross-party discussions and come up with a proper, detailed plan, which I believe would have had the support of everyone in this place, because we all want to see a good, sound, constructive plan for the national health service and social care. Sadly, this is not it.
Andrew Griffith (Arundel and South Downs) (Con)
I pay tribute to my hon. Friend the Member for Rushcliffe (Ruth Edwards) for her remarks.
My constituency has a disproportionately older demographic—those who live there are 50% more likely to be over 65 than the national average—but I want to lay to rest the misperception on both sides of the House that social care is simply about the older generation. More than one in three people in the system is under the age of 65, and because younger adults are in the system for longer, spend on them is proportionately greater, so this is not just about a battle of the generations.
I pay tribute to the millions of unpaid carers in society who for years have been papering over the cracks in the system and the capricious nature of continuing healthcare assessments. I have personal experience of some of that as for many years my father was my mother’s unpaid carer and had to deal with that at the sharp end. For that reason, I celebrate the fact that this is a nettle grasped. It is not necessarily the whole solution but it is the start of a package of measures that moves forward a debate that has been stalled for too long. That is one reason why we should all come to the House and use our voice and platform on the hard issues that we face in society.
I applaud the Government on their selection of national insurance, which is the tax with the broadest reach. It is progressive, and that is why so many of our European neighbours have chosen to fund their social systems through similar measures. It is a chimera to think that there is another way—perhaps Opposition Members have been taking medicinal hallucinogenics—because the national insurance take is more than 10 times that of capital gains tax and inheritance tax combined. No mythical tax on wealth will give us anything like what we need to take this issue seriously—and we should take it seriously.
Anthony Browne (South Cambridgeshire) (Con)
Does my hon. Friend agree that it is the height of political cynicism for Opposition parties to campaign repeatedly to increase taxes to spend money on health and social care and then, when the Government introduce such measures, oppose them? Does he think that they should commit themselves to scrapping the health and social care levy once it is introduced?
Andrew Griffith
My hon. Friend, as ever, makes an important point. We should be on a quest for consensus, and it would be useful to hear more from Opposition Members in the wind-ups.
I pay tribute to the many dedicated workers in care homes across my constituency as well as their residents—from Barlavington Manor in the north to Valerie Manor in the south and from Villa Adastra in the east to Westergate House in the west. They are just four of the 28 care homes in my constituency providing fantastic quality care. It would be lovely to see more resources pumped into them as well as their staff.
Let me conclude broadly where I started. This is a down payment on a process of reform in our healthcare systems, building on the innovation that we have seen. However, a health and social care system cannot be managed permanently on an exceptions basis. We need reorganisation, better data and better decision making to build the high-quality health and social care system that both sides of the House want to see.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Before we move on, I remind colleagues—I am sure they know—that it is very courteous to listen to a lot of the debate before intervening, because many colleagues have sat here from the beginning and are waiting to speak.
Rachael Maskell (York Central) (Lab/Co-op)
Take no comfort, nor relief. Those things you dread will still be true. But now, poorer through life and poorer through death. Through life, you will pay. When frail, you will pay. Disabled people will pay and pay and pay. For what? None of us knows. Time and again, we have been promised that social care plan. Like the emperor’s new clothes, there is nothing to show. But, rest assured, things are about to get tougher, budgets tighter and ends not meeting. That personal debt will grow.
Two weeks ago, there was no plan. The Prime Minister tossed a coin, and this is where it has landed. Now he is rushing through this Bill with no pre-legislative scrutiny, no impact assessment and no plan to fix the care crisis for those already in the system or the 1.5 million longing for help. There is nothing for unpaid carers, and £8 billion has been cut from the system. As ever, the Prime Minister is throwing out the headlines with little thought and then moving on, leaving a path of destruction behind him for someone else to clear up and, in this case, to pay up.
This will not clear the NHS backlog. As we have heard today, the staff shortages are not being addressed, and how can they be in such a short period. Just this weekend, we were 74 nurses short in York. That is the scale of the challenge, and one that the Government have not answered.
A decade into this Tory Government, there is still no plan. We just pay up, and one day we may learn what for. For starters, if someone holds assets above the thresholds, they will still pay £86,000—the vast majority of average care costs—and will still need to sell their home. Then there will be accommodation, if needing residential care, and living costs on top, and no cap until October 2023. This is why we need a public national care service that is free at the point of use and fairly contributed to by all.
With 84% of care home beds owned by private investors, including private equity firms, who are not paying this levy and whose sole purpose is to profit—profit from the frail—it is the social care reform we need that we should be debating today. Just one provider in my constituency made a 25% profit increase ahead of the pandemic, but it will be its staff, who were promised a pay rise while clapped by the Prime Minister, who will now have to pay the levy instead. But we have been denied the opportunity to debate what this nation is paying for.
The Labour party cannot consent. We believe that those who have more, should pay more. Take the London School of Economics wealth tax commission, which reported last December. It found that a tax on assets worth over £500,000 at 5% would draw a pot of £260 billion, which would pay for health and social care and that much-needed pay rise. The tax would be assessed on individuals rather than households, with the rate of tax being 5%, albeit with a standard payment period of five years, allowing a tax rate of 1% to be paid for each of those five years. The amount raised is the equivalent of income tax at 9%. Alternatively, if the threshold was £2 million, £80 billion would still be raised.
That would start another conversation: instead of low-paid workers funding the social care of the wealthy, the wealthy would be funding the social care of all. I ask Members: is this fair? This may not be the full answer, but it starts a different conversation—one that, in rushing through the legislation today, the Government are running away from.
Mr John Baron (Basildon and Billericay) (Con)
I join many Members who have already spoken in wholeheartedly supporting the Government in trying to grasp this nettle, which has been pushed into the long grass for too long by too many Governments of all persuasions. However, I think many of us are concerned about the haste with which this reform—or this funding, certainly—is being introduced. Parliament has little time to scrutinise the details properly, and there are so few details out there. Questions to the Prime Minister only last week, in a letter copied in to the Chancellor and indeed to the Secretary of State for Health, have been left unanswered.
I would ask those on the Front Bench what other types of funding for social care systems have been considered. Have they looked at the insurance-based systems on the continent? Why not a public insurance system, which has many merits? We are unclear about the exact improvements to social care, yet today we are signing off a massive tax increase—bigger than that raised by some Budgets.
I would also suggest that this is the wrong approach to the funding. The Conservative party has traditionally referred to national insurance as a tax on jobs. The Prime Minister, when opposing Labour’s increase from the Back Benches in 2002, called it regressive. He was right then, and I am afraid that he is wrong now in introducing this national insurance contribution tax increase.
The core of my one nation Conservatism is a belief that, in order better to help the more vulnerable and ensure that we maintain low unemployment, we should encourage economic prosperity. Low taxes help businesses, encourage prosperity and keep unemployment down—they certainly help to. Yet here we are, increasing taxes at a time when the recovery is still fragile after the pandemic. This will cost jobs, and it will result in lower pay and higher prices. I also to a certain extent question the fairness of this increase in our national insurance contributions, which will disproportionately fall on the lower paid. Why should wealthy non-working pensioners be exempt? If this were a truly broad-based tax, we would be answering that question, but there is nothing but silence from the Government on that point.
I am concerned about the lack of response from the NHS with all this extra funding going in and the lack of accountability. I was chair of the all-party group on cancer for 10 years. We continue to point out that we are failing to match international averages when it comes to our cancer survival rates. We have a mass of process targets that create myriad bureaucracies, but we are still not catching up when it comes to average cancer survival rates. Only half the NHS workforce is medically trained. We need to address that, because more money alone is not the answer. We need genuine reform that focuses on outcome measures, not process targets. So we need more time to consider the proposals and I will not be supporting the Government in the Lobbies tonight.
Tim Farron (Westmorland and Lonsdale) (LD)
I probably agreed with at least three quarters of what the hon. Member for Basildon and Billericay (Mr Baron) just said. One thing I did not agree with him on was his belief that the Government have grasped the nettle. I believe they have walked past the nettle, barely nodding at it, and the people who will be stung are the people still in social care, the people working in social care, and the people who will disproportionately pay for what the Government are proposing.
Conservative MPs and the Conservative press are concerned about the Prime Minister breaking his promise on taxation, but the promise he has most definitely broken is the one he made during the leadership contest in 2019, when he said he would
“fix the crisis in social care once and for all”.
He has done no such thing; that proposal is not before the House today. There was a promise not to raise taxes. If the Government chose to break that promise, I would be happy to provide them with cover for that. Labour may have dodged the issue, but I am clear that we should raise income tax so that this is paid for by people who have the wealth and ability to pay for it—not by national insurance, which often will disproportionately fall on younger working-age people. What do those people tend to have in common? They cannot afford a home, or at least a house that they own. What will we be asking them to do? To fund those who have a home to have the right to leave it to those who come after them.
Nobody should be forced to sell their home to pay for care. Just a few weeks ago, I was talking to a friend of mine who sadly has cancer. This was a terrible thing to say, but he said, “I feared cancer and I feared dementia, but I’ve got the least bad of the two.” He is living with cancer now. The reality is that, for many reasons, his care is paid for, but for those like my father-in-law, my grandfather and others who suffer from dementia, that care is not provided for. So it is right to have radical reform of social care, but this is not it. It is right that all the parties should get together to ensure we have a common approach to this, but this proposal has been dreamt up and issued as a press release—it is not the reform of social care we need.
This reform of social care does nothing to tackle the 120,000 care assistant vacancies in our country, or to give social care staff the pay and esteem they deserve. One reason there is a crisis is that wonderful people can earn more money stacking shelves than they can caring for our loved ones, of whatever age. This plan will do nothing to give local authorities the money they need to backfill the terrible backlog and black holes that the Government have left them. Again, they are taking unpaid carers for granted and—the hon. Member for Arundel and South Downs (Andrew Griffith) rightly mentioned this earlier—not addressing the needs of those in care who are not of retirement age but significantly younger. This is a massive missed opportunity that will be paid for by people who have the least.
In my community in Cumbria, we are about 10 years above the national average age. We have a smaller working-age population and a disproportionately large population in need of care. We have colossal staffing shortages as things are. This measure does nothing to meet the needs of the people in my community, because it does nothing to invest in the quality and standard of the care that they will receive.
Dr Murrison
I am loth to give the hon. Gentleman an extra minute, but I must ask him how much he would put on income tax. I know that his party was famously keen on putting a penny on income tax, but he has just made a whole load of spending commitments—particularly raising incomes for care staff. I assume he has costed that. If so, will he say how many pennies on income tax he proposes to burden our constituents with?
Tim Farron
We would need to raise income tax to do what the hon. Gentleman’s Government say they need to do in the short term to get through, and then we would have a ring-fenced, bespoke tax that would deal with social care. If people had lived to the age they do now when Lord Beveridge, the fine Liberal who came up with the welfare state and the NHS in the first place, wrote his plan, there is no doubt that social care would have been part of that package, and we would be paying more tax now as a consequence. I say we should be doing what we were doing around Dilnot a few years ago, when we were moving in the right direction, sworking often across the House, and coming up with a package that we would pay for. In the short term, though, we would immediately raise a tax that is affordable and fair and does not just clobber those people on low wages and people of working age. That is the right thing to do.
That is why this measure is not just the wrong way of going about this but a colossal missed opportunity. We were promised something like the Beveridge report, and we ended up with something written on the back of a fag packet. We need something that means people will look back on this generation the way people still do on the generation of politicians post war who built the welfare state in the first place.
Craig Mackinlay (South Thanet) (Con)
In common with my hon. Friend the Member for Basildon and Billericay (Mr Baron), I am wondering—I think many of us are—why we are here today. We have a fiscal event, the autumn Budget, in just six weeks’ time, which would seem to be the right forum to discuss these matters. One cannot help but wonder: why the haste.
We had the Dilnot commission report in July 2011, 10 years ago. Arguably, even then, that was 10 years too late. It was intended to solve the inherent unfairness between two people who were on similar incomes throughout their lives, one who rented and one who bought their home, whereby one lost everything and one got everything for free. That is at the heart of these issues and of affordability in the longer term. I get that, and the Government have to be applauded for finally thinking about these things, but haste is not due at this time.
I am sad that we are just reaching for the tax lever. That is not what Conservatives do. We are going to end up with a tax take at the highest level of GDP for 70 years. Since we are raising NICs—particularly employer’s NICs—it stands to reason that any employer with a pot that they were thinking about using to increase general salaries across their workforce will reduce that pot by 1.25%.
Let us concentrate on NICs. On our first day back at school last Monday, we debated the National Insurance Contributions Bill, which exempts from NICs veterans and potentially new freeport businesses. We have employer’s NIC relief for the under-21s and for those under 25 on apprenticeships. We have an employment allowance to exempt employers from national insurance. That was at £3,000 for all small employers, and it has now increased to £4,000, because exempting employers from national insurance is deemed to be a good thing.
I say to those on the Treasury Bench: please help me. We tend to tax things that are deemed to be bad. We tax things such as alcohol, cigarettes and fuel because we want lower use of them. They are deemed to be bad. Increasing a tax on jobs, something we want a lot of, seems rather bizarre.
I serve on the Public Accounts Committee, and just last week we did an investigation into the Department for Work and Pensions. Last year alone, there was £8.3 billion of fraud and error in its payments out. Obviously, the pandemic had something to do with that, but there is an in-built annual loss of £5.5 billion through fraud and error. That is something approaching half of what we are looking for here to solve these problems.
As Conservatives, we grasp difficult problems. We grasp and understand the problem of an ageing demographic in our populations. On pensions, we did something novel. We could have just reached for the tax lever, but we did not. We introduced auto enrolment pensions, where the employer and the employee contribute and every employee in the land earning above a certain amount has a pot that they can call their own, with the flexibility that that has. To me, that is the type of thinking we should be doing now. I am very concerned that we will just sink another load of tax into the Department of Health and Social Care and hope for a different outcome, when we have been throwing money into these Departments for many years, yet our waiting lists are at the highest ever.
Her Majesty’s loyal Opposition have been howling, “Let’s have wealth taxes.” Well, I am very pleased to tell them that, yes, we have a very substantial wealth tax in play and it is called inheritance tax. It has doubled since 2011, from £2.7 billion to £5.4 billion today, and that will be going in one direction, given asset value inflations and the fiscal drag within the IHT system.
Dr Murrison
Of course, we have also had a wealth tax in the form of the removal of indexation allowance on capital gains tax for some years now, which is very substantial over time.
Craig Mackinlay
I am very grateful to my right hon. Friend for highlighting some of the fiscal drags that have been beneficial to the Treasury. In terms of asset price inflation, which has nothing to do with the activities of the taxpayer, other factors of low interest rates are involved. There are big windfalls coming towards the Treasury, in terms of IHT and capital taxes, which were never really forecast and are now bearing some substantial fruit. So I would have hoped that the Treasury Bench might have thought, “Where are those taxes going? Where are the other losses within the system across different Departments? Are there procurement gains? Are we really saying that the way the NHS is run today is the best way of running it?” I would have hoped that that could have formed the new pot to solve our social care problem.
I am very concerned that this is going to be wasted cash. I am very unimpressed and I will not be supporting the Government tonight.
Fleur Anderson (Putney) (Lab)
I would like to declare an interest, as my daughter is a care worker.
I pay tribute to care workers across the country for all the additional work they have been doing throughout the pandemic, to unpaid carers and to community care services run by amazing staff and volunteers, such as Regenerate-Rise in my own constituency and the Katherine Low Settlement, where I used to work, running services for older people, before I became an MP.
This is definitely a problem that needs fixing, but I am really hoping for another Government U-turn on this issue today. There are 300,000 people on waiting lists for care services. There is a huge disconnect between the NHS and social care services. There are delays in getting care plans, community services are patchy across the country because of different funding and activities for adults with disabilities are being cut across the country, too. Mencap reports that one in three local authorities have closed day services for people with learning disabilities and that 57% of people with learning disabilities no longer receive any day services. Family carers are having to give up work and people cannot lead the full life that they want. There is an increase in isolation and a massive increase in requests for care services. At the same time, there are soaring budgets and shrinking budgets.
I have three problems with the issue today. One is the deferred payment. This is not solving the adult care crisis because it will go to fix the NHS backlog. How will we be able to cut that crisis in future years? In two or three years’ time, there will be increased staff, resources and facilities—absolutely needed after 10 years of underfunding—but how will we cut that in two or three years? This is absolutely a jam tomorrow policy and I do not know how it will work. We need money for adult social care services now. This will really frustrate people who are receiving care as well as those working in the care sector.
Secondly, this is the wrong way to raise the funds.
Back in March, the Chancellor said:
“We’re not going to raise the rates of income tax, national insurance, or VAT…It is a tax policy that is progressive and fair.”
So by his own admission, this is a tax policy that is not progressive or fair. It is taking from the poorest and leaving the wealthiest relatively untouched. It is a tax on jobs and disproportionately on working people. Why not tax dividends, capital gains or income from property?
Some 2.5 million families across the country face a double whammy of a national insurance rise and the £1,000-a-year universal credit cut at the same time. Care workers will not be getting a pay rise. They are promised some changes down the road, but nothing now, and yet they will have a tax rise. The £86,000 cap will still leave people having to sell their house. Inequality will increase and what will the levy fund? Where is the plan?
We need to transform access to care. There needs to be a home-first policy. Prevention is so important and, as I said, we need to join up the NHS with social care policies. One of the biggest frustrations I faced as an adult care worker was that we did not have a continuity of care between the two. It is not just about money; the systems must be reformed. Why should we have to pay for it when we do not know what systems will be changed? This huge tax increase cannot be guaranteed to fix the adult social care problem, because we have not been told what on earth it will be spent on. It is unfair, it will not fix the crisis and I hope to see that U-turn very soon. I cannot support this Bill.
Sir Mike Penning (Hemel Hempstead) (Con)
It is a pleasure to follow many colleagues who have talked from the heart about the great concerns that their constituents and we as family members have about the health and social care framework.
I will be supporting the Bill tonight because, as I said last week, kicking the can down the road, as several Governments have for years and years, is not the answer, but I have a couple of questions that I would like the Treasury Minister to address. I completely agree with the Chair of the Health and Social Care Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt) that if we just throw this money into the NHS and social care, it will not even touch the sides. It will just disappear. Previous Governments have done it up to now, so we have to be really careful about how the money is hypothecated and where it goes.
I am particularly worried that the top management, who earn so much, will not actually address the issues that we are talking about today. Naturally, I pay tribute to all the frontline workers in social care, all of our emergency workers and those in the NHS, but I worry about the decisions that are made and the salaries that some chief executives of trusts are on. Frankly, they are not only miles above what the Prime Minister gets, but miles above what even those in the City get. It is absolutely mind-boggling, so we have to be really careful about that and about the trusts doing what Parliament tells them to do. I know that will be addressed in the Health and Care Bill. We cannot have a situation again like the one I mentioned last week, where the Prime Minister came into my part of the world and said, “You are going to get a new hospital.” That was fantastic news; I put out press releases galore. We have been campaigning for that for years, but what we are going to get is a refurbished Victorian hospital in the middle of Watford. That is not the answer. The trusts need to do what they are told.
I will touch on one other area—dementia—which is the elephant in the room, and which my hon. Friend the Member for Rushcliffe (Ruth Edwards) mentioned. There is a lottery for our constituents and our loved ones when we are trying to sort out the difference between personal care and healthcare when it comes to dementia and Alzheimer’s. What goes on is immoral: one silo, the Department of Health and Social Care, fights against another, the Ministry of Housing, Communities and Local Government, about who might pay for that care. We have seen it in my family, in my constituency and in my surgeries. We have been fighting to appeal. People seem to be encouraged to appeal, so people appeal, but by the time the situation is dealt with, many of our loved ones and many of those in care have passed away. Only then do people win, so something is seriously wrong.
As we look at the extra money that is going in, we must break down the silos and the really immoral way—postcode lotteries are going on around the country today—that we judge who is entitled to healthcare and who is entitled to personal care. Dementia and Alzheimer’s—I always mix up the two—are illnesses, not something that people want or have brought on themselves, yet many people are having to fight to show that they have a condition so that the Department of Health and Social Care might pay for care. I hope that as we look forward we can try to address that. These are difficult conundrums, but we cannot put our constituents with Alzheimer’s or dementia—our loved ones, in my case and that of other hon. Members—in a position where they have to beg because their care relates to a different condition.
Jim Shannon (Strangford) (DUP)
Thank you for calling me to speak, Mr Deputy Speaker. Like many others, I am put in a difficult position by the Bill. I believe that there must be big changes to create an influx into the NHS for the reform that we are desperate for, but I have seen too many broken families who have lost a loved one who was waiting for mental health support, who could have been saved if their cancer diagnosis had come in time, or who are awaiting support to make their child’s educational journey positive, not a hellish nightmare without the support that they need.
I am torn, because I see the need for reform. I see mentally and physically exhausted staff at the end of themselves, trying to meet their obligations in the NHS, and desperate trusts putting up advertisements for off-duty staff to come in because of dangerously understaffed wards. All those things tell me that there is need for reform, but I do not and cannot support this method. I cannot support the middle class and the small businessman bearing the brunt of the cost again. I cannot wrap my mind around the concept that someone earning £15,000 a year will have the same amount taken away in national insurance contributions as someone on £150,000 a year.
I make it clear that I am not a socialist; there is nothing wrong with being a socialist, but I am a capitalist. I believe that the system that we have is important. I understand that big business must have big results to support the big workforce, but I believe that when raising money, the easiest way is not always best.
We must ensure that we do not continue to squeeze the middle class. The Government have not been able to assure me or my colleagues that their proposal is the best way or that it is better than a graduated system whereby those on huge wages paid an extra amount that they would not overly notice, instead of families on the brink having to sacrifice and struggle each day.
I speak to constituents who are earning too much for support but not enough to live comfortably. They are the group who will be most affected, but the burden could and should be more judiciously shared. For those middle-class families, for the small businesswoman employing 11 staff and for the pensioner who has been taxed for their entire life, I do not think that the proposed method is the best one, and I do not feel that I can support it.
From the refusal to lift the child benefit threshold above £50,000, which is preventing families from taking a pay rise for fear of losing the monthly child benefit payment that pays for necessities for their children, to the situation facing pensioners who thought that they had set aside enough to last, only to deal with an increase in the cost of living along with a raid of the pension in their savings account, life is uncomfortable for those who have worked hard and who believed that they would retire in peace. Those people are all willing to make a contribution to the NHS, but is it fair that they should feel the brunt alone? I feel that that is what is happening; it is not right and I cannot support it.
I have one more small comment to make, which is about the £420 million that will be allocated to Northern Ireland through the Barnett formula. Whatever process the moneys come through, I would like to see them ring-fenced, because as Departments bid for funding, there is every possibility that the money will be deflected from doing good to simply being abused. In Northern Ireland, it could be used for the machinations of other parties, while teenagers suffer from eating disorders and while child and adolescent mental health services teams cannot prevent children from hurting or abusing themselves. I have watched as the Northern Ireland Office has been strong-armed into funding endless legacy investigations to the tune of Sinn Féin, which wishes to rewrite history.
I have not heard that the Bill will prevent the misappropriation of central funding, so I cannot support it. That goes against the grain for me, because I believe in the principle of reform. I would welcome reform if a different method of raising funding were put forward, but I simply cannot agree with the Government’s method. I ask them, even at this late stage, to revisit the methodology and allow us all to support our NHS, as people want to, without further squeezing the middle class. That cannot happen.
Martin Vickers (Cleethorpes) (Con)
As someone with naturally Conservative instincts, I am inclined to say no to tax increases, and to greatly prefer the options that allow the Government to create the economic conditions for growth in order to fund our public services. We have to recognise, however, that the expectations of the public are much greater now than they were a relatively short time ago. Whether we approve or not, the Government are now expected to provide more and more services, and the public do recognise that there is a cost to that.
I am a child of the 1950s. At that time, it was expected that the family would look after children—not necessarily just the parents, but the wider family, and the next-door neighbour might be involved as well. Now, however, there is an expectation that the Government must fund facilities for childcare. The same applies to adult care: that, too, was something that families took on. It was a burden, there is no denying that, but one that was expected, and, in the family context, accepted. It was not ideal then, and what the Government are proposing now, I suspect, will also not be ideal. It will have imperfections. Our surgeries will be full of people saying, “My neighbour is getting this and I am not.” We all hear of such anomalies from constituents. There will be the issue of differences in property prices, for example. My part of the world has low property values: for £350,000, one can buy a nice four-bedroom executive property; that is not the case here in the south. There will be anomalies that need further consideration.
Then we need to ask, “How are we going to do this?” The Government need money now. That is the expectation of the general public. Yes, there is a danger that the money could fall into a black hole, but we all have the ability to challenge our local health trusts. My hon. Friend the Member for Great Grimsby (Lia Nici) and I have regular meetings with our hospital trust. We must expect the Government to challenge the NHS senior management at national level, but we all have a role to play. Our local authorities have scrutiny panels that can ask questions, but we as individual Members of Parliament can take part in detailed scrutiny. We want to know what has been done to improve dementia care in, for instance, Grimsby and Cleethorpes. We want to know what has been done to improve cancer care. Is the stroke unit better located at Scunthorpe General Hospital, which is the case in our district? There is much that we can all do to aid the Government, and, more important, to aid and help our constituents.
This is a massive challenge for Governments. Governments have to accept the world as it is, and not as they would like it to be. I urge my colleagues who have expressed perfectly legitimate reservations about supporting the Bill to have a rethink. The Government are delivering on what the public expect. The public know that massive amounts of money have gone into dealing with the pandemic, and they recognise that if they want a better health service—which they all do—and better social care, there is a cost. It is not a cost that I like, but it is the best way forward at the moment.
Geraint Davies (Swansea West) (Lab/Co-op)
The only way to sustainably finance the costs of social care and the NHS for an ageing population is a growing economy, so why is the Chancellor taxing work? He said at the last Question Time that the only way to tackle poverty was to encourage work, but he is taxing work, and specifically he is taxing poorer, younger workers who do not have assets to pay for the care costs of often richer, non-earning, asset-rich people. It is not fair, it is not economically effective, it is being rushed through—it is wrong in so many ways that it should just be scrapped.
Obviously, we need to pay for care costs. It is appalling that one in four people will be hit with massive care costs through no fault of their own, and we need a system that is fair in terms of taxation to pay for that. I am not a great fan of hypothecation, because we should be deciding how to tax in a fair and economically sensible way and setting out precisely what we are going to spend our money on, neither of which has been done. If we want to grow the economy and tax things that we do not want to occur—people have talked about alcohol and cigarettes—we should be tackling, in particular, air pollution. I say this as the chair of the all-party parliamentary group on air pollution. Air pollution costs us £20 billion in lost productivity and health costs, so why do we not have some sort of escalator on diesel? Why do we not have an incinerator tax? The plan is to double incineration by 2030, yet we read from the latest medical reports that a very small increase in NOx massively increases dementia and mental health issues by something like 32%, with an 18% increase in hospital admissions. We have heard new research about ultrafine particulates from incinerators in urban environments getting straight into the bloodstream and causing problems for the heart, the mind and the lungs in particular, but there has been no mention of any of this.
And what about plastics? There will be more plastics than fish in the sea by 2050. We plan to tax plastics at £200 per tonne, but in the EU the figure is £685 per tonne. If we put an extra £400 per tonne on the 12 million tonnes of plastic we produce each year, we would generate £5 billion. Why should we not be able to get a cheaper cup of coffee in a china cup than in a plastic one? That would save the environment.
I support the points that were made by my right hon. Friend the Member for Barking (Dame Margaret Hodge) and others on progressive taxation. Gordon Brown had a national insurance increase all the way up the income scale. Obviously we need a threshold if we are going to use national insurance. Lord Hendy is now putting forward the Status of Workers Bill, which would capture large numbers of people who are currently deemed to be self-employed so that their employers do not have to pay national insurance. In that way, we could have a larger tax footprint, which would be fairer.
Obviously companies such as Amazon should pay more and there should be a transactions tax. Landlords have made capital gains through stamp duty holidays and with interest rates at low levels, and we should also look at a carbon border tax at a time when China is producing more emissions than the United States and the EU combined.
We should tax the bad things—namely, climate change and pollution—not the good things such as work and the economy. On debt costs, the interest rates have been low—they are down £14 billion year on year—and this looks like another attempt to bring down the debt. We must tax the right things, not the wrong things, to sort out the problem.
Dr Andrew Murrison (South West Wiltshire) (Con)
I will certainly be supporting the Government in the Lobby this evening, and the reason is this: in 1948, we instituted a system of socialised medicine, which has the support of all major political parties in this country, for all medical conditions save just a few. They tend to be things such as dementia, the general frailty of old age and associated conditions such as Parkinson’s. Nobody in this place has any cause to hector or lecture on these subjects unless they have had personal caring experience for somebody with that spectrum of conditions, because I can tell them that it alters your perspective dramatically on what is needed to improve services for an increasing proportion of our population. It is no good Opposition Members professing their support for our model of socialised medicine while excepting the growing burden of ill health that tends to attend advanced years. That is chiefly what lies at the heart of this measure today.
If we are all agreed that it is invidious to except dementia and the frailty of old age from the provision that we have celebrated since 1948, we have to find an equitable way of paying for it, and that implies the use of a broad tax base. It is not clear to me from anything that has been said this afternoon that anyone other than those on the Government Front Bench has a clue as to how that alternative balance sheet would stack up. Despite interventions that I have made, I am none the wiser about what their alternative would be. Nobody enjoys taxation. As a Conservative, I loathe putting my hand in other people’s pockets, but there is a general expectation, after the pandemic, that money will have to be raised from somewhere. The only question that I would concede is when should we do that?
I would like to put one or two points to the Minister, having given him my support. We are fundamentally changing the health and social care system by providing this increase in funds and an alternative way of paying for health and social care through a hypothecated levy. It is likely that the social care industry will respond, as all businesses will. I am ever so slightly worried that things like hotel costs will be ramped up, as they are not covered by this, to the disadvantage of our constituents, and that costs will be frontloaded to about, say, £86,000.
I hope that Ministers, in their White Paper and subsequently, will insist on some way of limiting and moderating such frontloading; otherwise I fear that many of the advantages we want for our constituents and their families in this situation will be eroded. We need an indicative sum on, for example, hotel costs. Please do not assume that all within this sector are acting for pure and altruistic reasons. They are businesses and will respond as all businesses do.
I support the levy, as it is the right thing to do. No alternative has been put forward that is remotely credible, and I will strongly support the Government this evening.
Kim Johnson (Liverpool, Riverside) (Lab)
I pay tribute to the social care workers working in care homes and the domiciliary sector in my Liverpool, Riverside constituency.
This country is in the grip of a social care crisis, and this Bill needed to be a watershed moment for the sector. Instead, we have been presented with a package that neither fixes the social care system for service users and workers nor funds it fairly. Unprecedented numbers of staff are leaving the profession, with 600,000 care workers currently earning only the national minimum wage, more than 110,000 vacancies and a massive turnover of 30% a year.
We are in desperate need of a detailed plan to mend and future-proof a system broken by years of underfunding and neglect. Decent pay, terms and conditions for undervalued employees must take centre stage of any serious plan to tackle the deep-rooted structural issues in the social care sector, along with a long-term workforce strategy and improved quality and standards of care.
Instead, this plan does nothing to address the job retention and vacancy problem facing the adult social care sector by improving pay, terms and conditions. Can the Minister tell us what thought, if any, this Government have put into tackling job retention and vacancies in the social care sector?
Despite being the primary commissioner of adult social care services, local government is glaringly absent from the Government’s package. Age UK has called for a big injection of funding into councils’ care budgets, including a social care workforce strategy to meet rising demand and the needs of disabled and older people by widening the criteria for state support alongside a new deal for unpaid, informal carers.
We need a plan to fundamentally tackle the social care crisis through local government bringing services back in house, with proper funding raised by a wealth tax on the richest. Billionaires in Britain got £290 million richer every single day during this crisis. While they were raking in massive profits, millions across this country were struggling to make ends meet and many relied on food banks.
This package will leave a key worker earning £26,000 a year facing a hike in their Nl contributions, on top of a pay freeze, rising council tax, and a frozen personal allowance for income tax—and all this at a time when food, fuel and energy prices are increasing. It is obscene that, after all this, the Tories are pushing through a tax hike that will hit the lowest-paid workers while leaving the wealthy untouched.
The Prime Minister gave a strong assurance that he would fix the social care crisis after a decade of cuts by this Conservative Government, which took £8 billion out of the social care system. This plan does not come close to the additional £7 billion for social care called for by the Health and Social Care Committee, and much of the funds that will be raised risk being absorbed by a resource-starved NHS.
Social care should be universally free at the point of use, just like healthcare. Once again, we see another broken Tory promise. The lip service paid by this Government to levelling up is shown to be just as hollow as their promises not to hike taxes, and I will not be supporting this.
Richard Drax (South Dorset) (Con)
I am a great believer in the Conservative philosophy being probably the simplest of those of all the political parties. We believe in freedom—freedom of the individual and freedom from the state. We believe in low taxes. We believe in hard work and a safety net for those who fall into it. Aping Labour by spending billions of pounds we cannot afford will not fool the electorate for long. The NHS has become a religion—no one dares take its name—but a radical review of health provision is crucial if we are not to pour money into a black hole; we have heard this expression used repeatedly today, but it is a bottomless pit. Without reform, this money, well intended by the Government, will disappear.
Interestingly, and soberingly, the Resolution Foundation estimates that shortly 40% of all government expenditure will be on the Department of Health and Social Care. We repeatedly talk about reform but nothing happens. I was shocked when last week, having finished the debate, I learned that 43 new executives—I think I am right in saying this—are going to be employed by the NHS, on £270,000 each. I just do not know what to say. There are already enough executives in the NHS to run it, so why do we need 43 more, on these huge salaries?
As has been said, we are aiming our fire at business with this NI rise, and we are doing so at a time when the Office for National Statistics shows good news: employment is back to pre-pandemic levels, with more than 1 million job vacancies. That is fantastic news and so this is not the time to raise taxes. Every instinct in me screams for us to lower them, because if we do that, we get more money—that is a fact. There is no doubt that social care and the NHS need more money, but with it must come reform, as I have said. As a colleague said so wisely in the Chamber last week, we will never win the “arms race” with Labour when it comes to pouring money into the NHS. Like any household budget, if we cannot borrow, we have to prioritise what we spend. We have to cut in other areas.
As I said last week, where is the Singapore-style, low-tax economy we were promised once free of the European Union? Where is the narrative on a way forward as this pandemic becomes endemic and life returns to normal? Where is the vision? I sympathise with the Government and the Front Benchers, as these are unprecedented times, but I urge them: don’t go Labour-lite on us now. With our finances in a perilous state, we need to work our way out of this mess, not tax our way out. We need to galvanise our economy. Courage is needed, not hesitancy. Throwing out a sea anchor—I am a sailor and I know what I am talking about—will only create a drag on our recovery. It will not help it.
Let me remind the House, in the few seconds I have left, that we are talking about taxpayers’ money, something that, as Conservatives, we should not squander. I made this point last time, but this is taxpayers’ hard-earned money. Those on this side of the House are responsible for people’s money or we are not Conservatives at all.
Catherine West (Hornsey and Wood Green) (Lab)
I must agree with the hon. Member for South Dorset (Richard Drax) in one regard: we are talking today about not a small tax rise but a whopper. This levy takes us back to 1950s levels of taxation.
The post-pandemic recovery is currently particularly fragile. Usefully, the House of Commons Library sent me the statistics on the jobless figures today—I am sure many other Members have theirs—and in Hornsey and Wood Green there are 6,430 jobless people. That is 4,000 more than pre-pandemic, so the idea that the recovery is secure is for the birds. There is a real question mark in my constituency over job retention following the end of furlough, because the recovery in the service-based economy is yet to take off securely.
What is on the minds of my constituents in Hornsey and Wood Green? First, the likely cut of £20 per week for those on universal credit, which will affect 12,970 households in Hornsey and Wood Green.
Secondly, the two-child limit. If people in Hornsey and Wood Green have large families and rely on the benefit system for some assistance, only the first two children get any help. I am a third child. I do not know how many Members are third, fourth or fifth children, but they should think about their parents cursing them because they were born third, fourth or fifth.
Thirdly, energy bills are about to go up. I am sure the Minister has done his own analysis of the fact that we did not have a windy summer, which meant that the renewables did not do as much as we had hoped. We will be reliant on gas and even coal, which we should not be given all our commitments in respect of COP26. For those reasons, we will see increases in our energy bills this winter.
Fourthly, the potential for higher food costs is on my constituents’ minds—that is, if they can find the food that they like in the supermarkets after the effects of Brexit and covid.
Matt Rodda (Reading East) (Lab)
I am grateful to my hon. Friend for giving way on that very good point. Does she agree that it is fundamentally unfair for hard-working younger people, who face dramatically increased costs of living and high rental costs, to have to pay more than their landlords, who will not be taxed under the Government’s proposal?
Catherine West
My hon. Friend, who always talks about the impact of measures of this sort on those who rent, makes an excellent point. This levy is going to be very difficult for them, yet it will probably not be nearly as hard for their landlords.
Fifthly, the likelihood of a council tax increase is on my constituents’ minds. Why does council tax shoot up under Tory Governments? Because if local government is starved, council tax has to increase to cover local issues. In the case of this measure, the lowest paid will not only be paying for a whopper of a tax increase—the biggest since the 1950s—but will be faced with rising council tax bills and the precept for social care, because this measure will not adequately look after the local government aspect of social care. I declare an interest as a vice-chair of the Local Government Association and a former council leader.
I wish to make two further brief points—
Alexander Stafford (Rother Valley) (Con)
I am listening carefully to the hon. Lady’s interesting speech and her list of what her constituents speak to her about. One of the top issues that my constituents speak to me about is the need to deal with social care and to make sure that older people and people who need social care have adequate facilities and funding, yet I have not heard about Labour’s plan to deal with this important issue.
Catherine West
I am sure that when the shadow Minister, my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare), responds to the debate she will give the full detail of Labour’s proposals.
Let me return to my point about the important elements of reform that we need in local government. First, we need all care workers to be paid the living wage. By that I mean not Mr Osborne’s fake national living wage, which was the national minimum wage, but the real living wage, which in London is now more than £10 an hour but still languishes under £9 in other parts of the country. That must be addressed urgently. We need to look at those wages not least because of the important point that, as my hon. Friend the Member for Liverpool, Riverside (Kim Johnson) said, we are losing so many carers from the care sector. In addition, the Government are mandating vaccinations, and there is a big question mark over whether that is the correct strategy for those workers. Perhaps that is just another policy area where the Government are like a shopping trolley. Perhaps they will do another U-turn tomorrow and we will see that gone, we just do not know.
The other important element is training. Many experts have told me about the importance of training in the care sector, in the NHS, and especially in those dispersed jobs where people are actually working in the homes of those for whom they care and in our care homes. There is a desperate need for training and a proper career path in order to encourage people into the sector. Even the promise on the apprenticeship opportunities for young people to enter the care sector has been deeply disappointing in terms of the figures involved. Very few from the kickstart programme have ended up in the care sector, which desperately needs young people or people who are re-entering the workforce, but they need to be on a proper training path and in a proper career so that we have high quality care.
I hope that Members will search their consciences and think about how those leaflets will look at the next general election. We will be brutal about this, because the measure is attacking those who are least able to afford it.
Duncan Baker (North Norfolk) (Con)
Whether it is speaking about young carers, improving the pay and conditions of our care workers or pushing social care reforms for our older citizens, I have found myself in this place speaking about social care countless times since my election. One could conclude that I am happy that the Government are beginning to tackle this issue. I might be expected to say that as the MP who represents North Norfolk, an area where the social care sector is particularly important given the demographics of my residents.
As I have said to the many people who have asked for my thoughts on this Bill, in my view the prize of fixing social care is far greater in the long term than bickering about how we pay for it. It is regrettable, obviously, that we have to increase tax, but one simply has to be able to recognise the situation that the country finds itself in. The Exchequer cannot keep funding, in the current tax take, £12 billion to £14 billion a year—not to the extent that it has already supported the country to the tune of some £400 billion. Any reasonable person can recognise that. It would be fiscally irresponsible to continue to heap debt upon debt. There is probably no right way of creating the funding that we will require—a way that will satisfy everybody. Equally, there is no wrong way either. As I have not heard of a significant amount of consensus, a marginal rise in national insurance, to which, as we know, employees as well as employers will contribute, has, to a large degree in my constituency, been met with some understanding of the conundrum that we face.
The Opposition were asked time and again about how they would deal with this matter, but the hon. Member for Ealing North (James Murray) would not put a marker in the sand and explain what he would do.
Geraint Davies
I know the hon. Member said that it would be fiscally irresponsible to increase debt, but is he aware that the interest cost of debt per year has gone down by £14 billion because of historically low interest rates? Therefore, at this particular window in time, as we are coming out of a pandemic, would it not be better not to tax jobs?
Duncan Baker
I am sure the hon. Gentleman will remember the old adage that what goes up must come down, and, obviously, it could happen vice versa as well.
This Government have been incredibly financially prudent over the years. Most constituents around the country would say, “Thank goodness that we have had a Conservative Government looking after this country as they have produced one of the best responses to the pandemic in the entire world.”
What constituents want to see now are the tangible changes on the ground and the benefits. What we see today is probably one of the greatest welfare benefits that we have—the fact that there is a cap on how much a person pays in their later life for their care costs and that they will not have to sell their home will create security for a great number of people.
As the White Paper comes forward, I want to say three things to the Treasury and get these points on the record. First, I am a patron for the Holt Youth Project, which is a marvellous young people’s charity in my constituency. It has looked after some 50 young carers throughout the pandemic. Everybody knows that the life chances of young people are significantly affected as a result of looking after a sick or debilitated parent. I want to ensure that we can channel the funding that we get from this levy; there have been many asks today, including for dementia and other incredibly important causes, but please let us ensure that we fund young carers properly.
Secondly, let us ensure that unpaid carers are properly looked after. For those who take the burden off the state to care for their loved ones, the current allowance is £67 a week, at a cost to the Treasury of £3 billion a year. This must be looked at again.
Finally, let me address the recurring problem that we hear about all the time: the shortage of care workers. These people need to have the same high status and high regard as any NHS worker. We have to tackle and get to grips with the skills required to care for somebody with dementia or to give end of life care, and ensure that those care workers are properly rewarded.
Mr Deputy Speaker (Mr Nigel Evans)
To resume her seat no later than 4.45 pm—we will put the timer on—I call Nickie Aiken.
Nickie Aiken (Cities of London and Westminster) (Con)
I am a low-tax Conservative, but I have concluded over many years that if we are to resolve the social care crisis, it is necessary to raise the money to pay for it. I therefore support the introduction of a national health and social care levy. Pandemic or no pandemic, we have to raise the funds somehow. I feel that successive Governments, whether Labour, coalition or Conservative, have failed to address the social care crisis in this country because they were too scared to face the fact that we would have to raise the funds—until now. Well, the Prime Minister has made the brave decision to do it, but with that decision to raise funds must come reform.
I accept that the pandemic has meant that we now have a huge NHS waiting list of more than 5 million people. If we do not address that, it will only increase. I therefore accept that the money, in the first year or so, has to go to the NHS. However, as we have heard from across the Chamber over the last couple of hours, we must have reform. We cannot allow the money to continue to go into what has been described as a black hole.
When I was the leader of Westminster City Council, 40% of my budget was for social care and adult social services. That is an incredible amount of money. We know that people are living longer, whether in their own homes or in care homes. We have to ensure that local authorities are properly funded to provide the frontline services that they do. The Local Government Association claims that there is a gap of more than £2 billion, so I ask the Government to ensure that, in the spending review, local authorities are given the funding they need to address the immediate social care issues that they face.
During the summer recess, I was proud to spend a week looking after my father, who has advanced Alzheimer’s, while my mother had a respite holiday. It was a pleasure, but it was also very difficult. I pay tribute to all those family members who look after their loved ones who have dementia and Alzheimer’s. Our society owes them a huge debt. I hope that the money raised from this levy will go towards helping partners who look after their loved ones with respite care, and towards providing brilliant care workers—whether in care homes or providing care at home—with the pay and conditions that they deserve. Throughout the pandemic, they have shown what a brilliant service they provide.
I support the Government this evening, but I hope that we will see reform along with the tax rise.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to respond to this Second Reading debate on behalf of the official Opposition. I thank all hon. Members for their contributions. As several have said, it is good that we are now debating these issues, even though the Government have provided a short time today.
We have heard some excellent contributions, including from my right hon. Friend the Member for Barking (Dame Margaret Hodge), who spoke about how unfair the new tax is on working families. She also made it clear how many alternatives there are to this tax. My hon. Friend the Member for Birkenhead (Mick Whitley) talked about how the combined impact of this tax and the universal credit cut will push more families in his constituency into poverty. My hon. Friends the Members for Dulwich and West Norwood (Helen Hayes) and for Putney (Fleur Anderson) spoke powerfully on behalf of hard-working and underpaid social care staff, pointing out that the Government are increasing their tax through this Bill. As my hon. Friend the Member for York Central (Rachael Maskell) said, there is nothing in the Prime Minister’s announcement for unpaid carers. My hon. Friends the Members for Swansea West (Geraint Davies), Liverpool, Riverside (Kim Johnson) and for Hornsey and Wood Green (Catherine West) talked about the unfairness in this Bill.
The hon. Member for Rushcliffe (Ruth Edwards) made a powerful speech about her family’s experience with dementia and reminded us about the people at the heart of this debate. Several Conservative Members also called on the Government to think again about this tax rise, including the right hon. Member for Wokingham (John Redwood) and the hon. Member for Basildon and Billericay (Mr Baron). I hope they will join us in the Lobby tonight.
As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), set out last week, and as my hon. Friend the Member for Ealing North (James Murray) said earlier, Labour has two tests for the Government’s proposals: first, do they fix the health and care crisis; and secondly, are they funded in a fair way? The answer to both is a resounding no.
Gary Sambrook
We have had three hours of this Second Reading debate, and as far as I am concerned, not a single Opposition Member has actually said how they are going to fund their plan and how it is going to be fair, so will the hon. Lady take this opportunity now to tell the House what individual tax Labour would put up to fund it?
Abena Oppong-Asare
I am a bit concerned that the hon. Member has not been listening to the debate carefully. We have made it very clear: if a tax has to be raised, it should be fair across income groups and generations. The national insurance rise fails to pass these tests, and the Chancellor wants us to believe that there is no way to do so. That is not the case. I want to hear from the hon. Member what he is going to tell his constituents about breaking his manifesto promise, and why he has done so. What will he say to the low-paid hospital cleaners who will have to pay this tax when some of the wealthiest people in his constituency will not?
It has become increasingly clear that this Government do not have a plan to fix the social care crisis or to tackle spiralling NHS waiting lists. It is certainly not in this Bill, which only says that the Chancellor will decide how to distribute the revenues between health and care. Even if we look at the broader proposals, it is clear that there is still no plan for social care. Indeed, the Chair of the Health Committee made this point earlier. A promise of a White Paper is simply not good enough. Despite the Government repeatedly stating that they have finally grasped the social care nettle, the small print reveals that only a fraction of this spending will go to social care over the next three years—and even that is not guaranteed.
Of course our NHS needs more funding, not least because the Tories have underfunded it for a decade, but funding without a plan is not an answer. On social care, the Institute for Fiscal Studies has said that
“the extra funding will not be sufficient to reverse the cuts in the numbers receiving care”
since 2010. Under the Tories, billions have been cut from social care despite growing demand, vacancies have soared, and waiting lists have grown ever longer. This sector is in crisis and it needs help now. Instead, the Government are making it wait. The hard-working and underpaid staff in the care sector deserve better than that. As my hon. Friend the Member for York Central said, even with the new cap, hundreds of people will be left with high care costs, with many costs associated with being in a care home excluded completely from the cap. The cap does not even kick in until 2023. For those paying for social care, or those who need it but cannot afford it, this is no help at all. Even when it does start, too many will begin to face charges of hundreds of pounds a week even after they hit the cap.
The Government cannot even guarantee that this new system will prevent people from being forced to sell their home to pay for care. For those who live in the north, where house prices are generally lower, that is even more likely—£86,000 is a big proportion of house values in the north and the midlands. The plan fails on its own terms, and it is not only Labour saying that. Last week, the Conservative chair of the Local Government Association said that the Government’s announcement would make the situation worse because private care providers would face increased tax bills. Let that sink in: the leading Tory voice for local government is not only saying that the proposals will not help, but that they will make things worse, and it is not just him. The hon. Member for Stevenage (Stephen McPartland)—also a Conservative, last time I checked—said:
“The new health and social care levy provides no new money to fund social care for three years. No money for living costs, only personal care costs. Selling your home is just deferred. It is a tax on jobs.”
The Government have no plan for social care and no plan to bring down NHS waiting lists. Instead, all we are left with in this Bill is a manifesto-breaking tax rise on working people and the businesses who employ them—a tax rise that will cost a typical employee an extra £261. I say that again to the hon. Member for Birmingham, Northfield (Gary Sambrook): this tax rise will cost a typical employee an extra £261. It is a tax rise that leaves many graduates with a marginal tax rate of nearly 50% and that comes after this Government are already hitting working families with higher taxes and a freeze in the income tax personal allowance.
That is a triple whammy of taxes on working people, yet the Government have chosen not to extend the health and care levy to rental income, even though 67% of people who own buy-to-let properties are in the top fifth of income distribution. Nor have the Government looked properly at financial assets, stocks and shares, or income from other forms of wealth. The proposed dividend tax rise will raise only £600 million, compared with the £11.4 billion coming from workers and businesses, and it is not even in the Bill. Just £1 in every £20 is coming from dividends, rather than people’s wages, and the Government will not even rule out further tax rises on working people during the rest of this Parliament.
The tax rises could not come at a worse time. A fragile recovery is being put at risk at precisely the time we need businesses to create jobs. Family incomes are being hit by the universal credit cut and rising household bills. In fact, when combined with the universal credit cut, a care worker will be over £1,000 worse off a year. Let me repeat that: £1,000 worse off over a year. The Government’s own tax impact assessment, which my hon. Friend the Member for Ealing North referenced earlier, states:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
That just sums up how this Government are treating workers and families.
The impact assessment also states that the new tax will affect business decisions about hiring new workers and putting up wages. It is a tax on jobs, a tax on workers, a tax rise with unfairness at its heart, and a tax rise without a plan. Politics is about choices—Labour would not have made these choices. We cannot support this Bill, and I urge Government Members to remember their manifesto commitments that they each made, to think of the lowest paid in their constituencies and those in desperate need of care today and to do the right thing and vote against the Bill on Second Reading.
Jesse Norman
I thank everyone who has taken part in what has been, with one or two exceptions, a generally constructive debate. I will start with the contribution of the hon. Member for Erith and Thamesmead (Abena Oppong-Asare). She said rightly that politics is about choices, but what choice has Labour given the people of this country? Has it given the people of this country a healthcare plan or a social care plan? Has it given the people of this country any indication of what taxes it would raise? Again and again, the Opposition have been asked by Members not just on the Government Benches, but elsewhere, what taxes they would raise and what their plan is, and there is no plan.
Jesse Norman
There have been 27 speeches, so, if I may, I will continue for a while. I may take an intervention later if we have made a bit more progress.
I feel particularly badly for the hon. Member for Erith and Thamesmead because, when the hon. Member for Hornsey and Wood Green (Catherine West) was asked what Labour’s plan was, she said that her Front-Bench colleagues would address that in their remarks. We waited with bated breath for the moment when they would address the question of what the plan was or what taxes would fund it. I can tell you, Mr Deputy Speaker, that it will need a lot more than £12 billion of health and social care funding to repair the damage from that hospital pass from the hon. Member for Hornsey and Wood Green.
Catherine West
I am grateful to the Minister for giving way, as he mentioned me. The UK economy has seen enormous asset price bubbles, yet not much appears to be getting back from those who have made quite a lot of money over the years through real estate. Why is he taking more money from working people instead of those who have gained enormous amounts—millions—from the asset bubble?
Jesse Norman
I am desperately sad, because I thought the hon. Lady was going to answer my questions about Labour’s plan or the taxation for it. Of course, we would expect people earning that income to pay property and income taxes in the proper way, and, if they are receiving dividends, their tax will go up as a result of the changes that we have made. [Interruption.] I am asked on what basis I say that. It is on the basis of a distribution analysis of the overall package of measures published by the Treasury in the last week, which is available for all Members to read and consult. If they do, they will see that this is a very redistributive package, with the highest-income 20% of households contributing 40 times that of the poorest 20% of households. It is a genuinely progressive policy, and the distribution analysis makes that clear.
Paul Holmes (Eastleigh) (Con)
I do not think that the Minister will mind me saying that he has served in the House for slightly longer than me. In his time, has he ever known a situation in which the Labour party—a supposed party of the NHS—has voted against billions of pounds of investment in the NHS?
Jesse Norman
It is a desperate shame that the Labour party has decided to take this party political position, because this area above all is one where we would expect it to back its own policy priorities. I remind the House that these measures are more progressive than the national insurance contribution rise of 2003 for which Labour Members enthusiastically voted, yet they are not supporting them. I find that extraordinary—[Interruption.] I am asked where my plan is. It is written down, and it is called “Build Back Better: Our Plan for Health and Social Care” That is a plan. The void that exists on the Opposition side is not just a void of a plan but a void of a tax package to pay for it.
Colleagues throughout the House have made the right and proper suggestion and implored the Government to look carefully at how the funds that we are raising can be appropriately spent. We must be careful about that. No Conservative wants to raise taxes, and indeed no Conservative would like to waste money. I want hon. Members to understand that Ministers very much take that on board. As hon. Members will know, we have a health and social care plan coming forward in a White Paper, and legislation is in place to put it on the statute book. That is the position.
My hon. Friend the Member for North Norfolk (Duncan Baker) and the hon. Member for Liverpool, Riverside (Kim Johnson) rightly made a point about younger people and support for care workers. Of course, we have not just the already published plan for jobs but £500 million of new money pledged to support social care workers, including through new qualifications, progression, and wellbeing and mental health support. That is an important part of what we are doing.
There was one Opposition Member who had genuine ideas for taxation that would support social care: the right hon. Member for Barking (Dame Margaret Hodge). She presented a whole raft of ideas. I do not accept the ideas she put forward, for different reasons, and I think the proposal that the Government have put forward is superior as a single, broad-based package of measures that has this progressive, distributional effect, but she came forward with ideas. What a void, what an emptiness, what a vacuity sat around her from the Labour Front Bench and from the rest of her party. I congratulate her on at least trying to answer the question put by the hon. Member for Erith and Thamesmead that politics involves choices; and what was the choice? The right hon. Member for Barking gave us one.
In doing so, however, I think the right hon. Lady erred. There has been some discussion about the tax information and impact note that the Treasury put out last week. Let us be perfectly clear: that is a technical document that relates only to this levy. It does not relate to the overall effect of the package of measures that it funds; macroeconomically, we expect that overall effect to be broadly economically neutral. That is the picture we are presenting, so just to look at the tax side, as the right hon. Lady did, is I am afraid to miss half the point of it. The point was made very well by Ben Broadbent, a member of the Monetary Policy Committee of the Bank of England. He said that
“one should not ignore one half of that policy announcement as far as the effects on the economy concerned”,
and he was absolutely right about that. So what we have is a balanced policy: we have a health and social care plan with a funding package that the House is considering at the moment.
Let me talk a little more about colleagues. I very much support the comments of my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) about the concern that other Members across this House have about the increase in pay at hospital trusts and in some parts of the NHS. That is a matter of concern, and we have to be absolutely clear that that money is being properly spent in the NHS and across hospital trusts. It is a very strong concern of my right hon. Friend the Chief Secretary, because he—like us, like me—is concerned to support not just our NHS, but the taxpayer in making sure that that money is properly spent.
I very much supported the points made by my hon. Friend the Member for Arundel and South Downs (Andrew Griffith) when he celebrated the adult social care workforce. He was absolutely right to do that, and I hope he will be pleased at the £500 million that we have mentioned in that regard.
May I remind the House that, in grasping this nettle, the Government have not just moved forward on an issue that has been outstanding before this House for many years, but have shown how inadequate the Labour party response was to its own royal commission of 1999, from which, as we can see, virtually no social care—no enduring social care—package followed? If you do not like that, Mr Deputy Speaker, let me direct you to the Wanless report of 2006, on the basis of which no sustainable social care package was developed. That situation is changing now. This Government are putting that sustainable social care funding in place. We are doing it with a levy that tracks many other countries that have social care levies in place. This is a progressive, long-term way to address a problem that has remained in front of us, but unaddressed, for far too long, and I commend this measure to the House.
Question put, That the amendment be made.
Health and Social Care Levy Bill
Tuesday 14th September 2021
(2 years, 7 months ago)
Commons ChamberRead Full debate Health and Social Care Levy Act 2021 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 14 September 2021 - (14 Sep 2021)
19:23 - The House divided: - Ayes: 56 / Noes: 324 - Question accordingly negatived.
19:39 - The Committee divided: - Ayes: 236 / Noes: 320 - Question accordingly negatived.
19:52 - The Committee divided: - Ayes: 240 / Noes: 320 - Question accordingly negatived.
20:14 - The House divided: - Ayes: 307 / Noes: 251 - Question accordingly agreed to.
The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)
I should explain that although the Chair of the Committee would normally sit in the Clerk’s chair during a Committee stage, I will remain here in the Speaker’s chair while we still have screens around the table, although I will be carrying out the role not of Deputy Speaker, but as Chairman of the Committee. I should therefore be referred to as the Chair of the Committee rather than as the Deputy Speaker.
Clause 1
Health and social care levy
Question proposed, That the clause stand part of the Bill.
The Second Deputy Chairman
With this it will be convenient to discuss the following:
Amendment 8, in clause 2, page 2, line 21, at end insert—
“(1A) HMRC shall publish a forecast of the estimated costs of collecting the health and social care levy for the tax year 2023-24 by 31 March 2022.”
This amendment would require the Government to publish in advance of the levy coming into force its assessment of the extra costs of collecting the levy.
Amendment 7, page 2, line 23, after “cost” insert
“in current or future years”.
Amendment 1, page 2, line 28, leave out from first “as” to end of line 30 and insert
“determined by joint agreement between the Treasury and the devolved administrations of Wales, Scotland and Northern Ireland.”
This amendment would require agreement between the Treasury and the devolved administrations of Wales, Scotland and Northern Ireland as to the shares of the proceeds of the levy that are allocated between health and social care and between England, Wales, Scotland and Northern Ireland.
Amendment 4, page 2, line 29, leave out from “as” to end of line 30 and insert
“determined jointly by the Treasury and the devolved governments of Scotland, Wales and Northern Ireland.”
The amendment would require joint agreement between the Treasury and the governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four areas and between health care and social care.
Clauses 2 to 7 stand part.
New clause 1—Equality impact analysis—
“(1) The Chancellor of the Exchequer must review the equality impact of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the impact of the Act on—
(a) households at different levels of income,
(b) households at different levels of wealth,
(c) equality between different ages, and
(d) impact between the nations of the UK and regions of England.
(3) In this section ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”
This new clause seeks an equality impact assessment of the Bill covering households at different levels of income and wealth; equality between different ages; and the impact between the nations of the UK and regions of England.
New clause 2—Review of economic impact of Act—
“(1) The Chancellor of the Exchequer must review the economic impact in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the effects of the provisions of the Act on—
(a) business investment,
(b) employment,
(c) productivity,
(d) GDP growth, and
(e) poverty.
(3) In this section ‘parts of the United Kingdom’ means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland
and ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”
This new clause seeks an economic assessment of the Bill on investment, employment, productivity, growth and poverty in the devolved nations and English regions.
New clause 3—Review of revenue effects of Act—
“(1) The Chancellor of the Exchequer must review the revenue effects of this Act and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.
(2) Any review under this section must include an assessment of—
(a) the impact of this Act on revenue derived from—
(i) employment, and
(ii) self-employment; and
(b) the impact of the revenues under this Act from employment and self-employment on the revenues derived from taxation on—
(i) dividends,
(ii) rental income, and
(iii) other forms of personal income.”
This new clause would require the Chancellor to report to the House on the impact of the Act on tax revenue derived from different sources of income.
New clause 4—Review of impact of Act on business—
“(1) The Chancellor of the Exchequer must review the impact of this Act on business and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.
(2) Any review under this section must provide a separate analysis of the impact of the Act on the operating costs and profits of—
(a) small and medium sized enterprises,
(b) large enterprises solely based in the UK, and
(c) large multinational enterprises.”
This new clause would require the Chancellor to report to the House on the impact of the Act on the operating costs and profits of different sizes of business enterprises.
New clause 5—Review of equality impact of Act—
“(1) The Chancellor of the Exchequer must review the equality impact of this Act and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.
(2) A review under this section must provide a separate analysis of the equality impact of this Act on—
(a) income inequality,
(b) wealth inequality,
(c) geographical inequality,
(d) inequality between people with protected characteristics (within the meaning of the Equality Act 2010), and
(e) socio-economic status.”
This new clause would require the Chancellor to report to the House on the equality impact of the Act.
New clause 6—Report on levy expenditure shares—
“The Chancellor of the Exchequer must report to the House of Commons at the end of each financial year the share of the levy spent on—
(a) health care, and
(b) social care.”
This new clause would require the Chancellor to report annually to the House on the share of the levy spent on health care and on social care.
New clause 7—Report on levy revenue derived from those in the social care sector—
“The Chancellor of the Exchequer must lay a report before the House of Commons within six months of the passing of this Act, and every 12 months thereafter, containing an assessment of the levy revenue derived from those working in the social care sector.”
This new clause would require the Chancellor to report to the House on levy revenue derived from those working in the social care sector.
New clause 10—OTS Assessment of levy and National Insurance increase—
“(1) The Office for Tax Simplification shall publish by 30 September 2022 a report assessing the advantages and disadvantages of introducing the health and social care levy in comparison to the increase in National Insurance.
(2) The report shall include an assessment of the costs of HMRC in collecting the levy and for employers in complying with their obligations in relation to the levy.”
This new clause would require the OTS to publish by September 2022 its assessment of the merits of the levy in comparison with the increase in National Insurance, including costs of compliance with and collection of the levy.
Jesse Norman
It is a great pleasure to be here today to explain the clauses in this Bill.
The Social Security Contributions and Benefits Act 1992 sets out the earnings and profits on which employees, employers and the self-employed are liable to pay national insurance contributions. Clause 1 of the Bill introduces a new tax, to be known as the health and social care levy, which will be charged on the same basis as national insurance contributions. The levy will be set at 1.25%, and will affect earnings from 6 April 2023 onwards. When individuals or employers are liable for a qualifying national insurance contribution, they will also be liable for the levy. The levy will be payable on the earnings and profits on which those contributions are payable. The qualifying national insurance contributions in question are primary class 1 NICs that employees pay on their earnings, secondary class 1 NICs that employers pay on the earnings of their employees, class 1A and class B NICs that employers pay on benefits in kind received by their employees, and class 4 NICs paid by the self-employed.
This new levy has been introduced to raise funds for health and social care, so it is only right that individuals of all ages who are able to pay should do so. Therefore, individuals over state pension age who would be liable for those contributions were they not exempt will be liable for this levy.
Sir Edward Leigh (Gainsborough) (Con)
If we are talking about an insurance system, can the Government explain why they have ruled out state-sponsored insurance? I can understand why they cannot rely entirely on private insurance—the risk is too great—but Dilnot originally came up with the idea that people could take out insurance when they retired which would be a charge on their house, and they would have to pay it back when they died on the basis of the value of their house. I am not asking the Government to accept these ideas now; I am simply asking whether they have an open mind and are prepared to look at them. This is a complicated matter, and we want to have a real insurance system.
Jesse Norman
In the collective sense, this is a state insurance system, because it is making long-term provision for catastrophic outcomes in people’s health and social care, but the point that my right hon. Friend has made is an acute one. He will be aware that both the King’s Fund and the House of Lords Economic Affairs Committee have looked at private insurance models and concluded that they have severe limitations that would not make them appropriate. Indeed, no country in the world has a purely private insurance model. It has certainly been contemplated by Professor Dilnot, and it is compatible with the thrust of this legislation, that there should then arise a private insurance market, now that some of these catastrophic risks have been removed from the calculus that individuals have to make about their own social care. I hope that that addresses my right hon. Friend’s point.
As I was saying, individuals over state pension age who would be liable for those contributions were they not exempt will be liable for this levy. That means that pensioners in work will now contribute 1.25% of their “NIC-able” earnings, or profit, to health and social care in the same way as working-age employees and self-employed individuals.
Clause 3 discusses in more detail how NICs legislation applies to the levy. However, clause 1 also ensures that when an employer benefits from a zero rate of secondary class 1 NICs, such as employers of people under 21, of apprentices who are under 25, of veterans or of employees in freeports, those earnings that are subject to the zero rate will not be liable for the levy. That will ensure that businesses continue to invest in young people developing strong skill sets, and in those who have served this country.
John Redwood
As I understand it, it is the Government’s wish that the social care levy should appear as a separately identified line item, with that phrasing, on a payslip. Could it also be clear on a payslip that it would represent only a small fraction of social care costs and a tiny fraction of health costs? Otherwise, it could be very misleading.
Jesse Norman
That is a helpful suggestion. I do not think there will be any ambiguity in the language on the slip, but of course it might not be clear that it is not the totality of the funding that goes through Government. If I may, I will take what my right hon. Friend has said as a suggestion and refer it to colleagues.
Sir William Cash (Stone) (Con)
I would like to ask the Minister, as he has such responsibilities across the board, whether he has contemplated the question of public waste in the context of, for example, HS2? If we were to cut that back and to cut back waste generally throughout Government, would that not send an enormously powerful message to the British people that we are not only concentrating on this aspect of public expenditure but balancing it off by making real savings in other areas, given that the Treasury or its economic advisers have said that they have put phase 2a of the HS2 legislation on red watch because it is so impossible to achieve its objectives?
Jesse Norman
My hon. Friend has successfully dragooned a topic that has nothing to do with national insurance contributions or the levy into the debate, but let me reassure him that the Treasury seeks to exercise a hawk-like vigilance over all public spending. I do not think it would be appropriate to think of the response to the pandemic of the past two years as characteristic of the Treasury’s overall largesse, and we look very closely at the spending on HS2, which is the specific responsibility of my right hon. Friend the Chief Secretary to the Treasury and one that I know he takes with great seriousness.
Dr Murrison
The fact that the social care levy will be introduced in 2023 and not 2022, and that in the interim we will have to rely on national insurance, suggests that creating it will involve quite a lot of work and expense. How much is it going to cost to introduce the levy, beyond national insurance? Based on that, we will need to make an assessment as to whether it is worth while putting the 1.25% levy on people who are past state retirement age. If it is costly, we should not do it and simply rely on national insurance contributions. Allied to that, how much does my right hon. Friend think the 1.25% levy is going to raise from people who are beyond state retirement age?
Jesse Norman
That was a series of questions. The payslips that people are given will be generated by their own companies in the large part, and it is therefore important to think not only about the changes that HMRC will have to make but about the changes to be made by companies in order to reflect the amendment to payslips. In the case of HMRC, the Government have clarified in a letter to the Treasury Committee that, although it is very early days, HMRC provisionally estimates the operational costs of implementing the levy at between £50 million and £60 million, which is not nothing but it is not substantial in the context of the overall amount to be raised. I think the final part of my right hon. Friend’s question related to the amount that would be attributed to the over-65s. One would expect that to be relatively modest, because the number of qualifying people will not be enormous and because they generally have a high propensity to manage their work-life balance, meaning that there might be a dynamic effect from the levy. I am not aware that we have put that number into the public domain, but if we have it, I will see if we can publish it, probably at a future fiscal event—at the Budget or thereafter.
The Second Deputy Chairman
Order. Just before Dr Murrison makes a further intervention, can I ask the Minister please to face the microphone? Otherwise, Members will not be able to hear his responses; I have found it difficult to hear him.
Dr Murrison
Just to clarify my thinking on this matter, is that £50 million to £60 million a one-off or a recurring feature?
Jesse Norman
I think it is the set-up cost, although it may be incurred over more than one year. As I say, it is a very preliminary number that we have tried to get for the purposes of responding to the Treasury Committee’s inquiry.
Nigel Mills (Amber Valley) (Con)
My right hon. Friend talks about the advantages of having clarity on payslips about what people are paying for with the health and social care levy. Has he thought about combining the existing national insurance contributions that are allocated directly to the NHS and do not go into the National Insurance Fund? They are around £26 billion each year, which would effectively treble the amount of money in the levy. That would make it much clearer that people are paying all of it towards the health system, rather than having two different taxes doing exactly the same thing in slightly different ways.
Jesse Norman
My hon. Friend rightly points out that an element of NICs is already hypothecated, which is sometimes forgotten by people who are concerned about the hypothecation in the levy. I will take his remarks as a suggestion and reflect on them further. I recognise his expertise in this area, so I am grateful for the intervention.
Serendipitously, I will now address my hon. Friend’s amendment. This amendment asks that HMRC should publish a forecast of the estimated costs of collecting the levy. The published tax information impact note sets out clearly that the operational costs of the levy are being quantified. I have given a preliminary indication, but we will publish the final estimates before the levy comes into effect in April 2022. This amendment is therefore not necessary and I would ask him to consider not pressing it to a vote.
Matt Hancock (West Suffolk) (Con)
Building on the point made by my right hon. Friend the Member for Wokingham (John Redwood), is not one of the advantages of having a separate health and social care levy that, as people’s representatives, we can explain more clearly that if we want to put more money into the system, it has to be paid for? Will that advantage not ultimately help connect people to where their money goes and, therefore, enrich the debate?
Jesse Norman
I think it will, which is why the Government have decided to make this rather important change. It may well be that this is not the end of the story, and in due course the desire for clarity about how money is spent, which is expressed elsewhere in the tax system, might manifest itself in other ways. I do not want to speculate on that, but my right hon. Friend has outlined the importance of accountability, clarity and perspicuity in how money is spent.
Sir Christopher Chope (Christchurch) (Con)
Would it not be even simpler and more transparent if we had a social care levy standing on its own? Is it not the case that the Government do not want to have a social care levy on its own because they know that, if there were transparency, it would be obvious that we were reneging on our manifesto commitment of two years ago?
Jesse Norman
I do not think that is true at all. The reason for putting it on the payslip is so that taxpayers can see that this new tax is clearly represented. If they need reassurance that the support for social care, in their own life and in the life of their family and community, will be long standing and enduring, they need only look at their payslip.
Sir Christopher Chope
If it is about social care, why do we not have an exclusive levy relating to social care? Would that not be much clearer and more transparent?
Jesse Norman
My hon. Friend invites us to think of social care as a completely separate thing, but of course there is a tremendous overlap between social care and some aspects of health. It is important to make sure that the system, which I think all hon. Members realise is too disjointed, is more joined up. This treatment therefore appears to be more appropriate to an area where we want to see more integration.
Jesse Norman
The hon. Gentleman has not featured in the debate so far, so I will make a bit more progress before happily taking his intervention.
Amendment 7, tabled by my hon. Friend the Member for Yeovil (Mr Fysh), seeks to ensure that proceeds from the levy can be used in any tax year. As the Committee will be aware, the levy is designed to mirror the approach of the national insurance system, which has always operated on a pay-as-you-go basis. Indeed, that has been the case since the NHS and the National Insurance Fund were established in 1948. This means that national insurance contributions collected in one year are used to pay for the NHS and contributory benefits paid out in the same year. The pay-as-you-go basis provides a clear precedent for how the levy should operate and that also ensures simplicity and consistency across the NICs system. So I hope that my hon. Friend will not press his amendment, for the reasons I have outlined.
Clive Lewis
On the point made by the hon. Member for Christchurch (Sir Christopher Chope), one reason the Government have used the term “health and social care” is that they have established a principle that people pay at the point of delivery. As we see health and social care begin to integrate, the fear for many Labour Members is that this is a Trojan horse for introducing those payments for healthcare—for the NHS. One of my fears when the Prime Minister spoke of this delivering “profoundly Conservative” outcomes was just that danger.
Jesse Norman
It is helpful to have a diagnosis of why Labour Members might be opposed to or worried by this, but the fear is entirely without foundation. There is no suggestion that the Government wish to create a system that is anything other than free at the point of delivery, and that is the basis on which the Government have always proceeded and proceed now. We are trying to put a longer-term arrangement in place for social care that allows us to bring the same kind of clarity to it that people have enjoyed for many years with the NHS.
Nadia Whittome (Nottingham East) (Lab)
If the Government believe in a social care system that is free at the point of use, why are they not delivering a social care system like that, one like the NHS, which is universal and available to everyone?
Jesse Norman
I do not know whether the hon. Lady heard, but I was talking about the NHS and that has been a founding principle of the NHS, one the Conservative party have always adhered to, and rightly so. What we are doing with the levy is funding an expansion and a development of an existing set of arrangements, and, as I have discussed in relation to the question from my right hon. Friend the Member for Gainsborough (Sir Edward Leigh), the potential to expand that through the use of other mechanisms of support, now that these catastrophic risks have been removed, or will be removed, from people’s lives.
Let me turn to the amendments tabled by the Scottish National party and Plaid Cymru which look to require a joint agreement between the Treasury and the Governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four parts of the UK, and between healthcare and social care. As for how the levy revenue will be split between the four parts of the UK, this legislation mirrors existing legislation on how NHS allocation is divided between England, Scotland, Wales and Northern Ireland. It is right and appropriate that we should follow that established precedent. The Government will work closely with the devolved Administrations on the implementation of the levy, including on the process for allocating revenues across the UK and on the split between health and social care from April 2023 onwards. It is also worth bearing in mind that the devolved Administrations’ overall funding will continue to be determined by the Barnett formula, so that this process will just determine the element provided by the levy. I hope that the Members concerned will not press their amendments, for the reasons I have outlined.
Alison Thewliss
I do not know whether the Minister has read the note from the Hansard Society on this, but it is concerned by some of the implications for the devolution settlement. It says:
“There is also no requirement in the Bill for the Treasury or the Health Secretary to consult the devolved administrations about any aspect of the process.”
Is that not a cause for concern?
Jesse Norman
The Treasury already consults the devolved Administrations very closely on many aspects of tax policy and there is no reason to think, and the Bill does not suggest, that there should be any other reason for handling this. On the contrary, following an existing hypothecation gives direct support to devolved Administrations that they will be able to receive the Union dividend, which is generated and delivered by this policy.
Clause 2 creates a legally binding obligation to use the funds raised by this levy for the purposes of health and social care, and sets out that HMRC will direct funds to the Secretary of State to be used for the cost of health and social care in England, Wales, Scotland and Northern Ireland. The funds from the levy will be shared between healthcare and social care, and will be shared between each nation in a proportion determined by the Treasury. The Treasury has used the long-standing Barnett formula to fund devolved Administrations and will continue to do so for the proceeds of this measure. Clause 2 goes further and ensures that any interest or penalties that can be attributed to the levy will also be used to fund health and social care. However, any expenses incurred by HMRC in collecting the levy will be deducted from the proceeds, which ensures that HMRC has the ability to collect and police this levy properly. I therefore ask Members to allow clause 2 to stand part of the Bill.
Dr Murrison
On clause 2, in 2014 we passed the Care Act and accepted the Dilnot proposals; slightly less than two years later, we canned the central part of the Dilnot proposals, in that it was decided that local government should in fact have the social care uplift, which had been anticipated in 2014. What certainty do we have that the measures we are passing today will not be dealt with in a similar way if, in two or three years’ time, we find that the pressures on local government are so acute, which they may well be, that we have to can some of the measures we discussed earlier?
Jesse Norman
I thank my right hon. Friend for his question. I think the point is perfectly clear: this levy is intended to be and will be a long-term, permanent funding arrangement to support health and social care. The plan includes a component that is designed to support local government in the delivery of care services without distorting markets that are already in existence. There is no reason to think, and we do not anticipate, that there will be specific issues that cannot be addressed at the time. The commitment to provide a longer-term funding settlement that can be reviewed and considered by individuals when they pay their national insurance contributions, and to do so in a way that gives them comfort that that same settlement will be in place, in a way similar to the state pension system, so that they can plan against it, is manifest. The Government have made that clear.
Clause 3 specifies that any provisions that apply to a qualifying national insurance contribution are to apply to equivalent payments in respect of the health and social care levy. It also sets out the limitations of such provisions applying to the levy.
Clause 4 provides for regulations for the purposes of the health and social care levy to be made under the Bill and specifies the parliamentary procedure that will apply to those regulations.
Clause 5 sets out the transitional arrangements for the measure and specifies that they will apply only for the 2022-23 tax year. Its effect will be to increase temporarily the rates of classes 1, 1A, 1B and 4 NICs by 1.25% for one year. There will be a corresponding temporary increase in the amount of contributions allocated to the NHS by the same amount.
Clause 6 defines various terms used in the Bill. Clause 7 specifies the short title of the Act as the Health and Social Care Levy Act 2021 and states that the levy is payable by or in relation to employees of the Crown. I commend all those clauses to the House.
Let me turn to new clauses 1 and 2, tabled by the SNP, and clauses 3 to 5, tabled by Labour. These new clauses ask the Government to review and report on the impact of the revenue effects of the levy, its impact on business and its impact on equality. I wish to explain why they are unnecessary.
The Government have already provided a number of assessments of the levy’s impact, including a distributional analysis of the impact of the combined tax and spending announcements that shows that lower-income households will be large net beneficiaries from the package, with the poorest households gaining most as a proportion of income. It also shows that the 20% of highest-income households will contribute more than 40 times the contribution of the 20% of lowest-income households.
There is a further assessment in a technical annex in the Government’s plan for health and social care. It sets out the impact on the Exchequer, individuals and businesses and shows that 70% of the money raised from businesses will come from the largest 1% of businesses, while 40% of all businesses will pay nothing extra.
The tax information impact note is a third form of assessment. It sets out the equality impact of the levy specifically rather than of the overall package of measures.
Alex Sobel (Leeds North West) (Lab/Co-op)
As well as on businesses, the levy will have a large effect on the bills of public services. For instance, West Yorkshire Police is looking at having to pay an extra £3 million of national insurance, and for Leeds City Council the amount for directly employed services is also in the region of £3 million. Somewhat ironically, many of the social care services that the council uses are outsourced, so the NICs will push up the cost of those services. What assessment has the Minister made of the effect of the levy on local government and the police?
Jesse Norman
The plan is clear that, to the extent that national insurance contributions are incurred by public bodies, they will be met. The funding is set up on that basis. In respect of local government, extra pressures other than those already contemplated are matters for discussion in the spending review. That is the normal fiscal procedure and the one the Government are following.
I turn now to address the Opposition’s new clauses 6 and 7 on reporting the levy expenditure shares and the revenue derived from those in the social care sector. First, on the share of levy spent on health and social care, the Government already routinely publish data on departmental spending throughout the year, including at main and supplementary estimates, through public expenditure, statistical analyses and in departmental annual reports and accounts as well as data on the revenue raised from individual taxes.
At present, this reporting shows, for example, exactly how much revenue NHS England receives from national insurance contributions. In future, this will show the contribution that this levy makes to the budgets of the Department of Health and Social Care and the Ministry of Housing, Communities and Local Government. There is no need for additional reporting in that context as all the relevant information will readily be publicly available. The Government have already published the amounts that will go to the NHS and to adult social care over the next three years as a result of this levy and will confirm final allocations at the spending review.
Finally, on the levy revenue derived from those in the social care sector, existing data sources do not include or reliably collect data on employment by sector. It is not known which sector an individual works in, only their income types and amounts. I hope that, given these considerations, Opposition Members will not press their new clauses for the reasons that I have outlined.
Let me turn to new clause 10 tabled by my hon. Friend the Member for Amber Valley (Nigel Mills). This would require the Office for Tax Simplification to publish an assessment of the merits of the levy. As outlined in the Finance Act 2016, the statutory role of the OTS is to advise on the simplification of the tax system. To assess fully the advantages and disadvantages of introducing the health and social care levy would require the OTS to consider and comment on choices with far broader policy considerations, including on health and social care, which sit well beyond its remit and expertise.
The OTS functions as an adviser to the Chancellor rather to Parliament and it is for the Chancellor to commission work for the OTS or for the OTS to advise the Chancellor on its own initiative as it sees appropriate. It is not the role of Parliament to commission work from the OTS, though I have no doubt that the Treasury will have taken on board this new clause, and I thank my hon. Friend for tabling it.
The published tax information and impact notes set out clearly that the operational costs for the levy are being quantified and the Government will publish these estimates before the measure comes into effect in April 2022.
Nigel Mills
Does my right hon. Friend have any rough estimate of the cost to business of having to comply with the rules of paying, in effect, a third payroll tax? Does he have any idea of the costs of changing the software to include that levy and of redesigning payslips? All those costs will have to be borne. Does he have any estimate for us before we decide whether we want a new tax or just to increase national insurance as we are doing for the first year?
Jesse Norman
It is true that, just in relation to the levy, business will bear some cost and the existing tax information and impact notes outline that there will be costs to be borne, as one would expect with any tax, let alone a broad-based tax of this kind. The package goes well beyond this, and businesses will be large beneficiaries in many ways from aspects of the package because they will benefit from having a healthier and more secure workforce than they would otherwise have. How one measures that I am not entirely clear, but I take the point that my hon. Friend makes and will, of course, refer it to colleagues. Having said that, I hope that he will not press his new clause for the reasons that I have outlined.
Mr Deputy Speaker (Mr Nigel Evans)
I would just like an indication of who will want to make independent speeches by bobbing—thank you.
James Murray
As we turn to the Bill’s Committee stage, I will address the new clauses tabled in my name and the name of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).
We know that social care desperately needs more funding and the Government claim that their Bill today will help to raise some of that money, but the truth is that there is nothing in this Bill that will guarantee a penny going towards social care. I will return to that point when I address new clause 6, but first I want to look at the core measure that this Bill introduces—the unfair tax rise on working people and their jobs. Our new clause 3 would require the Government to report to the House of Commons on the impact that the Bill will have on tax revenue derived from different sources of income. On the one hand, there is income from employment and self-employment, which the Government have chosen to tax hard. On the other hand, as new clause 3 mentions, there is income from dividends, rental properties and other sources of wealth, which the Government have left untouched. We know that the Government have chosen not to raise taxes for those with large portfolios of stocks and shares, and for landlords renting out multiple properties, but the Bill even lacks any mention of taxes on dividends, despite the Prime Minister saying that they would be taxed more. Perhaps when the Financial Secretary to the Treasury responds, he could explain why the Government have chosen to delay implementing a tax rise in dividends until the next Finance Bill or beyond. Will he give us his word that the increase in tax on dividends will definitely go ahead?
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
I am someone who has believed in getting cross-party consensus on the future of social care funding, and who has been calling for a health and social care levy since 2016. Does the hon. Member recognise that there has actually been cross-party consensus on this issue, and that the shadow Care Minister, the hon. Member for Leicester West (Liz Kendall), called for a health and care levy in 2018? How does he reconcile that with his comments just now?
James Murray
Let us be really clear about what the shadow Care Minister, my hon. Friend the Member for Leicester West (Liz Kendall), proposed, because it was entirely different from what is being discussed now. She proposed that the tax should be raised from unearned income, and that it should be progressive and fair between generations, which fundamentally differentiates it from what we are discussing today. If the Government had truly sought to build cross-party consensus, does the hon. Gentleman not think that they would have done better to take some time over the Bill, rather than rushing it through within a week of the proposals first being announced, with limited ability for scrutiny and without any discussion of cross-party consensus about how to proceed?
James Murray
I am going to make some progress now; I have given way to the hon. Gentleman already.
As I said, although new clause 8 has not been selected today, I hope that Government Back Benchers have seen it on the amendment paper and will perhaps raise the matter with their colleagues on the Front Bench.
I hope, however, that there will be a vote this evening on new clause 5, and I urge Government Members to join us in voting for this crucial review of how the Bill will make inequality worse. We know how widespread and deep rooted inequality has become in our country. The latest bulletin from the Office for National Statistics on household income inequality in the UK for the financial year ending 2020 confirms what we all know: the income gap between the richest in society and the rest of the population has widened over the last decade. A tax rise that singles out income from employment can only make this inequality worse, and new clause 5 seeks to expose this.
Not only does inequality manifest between people who may live in the same area, it also creates divides between different nations of a country and the regions within them. In areas where average wages are lower and fewer people get income from other assets, the impact of the national insurance rise and the levy will be more acutely felt. Recent analysis in the New Statesman suggested that within the regions of England, it is people in the north-west and the west midlands who will take the greatest hit to their disposable income as a result of the Bill.
Data from the Office for National Statistics’ wealth and assets survey shows that the south-east is home to well over 3 million adults living in families with net wealth per adult of more than £250,000. That is roughly six times the number in the north-east. A tax increase that ignores income from renting out properties and selling financial assets, and that seeks to fund a plan that ignores differences in house prices and care costs between different regions, is destined to make inequality worse.
Dr Murrison
We are getting more granularity in the proposals that Opposition Front Benchers have in their heads for funding the uplift, which I think we all agree is necessary for health and social care, but can I probe the hon. Gentleman to describe the nature of the landlords or property-based businesses he has in his crosshairs for the levy of the moneys that he has in mind? Does he mean, for example, the mom and pop organisation that has bought a small residential property because it has no public sector pension, for example, and is relying on that for income in old age, or does he have in mind a business like any other business that has large numbers of commercial properties? How much does he think he is going to raise from the alternative that he has suggested?
James Murray
I thank the right hon. Gentleman for his intervention, but I do feel that there is a broad consensus across this country that those with the broadest shoulders should make more of a contribution. It is quite clear from the reaction that people have had to the Government’s proposed increase in national insurance and new levy that this is falling on working people and jobs rather than taking other sources of income from wealth into account.
I have just spoken about the massive impact that this will have on inequality between different regions of the country. I therefore ask Conservative Members to guess how many times last Tuesday, when the Prime Minister announced his approach here in the House of Commons, he used the phrase “levelling up” in that 90 minute statement. It was zero. Last Wednesday, when the Financial Secretary had to take the rap here on this tax rise, how many times did he use the phrase “levelling up” in a six-hour debate? Zero. The truth is that we are a very long way from the levelling-up agenda that we hear, or at least used to hear, so much about.
Of course it is not just workers and the self-employed who will feel the direct impact of the Government’s tax rise in this Bill. This tax rise will hit businesses that want to create jobs too. That is why we have tabled new clause 4 to show the impact it will have on businesses, and on small and medium-sized businesses in particular. There will be no point in the Financial Secretary denying the impact of this measure on businesses creating jobs: it is set out starkly in the Government’s own tax information impact note that he approved last week and that we have referred to several times today. I set out earlier how this note admits that the Government’s approach will impact business decisions around wage bills and recruitment. It goes on to explain how this measure
“is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”
No wonder the Government have managed to unite business groups, workers and trade unions against their plans. At just the time when we need to see job growth, and when furlough is ending, the Government impose an extra flat cost on getting people into work. The Federation of Small Businesses has shown that this move could lead to 50,000 more people being left out of work. Yet again, small and medium-sized businesses least able to afford this tax rise will be hit hardest while online multinationals continue to dodge their tax on this Government’s watch.
The Government’s justification for much of the Bill is that they claim the levy will fix the crisis in social care. As we made clear on Second Reading, however, there is no plan to fix social care, nor even a mention of or reference to one, in this Bill. Fundamentally, despite all the rhetoric from the Prime Minister and the Chancellor, there is no guarantee that social care will benefit from the Government’s tax rise in any way at all. In the first year, the Bill explicitly rules out any money raised going toward social care. Beyond that, when the levy comes into force, it is entirely possible that not a single penny of any money raised will ever go towards the social care sector. I know that Treasury Ministers will deny that this is the case, so we ask them and Conservative Members to back our straightforward new clause 6. I note the Financial Secretary’s comment that the new clause would simply require the Chancellor to report transparently and straightforwardly on the share of the levy spent on social care each year so that we can all see what proportion of the money raised is going to the social care sector.
Finally, I turn to our new clause 7. Nothing could sum up the intrinsic unfairness at the heart of this Bill more than the case that this new clause points towards. The unfairness of the Government’s approach is impossible to ignore when we realise that this tax rise, raising money the Government claim will go towards social care, will not see those with the broadest shoulders paying their fair share but instead hit low-paid social care workers themselves. Our new clause asks the Government to be transparent and honest about this by requiring the Chancellor to report on how much revenue the levy raises from those working in the social care sector. This Government’s choices to raise national insurance, to cut universal credit and to freeze personal allowances mean that a social care worker will pay £1,108 more in tax a year. The Chancellor once clapped for key workers; now he is taxing key workers. This will hit working people hard, and we will not let voters forget it.
Mr Fysh
My intention with amendment 7, which I have tabled with esteemed colleagues, was to try to get the Government to focus on a way of looking at the future costs of social care and how to finance them more creatively. I have to ask: if not now, when?
We know that the most powerful way to address costs in the future is to provide for them in the present and to have the power of compounding investment returns over a period of years to meet the liabilities that people have. I am passionate about encouraging the Government to look at ways to encourage people across the board, with progressive incentives in different ways, to make provision for themselves with support from the state.
People think that they pay a contribution into national insurance that rolls up over time and gives them an entitlement to a pot of money—I have heard constituent after constituent talk about that—when we in this place know that that is not in fact the case. In fact, my right hon. Friend the Minister confirmed that that is not the Treasury’s view and that national insurance is a tax collected in-year that must be spent in-year.
There is a big opportunity for reform and innovation that could be useful and get very much back to the ethos behind the Beveridge report and the origins that I spoke to in the Second Reading debate. There was a radical movement trying to help individuals and groups provide for each other. Lloyd George and the Liberal Government’s 1911 Act was about getting national aid into the system in a creative way. I think there is an opportunity for us to talk as one whole House about innovating for the modern world in that way. What was wrong with some of those older schemes and co-operatives, friendly societies and such things in the old days was that sometimes people ran off with the money. That was one reason why there was a need to put more of a national embrace around it and administer it that way. In the modern world, we can do it differently.
All I was trying to do with the amendment was give scope for the Government to think about applying some of the funds from an element of national insurance or something related to it—that is, the levy, which clause 2 sets out—to help incentivise such pooled saving schemes. That is not necessarily insurance or private insurance with a middleman; it could be national schemes or community schemes that are properly co-operative and very low-cost. There are many modern approaches to that in the digital world, such as digital autonomous organisations, where there are no middlemen at all and people do not have to rely on a contract.
That was the pure intent of my amendment, so I am a little disappointed that the Government do not seem to want to engage with it. I urge my right hon. Friend and those on the Treasury Bench to think about ways we might do that in the future, because I can see it as a useful evolution of the policy that might bring people from all parts of the House together in the way I have been describing.
Dr Poulter
I am sympathetic to the point that my hon. Friend is making. In principle it is a very good point, but the practicalities are that the moment we move towards the system that he is advocating, we have to clearly define what is health and what is social care, and that makes the integration of the two systems much more challenging. In the context of better integrating health and social care, has he considered that practical element in putting forward this proposal?
Mr Fysh
I thank my hon. Friend for his intervention. The truth is that, yes, I have thought about that, and I must emphasise that I am thinking about this measure only in terms of social care costs and liabilities. We have heard how residential care living costs will be excluded from the funding produced by the levy. Pooled savings schemes or liability defrayal schemes could easily include such elements and make a really big difference. I am not talking about the costs of healthcare in the healthcare system.
There are ways in which the healthcare system could look at insuring itself against particular outcomes. Sometimes, unfortunate things happen in neonatology, for example, which have a long liability tail in younger people living with healthcare needs. Those are targeted things, but that is completely separate from the present need to get money into social care. That is what I am talking about, and such a scheme could get money into social care more quickly than the plan that we have heard to date.
Dr Murrison
I have been listening carefully to my hon. Friend and what he has said has a great deal of merit. Does he agree, however, that while the Government’s aim is to integrate health and social care, which arguably have been divorced one from the other since 1948, to the great detriment of the people we represent, the system he suggests might exacerbate that problem? That would be in contrast to the provisions of clause 2, which leave it up the Treasury to decide how moneys raised by the levy should be apportioned. Surely it is better that the Treasury can do that so that it can facilitate the integration of health and those elements of social care that relate to care as opposed to residential costs.
Mr Fysh
I do not think that the amendment would remove any of the Treasury’s discretion in clause 2; all it would do is specify that moneys raised could be used either in the current year or against future years’ costs. The Treasury would govern how such schemes worked and how to achieve that integration.
Since I was elected, I have been passionate about the integration of health and social care, and I anticipate that, through such an amendment, the Government could help to get money into the system to help it work well. I hope that the Government will reconsider their request for me to withdraw the amendment. I would love them to adopt it. It would be no skin off their nose to do so; the amendment would just give them a bit more flexibility in the Bill. I look forward to hearing my right hon. Friend the Minister’s response.
This is a probing amendment, and I cannot be confident that the Labour party will support it, perhaps because of their slight misunderstanding of its purpose, so this might not be the time to force the Government’s hand. However, it could be a useful evolution of the national insurance policy, given the direction in which the Government want to go on that.
Stephen Flynn (Aberdeen South) (SNP)
It is a remarkable feat indeed that the Government have managed to unite the left-wing press, the right-wing press, the Unionist press, the nationalist press, pressure groups in favour of ending poverty and pressure groups who want to see businesses excel, all in condemnation of the Bill. Although I do not think anyone in the House doubts that it will once again sail through the voting Lobbies this evening, I would like to put in my two cents for what little it is worth. In that regard, I commend the amendments in my name and those of my learned colleagues.
As colleagues across the Chamber will recognise, new clause 1 seeks to get the Government to provide an equality impact assessment of the effect of this Bill, by age, on people’s wealth or income. The reason they will not accept that, despite the polite remarks of the Minister, as always, is that such an equality impact assessment would put in black and white what all the pressure groups are telling us. Indeed, much of what we have heard from Members across the Chamber throughout today and last week is that the Bill, in its entirety, will hammer the youngest and those who work the hardest in society, but not necessarily those in the south-east of England who have the most to give.
I heard a remark earlier that about 50% of the income that will be generated by this Bill will come from those under the age of 45. It will be coming primarily from younger people, who are the very people whose horizons have been shortened by Brexit, and whose job opportunities, career opportunities and educational opportunities have been hammered by the pandemic. What the Government are seeking to do is impose further challenges to their lives. It is an unforgivable act, but one that they are going to push through with no contrition whatsoever, as far as I can see, and in the knowledge that they also plan to cut universal credit in the coming weeks—a double whammy on those in society who can least afford to face the real challenges in front of them, and an abdication of responsibility of the highest order.
However, it is not just individuals, young people, working people or families who will be hammered by this tax; it is also businesses. That takes me nicely to our new clause 2, which involves trying to get the Government to do an economic impact assessment of these policies. However, they will not do that either, because they know what the outcome would be, as we see in the language being used by business groups. The Federation of Small Businesses has been absolutely clearcut about its expectation that the proposal will force 50,000 into unemployment. It is a disaster for business.
The Tory party was once, when I was growing up anyway, regarded as the party of business. What has happened? Why are we in a situation now in which not only have the Government forced through Brexit in the middle of a pandemic—and businesses are having to deal with the challenges of exporting goods and the shortages of supplies, to pay back bounce back loans before they have even had the opportunity to bounce back, and to deal with the fact that furlough is going to end despite the clear uncertainty facing them—but they are seeking to impose a jobs tax? Where is the justification for that? I encourage any Government Member to rise to their feet and disagree with anything I have said, but they will not because they know that we are right in this regard.
Dr Poulter
I declare an interest as a practising NHS doctor. Will the hon. Member reflect on the fact that the single biggest transformation delivered to health and care in the last 20 or 30 years was when Tony Blair increased national insurance to give a huge injection of funding to improve care for patients throughout the United Kingdom, including Scotland? In reflecting on that, can he see the benefits that will come from this levy for patients in his constituency and all our constituencies in the years to come, because it will make a difference? Will he reflect on the difference that it will make to real people’s lives—improving cancer care, reducing waiting times—and does he see that there is a benefit in that?
Stephen Flynn
I thank the hon. Gentleman for his intervention and for the tone in which it was made, and I shall reflect on two points in relation to what he said. He said that perhaps the biggest change to health and social care was the action of Tony Blair, but I happily disagree with that. In fact, it was in 2016 in Scotland, when we did something that I heard Members discussing earlier at length: we integrated health and social care in Scotland. That was on top of the fact that we provide free personal care for our elderly and so on, and that is in contrast to the situation in England, which has led to the crisis we see before us.
On the hon. Gentleman’s point about finance, which is the crux of this argument, do the ends justify the means? That is the purpose of this discussion. I believe in the ends. I believe our NHS and social care services deserve more money, but I do not believe that this is the right way to do it. That obviously leads to the next question, which is about how we should fund this. I heard Conservative Members—rightly—shouting at the Labour Benches, “What is your plan?”, but what is the cost of Trident? What is the cost of nuclear weapons? Over their lifespan I believe it is between £164 billion and £200 billion. Conservative Members will not say that those weapons should be scrapped, but I will. They should absolutely be scrapped, and we can use that money to fund our vital NHS services. The answer is staring them in the face, but they choose not to look at it because this is about priorities, and their politics and priorities differ massively from mine, and ultimately from those of the people of Scotland.
Finally, amendment 4 goes to the nub of where much of our frustration lies with the Bill, because if we shake it about a bit, this is ultimately another UK Government power grab. They are seeking to tell the Scottish Parliament how it should spend money in devolved areas. Whether they agree or disagree with the national insurance hike, all members of the Committee, certainly Unionist Members, should be concerned about the consequences of the UK Government seeking to impose themselves once again on devolution. I say that not as someone who seeks to defend the Union—by all means continue to do it—but because all the UK Government are doing is driving home the message in the minds of the people of Scotland that they do not respect the devolution settlement and they do not respect the Scottish Parliament.
Nigel Mills
I come at this debate from a slightly different angle. When we first heard rumours of a tax rise to fund health and social care I felt that, given that we had just spent £400 billion to get us through a pandemic, and that we wanted to get health care services to 110% of previous capacity to clear the backlog, we could accept that a tax rise had to be found to do that. I thought there was no other way, given that the economy and tax revenues are still smaller than they were, and that that was the responsible and prudent thing to do. I may not have chosen national insurance, but I accept that it is probably one of three taxes that the Government could have chosen.
My interest is in why, in the long term, we have chosen not to raise national insurance but to have a new tax. I remember that when I was first elected we were keen on simplifying the tax regime. We even had a review into whether we could merge income tax and national insurance, so that we could have one tax fewer, and make it cheaper and simpler to collect. For some reason that I will try to work out, we have now moved on to adding a kind of son or daughter of national insurance to the tax code. I think the only slight difference is that the new tax will apply to the earned income of people over retirement age, where national insurance does not. I do not know how much that will collect—the Minister would not give us an estimate—but I think it is a pretty tiny amount, and I am not sure there is huge advantage in that.
Being a bit of a cynical sort of person I thought that perhaps because our manifesto promise ruled out tax rises we could have a levy, and that people would fall for that, but I am glad we did not take that line. Indeed, the Government were clear that we are breaching our manifesto promise, for justifiable reasons in the circumstances.
Perhaps we are trying to create some clarity, thinking that if people can see a hypothecated tax, they can see how much they are paying for health and social care and they will understand and value what is happening, except of course we are raising by this levy £12 billion a year or so—a tiny fraction of what we spend on the NHS, let alone social care—and people will see a social care levy on their council tax bill. In fact, this money is not even the biggest part of national insurance that will go to the NHS; as I said earlier, £26 billion a year—roughly 2% of the national insurance contributions in each class—already goes directly to the NHS and does not go down the usual route of national insurance funding. I am not sure that we are going to get the benefit of clarity for people about what they are paying.
Jesse Norman
I am afraid that I must correct myself. It is actually £40 million to £50 million, rather than £50 million to £60 million. I was relying on an imperfect memory.
Nigel Mills
Perhaps the Minister was building in some optimism bias, as the Treasury normally does to other people’s forecasts, and going for £50 million to £60 million to make sure. I do not know whether that is the cost of building the systems to enable the returns to be made, or to enable the systems to collect or chase the money, or whether there is going to be some ongoing annual cost; I assume that there will be some ongoing annual cost in trying to chase compliance too. However, we do not have an estimate for how much we are going to be imposing on business to pay this tax.
I imagine that this will be a separate tax that is not collected in the same way—the same box—as national insurance. I assume that there will have to be different parts of the payroll returning different calculations, which will require every software provider to change all their software coding to cope with it and to add in the new amount that is being paid by people over retirement age who do not normally pay national insurance. All that will cost time and money and need testing and compliance, and then we will have to check whether employers are following it and chase them for the money.
I suspect that there will be quite a large up-front cost for all that work to be done, and then a reasonable annual cost to ensure compliance, so there is a first-order question whether we are raising more by quite rightly taxing people over retirement age on their earned income—this 1.25%—than we are having spent on obtaining that. From the Minister’s remarks, I am not convinced that the answer will be positive, so in actual fact, we are creating a whole new tax to raise less money than it costs to collect it, for no real advantage other than a presentational one.
John Redwood
My hon. Friend is such an expert on this. Has he probed or got anywhere with finding out how much consequential tax loss there might be from the national insurance rise, or the care tax rise, itself? Presumably, there are some losses that will have to be offset, so gross will not necessarily be net.
Nigel Mills
I assume that my right hon. Friend is right that, if we reduce the number of people in work or reduce their pay rises, that will work its way through the system. The Minister may be better placed than I am to work out an answer to that question.
The nub of my argument, and the reason for amendment 8 and new clause 10, is that we have 18 months before the new levy comes into force—we accept that we cannot bring it into force in six months’ time, presumably because it is so hard to get the systems in place, and that we have to raise national insurance for the first year and move to the levy after that—so perhaps if we had all the information in front of us in the next six months or year, we could make a choice whether to go ahead with the new levy for the small amount of extra income, or whether to stick with the national insurance rise and find other ways to explain to people what they are paying their taxes for.
I think the Minister accepted that HMRC will publish its estimate, and I am sure we could find a way of getting an accurate estimate of the cost to business of complying with the levy. We could then take an informed decision before we finally introduced the levy. I think that would be a positive step in tax policy. However, if we really believe that we want a separate levy to show what people are paying directly for health and social care, I think that we should move the existing 2% of national insurance that goes directly to the health service into the levy, so there is one hypothecated payroll tax that goes to the NHS on people’s payslips, rather than it being hidden in a part of national insurance. I cannot see any reason why, if we go down the line of introducing a new health and social care tax, we would not want to have all the hypothecated payroll taxes going into the NHS or social care to get any of the advantages of that.
I will not be pressing my two new clauses to a Division, but I urge the Minister to give some serious consideration—I suspect he did not know about this new levy until around about last weekend, when it was probably dreamt up in No. 10 as a way of selling a tax rise—to using the 18 months he has before the levy comes in to try to work out whether the costs of collecting it are worth the small change. If he really does think there is a compelling argument for charging people over retirement age national insurance if they stay in work and are earning, let us charge them the full rate, rather than 1.25%. I cannot see how we can justify that they do not pay the existing 2% that goes to the NHS but they do pay the 1.25%. There seems to be no logic in that at all to me, so perhaps we should think properly and coherently about the tax system. Let us have the full rate in that situation.
Let us have a decision when we get around to the Budget in 2022. Is going ahead with this levy going to raise more money than it costs? If it is not, let us just leave it on national insurance where it will be sat at that point. That would be a more coherent way of running our taxes.
Nadia Whittome
With your permission, Dame Eleanor, I will speak to new clauses 3 and 5, tabled my hon. Friends the Members for Ealing North (James Murray) and for Erith and Thamesmead (Abena Oppong-Asare). New clause 3 requires the Chancellor to assess the impact of the Act on tax revenue from different sources of income and new clause 5 calls on the Government to publish an equality impact assessment of the Act.
Dame Eleanor, given that even in Committee this has been a wide-ranging and broad debate, I hope you will allow me to set out the context of those new clauses. It is people in poorly paid jobs who will bear the brunt of the national insurance increase, at a time when in-work poverty is already at a record high. How can it be right to ask those who are already saddled with extortionate housing costs, poverty wages and mountains of debt to pick up the tab for this Government’s failures on social care? To put it simply, the Government are choosing to protect the interests of the wealthy who fund them at the expense of low-income workers and renters. While landlords and the super-rich who are hoarding wealth and housing pay nothing under this new tax, my constituents will be having their pockets raided.
Since 2010, under this Government’s watch, £7.7 billion has been cut from social care budgets. If I could sum up this policy—if we can call it a policy—in one word, it would be “unfair”: unfair on the working people who are funding the tax rise; unfair on the care workers who will not see their pay and conditions improve; and unfair on those relying on social care, whose needs will continue to be unmet. Figures released this week show that nearly 70,000 people in England could die waiting for social care before these changes even come into force.
If the Government were interested in fairness, they would tackle the soaring housing costs, low-paid jobs and inadequate benefits that my constituents are facing. Instead, their policy agenda is fuelling inequality and impoverishment. As we heard from the hon. Member for Aberdeen South (Stephen Flynn), 2.5 million working households will be hit by the cut to universal credit and the increase in national insurance. Working families will be losing, on average, over £1,000 next year. Meanwhile, the furlough scheme is ending and evictions are resuming.
There is, however, a group of people who have benefited from the pandemic—who have done very well, in fact: British billionaires. They have increased their wealth by over £100 billion. That is why now is the time to get serious about taxing wealth. The Chair of the Health and Social Care Committee, the right hon. Member for South West Surrey (Jeremy Hunt), said earlier in the debate that this tax hike would raise more than a wealth tax, but I am afraid that that is not true on any measure. City A.M.—this is City A.M., not “Das Kapital”—calculated that one wealth tax option would be to tax wealth progressively between £1 million and £10 million, with all wealth beyond £10 million taxed at 3%. That would bring in a total of £55 billion over five years. Alternatively, the economist Richard Murphy calculated that, if wealth was taxed at the same rate as income, that could raise up to £174 billion a year.
Will the Minister explain why none of those options was considered and what the Treasury makes of those calculations? And perhaps the Chancellor could explain to us, as a multimillionaire, why he cannot dig deep into his own pockets and why it has to be my constituents—in fact, all our constituents—instead. I think that this House and working people across the country deserve to know why a wealth tax was dismissed in favour of a tax on the poorest and the lowest paid, and what is more, to fund a plan that will not even work.
We have heard during this Committee that the Government’s excuse for not ring-fencing the money raised for social care is that health and social care are interlinked. I agree, to an extent, and that is why, to fix our social care system, we need a national care service, like our national health service, which is free at the point of use. We need to redesign the system so that the needs of care users, for want of a better word, and care workers are at its heart. The money to do that is there but it is in the pockets of the richest and it is the political will from this Government that is sorely lacking. Anything less than a national care service, funded by a tax on wealth, not on workers, would be a great disservice to the people we are elected to this place to represent.
John Redwood
I have worries about hypothecation. I thought the Treasury used to be against it and it is a difficult doctrine to make work well, because it is not always the case that a particular tax just happens to raise the right amount of revenue for a particular purpose, or if it does in one particular year, that may not be true in a future year because the revenue may grow too slowly for the purpose, or the purpose may become less popular and the revenue may exceed what is needed. I have always favoured the Treasury orthodoxy—I am not always someone to support Treasury orthodoxy—that it is better that we have a very big general pot into which we collect the taxes, and then we have general distribution based on tightly argued issues between Government Ministers and Departments on what their spending priorities are and the minimum amounts that they need to spend to get good results in their leading areas.
However, now that Ministers are treading the boards of hypothecation for the first time in this interesting way, I advise them that it is a very good rule, if they wish to sell the idea of hypothecation, that the tax revenue that they collect should pay for the thing that they are attaching to the hypothecated revenue. My big worry about this hypothecation is that the sum of money for social care—when we eventually get to that point after three years—collected by the so-called social care tax will be only about one fifth of the actual costs of social care to the public sector. Of course, there are additional costs to private individuals as well and I would not want my constituents to be misled. I have already had emails from constituents saying, “As the Government seem to be pressing ahead with this social care levy, I assume that I will no longer be asked to make any contribution through my council tax to social care”. Being an honest man, I have written back and said, “No, you can’t assume that at all. Social care is going to need a lot of money and I don’t think the idea is that the council tax levy part of it, or the need for that, will suddenly disappear.” So I think one does need to look again at hypothecation. If, for example, we wish to have hypothecated taxes to pay for the current costs of health, as identified by the Treasury for the current financial year, we would need to say that all income tax, all capital gains tax, all inheritance tax and all stamp duty—in other words, all income and wealth taxation—were already going to pay the large sums required for health in this year’s public budgets. Maybe we could start by renaming income tax and all the wealth taxes as a health tax, which would give people some idea of the scale of expenditure that we are talking about. There might then be a more interesting and useful debate to be had.
Dr Murrison
I am listening carefully to my right hon. Friend. Does he share my concern that there may be an element of gaming by the social care sector, in so far as hotel costs are clearly exempted? Our constituents who may be listening might not be fully aware of that. There is a real possibility and risk that the sector will seek to enhance and embellish those costs so that they become a bigger and bigger proportion of the total take. Does that not need to be made explicit? Does my right hon. Friend think that in the White Paper process that we are about to embark on, there would be merit in limiting that cost in some way to ensure that the potential market exploitation of the Bill’s proposals is avoided?
John Redwood
I was with my right hon. Friend until his last recommendation. He had pre-empted what I was going to say next: that we need greater clarity about the three different kinds of costs that an elderly person can face.
All of us in this House agree that we believe in a health service that is free at the point of need, so that any elderly person, like anyone else, has complete entitlement to completely free healthcare if they need GP or hospital treatment. That is not in dispute. However, as my right hon. Friend has just reminded the Committee, it looks as though these proposals also say that if an elderly person is living in a care home, the board and lodging, or the hotel costs or whatever we like to call it, are not part of that kind of treatment, so if the person has money, they will have to pay for those.
I find it difficult to say that we need to pre-empt the possibility of care homes wishing to charge a bit more for that hotel accommodation, because there could be good reasons for their needing to do so, and the law is a very clumsy instrument when it comes to intervening in thousands of decisions that individuals and businesses have to make about what is a fair price. I do not think that there should be absolute price control, because it might be a period when wage costs or food costs had gone up, which the care home needed to pass on—or the care home might be improving the quality of what it was offering, in which case it would be mutually beneficial, or at any rate perfectly reasonable, for it to pass on that cost.
Dr Murrison
My right hon. Friend is being very generous in giving way. May I just clarify my intent? It would be reasonable to have an indicative cost. After all, in the case of most of our constituents who are living in a residential set-up—we are talking, basically, about a bedsit—what is usually involved, in my experience, is fairly basic food and some heating. The cost of that is not enormous, and it is the sort of thing that we would be expected to fund in any event were we living in our own homes; probably rather more so. Would it not be reasonable to have an indicative amount that it is felt reasonable for homes to be charging people—particularly, I have to say, if they are being funded through local government?
John Redwood
I do not think that that is possible at all. Property costs vary to an incredible degree across the country. Levels of staff provision are different in different homes, the quality and level of service are different, and the needs of individual residents are different. Some are in relatively good health, and do not need to find the back-up or assistance that others require. What I want to see—and I think that we need to debate this more than we have so far—is better quality for everyone who needs end-of-life care or time in a nursing home. My right hon. Friend has suggested that some are quite basic, and I think we need to worry about that and work at it.
For me, the big care problem is whether it is adequate. I am not quite as worried about the family finances as I am about the experience of the elderly person and whether it is good enough, and, where the state is the sole funder or a substantial funder of the care, whether we are doing a good enough job in allowing a reasonable quality of care in terms of staffing numbers, training of staff and staff wages. When elderly relatives in my family have been in care, we have always wanted to make sure that the staff were well remunerated, rewarded and motivated, and had proper training, support and back-up from the care home, because I wanted them to be well looked after.
There is a much happier environment if the people working in the home are proud of it and have, for instance, a decent career structure. I therefore think that we need to be very careful about a cost-down or standard-cost approach. We need to understand the variety of life, but we also need to make sure that those who rely entirely on state support, or who may be becoming more reliant on it under the Government’s likely policy, will none the less look forward to a reasonable standard of care, and that the people who work with them and for them are treated well by employers who respect them and offer them a career structure, proper training, decent support and all those other good things.
In conclusion, I hope the Government will look again at some of these points to ensure that there is no muddle over the true costs of these services and the contribution that the tax will make, if they insist on it, because it will be quite a small contribution as a proportion of the whole. Will they also look at a big care issue that does not get enough attention in the Bill, which is the quality of the care? That leads immediately into the quality of the experience for the employees, their career structure and their ability to create good atmospheres in care homes that are of a high standard. Can we also have a bit more thought and more information on what this will mean for individuals going into care homes and their supporting families? I am afraid that I still do not have a clear explanation to offer my constituents as to what their experience would be under these proposals.
Richard Burgon (Leeds East) (Lab)
I am speaking in support of new clause 3, which would require the Chancellor to look at different taxes to raise income. There are many other ways to raise this money and, in particular, I believe that we need to look at ways to tax wealth rather than taxing working people. Wealth in this country is concentrated among the top 1%, so instead of imposing a tax bombshell of £12 billion a year on working people, the Government could focus on the wealthy. They choose not to; instead, we have a tax system rigged in favour of those who already have wealth. They pay lower taxes than the millions who have to go out to work to make a living. The truth is that the Government’s proposal makes that situation even worse, and that is not right. The Government could reform capital gains tax, so that instead of lower taxes for wealthy people, that money could be used to fund social care, but they choose not to do so. They could raise many more billions of pounds by a direct wealth tax on the richest 1% with assets of more than £5 million, but they choose not to do so.
I am backing new clause 3, because there is always an alternative. That the Government refuse to back such alternatives speaks volumes. Aneurin Bevan once said that socialism was the language of priorities, but conservatism is the language of priorities too: the priority of safeguarding the wealth of the super-rich and sticking the boot into working people. This is the same old Tory party, attacking working people and defending the wealthy. We have heard a lot in this debate about so-called tough choices, but when politicians speak the language of tough choices, it usually means that they are taking the path they think is easiest. The truth is that the Government are taking the easy choice: not levelling up but kicking down and taking a hands-off approach to the wealth of the super-rich. There are alternatives, and that is why I am backing new clause 3.
Mr Richard Holden (North West Durham) (Con)
I thank the hon. Gentleman for giving way, and I would also like to welcome the hon. Member for Nottingham East (Nadia Whittome) back. It is great to see her back on the Opposition Benches. There is a similarity between what the hon. Gentleman is saying and what those on the Government Front Bench are saying; at least they are both putting forward proposals. He is putting forward a wealth tax and the hon. Member for Aberdeen South (Stephen Flynn) proposed the scrapping of Trident, but the Government are at least being honest in saying that people are going to have to pay more through national insurance: £907 a year for a Member of Parliament and £80 a year for somebody on the national minimum wage. Has the hon. Member for Leeds East (Richard Burgon) managed to convince those on his Front Bench to be as honest as he and the Government are in coming forward with an actual proposal for what they would do?
Richard Burgon
I had actually finished my remarks, but I would be happy to take this up with the hon. Gentleman on another occasion if he so wishes.
The Chairman of Ways and Means (Dame Eleanor Laing)
I have to say I was not quite sure about that. I thought that the hon. Member for Leeds East (Richard Burgon) had finished, but the hon. Member for North West Durham (Mr Holden) nevertheless managed to make his intervention. He may indeed have wanted more, but the hon. Member for Leeds East read the mood of the House very well.
Sir Christopher Chope
It is a pleasure to follow the hon. Member for Leeds East (Richard Burgon). He talked about alternatives, and perhaps I can throw out a possible alternative that he might think reasonable. Why should the very rich have unrestricted access to a free NHS?
Whenever that is raised by Conservative Members, Opposition Members object to the idea and say that it would undermine the principles of the NHS. I do not expect him to answer that question, but I throw it out there because it is another alternative that could be considered.
Richard Burgon
It is useful that Members on both sides of the Committee are coming clean with all sorts of ideas. I would assert the principle of universalism—universalism of the welfare state and universalism of the NHS.
Sir Christopher Chope
I thought that might be the hon. Gentleman’s response. Today we are talking about social care as well as healthcare, and the principle of universalism does not apply to social care because it is and will continue to be the subject of means-testing.
The Government talk the talk of integrating health and social care, and I had an exchange with my right hon. Friend the Minister on this subject. He justifies having a health and social care levy on the basis that they are interdependent. If they are interdependent and we are moving towards an integrated scheme, why do we not apply the same principles to both NHS healthcare and social care? We could have means-testing for healthcare, in the same way as we have for social care, or we could not have any means-testing for social care, in the same way as we do not have any means-testing for healthcare. If we are going to merge the two schemes, we need to resolve those anomalies. I am afraid that everything that has come out of this short debate shows that the Bill is a muddled fudge that perpetuates the distinction between health and social care but does not meet the challenge I put to the Minister: why not have a distinct social care levy?
Is it reasonable that we should have co-payment in the NHS? If so, it would generate an enormous amount of additional income. We essentially have co-payment on prescription charges, ophthalmology services, dentistry and, increasingly, audiology services. The idea that we should have co-payment more widely, so that people who can afford it contribute, say, half the cost of an orthopaedic operation, seems to be anathema to the Government. I do not understand why, if they want to get more money into the system.
Our system differs from most overseas systems. We are not spending more on healthcare in this country, but we are spending more on publicly funded healthcare and not enough on privately funded healthcare. I would like to see a Government strategy to encourage more investment by ordinary individuals in the healthcare system. I have a private Member’s Bill on co-payment coming up in the new year, but perhaps before that we might be able to get some movement from the Government on these principles. We have co-payment in the social care sector. If it is all right in the social care sector, why is it not all right in the healthcare sector? We are excluding hotel costs—the board and lodging costs—from the £86,000 social care threshold, but we do not charge any hotel costs to rich people who are in hospital. Why not? There does not seem to be any logic in that.
I am glad it looks like the Minister will have a long time to answer these points and the other important points raised by my hon. and right hon. Friends. If we are going to have a complete review and fundamental change of outlook on health and social care, we need to meet those challenges. What is the answer as to why we do not charge hotel costs for millionaires in hospital? That would introduce more income into the service and bring it into line with what happens with social care.
Those questions remain to be answered, but there are a whole lot more besides. I was looking at the Official Report of an exchange in the other place yesterday evening. The Parliamentary Under-Secretary of State for Health and Social Care, Lord Bethell, said that
“we recognise that family carers play a vital role. When we announced an additional £4.5 billion over three years for social care, it included a commitment to take steps to ensure unpaid carers have the support, advice and respite they need.”
We know that there are about 1.6 million unpaid carers, and that was leading them to believe that there was some sort of dividend around the corner for them. However, Lord Lilley picked up on that point and asked the Minister to
“confirm that…there would be only £1.5 billion a year going to social care from the large increase in national insurance”.
Obviously, that is correct. He then asked the Minister to
“confirm that nearly half of that will be absorbed by the need to pay for the extension of free social care to those with valuable homes…That means that nothing will be left to help domestic carers.”
That was a perfectly straightforward question, and as it was not answered in the other place last night, I hope that the Financial Secretary can answer it tonight. The answer that that Health Minister gave—perhaps the Treasury has a better view on this—was that
“the maths that my noble friend has done is a little bit premature.”
I did not think that maths could ever be premature. He continued:
“The White Paper will come out later this year; it will spell out the precise financial arrangements, and I am looking forward to that.” —[Official Report, House of Lords, 13 September 2021; Vol. 814, c. 1130.]
The Minister was implying that he did not really have a clue as to what was going to be in it when it came out. That is an example of the muddled thinking, the failure of the Government to answer precise questions and the very dangerous policy of raising expectations among our constituents that somehow they are all going to be able to relax and spend all their hard-earned savings and use their houses for themselves without having to contribute much towards the long-term costs of social care.
May I throw out a suggestion arising from that exchange in the other place last night? If we have 1.6 million people providing free care for their loved ones, why are we choosing to impose upon them an extra levy, an extra tax? Surely it would be reasonable—clause 4 enables this to be done by subsidiary legislation—to exclude those who are looking after their loved ones, doing the right thing and saving the state a lot of money. We could say, “In return for doing that, you will be exempt from the 1.5% levy.”
Sir Christopher Chope
I am delighted to see that my right hon. Friend thinks that is a good idea. I hope we will get some nodding soon from those on the Front Bench, but I have looked there in vain so far.
Anybody who speaks in a debate such as this is open to the challenge as to how they would pay for this. That challenge was put across the Dispatch Box today by Conservative Members to Opposition Members, and answer came there none. I have an anecdote to share with the House. Probably around a fortnight ago I was talking to a former very senior aide at No. 10. He said that one great thing that has come out of the covid-19 emergency is the sure knowledge that we can manage with 25% fewer civil servants in government without any detriment to the quality of government. That came from a senior adviser at No. 10. How many fewer civil servants does my right hon. Friend the Minister think we can have without any detriment to the public service?
John Redwood
My hon. Friend is making an interesting speech. Does he think that as a lot of civil servants now find they can work pretty well from home, we do not need all these expensive offices and perhaps ought to be surrendering leases?
Sir Christopher Chope
That is another excellent idea. I am grateful to my right hon. Friend for the suggestion, but I fear that the Government are so focused on spending money that they have lost any incentive to try to control expenditure, which I thought was the Treasury’s job. It takes me back to Geoffrey Howe’s first Budget. The Conservatives had become a national Government on the back of very high socialist spending and a popular rebellion against socialist waste and high taxation. In his first Budget, Geoffrey Howe emphasised: “Finance must determine expenditure”. That message has now been lost by the Government, who are saying that expenditure must determine finance. Our Government—I say “our Government” advisedly—have reverted to the old socialist tax and spend philosophy in which expenditure determines finance. I hope that my right hon. Friend on the Front Bench will explain why he thinks that to change our philosophy fundamentally is consistent with Conservative values.
My final point is about the Barnett formula. The Bill recites a restatement of the fact that the Barnett formula is there and says, “Isn’t it fair?” My constituents are incensed at the unfairness of the Barnett formula, which results in their paying higher taxes so that the people of Scotland can receive higher public services, with much more spent on those services in Scotland than is spent in England, financed by our constituents in England. Why, when we should be looking at issues that relate to expenditure, are we just saying that the Barnett formula is going to apply? Will my right hon. Friend the Minister say what will happen when the Barnett formula is reviewed or abolished, as surely it must be because it has outlived its usefulness? The House of Lords did a comprehensive demolition job on the Barnett formula, which was brought in years ago as a stopgap—a plastering over of some cracks—and has now almost reached the status of some religious doctrine.
My right hon. Friend the Minister will not be able to persuade me to do other than vote against this Bill’s Third Reading, because introducing it is a chronic mistake by the Government, and it is even worse that we should be imposing taxes without explaining how we are to spend them. But let me leave that on one side. I hope that my right hon. Friend, wearing his Treasury hat, will be able to explain exactly what the Government are doing to help to constrain and reduce waste in public expenditure, whether it be by getting rid of leases on surplus buildings; by sacking staff who are not productive; by introducing the long-promised cap on exit payments; by stopping the obscene salaries that are paid in much of the public service; or by addressing the problem of all these bureaucrats in the health service who seem to squeeze out productive activity, for whom we are having to pay dearly and are going to have to pay the highest taxes in our lifetimes. Those are the challenges that the Government must face up to if they are to be able to recover not just my support, but the support of so many Conservative activists up and down the country.
Jesse Norman
I thank colleagues for their contributions to the debate. It has been very wide ranging—especially the last speech—occasionally touching on the subject of the Bill and the clauses and amendments in it.
Let me start with the hon. Member for Ealing North (James Murray) who speaks for the Opposition. He asked why the dividend tax has not been brought in. The answer to that question is that it does not fall under a national insurance contributions Bill. Dividends are subject to a separate dividend tax regime. That is a tax that is already in existence and it will be handled, as the Government have already made clear, in the course of the forthcoming Finance Bill.
The hon. Gentleman asked questions about levelling up and multinationals’ tax avoidance. I think he is aware that the Government’s approach to levelling up is extremely manifest, most recently in the work that we have done with the UK Infrastructure Bank, which is specifically dedicated to net zero and levelling up and which has just recruited a world-class new chief executive. On the case of multinationals, he has obviously forgotten that the Government have been in the vanguard of the G20 and the G7 in arranging and leading on a new settlement on Pillar One and Pillar Two multinationals’ tax avoidance.
The hon. Gentleman repeated his untrue claim from the earlier debate that these measures contain no new funding for social care. In fact, as the Chief Secretary to the Treasury said a few minutes before he first said that, the measures contain £5.4 billion to support social care, which is in the plan. In case he missed it, it is in paragraph 36 of the plan. It is no wonder that those on the Labour Front Bench do not think that we have a plan if they cannot be bothered to read the plan that we have actually published.
James Murray
To be absolutely clear, the question that I was putting to the Minister was: where in the Bill is there a guarantee that a single penny of this new levy will go to social care?
Jesse Norman
The Bill is designed to fund the plan and the plan has been published. The plan is perfectly explicit as to where the money is going with regard to social care and how much is going to social care. It is in paragraph 36. The hon. Gentleman only needs to look at the plan to see it.
My hon. Friend the Member for Yeovil (Mr Fysh) tabled a probing amendment and explained the background to his own amendment 7, and I thank him for that. I mean him no disrespect when I say that the Government have taken the amendment on board, and will take it on board, but I still ask him to withdraw his amendment.
The hon. Member for Aberdeen South (Stephen Flynn) talked airily about unfunded social care plans controlled, as it were, by England over Scotland. Nothing could be further from the truth. The truth is that Scotland has social care plans that are underfunded. Audit Scotland said that more money was needed. The Independent Review of Adult Social Care in Scotland said that more money will need to be spent over the longer term. Unfortunately, he also ignores what has been accurately described by the Prime Minister as the Union dividend from which all the devolved Administrations will benefit.
My hon. Friend the Member for Amber Valley (Nigel Mills) asked the important question of why a new tax. It is important to focus on this. The reason there is a new tax is that this is a fundamental change in how we have been thinking about social care. Andrew Dilnot himself has said that he does not think it inappropriate to have a new tax funded to support this.
My right hon. Friend the Member for Wokingham (John Redwood) talked about Treasury concern with hypothecation, which remains intact. There is already an existing level of hypothecation within the national insurance contributions system and this plays off that. The hon. Member for Nottingham East (Nadia Whittome) went into a long diatribe, in which she accused the Government of seeking to protect the richest people in society, to which the only simple answer is that that is absolute nonsense. I think she missed the debate on Second Reading, but if she read the distributional analysis, she would see that this package means that the 20% of highest income households will contribute 40 times the amount contributed by the least well off 20% of households. It is also worth pointing out that the highest earning 14% will pay roughly half of all revenues. Even the Wealth Tax Commission, which is independent of Government and dedicated to the idea of arguing for a wealth tax, acknowledged that the UK is on par with G7 countries as regards a wealth tax. Under a more inclusive definition—one that includes, for example, stamp duty land tax—the UK is near the top of the G7 countries in terms of a wealth tax.
My right hon. Friend the Member for Wokingham talked about hypothecation; I perfectly understand that. He also mentioned gross net revenues. These are net revenues—revenues that have been calculated net of the effects. The detail is set out in the technical annex to the published plan.
The hon. Member for Leeds East (Richard Burgon) revisited some of the themes set out by the hon. Member for Nottingham East, but I am afraid no more persuasively.
My hon. Friend the Member for Christchurch (Sir Christopher Chope) went on a glorious canter, or possibly a ramble, around various public spending concerns. I fully appreciate his concerns. Very little of what he said actually bears direct relation to the levy, but let me address the parts that do. He asked why there is no distinct social care levy. Of course, it is possible to claim, as I did, that there is a need for greater integration between healthcare and social care, without suggesting that the funding for those things needs to be handled in exactly the same way across both. This provision blends the funding in a way that is felicitous for both elements.
My hon. Friend argued vigorously for co-payment. I take his arguments as I am sure he means them and look forward to seeing his Bill. He also mentioned millionaires in hospitals. He is right that maths is eternal; our noble Friend Lord Bethell may have been referring to the fact that calculations are not eternal, but may be in time and premature.
Sir Christopher Chope
In the Conservative party manifesto almost two years ago, we promised that we would reform social care at the same time as promising that we would not increase VAT, national insurance or any other taxes. If it had not been for the pandemic, how would we have dealt with the challenge of reforming social care without raising taxes? Surely one way of doing it would have been to reduce public expenditure elsewhere.
Jesse Norman
It is very hard for me to comment on such a remote hypothetical, but the fact of the matter is, as the Prime Minister said, no political party had a pandemic in their manifesto and we have to deal with the situation—
The Chairman of Ways and Means (Dame Eleanor Laing)
Order. I would be grateful if the Minister would address the Chair.
Jesse Norman
I am so sorry, Dame Eleanor. I am rightly chastised and thank you for that point.
My hon. Friend the Member for Christchurch asked why the Barnett formula applies and what will happen once it is abolished, but once again he takes the Committee to the outer reaches of speculation. The fact is that it does apply and it has thoroughly beneficial effects for the devolved Administrations as regards this piece of legislation.
With that, I ask those who have tabled amendments and new clauses to withdraw them. I commend the Bill to the House.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Destination of proceeds of health and social care levy
Amendment proposed: 4, page 2, line 29, leave out from “as” to end of line 30 and insert “determined jointly by the Treasury and the devolved governments of Scotland, Wales and Northern Ireland.”
The amendment would require joint agreement between the Treasury and the governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four areas and between health care and social care.—(Alison Thewliss.)
Question put, That the amendment be made.
Jesse Norman
I beg to move, That the Bill be now read the Third time.
I am grateful to all right hon. and hon. Members who have participated in the passage of this landmark legislation. I would like to remind the House, if I may, of the Bill’s provisions and its overarching goals. We may talk loosely of it as being based on national insurance contributions, or indeed as being a national insurance contributions Bill, but it is of course a separate Bill to introduce a 1.25% health and social care levy based on national insurance contributions.
The levy will be introduced in 2022. In 2022-23, it will be delivered through a temporary increase in NICs rates of 1.25% for one year only, with all revenues generated being ring-fenced and paid to NHS England, NHS Scotland, NHS Wales and the equivalent in Northern Ireland. Then, from April 2023, a formal legal surcharge of 1.25% will replace the temporary increase in NICs rates, with revenue ring-fenced for health and social care only. The levy will also then apply to those working who are over the state pension age.
The levy will enable the Government to tackle the backlog in the NHS. It will provide a new, permanent way to pay for the Government’s reforms to social care and will allow the Government to fund our vision for the future of health and social care in this country over the longer term.
I reiterate my sincere thanks to all Members who have engaged in our series of stimulating debates on the measure. I commend the Bill to the House.
James Murray
I thank the Clerks for their excellent and particularly rapid help with amendments to the Bill.
Today, the Government have been determined to push through their tax rise on working people and their jobs as quickly as they possibly can. The Bill contains nothing at all—not even a reference or mention—about a plan to fix social care, and it fails to guarantee that a single penny of the new levy will ever go towards the social care sector.
On Second Reading, the Opposition attempted to push for a guarantee that Parliament would vote on a social care plan before spending the money that the Bill raises. The Government rejected our attempt, and I am sure there are many Conservative Members who feel deeply uncomfortable about the position in which they find themselves.
While the Bill lacks a plan for social care or any commitment that a plan will ever be in place, or even that any of the money that the levy raises will ever go to social care, it does include a tax rise—a tax rise that hits working people and businesses creating jobs. We know what that will mean for people across the country: combined with the cut to universal credit and the freeze in personal allowances, hospitality workers, teaching assistants, supermarket workers and social care workers stand to lose more than £1,000 next year.
Members do not have to take my word for it. The Financial Secretary admitted the impact that this tax rise will have in his own tax information and impact note, which set out in no uncertain terms that people who are just about managing financially will see their disposable incomes fall. The Conservative party has united the Federation of Small Businesses, the British Chambers of Commerce and the CBI against its plans. They all agree that this represents a blow to jobs growth at a crucial point in the UK’s economic recovery. Last night, the Financial Times published its view that the “Tories must regain trust as the party of business”—which seems to be an understatement, to say the least.
The Government’s approach will hit businesses creating jobs, and it will disproportionately hit working families and young people. It will hit those on low and middle incomes. It will hit people in some parts of the country more than others. But when we tried to push Ministers in Committee to come clean about the unequal impact of their tax rise on different people and across the country, or to be transparent about how it would hit social care workers themselves, they refused. The Prime Minister, the Chancellor and the Conservative party simply have their fingers in their ears.
Finally, the Government have refused to accept throughout today’s debates, and indeed throughout the last week, that there is any alternative to their tax rise. The Prime Minister and the Chancellor are desperate to pretend that this is the only way to raise the money, and that simply is not true. A fairer approach to funding the NHS, social care and all our public services would see those with the broadest shoulders—including those with incomes from large financial assets and multiple rental properties, and other income from wealth—contributing more. The Government have refused to consider those options, and would prefer to hit workers instead.
The simple truth is that there is no plan to fix the crisis in social care. There is no plan to improve the pay and conditions of care workers, no guarantee that any of the money will go toward social care, no guarantee that people will not have to sell their homes for care, and no plan to clear the NHS waiting list backlog during the present Parliament. All that we have is a tax on working people and their jobs. It tells us everything we need to know about the instincts of the Tories when they are in power, and that is why we will be voting against this Bill.
Alison Thewliss (Glasgow Central) (SNP)
Let me first take the opportunity to thank the Clerks, who give us so much support in putting together amendments to the Bill, which arrived at such short notice. I thank Scott Taylor and Salma Saade in our research units, who also helped, and my hon. Friend the Member for Aberdeen South (Stephen Flynn), who did so much in Committee.
This is a Bill and a tax without a mandate, in Scotland or even in England, since it is a breach of a Tory manifesto pledge—a pledge reiterated by the Chancellor at the time of the Budget. The Health Secretary has said that it is for the Scottish Government ultimately to decide how money is spent, but the Prime Minister said that the UK would direct money raised by this levy to the devolved institutions, and the Chancellor is on record as saying that the UK Government have the right to do this. The truth—the legal truth, because it is in the Bill—is that the Treasury may determine how this money is spent in Scotland. That is a fundamental undermining of the devolution that we fought so hard to get. Within the Bill, Ministers can even change what they like in regulations later, so even what we agree today may not be the principles that the Government will go by later on.
This is a tax on the people of Scotland to pay for England’s social care crisis. It is a tax on young people and lower earners to pay for the wealthy. It is a tax on jobs, undermining recovery at a time when we need to be thinking about getting people into work, not making it harder for businesses to employ them. It is also a tax on the many who have been completely excluded from UK Government support throughout the pandemic and who are now going to be hit by this increase. It is also a power grab. It is another Tory power grab on devolution. This is not a Union dividend; it is a Union dead end, and we on the SNP Benches will not support this new Tory poll tax.
Question put, That the Bill be now read the Third time.
Health and Social Care Levy Bill
Wednesday 15th September 2021
(2 years, 7 months ago)
Lords ChamberRead Full debate Health and Social Care Levy Act 2021 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 14 September 2021 - (14 Sep 2021)
Health and Social Care Levy Bill
Monday 11th October 2021
(2 years, 6 months ago)
Lords ChamberRead Full debate Health and Social Care Levy Act 2021 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 14 September 2021 - (14 Sep 2021)
The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
My Lords, it is a pleasure to open this Second Reading debate on the Health and Social Care Levy Bill. This is a short but very important Bill that aims to legislate the plan announced by the Prime Minister on 15 September. The plan will tackle the NHS backlog, put the adult social care system on a sustainable long-term footing and end the situation in which those who need help in their old age risk losing everything to pay for it.
The Government’s plan will make a substantial difference to the lives of millions of people across this country. It will be funded with a record £36 billion investment in the NHS and social care systems. Noble Lords will be aware that such an ambitious plan requires funding. In order to pay for a significant increase in spending in a responsible and fair way, the Bill before the House today introduces a new 1.25% health and social care levy. The levy will apply UK-wide to taxpayers liable to class 1 employee and employer, class 1A, class 1B and class 4 self-employed NICs. However, it will not apply where taxpayers pay class 2 or class 3 NICs. It will be introduced from April 2022 and, from April 2023, the levy will also apply to those working over the state pension age.
Noble Lords may be aware that it takes time for HMRC to prepare its systems for such a major shift. That is why, as set out in Clause 5 of the Bill, in 2022-23, the levy will be delivered through a temporary increase in NIC rates of 1.25% for one year only. I would like to make it clear that all net revenues generated by the temporary increase in NIC rates will be ring-fenced and paid to NHS England, NHS Scotland, NHS Wales and the equivalent in Northern Ireland. From April 2023, the temporary rise in NIC rates will be replaced by a formal legal surcharge of 1.25%. Clause 2 of the Bill sets out that this revenue will be ring-fenced for health and social care only.
It is the intention that existing NIC reliefs and allowances will also apply to the levy. That will mean that 40% of all businesses will not be affected due to the employment allowance. When it comes to individuals, those earning more will pay more. The top 14% of taxpayers will pay around half the revenue raised. Conversely, at least 6.2 million people earning less than the NIC primary threshold will not pay the levy at all.
Let me once more remind Noble Lords today why this levy is so crucial. As the Prime Minister and the Chancellor have said, this levy will enable the Government to properly fund the NHS, so that it can recover from the pandemic. Senior NHS leaders have made clear that without additional financial support we will not properly be able to address the significant backlog in the health service. To get everyone the care they need will take time and will require additional revenue.
In addition, our social care plan aims to create a dramatically expanded safety net for people in their later life. This means that, instead of individuals having to bear the financial risk of catastrophic care costs themselves, we as a country are deciding to share more of that risk collectively. This is a permanent, new role for the Government and a structural increase in the size of the British state. We therefore need a permanent, new way to pay for it. Noble Lords will be aware that the only alternative would be to borrow indefinitely. That would clearly be the wrong course of action when our national debt is already the highest it has ever been in peacetime. Borrowing ever more today just means higher taxes in the future.
We need to fund our vision for the future of health and social care in this country over the longer term. As the Prime Minister said, with proper funding, we can tackle not just the NHS backlog and expand the social care safety net but afford the nurses’ pay rise, invest in the best equipment, prepare for the next pandemic, provide the largest investment ever to upskill social care workers and build the modern, more efficient health service that the public across the UK deserve.
To conclude, this levy will enable the Government to tackle the backlog in the NHS. It will provide a new, permanent way to pay for the Government’s reforms to social care, and it will allow the Government to fund our vision for the future of health and social care in this country over the longer term. I beg to move.
Lord Eatwell (Lab)
My Lords, I am grateful to the Minister for his brief introduction to the Bill.
The key promise of what he has described as the permanent new role for the Government, as expressed in the Bill and accompanying documentation, can be described as the introduction of the health and social care levy, which will mean that, between 2019 and 2025, the NHS England budget can increase by 3.9% per year in real terms. That is slightly above the long-run average of 3.6% in UK health spending. However, it is well above the 1.2% per year seen in the Conservative austerity years from 2010 to 2019, in which the share of GDP spent on the NHS fell year after year, leaving the NHS severely weakened when the pandemic struck. However, even this new higher rate of investment in the NHS will be well below the average of 6% per year seen under the Governments of Tony Blair and Gordon Brown.
It is useful to start from the fact that the Bill consists of three semi-independent strands woven together. First, there is the introduction of a new hypothecated tax: the health and social care levy. Secondly, there is the predominant alignment of the base on which the new tax is charged with the present tax base of national insurance contributions. I say “predominant” because the levy is also to be funded by the extension of NICs to those over 65 and by the dividend tax promised in the Budget later this month. Therefore the tax base is potentially malleable: it need not be NICs and it is not entirely NICs even at the beginning. Thirdly, there is the transitional arrangement of raising overall taxation in 2022-23 via the one-year increase in NICs—the transitional year.
To assess the true impact of the Bill it will be helpful to deal with these three strands of the Bill in order, beginning with the first strand: the new hypothecated tax. It is well known that hypothecation is a dirty word in the Treasury. National insurance contributions, for example, are not allocated uniquely to national insurance, and the road tax is not used for the upkeep of roads. Yet here we have a substantial increase in taxation that is, we are assured, pre-allocated to health and social care. Given the historic experience with other fictional hypothecation, it is reasonable to ask: for how long will this last? It is noticeable that Clause 4 allows the Treasury to use the levy to make different provision for different purposes, not necessarily the purpose described by the noble Lord. The only conclusion can be that this is a grudging and perhaps temporary hypothecation—a temporary uplift in NHS spending sufficient to buy political time as NHS waiting lists reach all-time highs. Can the Minister make it crystal clear: is this hypothecation here to stay or is it a temporary political expedient?
Once introduced, taxes tend to rise, so does the Minister expect an expanded role for this new hypothecated funding of health and social care? Or does the Minister agree with the assessment of the Institute for Fiscal Studies that
“In the short run, the additional revenues may be spent on boosting spending on health and social care. In the longer-run, the hypothecation is an illusion”?
If for now we accept the Government’s commitment to hypothecation, what is the rationale for the second strand: basing the levy predominantly on the NICs base rather than any other tax base? It is, after all, obvious that this will solely impact individuals whose income is mainly made up of earnings or profits, as opposed to other forms of income such as property income, pension income or savings.
When the Minister replies, will he explain why the levy does not cover income from buy-to-let properties? Why does the levy target the 17% of pensioners who work, while allowing wealthy pensioners receiving income from other sources to escape scot free? And why does the levy fall on low-paid workers?
Given the evident unfairness, I find the Government’s attempts to justify the distributional impact of the levy in the document entitled Illustrative Analysis of the Impact of “Building Back Better: Our Plan for Health and Social Care” a disturbing insight into Tory instincts where the NHS is concerned.
It is customary for the Treasury to accompany fiscal changes with an analysis of the distributional consequences of those changes: the impact on the poorest 10%, the next poorest 10%, and each decile up to the wealthiest 10%. Here, for the first time, the Treasury presents the impact of the levy on individual social groups together with what it believes will be the consequential spending on healthcare from which that social group would benefit. In other words, payment of the levy by a given group and the provision of healthcare to that group are linked. It is but a short step from this approach to the idea that payment for healthcare and receipt of healthcare should be linked—a negation of the fundamental character of our NHS, in which funding and the delivery of care have never, before this document, been linked. I hope that when the Minister sums up, he will disown the document.
I turn to the third strand: the impact of the increase in NICs and the dividend tax from their introduction in April next year. The policy paper published by HMRC on 9 September sketches—the appropriate word for something that is very limited—the various impacts that the Government have considered. For example, HMRC refers to the impact on households:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
This is not the Opposition speaking, it is HMRC. On business, the Government tell us:
“This measure is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”
On the economy as a whole, HMRC says:
“The measure is anticipated to have a significant macroeconomic impact, with consequences including but not limited to for earnings, inflation and company profits. Behavioural effects are likely to be large, and these will include decisions around whether to incorporate or not, and business decisions around wage bills and recruitment.”
That is all rather serious stuff. Will the Minister tell us what steps are being taken to offset the impact on those who HMRC says are just about managing financially and who will see their disposable income reduced? Is he content to serve in a Government who wilfully introduce extra taxation that they acknowledge will hit those who are just about managing while at the same time cutting universal credit? Is he proud to be doing this to those who are suffering in-work poverty?
What of the impact on those 1.6 million employers—many of whom, as HMRC says, may well be reassessing business decisions on wage bills and recruitment? Will the Minister tell us exactly what the Government anticipate will be the scale of the impact on recruitment? Does he agree with the assessment of the Federation of Small Businesses that the levy will result in 50,000 fewer jobs being created? Does he agree with the Institute of Directors, a well-known left-wing organisation, which argues that:
“This is an extraordinary time to be adding additional burden to business and the cost of employing staff”?
Where are we to find the Government’s assessment of the impact of these measures on earnings, inflation and company profits? We have been offered none. However, the Institute for Fiscal Studies has again commented that:
“Following a rise in income tax of £8 billion and in corporation tax of £17 billion in the March Budget… the Chancellor has announced a further tax rise of £14 billion… which if delivered will raise the tax burden in the UK to the highest-ever sustained level.”
When the economy is struggling to recover from the pandemic, when the furlough scheme has ended, when business support has ended, leaving small and medium-sized companies with debt-laden balance sheets, when output is barely back to pre-pandemic levels and is hampered by serious supply chain problems and fuel shortages, the Government raise the tax burden to the highest-ever sustained level. Does the Minister consider that in this critical recovery period, the introduction of a levy that will have “significant macroeconomic impact” is quite such a good idea?
Finally, we come to the most important question of all: will it work? A fundamental issue must be the division of revenues between the NHS and the social care providers. As has been made clear, spending will be heavily weighted towards the NHS in the first three years, and then perhaps there will be some crumbs for social care. How can the Minister really pretend that this is the plan that the Prime Minister promised two years ago? To quote the Institute for Fiscal Studies once again:
“While the precise path for spending—and hence for the availability and quality of care—is unclear, it is clear that the extra funding will not be sufficient to reverse the cuts in the numbers receiving care seen during the 2010s”—
the great austerity period.
“Thus, while more people will become entitled to financial support as a result of the reforms planned”,
as the Minister told us,
“many people with care needs not considered severe enough will continue to miss out.”
In fact, the focus of what has been announced is almost entirely on changing who pays for care rather than directly addressing the growing problem that too few people are getting the care they need in the first place.
In his introduction to Build Back Better: Our Plan for Health and Social Care, the Prime Minister writes:
“We will bring the health and the social care systems more closely together”.
Over the weekend, there have been suggestions in the press that the Government are planning to create a national care service, integrated in some way with the NHS. If this is so, will the Minister tell the House what will be the role of the levy? Will it be raised further for what will be an expensive operation? Will hypothecation be extended?
I am afraid that the Bill is a typical example of ill-thought-through legislation, rushed through Parliament to spare the Prime Minister political embarrassment. If this was a plan ready more than two years ago, why the need for fast-track legislation? The explanation given by the Government is, I am afraid, disingenuous:
“The legislation is required to be in place for the 2022-23 tax year, which starts on 6 April 2022. The increase in National Insurance rates for that year will require changes to be made to the systems of employers and HMRC … it is important for both those employers and HMRC to have as much time as possible to implement the changes.”
All this amounts to saying that, even though the Government have announced the policy, with great fanfare, uncertainty about whether it will be put into effect persists, halting action until the relevant legislation is passed. In other words, a Government with a majority of 80 in the House of Commons are uncertain whether they can pass a money Bill. Pull the other one.
The rush was clearly designed to limit the time for proper scrutiny of the Bill and its many implications—scrutiny that your Lordships’ House can provide this afternoon. With that proper scrutiny, it will be evident that the provisions in the Bill are ill-thought-through and unfair, and will have potentially serious macroeconomic consequences.
The Deputy Speaker (Lord Haskel) (Lab)
My Lords, the noble Baroness, Lady Brinton, is taking part remotely. I invite the noble Baroness to speak.
Baroness Brinton (LD) [V]
My Lords, I declare my interests as a vice-president of the Local Government Association and a vice-chair of the All-Party Parliamentary Group on Adult Social Care. I also declare that I am disabled as a result of a long-term condition, and that my husband is my unpaid carer.
From these Benches, our focus is to see how this levy Bill will benefit those using social care and those working in it who are trying to provide an essential but frankly invisible service against impossible odds. There is no doubt that they have hoped that this Government will introduce real reforms for the care sector, especially after Ministers’ abject failure to protect people in care homes during the pandemic: from the lack of tests and PPE, to lies about a “protective ring” around care homes while people died in horrifying numbers. The way hospital patients were moved into care homes to free up space without being tested for Covid was equally horrifying for patients, their families and the staff in care homes, too.
The current underlying problems in our care sector were there long before the pandemic. We have an iniquitous funding system, with the general public not understanding that they are more than likely to have to pay for their care, and that the so-called “hotel costs” of living in a care home—accommodation and food—will now be separated out.
Ten years ago, the three major parties all came together to support the proposals of Andrew Dilnot’s review—but, just before we were going to achieve success, the Conservative Party walked away. Over the succeeding decade, the crisis in the sector has worsened considerably, not least because of the draconian cuts to local councils and other local services, especially to those that are there to help keep people out of homes, to keep their independence and their lives going. The current pricing of beds and the cuts to day services mean that independent living, which really would help keep people out of homes, just is not there. Staff in the care sector, unlike in hospitals, are paid at the minimum wage because, shamefully, as a society we regard social care as unskilled, when those of us who know the sector well see the exact opposite.
Worse, the funding rates for residents are based on most staff being on the minimum wage, making it impossible now for employers to compete with retail, hospitality and agriculture, where employers are charging customers more and are then able to pay their staff more. Worse, these dedicated staff, under this proposal, will be paying an increase in national insurance, which will further reduce their income at the exact time that they are facing cuts to universal credit and increases in the cost of energy, food and many other items. The limits on publicly funded costs and the iniquitous position of privately funded beds now cross-funding those in beds funded by the state must stop—and now. But this means that the real rates need to be paid to reflect that cost.
The paper Build Back Better: Our Plan for Health and Social Care, published last month with a foreword by the Prime Minister, is not a plan for health and social care. It is a funding plan for how people pay for their care and for the NHS, and for what element is paid for by the state. The Minister has set out the structure for paying the costs of those who will need support beyond the proposed cap, but not, as many think, for extra front-line funding for our care homes. Even worse, the public do not understand that this cap excludes all of the so-called “hotel costs”, regardless of the resident’s length of stay. That means that those who believe this Conservative Government’s words that they will no longer have to sell their home might find themselves, if they are asset-rich and pension-poor, likely to have to sell their home anyway for a large portion of their weekly care costs. This sleight of hand is breath-taking.
The extra funding referred to by the Minister in the paper for the next three years is first and foremost for the NHS, which is likely to have to absorb the 3% pay rise that the Government have graciously given it, as well as deal with the backlog from the pandemic. Once again, the Government are blunt: social care will get whatever sits behind and is left from that NHS spend. Already, many in the care sector are concerned that there will be nothing left for social care, so I really hope that the Minister will be able to say what funding from the £12 billion announced in the paper is guaranteed for the social care sector. Will any extra be provided if the NHS needs it all?
I echo concerns about what was said in newspapers over the weekend. There were leaks from the Government that local authorities might well be required to fund support for social care increases via council tax increases of 5% per annum for three years. That is another deeply regressive tax that puts a very specific burden on the lowest paid in our society. I echo concerns about the rumours outlined by the noble Lord, Lord Eatwell, about integrated health and care services in the future. Is this not all totally upside-down and back-to-front? Surely the principles of reform should be announced first, before a funding mechanism is agreed by Parliament. Despite the fact that the Commons is already looking at the Health and Care Bill for integrated care structures, the Prime Minister’s proposals for reform of the social care sector remain stubbornly in his mind and behind the closed doors of No. 10. There needs to be honesty about the direction; reforms must be long-term and total. They are missing at the moment, and this is a key element.
How will the delivery of social care itself be reformed and do we know that the funds sought through the levy will be adequate for it? From these Benches, we were clear in our 2019 manifesto that we would raise additional revenue that would be ring-fenced to be spent only on NHS and social care services through income tax. This would be generated from a 1p rise in the basic, higher and additional rates of income tax. We would use this cash to relieve the crisis in social care and urgent workforce issues and to invest in the mental health and prevention services that I outlined earlier. This frankly represents an efficient and effective way of spending these extra resources and ensuring that they will have the greatest impact on the quality of care that people receive.
We from these Benches have been calling on the Government not to delay any longer and to engage urgently in cross-party talks on the wider future of social care. If the Prime Minister has not yet announced his reforms to social care but keeps saying that he is prepared to talk to other parties, why are we not talking now? Perhaps the Minister could remind him.
Two years ago, Boris Johnson pledged from the steps of No. 10 that he would fix the crisis in social care once and for all, as a top priority. But with social care services in crisis, it is time that he sets out how he plans to do it. Instead, people are selling their homes to pay for care and more than 1.5 million people are missing out on the care they need. More and more people are stranded in hospital, unable to leave because the follow-up care just does not exist, and the staffing crisis in the sector worsens daily. This is putting an increased strain on the NHS, which does not have the cash to cope.
The cost of inaction and delay is falling on the shoulders of the over 11 million unpaid carers in the UK, whose contribution to the current social care system is almost completely ignored. The cost of reform to the Government might seem large, but it is a fraction of the true cost to families across the country. Carers UK estimates that unpaid carers already save the Treasury £193 billion a year. Any discussions of funding for social care services need to include discussions on fair pay and support for hard-working carers employed in the sector. This pandemic has reminded everyone that caring for people’s health does not stop at the hospital exit or the GP’s surgery door. We can improve the NHS only if we properly support carers, whether unpaid family carers or dedicated staff working in homes and in patients’ homes.
This Bill does not build back better; it is a building block to start the funding mechanism, but one that uses national insurance, disproportionately affecting those on low incomes, including, critically, those working in the sector. Perhaps that is this Government’s secret plan. After all, the Secretary of State for Health and Social Care told the Conservative conference last week that we did not need the care sector, as families should just look after their own. Of all the comments from Ministers over recent weeks, that was the most chilling. I hope the Minister can reassure us that the Government believe in, and support, our hard-pressed social care sector and recognise the real need for reform beyond the financial levy. From these Benches, we remain prepared to help.
Lord Forsyth of Drumlean (Con)
My Lords, it is a pleasure to follow the noble Baroness, who speaks with such authority on this subject. I very much welcome the Prime Minister’s determination to fix social care. However, this Bill does not do that. It is a bit like going into a restaurant and being presented with a bill for the meal before you have even seen the menu. I have to say to my noble friend the Minister, whom I admire enormously, that to speak for less than five minutes on a Bill of this importance to the economy and to millions of families—a Bill which has been rushed through for reasons that I still do not quite understand—says something about the relationship between government, the Executive and Parliament itself.
The Bill certainly will not fix social care but it will massively increase the regressive nature of the taxation system, because, as has been made clear, it will place the burden on those who have least, not those who have most. Way back in 2006, when we were in opposition, George Osborne and David Cameron asked me to spend a year of my life with some very able people of all political persuasions to produce a tax reform document. One of the recommendations was to look at merging national insurance with income tax. This is an absolute missed opportunity for those of us who believe we need a simpler, fairer, flatter tax system in our country.
I have a number of questions on the tax aspect. What measures will be in place to prevent people getting round these national insurance increases? I can see even now—well, I cannot actually see it, but I can imagine it—people in the City thinking, “Those bonuses we were going to pay in April, perhaps we had better pay them in March.” How will we avoid the loss of expected revenue? Will measures be brought forward to avoid forestalling?
I will concentrate on social care. The Economic Affairs Committee, which I chair, produced a report more than two years ago called Social Care Funding: Time to End a National Scandal. We set out a series of arguments. Since then, we have had a number of debates in this House on this subject. There has been unanimity across the House on the need to deal with this urgently. Since then, and in the run-up to the publication of that report, demand for social care has grown and grown—and not just among the elderly. One of the really frustrating things about this debate is that everyone seems to focus on the elderly. We are told that it is not fair that young people have to pay for the needs of the elderly, yet half the budget goes on people of working age; the demand from that group is growing as well.
Our report set out a number of questions for the Government. I am very pleased that my noble friend Lord Bethell will speak later in this debate. At each and every debate, he has said that the Government will produce a White Paper but that they want to follow the recommendations of the Economic Affairs Committee and find a solution on an all-party basis, so that it is permanent and so we can move forward. This is certainly not an all-party solution. In case people think I have gone native, I also think it is a bit rich for the Opposition to keep criticising what the Government are doing, without putting forward their own proposals on social care.
In this context of increasing demand, our committee reckoned that it was necessary to spend £8 billion on social care just to get back to the standards of care that existed in 2010. This Bill aims to raise £12 billion, but that will not touch the sides of the problems which face the social care industry and the people who depend on it.
My right honourable friend the Chancellor said that it was a moral duty to ensure that the costs of this were met by an increase in taxation and not by borrowing. Personally, I think we need to think about how as a nation we can generate the wealth to meet our obligations to the elderly. If we are going to talk about moral duties, it is certainly a moral duty to ensure that there is a safety net below which those vulnerable people will not fall. And they are falling.
This Bill, and the Government’s proposals set out in that document, do nothing to address immediate needs. As the noble Lord, Lord Eatwell, said, it is not clear how much of the £12 billion will actually go to social care. Last time we had an emergency payment for the National Health Service, it was £20 billion, and it disappeared into the health service. How much of it went to social care? Almost nothing. The entire cost of social care then was £20 billion. Some people refer to social care as the Cinderella service, but in this case, Cinderella never gets near to going to the ball. That is true of these proposals.
We are told that this will happen in 2023 and we are told that the Dilnot report is the answer. When our committee looked at Dilnot, we were concerned. If you have a cap on spending, the level at which the cap is set is very important, and £86,000 is quite high. Most people will, sadly, spend only three years in nursing care, so you would have to go pretty hard to spend £86,000. Does it apply then only to those who might spend a long period in nursing care? That is okay, but how will the £86,000 cap be calculated? Will we have an army of bureaucrats going through every invoice and every type of care provided in the course of a lifetime? No. I suspect—and the Government’s own publication hints at this—that it will be calculated on the basis of what the local authorities would have paid. But we know, and our report pointed out, that the local authorities’ rates are being subsidised by self-funders, who are sometimes charged as much as 40% more than the going rate for the local authorities. That is not to blame the local authorities; they do not have the money, so they try to squeeze.
What is the solution put forward for this? It is that everyone, even if they are a self-funder, can have their place found by the local authorities. That will not provide the revenue for the people who run the nursing homes. As a result, the nursing homes are going to disappear. Indeed, it is already happening that they favour self-funders because of the differential.
When we started our report on social care, I was attracted to the idea of a cap because the insurers would then be able to come in behind it. It will not work, however, because of the size of the cap and because, on the whole, people will not buy insurance for something they think will not happen to them. It is hard enough to get them to invest in pensions, when they know—or hope—that they are going to get old. They do not hope that they will require care in a nursing home or elsewhere.
The most chilling thing of all—because none of this money will be allocated to social care in the short term—is that it will all be left to local government. Over the weekend we heard the hints that the noble Lord, Lord Eatwell, mentioned: that local government will need to pick up the strain here. It does not have the money. If it goes on the council tax, that will be even more regressive and damaging and will introduce a postcode lottery for care. The sad thing is that some of the local authorities with the broadest tax base have the least demand, and those with the narrowest tax base have the most demand. There would therefore be inequality. Building up? This is building down. A postcode lottery would be the consequence.
What will the Government do to fulfil the Prime Minister’s promise to fix social care? I have been watching the Brown-Blair films, and there is a bit where Gordon Brown is alleged to have said to Tony Blair: “You have stolen my”—expletive deleted—“Budget”. I have a feeling that the Chancellor’s Budget has been stolen a bit here, because we have a commitment in this respect, but where are we on local authority funding? If we are really to fix social care, I assume that the Chancellor will make a very generous settlement to local authorities in order for them to provide the means they need to deal with this problem now. I hear someone saying it is unlikely—have faith.
If the Government really want to fix social care and are committed to the Dilnot solution, why on earth are they not doing it now? The legislation that provided for Dilnot was passed in the Care Act 2014—seven years ago. It is there on the statute book; they could do it now. What we are seeing here is a bit of: “I need money for the health service and I need money for social care. Let’s think of a number that’s not quite big enough, and we’ll say that we’ll do it first for the health service and then social care will get it.” If you believe that, you will believe anything, because the truth is that the National Health Service needs that £12 billion and, three years on, the money will not be available—just like the £20 billion put in before, as I mentioned.
I have a question for my noble friend: is domiciled property to be included in the means test for domiciliary care? At the moment it is not. If it is, it will create a huge incentive for people to go into nursing homes and a real unfairness for people who wish to be cared for in their own homes.
I did a few calculations, in case my noble friend thinks I was being unfair about the regression. If you are an average worker on an average wage and are paying the basic rate of income tax at 20%, and you work that little extra to create that extra £1 of value, 20% of that disappears in income tax, 13.25% disappears in national insurance and your employer has to give up 15.05%. In other words, 48.3% of every £1 disappears—and we wonder why our productivity is low when those are the incentives. I do not believe that national insurance was the right tax to use to achieve the purpose that the Government intend.
Of course, it is too late to say that now. We cannot change it in this House; we have to leave it to the House of Commons. A decision has been taken, but it is for the Government to fulfil the Prime Minister’s promise to fix social care and that means looking at the resources provided to local authorities, which have been absolutely heroic. My bins get emptied once a month now. Almost every service has been cut to the bone in order to try to help those people needing care. We look forward to the Budget at the end of the month and the fulfilment of the promises that have been made.
The Lord Bishop of Carlisle
My Lords, it is a privilege and a little daunting to follow the noble Lord, Lord Forsyth. I should declare an interest in this debate, given that I share with my brother in caring for our 93 year-old father who has dementia. He lives with each of us for six months at a time.
To be positive for a moment, I should also say how grateful I am that the ongoing nettle of funding social care is being grasped, at least tentatively, by this proposed levy when, for so many years, it has been studiously avoided or ignored. Nor would I wish to quibble with the obvious benefit of this proposal for our hard-pressed NHS, resolving as it will at least some of the backlog of diagnosis and treatment that has built up during the pandemic. Despite the hesitations already expressed about Sir Andrew Dilnot’s proposals, I am glad of signs that some of them—now 10 years old—are being partially implemented. I am also delighted that the question of integration between health and social care is, at least on the surface, being taken seriously at last.
But—and it is quite a significant but—there are several problems with this proposal, in addition to those which have already been raised, which demand our attention. First, we have already referred to the relatively small amount of money raised over the next few years that will actually go into social care when the whole social care system is already on its knees and in danger of breakdown.
Secondly, even after two years, there are real questions about whether the funding allocated will be enough and, indeed, as the noble Lord, Lord Eatwell, has indicated, whether this hypothecation will actually last.
Thirdly, little attention has been given as yet to workforce planning, which goes hand in hand with the developing integration of health and social care and is so crucial for the future. We are promised more of this in the forthcoming White Paper, to which I look forward and which will, I hope, also address issues such as the value and status of paid carers, many of whom will in the near future find themselves even worse off than they already are due to a combination of the levy, the removal of the universal credit uplift and the rising cost of energy and other goods, as mentioned by the noble Baroness, Lady Brinton.
Fourthly, the massive contribution of unpaid carers—really massive—is not yet properly recognised. We need further proposals for funding carers’ breaks; for increasing the carer’s allowance; and for honouring the Government’s manifesto pledge on leave from the workplace. However, I am pleased to know that unpaid carers will be consulted about the White Paper and blueprint for adult social care which we all await with some eagerness.
The fifth point is that people of working age with complex disabilities currently account for about half the total spend on social care, as mentioned by the noble Lord, Lord Forsyth. I hope that they will also be consulted to ensure that any reforms in future meet their needs. Sixthly, while welcoming the money that will be aimed at hospital discharge and rehabilitation—about £500 million—I wonder whether this relatively small sum will be enough for the sort of preventive measures that could make such a huge difference to the current demand for social care.
Finally, whatever the amount raised by the levy and however it is ultimately distributed, the biggest question of all—this has been raised by the noble Baroness, Lady Brinton, and so graphically by the noble Lord, Lord Forsyth—relates to the quality and nature of the care on which this money will be spent. We on these Benches were unsuccessful in proposing a cross-party Select Committee to consider that issue, so instead we have established a commission that has been tasked with reimagining social care in this country. We look forward to sharing our findings in due course with both Her Majesty’s Government and Members of your Lordships’ House.
Lord Macpherson of Earl’s Court (CB)
My Lords, I draw attention to my declaration of interests in the register, including the ownership of a flat that I rent out.
I have long been in favour of a health and social care levy and, unlike most former Treasury officials, I am in favour of the hypothecation set out in the Bill. It was clear long before we knew about Covid-19 that the country would need to spend more on the national health service and social care. Demographic pressures have been building for some time and are set to increase further over the next three decades. The events of the last year have confirmed that care home provision is simply not good enough. It is a mark of a civilised society how a country treats those in need of the greatest care.
It has also been clear for some time that the Government have lost the will to find offsetting spending savings to pay for demands on our health and social care system, so taxes have to rise. I have no great problem with that. With gilt yields rising, debt interest promises to be the fastest-growing programme in the spending review. Better to finance current spending out of revenue than through borrowing. So I congratulate the Treasury and the Minister on achieving something all too rare: persuading an oversensitive No. 10 to accept a tax rise that breaks a manifesto commitment. This is not a forced tax rise of the sort that followed crises in 1976, 1992 and 2009 but a discretionary one. The Government are choosing to spend more, so they are taxing more.
I am tempted to leave it at that, but I feel duty-bound to take issue with three aspects of the tax. First, there is the issue of fairness. It is a principle of sound taxation that the tax base should be as wide as possible to keep rates as low as possible. Here I fear the Treasury has missed a trick. The health and social care levy should be paid by everyone, old as well as young, and should be payable on all income.
I welcome the Chancellor bringing dividend income into the levy’s coverage, but I am puzzled that rental income is exempt. The fact is that rental income has its own income tax schedule, Schedule A, so it would be easy enough to ensure that such income bore a higher rate of income tax. Indeed, for much of income tax’s 220-year existence, unearned income incurred a higher tax rate than earned income. That has been turned on its head over the past 40 years as Governments have chosen to channel tax increases through national insurance and tax cuts through income tax. However, the issue of rental income is a matter not just of fairness but of economic efficiency. Housing already receives substantial privileges, which further entrenches the bias in favour of property investment over equity investment. Rentiers generally do not need additional privileges—they have enough already.
I am also concerned that the levy further increases the differential in tax between employees and the self-employed. However, having spent 30 years of my life trying to persuade politicians to close this gap, only to see the noble Lord, Lord Hammond of Runnymede, try and fail the year after I left the Treasury, I am sufficiently realistic to accept that there is a zero chance of correcting this anomaly.
My second concern is that Government have decided to apply the levy to employers by increasing the rate of national insurance that they pay. This is sleight of hand, as the incidence of the tax and its economic effect is the same whether it is borne by employees or employers. It would have been much more transparent to introduce a levy of 2.5% payable only by individuals. I fully understand that taxing employers is easier politically—they do not have many votes—but, as always with tax, there is no free lunch. Employers’ national insurance is a tax on jobs. Tax more employment and you get less of it. That is why Margaret Thatcher abolished the national insurance surcharge in the 1980s.
I recognise that this Government have a rather different attitude towards business. The Chancellor has announced over £40 billion of tax increases this year. Nearly two-thirds of these will be borne by business in the form of high corporation tax and national insurance. That may be good politics, but at a time when Brexit has made it more important than ever that the UK is business-friendly, it is almost certainly bad economics. That, in turn, makes me wonder whether the Government will succeed in making the tax increase stick. Over the past 50 years, there has been many a radical tax change. Tax rates have swung wildly, new taxes have been created and old taxes abolished, but throughout this period, the tax take has remained stubbornly stable. No Chancellor has managed to get tax receipts above 34.1% of national income. Many Chancellors have forecast a rising tax take, only to be disappointed. This Bill envisages a tax take not seen since the days of Sir Stafford Cripps. I am sceptical it will deliver it.
My final point relates to where the money will be spent. I can see the case for capping the care costs individuals pay, but I agree with the noble Lord, Lord Forsyth, that it likely to have many unintended consequences. The social care cap is a simple income transfer from those who pay the levy to those who benefit from the cap. Of itself, it does nothing to increase the capacity of the social care sector. Given the travails of the past 18 months, that should surely be the priority at the current time. It would be tempting to rely on increased funding for local authorities, but, again like the noble Lord, Lord Forsyth, I fear that will not be forthcoming. It is not a protected programme, and recent Governments, since 2010, have chosen to squeeze local authorities over and over again. So, as well as looking forward to the increase in the social care levy, we will be looking forward to many an increase in council tax.
To conclude: I support this Bill, but the design of the levy has flaws. I hope that once the levy is in place, the Government will seek to address some of its faults.
Lord Hunt of Kings Heath (Lab)
My Lords, for decades, social care has proved to be an intractable problem. After numerous reviews and failed reforms, the level of unmet need rises, the pressure on unpaid carers grows, the supply of care providers diminishes and the strain on the undervalued care workforce ever increases. So, it is welcome that at last we have a proposal before us and, as the noble Lord, Lord Macpherson, has said, a recognition that taxes will have to rise to pay for it.
The problem is that these are the wrong proposals. What the Minister has brought to us today, is essentially a tax increase on younger and low-paid workers so the wealthy can retain more of the value of their properties to pass on to their children. As we have heard, it is a tax on employment that will hit businesses. It will not, as yet, solve the underlying pressures in social care.
What a flimsy Bill it is. It is treated—remarkably—as emergency legislation, despite the fact that the Government have had 11 years to bring forward proposals to Parliament. There have been no cross-party talks about this and no consultation, and no Select Committee was allowed to scrutinise the Bill before it was brought before Parliament. Clause 4, as my noble friend Lord Eatwell said, is remarkable in the power it gives to the Treasury to make any change it seems to want to in relation to the proposals before us. If this Bill were to receive proper parliamentary scrutiny, it would be torn to bits. No wonder the Minister spoke for less than five minutes.
My noble friend Lord Eatwell has already referred to the remarkable commentary from HMRC on this tax rise. I will repeat one comment that he made. HMRC said:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
As my noble friend said, how can the Minister justify that? What does he say to the CBI, which commented that a national insurance increase
“will directly hurt a business’s ability to hire staff, at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages”?
Indeed, having listened to the Prime Minister and Ministers last week, I might ask whether the Government have any interest at all in the future health of our business sector. It seems not.
Unfair as it is, will this levy be sufficient? In his opening remarks the Minister remarkably claimed, without any evidence whatever, that this will put social care on a long-term sustainable footing. But we have already heard that the levy is projected to raise £36 billion over the next three years, that all the money raised in 2022 will go to the NHS and that for the remaining two years £5.4 billion will be invested in social care. This money is not designed to alleviate existing funding pressures on the system, yet these are immense. The committee chaired by the noble Lord, Lord Forsyth, published an excellent report which estimated that an £8 billion yearly increase would be needed to restore care provision to 2010 levels—he has already referred to that. But the £5.4 billion, one assumes, is to be allocated primarily to implementing the cap.
The Health Foundation, following up on the Select Committee report, set out at the beginning of this month what it may cost the Government to fund the NHS and social care system in England, along with workforce requirements, over the next 10 years. It looked at two projections, stabilisation and recovery, and stated that both of them would need much higher growth than in recent years. It said that
“an additional £8.9bn and £14.4bn is needed in 2030/31 over 2019/20 for the stabilisation and recovery scenarios respectively.”
Does the Minister really think that the levy is the answer to that, when most commentators reckon that, in the end, the NHS is going to need almost all of the levy and is likely to get it?
The claim that no one will be forced to sell their own home is surely questionable. My estimate is that on average a person will have to spend at least £160,000 before they get to the £86,000 cap. This takes account of a modest calculation of living costs at about £12,000 per annum, and the fact that the £86,000 cap, as the noble Lord, Lord Forsyth, who is surely right, said, will be calculated on local authority rates—despite the fact that the self-funders subsidise those local authority rates. Even when a person reaches the cap, they will still have to find living costs on an annual basis, and it is quite likely that the local authority will still pay only at the local authority rate, so many people will have to pay top-ups as well. Melissa Lawford in the Sunday Telegraph put the estimate much higher. She thought a self-funder would receive government support only after five years, having spent £296,000. The puzzle to me is that no effort at all has been made to encourage and incentivise the insurance market to provide a more effective way of support for self-funders.
The ABI, in a commentary it set out over the weekend, said that the cap should be viewed as a solution to avoid catastrophic care costs and not as a way to enable a private market to develop. A cap, in itself, would not prompt a market to develop. Why on earth are the Government not seeking to incentivise a private market to develop to help self-funders, allowing the Government to concentrate on the proper provision of social care for those who cannot afford to pay above any insurance prospect?
Why have the Government spent so long dithering about implementing Dilnot when they should have been thinking about a much more concerted approach to dealing with these issues, to encourage as many people as possible to support themselves while shoring up the pitiful state of our social care system at the moment? There is no plan. We are promised a White Paper in December. Does any noble Lord think that this is going to be well thought through in a way that will deliver a good social care system for us going forward?
What about carers? The right reverend Prelate asked what this would mean for carers. I would just say to him, as Carers UK has said, that carers have been propping up a chronically underfunded healthcare system at huge cost to their own personal health, finances and ability to stay in work. It is very telling that nothing, in all the claims the Government have made, has been said about how carers will be helped.
Paul Johnson of the IFS recently described our social care system as the unfinished business of the National Assistance Act 1948. It enshrined, he said, a Poor Law philosophy of both needs-tested and then means-tested moving into the social care system, to be run in parallel with the free at point of use NHS.
This Bill is not the answer to that. It will not transform social care; it will not help care workers get the pay, terms and conditions they deserve; it will not help unpaid family carers. Instead, we have a huge, missed opportunity and a tax on the youngest and lowest-paid workers for the benefit of the better off. This Bill will not do.
Baroness Tyler of Enfield (LD)
My Lords, I declare an interest as a close family member is a long-term care home resident. Before turning to the specifics of the Bill, I will make a few general points about reform of social care, as others have done.
First, as well as looking at how the money is raised to provide a cap on social care costs and a more generous means test—as we are today—we must consider how we can best shore up a fragile and highly fragmented sector reeling from the impact of the pandemic, increased costs and low occupancy rates, with some care homes becoming increasingly financially unviable. Immediate funding is needed to improve the quality of care and introduce minimum standards for care homes.
Secondly, we urgently need a new deal for the care workforce, with action on pay, training development, career progression, professionalisation and recognition. In my view, care staff, who have given so much during the pandemic, deserve to be paid well above the minimum wage. Thirdly, and as the noble Lord, Lord Forsyth, pointed out, half the adult social care budget is spent on working-age adults—often people with learning disabilities—many of whom do not own their own home. So framing this whole social care debate in terms of trying to prevent older people having to sell their homes is only one part of a much bigger picture. Finally, the social care sector is complex and little understood, with both large and small providers providing both domiciliary care and care in care homes—something I hope I can expand on when we have our debate on Thursday.
The Bill takes forward the Government’s decision to introduce a new tax to pay for social care, beginning as a 1.25% rise in national insurance from next year and then becoming a separate tax on earned income from 2023—the levy. It is estimated to raise £12 billion per year.
As others have already said, raising this money primarily from national insurance is regressive, falling disproportionately on the young and low-paid. While I welcome the fact that the levy will be payable on dividends and pension earnings, which is a step forward, there is no getting away from the fact that this tax will impact hardest the lowest earners and youngest, as the noble Lord, Lord Hunt, said, as well as hammering small businesses. The threshold for paying national insurance contributions is lower than the income allowance threshold, so a worker has to earn only £9,560 to start paying NI contributions, as opposed to £12,570 for income tax. The rate paid on national insurance falls as earnings increase, in contrast to the more progressive structure of income tax.
As well as its regressive nature, national insurance is levied only on earnings and not on unearned income, so those in work contribute more. In addition, increasing national insurance increases the tax gap between employees and the self-employed, and the gap between the tax that people pay on their employment income and the tax that they pay on income from renting out property. Those last two points were compellingly covered by the noble Lord, Lord Macpherson.
None of this feels fair to me. As Paul Johnson, director of the Institute for Fiscal Studies—much quoted already in this debate; I hope he is listening—has said previously:
“Funding social care just from national insurance would be very inequitable.”
He pointed out that the levy on employee earnings and employer wage costs, despite applying to working pensioners and running alongside an increase in tax rate dividend—we do not know what that will be yet—remains
“a tax which will be overwhelmingly borne by workers with very little coming from pensioners.”
That is a serious concern.
We already know that the vast majority of the money raised will go to the NHS, including £5 billion for healthcare in the devolved nations, to increase capacity and help with the backlog of treatments built up over the pandemic. Of course that is much needed, but it leaves only £5.3 billion to be allocated to social care, and the bulk of that—£2.5 billion—will fund the cap on lifetime care costs. Ultimately that leaves, by my calculation, some £2.8 billion over three years for social care reform, which is so much lower than many respected commentators, such as the Health Foundation, have said is needed. Indeed, a total reform package which included investment to improve access to social care, paid workers decent wages and enabled providers to deliver higher-quality care is estimated by the Health Foundation to cost about £12 billion, as the noble Lord, Lord Hunt, said. That sounds a lot but, to put it in perspective, it represents about a month’s NHS funding or 0.6% of GDP.
Now that the Government have finally published their proposals for social care, it is time to start the long-overdue cross-party talks that have been promised for years to bring on a proper, long-term, sustainable solution that ensures that everyone gets the quality care they need, which this short-term fix clearly does not. For me, nothing should be off the table in those long-term cross-party talks; they should certainly include looking at other sources of income and wealth. It seems illogical that income from property rental is excluded, so we end up with a situation whereby a relatively low-paid pensioner earning a little extra to help make ends meet will end up paying national insurance, whereas a property owner receiving a good income from rent will pay nothing, a point made by the noble Lord, Lord Eatwell. To throw in another idea, how about taxing the IT giants in the digital economy—the Facebooks and Googles of this world—so that they can start making a proper contribution to health and social care?
I have long believed that we should look for a long-term solution through the prism of intergenerational fairness, in which all generations contribute but no one generation is impacted unfairly. That will be vital to ensure greater buy-in across the generations. Although it may be a bit out of fashion, I have always sympathised with the recommendation of the Barker commission back in 2014 that the over-40s pay an additional national insurance contribution earmarked for adult social care. However, proper cross-party talks involving a wide range of stakeholders are far more likely to come up with a long-term funding solution that sticks, rather than being a political minefield in every general election.
This is a deeply flawed Bill which fails to set out a plan to fix the crisis in social care or improve pay and conditions for social care workers. Only a small proportion of the money raised will go to social care over the next three years, and even that is not guaranteed. It is deeply concerning that there is no commitment that Parliament will get a vote on the social care plan when it is finally published before spending the money it raises.
I end by asking the Minister to explain more convincingly than I have heard so far why the Bill was brought forward before details of the Government’s social care reform plans for England have been published—which is very much the wrong way round, as many other noble Lords have said. Can he also clarify whether the cap on lifetime costs will be available only for those starting care from 2023—that is, it will not apply to those already in the system? If that is the case, it strikes me as very unfair.
Lord Lansley (Con)
My Lords, I am very pleased to follow the noble Baroness; I agree with her on one or two items I will come to in a minute. She had some ideas about how these revenues might be otherwise achieved. I will not offer my own ideas, but there is a question here; I wondered whether the noble Lord, Lord Macpherson of Earl’s Court, might have said this. It seems very misplaced to have a fiscal effect of this scale in September when the Chancellor should be on his feet in late October with what ought to be the fiscal event that gives us the OBR’s judgments, which enables us to see the whole panoply of revenue and expenditure, and I am surprised that it was done this way. It is obviously done for political reasons; it has enabled the Treasury to distance itself somewhat from the decision that led to this. I am grateful to my noble friend on the Front Bench for introducing the Bill in this way. He set out the Treasury’s arguments in favour of the Bill; it was therefore necessarily a short speech.
The noble Lord, Lord Eatwell, is not in his place at the moment but I was surprised that he did not refer to Gordon Brown’s hypothecation of a national insurance increase to the NHS. As a subsequent Secretary of State, I can say that this was important only in so far as it made the accounting for the NHS in the departmental accounts more complicated. It had no impact whatever on the decisions made about revenue and expenditure in the Department of Health, as it then was. This will not have an impact either. The NHS will continue to be funded out of general taxation, and the only impact of this increase is that it further reinforces the misplaced belief on the part of the general public that the NHS is funded out of national insurance contributions and it is therefore a contributory tax. It is not like that, has not been like that and will not be like that. The noble Lord, Lord Eatwell, made a point about whether people think that they have access to the NHS because they pay for it. They have free access to the NHS because they pay for it through general taxation, not because they pay for it through national insurance contributions, and the extent of their national insurance contributions has no impact, and should have no impact, on their access to the NHS.
I have two problems with using national insurance contributions in this way for the National Health Service. The first is that it is a tax on jobs. This is happening in the week after the Prime Minister has told the business community that it is going to have to pay higher wages, so it may well say, “If we have to pay higher wages, you might not impose on us additional costs of employing people”, which is exactly the point that the noble Lord, Lord Macpherson, made. There is a gap at the moment between the cost of employing people in this country and the cost of employing people in, for example, continental Europe. However, we cannot be complacent about that, because there is a different gap and a cheaper cost of employing people in many of our other competitor countries. We have to be very aware of the risks associated with continuously increasing the cost of employment.
All that said, increasing national insurance is an inappropriate way of funding social care. Like my noble friend Lord Forsyth of Drumlean, I welcome the fact that the Government are addressing the funding of social care. They have done so in the past, through one or two mechanisms, but at no stage have we seen the increases in resources for social care keep pace with the rising cost. That is where we need to be. The NHS, as I know perfectly well from past experience, needs, broadly speaking, a 4% per annum increase in real terms to keep pace with demand. Social care is getting nothing like that, but the increase in demand for social care is very like that for the NHS.
More of these resources should go to social care than the Government intend—not all of them, but perhaps one-third over the next three years—and that should start now. If you ask people in the NHS whether funding for social care and funding for the NHS are separate, they of course understand the essential link between them. Funding social care now, so that we can remedy some of the lack of access to local authority-funded social care and enable people who have substantial, not just critical, care needs to get access to social care, will do a great deal to reduce the crisis in demand for the NHS.
This is particularly true of accident and emergency units, which are often presented with older, frailer people with comorbidities—incredibly difficult patients with whom to work. The NHS does not want to discharge such patients to their homes with comorbidities and unresolved issues, so the cost to the NHS is very high. But such patients can be managed through the social care system and in primary care—we just need to make sure that they have fewer crises that have not been anticipated and dealt with.
Speaking as the Secretary of State who asked Andrew Dilnot to form his commission and prepare his report, I note that it is now over 10 years since it was presented. We legislated for it in 2014. It is available and it could be implemented now, but in my view it should not be paid for out of the national insurance increase. I proposed, more or less 10 years ago, that it should be paid for by removing the exemption for people’s principal private residence from the means test for domiciliary care. My noble friend Lord Forsyth of Drumlean asked this question. Now, it would, I think, raise something like £1.3 billion a year. If, in addition, higher-rate taxpayers who are pensioners were not to receive the winter fuel allowance, we would have about the amount of money necessary to pay for the cap on care costs and the changes to the means test.
That is how it should be paid for—within the system, essentially by those who will benefit from it, because they have the underlying resources to do so, not least in the properties that they own. So let us not go down the path of unfortunate intergenerational impacts, particularly for younger people, of putting this on to national insurance contributions.
My final point is that a White Paper on social care and healthcare is coming. We already have the Health and Care Bill. The integrated care in that Bill is not integrated care between health and social care. When we talk about integrating health and social care, what we need is not institutional integration but integration around the care user and patient themselves. That is the only integration that will really work: integration around the person themselves. Whether it is done by personalised care or self-directed care, it needs to be supported by pooled budgets and joint commissioning. Fundamentally, it is about giving patients and care users themselves, and their families, much greater control over the nature of the services provided to them by the NHS and social care. I hope that is what we shall see in the autumn.
Lord Lipsey (Lab)
My Lords, if we did not have a national insurance contribution system, no one would even think of inventing it. This debate has been a succession of hammer blows to the structure of national insurance, which is not paid on unearned income such as rent, is paid at a higher rate by the poor than by the rich, and is not paid by the elderly, who in this case will be the main beneficiaries. It is a nonsense tax, which makes it odd that even this Government should choose it as their preferred way of funding increased spending on health and social care.
This afternoon, I will not go into the social care elements. The cap introduced by the Government is nonsense, but we will debate that on Thursday. I will focus merely on this choice of method. Paul Johnson, the director of the Institute for Fiscal Studies—the Johnson who never lies—has said:
“Funding social care just from national insurance would be very inequitable. It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners”.
The Government know this and go to unbelievable lengths in their attempts to deny the clear facts. Boris Johnson said:
“The top 20% of households by income will pay 40 times what the poorest 20% pay”.—[Official Report, Commons, 8/9/21; col. 296.]
Yes, but that is because the poorest 20% pay virtually nothing because they do not earn the basic minimum for this.
Then there is the Treasury’s document, published with this, called Illustrative Analysis of the Impact of “Building Back Better: Our Plan for Health and Social Care” on Households. In general, I am that rare creature: a supporter of the Treasury—much more so than the ex-Permanent Secretary has shown your Lordships that he is this afternoon. But let me put it as mildly as I can: this document will not go down in the history of the Treasury as one of its finest bits of work. It puts together two completely unrelated bits of government spending—the bit on health and the bit on social care—and calls them “a package”. Of course, money spent on the NHS is reasonably progressive, because a great deal of it goes to poorer people, but money spent subsidising social care mostly goes to the better off. The cap will almost entirely benefit the better off, since half the population are paid for by the state anyway. It will not do to put these two things together.
Anyway, until we get this White Paper—if we ever do get it—we do not know what the Government are actually proposing. This is not just a matter of making a few broad statements that sound good on the telly interview. There is a great deal of detail on all this, and we do not know anything about that detail. There are some pretty weird assumptions in that Treasury paper. If you look down at the footnotes—the sort of thing that only I am geekish enough to do—you will see that the benefit calculation is done without including residential care. What is this whole business about? It is about people in residential care who run out of money, and yet that is excluded from the Government’s analysis. You could not make it up.
I referred favourably to Mr Johnson earlier on. It would be a favourable contribution to public debate if the IFS was to produce a more detailed and objective expert analysis which is not shaped by the instructions of Ministers to deny what clearly is the truth.
Finally, I want to say something about the Government’s procedure on this Bill. It is now more than 20 years—who would believe it—since the Royal Commission on Long-Term Care of the Elderly reported. I signed a minority report. It is a decade since the Dilnot report, which was legislated for by the Government, although the legislation was never brought into effect. Apart from those reports, there has been a non-stop flow of learned and wise contributions on the subject—well, some of them were wise.
Nearly two years ago, Boris said that it was a done deal:
“We will fix the crisis in social care once and for all with a clear plan we have prepared”—
tick, tock, tick, tock. After that, we got the September announcement. We might have expected further consultation and discussion to fill the many gaps in it. Indeed, we expected to have a White Paper, but very curiously we do not have a White Paper: we have this Bill before this House’s powerless presence. We are voting for a levy to pay a lot for something, but we really do not know in any detail whatever what it is paying for.
The Government’s excuse—I am amazed that even these Ministers dare utter it—is that it is to give time for employers to prepare for it. What about the 18 months that have passed since their plan was already fully baked, as Johnson told us on the steps of Downing Street? What about those months in the summer when, day after day, there were leaks in the newspapers about the alleged position of various Ministers on the details of this plan? Time did not matter then but, now, when they want to get this legislation through without either House of Parliament having a chance to look at it properly, time has been cut short for political reasons.
Legislating in a day should be done only in circumstances of extreme urgency. To do it for a tax that will not even bite until 2022 and for a policy that will not even be fully in being until 2024 is a travesty of democracy. Legislate first, policy later—it is Alice in Wonderland.
Lord Bethell (Con)
My Lords, in the last two years I have become seasoned in these debates on social care. I am completely and utterly persuaded that there are very strong arguments for the fundamental reform of how social care and our health system are provided for, and how it is operationally delivered. In the last 18 months, I have lived a ministerial life with day-to-day meetings where, at first hand, I have seen the pressures on the NHS and the huge and completely unsustainable amounts of money that have been spent to support the response to the pandemic. I have seen for myself the fragility of our social care system, for both the elderly and the vulnerable, the technology we needed to put in place to try to sustain people during the pandemic, the PPE, the support we gave to staff and the financial fragility of many of the providers. I am under no doubt that these matters need to be addressed very fundamentally.
Many noble Lords have spoken very movingly about their strong suggestions for not just the moral and pastoral cases but the fiscal case for why reform is needed, and how the financial issues need to be addressed. But I still stand here pleased to support the Bill because my biggest concern when I was on the Front Bench was that we would not address these issues at all. I was concerned that they would be lost in a political quagmire because I do not see any form of political consensus about any of these ideas. I say that with huge regret; I wish there was a political project and some form of collaborative enterprise where the voices in this Chamber and elsewhere had somehow come together to create some form of consensus, but I just do not see that happening.
Noble Lords, including the noble Lord, Lord Macpherson, and my noble friend Lord Forsyth, have made incredibly persuasive arguments about how to rewrite the tax code and completely rethink the financial arrangements around health and social care. I am strongly persuaded by the intellectual arguments they make, but I do not see us being in any shape to fundamentally rewrite the tax code this year.
Therefore, with that degree of pragmatism and in celebration of simplicity, I support this money Bill, because it addresses the sustainable financing of health and social care in the near term. Coming out of the pandemic, with a huge backlog at the NHS and with the financial fragility of many care providers, it is essential that we find some money as quickly as we can to plug those gaps.
The sequencing of this is incredibly frustrating. I wish there was a White Paper that laid out a clear programme for reform at every level, but that does not exist. The Bill provides some breathing space and a degree of confidence about where the money has come from, so that that work can be done, and that is why I support the Bill, but the Minister would help enormously if he could answer a few questions in his closing remarks about where the money is going—particularly the £500 million earmarked for the training of care providers. The noble Baroness, Lady Tyler, spoke very movingly and quite rightly about care providers, who did so much in the last 18 months and need so much more in terms of visibility of their career prospects, and therefore an idea of how that money will be spent would be extremely valuable.
Respite support for unpaid carers was clearly one of the most acute needs to emerge from the pandemic, and I was very moved to sit through debates on that. It would be very helpful if the Minister could talk about whether there will be resources to contribute to it.
Lastly, on my own particular interest in technology, we can make social care much more productive through better use of digital records and things such as acoustic monitoring and dementia-focused entertainment, and I ask the Minister to reassure us that NHSX will have the resources to address those issues.
Lord Whitty (Lab)
My Lords, it is of course a pleasure to follow the noble Lord, Lord Bethell, but also to underline that what he has bequeathed to his successor is no answer to this problem, and he is now asking the Minister to provide at the end of this debate an answer which he and his many predecessors failed to provide.
I am totally convinced that the social care system has been chronically underfunded for decades and that the NHS itself requires very substantial increases, not just because of coronavirus but because of earlier underfunding and mis-funding. I am therefore at one with the noble Lord, Lord Macpherson, that we do need a significant tax rise, but I strongly object to this Bill. I object to its ill-thought-out basis; its misuse and possible distortion of the national insurance system; its regressive burden and unfairness, in terms of its impact on low-paid workers, jobs and the young; its jobs-threatening impositions on employers; and its ambivalence on whether this is a temporary or permanent structure for our taxation system, with its half-baked and probably temporary hypothecation.
I also object, and here I follow my noble friend Lord Lipsey, to the way in which this House has been asked to consider the Bill. This has been designated a money Bill, but behind it is an enormous political and policy issue: it is not just about our resources; it is about what we are going to do with those resources. The House of Commons was asked in a day to pass the Bill, in both senses, and we are not really allowed to vote on it. This is treating Parliament with contempt. It is also treating the public with contempt, as well as those of us who are supposed to benefit from this increase in resources, and those who are expected to pay for it. I do not think we should be party to that. Unfortunately, given its designation, we have no means of not being party to it.
I take one phrase from the noble Lord, Lord Forsyth, much of whose speech I totally agree with—I also agree with, rather more than I expected, the speech of the noble Lord, Lord Lansley, and with the masterly speech by my noble friend Lord Eatwell—that we cannot agree wholeheartedly to a Bill before we have seen the menu. That is what we are being asked to do today.
Behind all this is the fact that social care has been underfunded, staff are underpaid and service quality is rarely checked. Residential care is paid for in a variety of different—mainly unjust—ways, principally by individuals and their families through self-funding and unpaid care, but also by local government and the NHS regarding the nursing component. It is a mess. Care workers attending the clients’ own homes are subject to intolerable time regimes, their pay is awful, their management is awful and the visit diaries mean that those who really need sustained care rarely get it. The Covid epidemic has made this much worse.
Similarly, the NHS has been subject to severe cuts and constant reorganisations, but it has always been financed by general taxation. The tax proposed in this Bill is termed a “levy”. Normally the term “levy” suggests that we are addressing a temporary problem—it may be a big one such as a war, but nevertheless a temporary problem—but this must be resolved on a long-term basis. The genesis of this proposition is interesting. Originally the proposition was to raise money for social care but somehow it has been hijacked by the absolute necessity to find very substantial sums of money for the NHS. The bulk of the money is, rather peculiarly, to be raised on the basis of national insurance not general taxation, but the proceeds will go into the general fund.
As the noble Lord, Lord Macpherson, said, hypothecation is usually a dirty word in the Treasury, yet the mandarins have somehow been convinced that it is sensible to apply it to this. I am not against that in principle, but I wonder how a complete shift in Treasury ideology, a muddled basis of taxation and a lack of clarity as to how long this will persist give us a proper way of forward planning. I have a theory about why this was done. My noble friend Lord Lipsey pointed out that the Royal Commission on which he notably sat and many think tanks, commissions and inquiries since then, including Andrew Dilnot’s, have looked at this in detail. Some of those proposals have been half-baked, some pretty good, some partly good. Some have raised the issue of basing social care on a national social insurance basis. This is leverage. This is an old idea rethought. My feeling is that part of what the Prime Minister so wildly committed to, in resolving social care once and for all, was some of these ideas, which were floating around in circles in which he moved but were in reports he hardly read, which included a social insurance principle. This was regurgitated, therefore, in this form in this Bill when the Chancellor and the Secretary of State for Health realised that they need an answer to some of these issues. However, instead of it going into social care and making social care part of social security, it was hijacked and used for the very pressing and important needs of the national health service.
This is not a way to operate. The committee of the noble Lord, Lord Forsyth, provided a much sounder basis for proceeding in relation to social care. The issue of the integration of social care and the health service has been with us for a long time. Like the noble Lord, Lord Lansley, I mean integration not necessarily of institutions but of policy. This does not resolve the issue at all; it simply doles out the bulk of the money to one part and a little bit left over to the other.
The Bill is not about a sensible plan for bringing NHS and care services together, nor about putting both on a social insurance basis. It is about avoiding putting up income tax or profits tax contrary to the Conservative Party manifesto. It is about not depriving wealthier families of the inheritance of their parents’ homes to pay for when they have to go into a care home. Frankly, it is about putting the burden on lower-paid workers and small employers, who will disproportionately be paying the cost.
What started out as a vaguely half-decent strategic idea for social care has ended up in a bodge, and one that I think will boomerang on this Government. I plead with the Government that there is time to think again—not much time, but time to devise both a financially viable long-term social care system, which may or may not be based to some degree on social insurance, and to find the undoubtedly much-needed money for the NHS, but in a much less regressive manner. We need a long-term plan for health and social security, not a thin White Paper that just tells us how much it will cost us when we do not know what it is. We need a strategy whose cost is based on everyone contributing according to their means. We can thereby ensure that people get the benefit according to their needs.
Baroness Fraser of Craigmaddie (Con)
My Lords, I refer to my interests as set out in the register. I have no illusions about the mountain that health and social care services have to climb as we emerge from the impact of Covid, and I have no illusions that the necessary steps will require significant funding. Like my noble friend Lord Bethell, I welcome the Bill in that at least it grasps the nettle of an issue that needs to be grasped urgently.
I will confine my remarks not to how the extra funding is raised but to how it is to be spent. First, I would welcome funding for improved health and care services in Scotland. In fact, the Scottish Government have a manifesto commitment to establish a national care service over the next 10 years. I am sure they would welcome a union dividend of more than £100 billion, whatever they might say.
I also know that the other place debated and defeated the amendments to Clause 2 to allocate and give the funds from the Bill to the nations of the UK in accordance with the Barnett formula, but is it really in line with our stated intention to treat the devolved Administrations with respect for the Bill to state where the consequential spending is directed? Please let us not give Ms Sturgeon yet more ammunition to aim at Westminster.
Secondly, the levy perpetuates the status quo as regards spending on health and social care, as many noble Lords have stated. Experience, though, has taught us that investment alone will not be enough to fix the challenges faced by health and social care services. The Prime Minister himself, in the introduction to the Building Back Better document, said that
“when COVID-19 broke out, there were thousands of hospital beds filled with people that could have been better cared for elsewhere.”
That was indeed true, and remains true, but our answer to this challenge is always just to create more beds. We saw great efforts going into the building of temporary Nightingale hospitals, but there was no equivalent for social care or community rehabilitation. Why not? Because, as always, social care is seen as secondary to the needs of the organisation that is the NHS.
If the solution is not just more money, it is also not just more people. The people in the current health and social care system are most definitely a crucial part of this answer, but just wishing for more of them is not the solution either—not least because there are worldwide shortages of supply in some specialisms and it would take years to train the additional numbers required.
I turn to the lessons learned during the pandemic, which is why we are here in this urgent debate. Research from the University of Glasgow and the London School of Hygiene & Tropical Medicine found that many disabled people and their families felt abandoned and that existing structural failings and inequalities were starkly exposed and magnified. Their research concluded that it was the third sector that was best able to adapt to this increased need in the community and to deliver the services and care during the pandemic.
I declare an interest as chief executive of a third sector organisation, Cerebral Palsy Scotland. Third sector organisations reimagined their services very early, often in difficult circumstances with huge funding and personnel challenges. They set about tackling isolation; filled gaps after the closure of daycare centres and community services; supported people to become digitally literate, so that they could access online healthcare; and, in effect, became the mechanism that kept people well and enabled the NHS to respond to the challenges of Covid. In fact, the state became reliant on a strong and resilient third sector. The third sector, therefore, plays a key role in the solutions facing health and social care, yet a few organisations seem to be relegated to the back pages in a list of stakeholders.
The justification for this levy is that we are trying to build back better. It is essential that we do indeed build back better because what we had before was not working. What we saw during the pandemic illustrates what happens when we fail to understand the impact of the withdrawal of services on disabled people and those with long-term health issues. It illustrated that, to keep people out of hospitals, we have to support them to remain well at home. It also demonstrated the importance of ensuring a robust third sector.
The key to the successful deployment of the health and social care levy will clearly be in the details of the much awaited White Paper and the Health and Care Bill, which I look forward to coming before this House. International examples of where integration has worked best have required local delegation and local solutions. In Scotland, we have been trying it since 2014 but, as my noble friend Lord Lansley said, it went from being a very person-centred hope to being one where the free at the point of delivery NHS was merged with the paid-for systems of social care. We are still dealing with the problems that trying to put those two large organisations together have created.
The answers that the Government are looking for clearly lie in fundamental reform of the whole system, not just little parts of it. We cannot just keep spending more and more money to fix backlogs. We must be bold, but we have to take those who use health and social care, those who work in health and social care and all cross-sector organisations that provide health and social care with us. If we do not, all we will do is take the taxpayers’ cash and they will see no real benefits from it.
Lord Hain (Lab)
My Lords, I declare an interest that may be common to many, if not most, of us in your Lordships’ House. I have a relative living in a care home in England, so when the Prime Minister, with his trademark flourish, announced a new social care policy, I was naturally encouraged. However, as I examined it against the reality facing my relative and most of our citizens needing residential care or 24-hour home care, I became increasingly sceptical. Here is my take on what his policy means from the front line. If the Minister thinks I have got anything wrong, will he please say so when he replies? Specifically, will he write to me in response to what I have said?
The Government said that the reforms would address the problem of people having to sell their homes to pay for the cost of care. From October 2023, they plan to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap will be applied irrespective of a person’s age or income—so far, so good.
However, Boris Johnson’s reforms do not live up to their marketing, and the cap will help relatively few who need care. It would be a surprise to most people to know that only care costs will be covered by the lifetime cap and that these do not include the so-called hotel costs, which may be very, very high. Under the Prime Minister’s framework, only money spent on meeting a person’s personal care needs counts towards the cap. The Government’s position is that a person would have to pay for living costs even if they did not need residential care but depended on care—maybe continuous care—at home. Spending on daily living costs, or what the Government refer to as hotel costs in a care home, does not count. There is therefore no help under the policy towards accommodation and food, as these are designated by Ministers as part of hotel costs.
The care costs would cover the nursing and care staff and possibly the costs of ancillary staff and medical supplies, but not the other costs of providing a residential care service. These include, for example, any mortgage on the residential home, insurance and legal fees, audit and professional fees, council tax, utility bills—such as rocketing heating costs—waste disposal, registration fees, transport costs, maintenance, marketing, office services and so on. These are categorised as counting towards the hotel costs and not covered by the lifetime cap.
I have looked at the current fees breakdown in a large care home in England with 50 beds running at 92% capacity. The current social service rate—the rate the local authority may contribute—does not even cover the care and nursing staffing costs; nor will the new plan. Yet the Prime Minister has given the impression that people entering residential care will benefit from the reforms to the social care charging framework with the introduction of the £86,000 lifetime cap on the amount anyone will spend on their care. In reality, only a small percentage, perhaps a measly 5%, will be protected from “catastrophic care costs”. Therefore, contrary to what the Prime Minister claimed, many, if not most, people will still have to sell their homes to pay for care.
Although the reforms are meant to solve the current catastrophic crisis in social care, it appears from paragraph 60 of the Government’s much-vaunted new policy, that there will be nothing for adult social care until April 2023. There is no funding in the levy to address the current problems facing social care and no plans to tackle the current gaps in the social care workforce, with over 100,000 vacancies. Although the Government’s plan discusses greater professional development and career support for social care workers, backed by a £500 million investment and a workforce White Paper, it contains no credible plans to tackle the current chronic shortage of social care staff.
Stakeholders in social care have highlighted challenges associated with transferring revenue raised by the new levy from the NHS to social care in future years, pointing out that there is absolutely no precedent for this, especially with many parts of the NHS on life-support, facing massive funding gaps, and serious shortages—running into tens of thousands—of doctors and nurses. The new funding will probably stay in the NHS and care home employers will be left with an additional burden: having to bear the payroll burden of the national insurance hike provided for in this Bill. That means that they will have to pass that on to their residents, many of them dementia patients and therefore oblivious, even if their families most certainly will not be.
The Government have said they will ensure that local authorities have access to sustainable funding for core budgets at the spending review, but local authority leaders across the party divide do not believe this. They have suffered budget cuts of around 30% these past 11 years, and it is not honest to dump the problem back on local councils. That means that people needing care will have to sell their homes whatever the Prime Minister claims. People on very modest incomes or pensions living in modest homes will lose them to finance costs of around £5,000 monthly for residential and nursing care. The new levy is simply totally inadequate to fund plans necessary to reform adult social care if Britain is to claim to be a civilised society.
It is troubling that the Government’s solution to addressing social care’s core pressures appears to be the use of council tax, a social care precept and long-term efficiencies. To describe this as totally unrealistic is overly polite. The Prime Minister might better recognise it as sheer balderdash.
His reforms will instead create confusion and frustration among the public. On the one hand, people are told that the levy will fund adult social care and, on the other, that “hotel costs” are not covered. Hotel costs is a handy label for Ministers, because it implies to the public some super-duper state of luxury when actually it is a massive slice of providing care.
The £86,000 cap will benefit very few people, leaving most to continue paying high care home fees. Rather than create a simpler system of funding, the plan also paves the way for entrenching the complexity of funding that has beset social care for so long. This has left many families in a state of misery as they grapple with care costs of £1,300 per week in residential care homes, with staff on poverty wages and businesses struggling to survive. Sadly, this is no care plan; it is a care con.
Lord Shipley (LD)
My Lords, I remind the House that I am a vice-president of the Local Government Association. Like others, I was very surprised by the speed with which the Bill passed through the House of Commons. I was even more surprised by the lack of challenge to it. As we have heard from right across the House this afternoon, national insurance is the wrong tax to use. Calling this a levy makes no difference. It is a tax. It is a change to the tax system worth £12 billion a year for three years—indeed, inevitably, longer than that.
It is a tax on work and it is more regressive than income tax because the rate charged reduces at higher earning levels. Those earning under £967 per week pay national insurance contributions of 12%, but those earning over that level pay only 2% on earnings. If speed is needed, using income tax would be fairer, because the threshold for paying national insurance is lower than it is for income tax. Thus, this levy hits the lower-paid more. As we have heard, those paying income tax have a personal allowance of £12,570, but the national insurance threshold is £9,568 for employees and £6,515 for the self-employed. Most of the revenue for the new levy will come from workers earning under £50,000. That is particularly unfair to younger workers.
Reference has been made to the briefing note from HMRC. I repeat this point, because it is important. The briefing note says that the Financial Secretary to the Treasury has agreed that:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
It is astonishing that the Government find this acceptable. They have declared that they are pursuing a policy of levelling up. You cannot level up places without levelling up people, but you cannot level up people on low incomes by increasing the amount of tax they pay.
The context of the Bill is a tax burden which will be the highest in 70 years. At the same time, inflation is rising to over 4%, energy costs are spiralling and there is now talk of council tax rises of over 5% each year for several years. I submit that we cannot go on imposing high council tax rises year after year to help meet the cost of adult social care. The Government introduced the social care precept in 2016 at up to 3%, yet council tax is regressive. Council tax rises impact disproportionately on poorer people.
Yet the demand for social care is rising. Councils need an extra £2.6 billion a year simply to maintain current levels of social care, but they will get only £5.4 billion from the new levy over three years. Will there be enough money for social care? What is the spending profile for social care over those three years? How much will go to the NHS and how much will come to social care?
It could be argued that national insurance is easier for the Treasury to impose since it is relatively easier to administer. However, it hits the lower-paid and younger people most. A 1p increase in income tax, as my noble friend Lady Brinton has suggested, would at least raise contributions from better-off pensioners.
Council tax is being used to support adult social care based on property values of 30 years ago. It is, as I said, a regressive tax: those in lower tax bands pay higher effective tax rates than those in higher bands. One policy suggestion made recently by the Housing, Communities and Local Government Committee in the House of Commons is for a proportional property tax to replace council tax and business rates. I hope the Minister will agree that the time has come to look very closely at that suggestion.
This is an inadequate Bill, rushed through and ill thought-through, which will not solve the care crisis. I hope the Government will take note of the fact that most speakers today have found the Bill wanting.
Lord Hannan of Kingsclere (Con)
My Lords, that is one way of putting it. This Bill has been so hacked about from every Bench, so lacerated, that it seems an act of almost wanton cruelty to take out my own cleaver and join the mob. In the spirit of balance—at least, of karmic balance—let me therefore at least preface my remarks by saying that this is a good problem to have, in one sense, because we are talking about a problem caused by improvements in medical care and increased longevity, and we are looking at ways in which the wealth of an increasingly well-off society can spill over into the social care sector.
In the end, wrote Goethe, in what has always struck me as the single most depressing line in the whole corpus of European literature, we are all King Lear. Of course it was not quite true in his day and it is not true today, but we have a challenge, like every developed country, in ensuring that we are not stretched out upon the rack of this tough life any longer than necessary.
I wanted to agree with what I thought was a devastating takedown of the proposals by the noble Lord, Lord Eatwell, but I am going to disagree with one aspect of his remarks where he spoke about the reduced proportion of GDP going on health and social care. That strikes me as not a great measure. A more useful metric is what is the absolute amount. If you can grow an economy very quickly then a smaller proportion of that economy can be a much larger sum. It therefore seems to me that the question, if we are looking at how to fund this or indeed any other aspect of our welfare system, is where we strike the balance between getting instant revenue now by raising taxes and ensuring that that growth continues, thereby generating future surpluses. If, as in this case, we are looking at the prospect of increasing costs—because I think we can reasonably expect that longevity will continue to increase and that there will continue to be medical advances—how do we ensure that it is funded sustainably and that we do not, in removing money from the productive bit of the economy now, reduce the overall size of the economy and so damage future revenue?
However, I agreed very much with what the noble Lord said about the craziness, as we come out of the worst downturn that we have had—worse than anything we saw in either war or in the recession—of taxing jobs. Of all the ways that we could be raising revenue, this seems to me the most misconceived. On the contrary, we should be finding ways to reduce taxes on employment and investment so that, as furlough ends, we encourage people and firms to be investing and hiring more, thereby of course generating more economic activity and, in the medium term, more government revenue.
I would be very happy to see national insurance scrapped. If we consider the case made against it by the noble Lord, Lord Lipsey, and my noble friend Lord Lansley, it is quite difficult to see why anyone—I agree with what the noble Lord, Lord Lipsey, said—would invent it today. I very much support my noble friend Lord Forsyth of Drumlean’s idea that we should be honest and merge it with income tax and stop the pretence that it is somehow a hypothecated tax paying for social care. Of course, Governments will never do that, because they will never admit the amount they are actually taking in income tax—so they pursue the strategy of having lots of little taxes to add up to one big one as a way of disguising the overall tax burden.
I also agree with the noble Lord on the absurdity of hypothecation. It is not that it is a bad idea, but that it is impractical. It did not work for Gordon Brown and has not worked for any other leader. It is impossible to devise a system where a Chancellor cannot simply substitute a different budget. It has defeated every attempt at doing so.
Finally, I agreed with the noble Lord, Lord Eatwell, when he spoke very truly and said that it is in the nature of taxes to go up. That has been true of almost every tax, going right back to the introduction of income tax as a temporary measure to pay for the Napoleonic Wars. Governments find that they do not have the revenue they need and have to widen and deepen the tax. So let us be clear what we are talking about; it is going to be a ratchet, where there is constant pressure for higher budgets, higher caps and so on.
Why are we doing this? Why have we picked this tax and this method? And why, as every other Bench has asked, are we doing it in such a hurry? I was very struck by how few people in the other place on the Conservative Benches voted against it. My right honourable friend the Minister, with commendable honesty, described it as a
“permanent … increase in the size of the … state”.—[Official Report, Commons, 14/9/21; col. 844.]
That is absolutely right. How many people on Conservative Benches in either House went into politics in order to pursue a permanent increase in the size of the British state? Yet there were only something like five Conservatives in another place who voted against it.
I suspect that that is because, when asked in isolation, this measure polled very well. It always does. If ever you phrase an opinion poll question as “Should we raise taxes to pay for”—insert desirable thing—you always get a very large yes, because people have been conditioned by our political discourse to hear the question as “Are you a nice person? Are you selfless or are you greedy?” They cannot tick a box in that opinion poll that says “Well, only if it is accompanied by efficiency gains”, or “Yes, I will happily fund more clinicians, but I don’t want to fund more NHS diversity officers”, or “What has happened to the £20 billion that has already been spent?”, or “Could it be done with the following priorities?” So they say yes because they do not want to look ungrateful.
My noble friend Lord Tebbit, when he was the Conservative chairman, once said that the only opinion poll on tax that matters, the only question that elicits a valid response, is “Do you feel that the amount of tax you personally are paying is too low, too high, or just about right?” I suspect that, when people see the implications, not least the second-order implications, of there being fewer jobs and therefore less overall revenue and slower growth, there will be a very different attitude.
Of course, your Lordships do not need to worry about opinion polls. The function of this House is precisely that it can take a longer view and bring perspective to these questions. It is clear, if you look at the long view and take a proper perspective, that the way to have growth and an economy that can then more easily accommodate increases in healthcare, social care and all the rest of it, is by pursuing the formula that has always and everywhere increased economic performance: freer trade, lighter regulation and lower, flatter and simpler taxes.
Lord Griffiths of Burry Port (Lab)
My Lords, it is with some trepidation that I add my voice to those who have spoken already on this matter. Some of the speeches will live with me for a very long time, in the way that the case has been put and the evidence put forward, and it seems almost recondite for someone like me to add to the detail. I want to come at it from the point of view of social care but also, perhaps existentially, from my experience with MHA—Methodist Homes for the Aged—the largest charity care provider in the country, which has been doing it for 75 years. It has 70 residential homes scattered across the country, looking after 4,400 people. Three thousand people are being helped to live in their communities, with staffing and support people to do that, and 11,000 in their own homes. MHA has 7,000 staff and 3,750 volunteers. As the cream on top of the milk, it is one of the leading exponents, in such institutions, of music therapy—just to indicate that all is not simply bread and butter.
It has to be said that seeking some guidance from MHA on what it has felt about what has been happening on the ground in the communities that it cares for is what gives me a sense of wanting to contribute to this debate. Things have been dire. Let us look, first of all, at the last 18 months—or whatever it is—since Covid started and see how it has affected the care system in general. If all goes well and things are better than we think and expect, we are talking about waiting two years before a certain amount of money might come into the system and be addressed to social care. The last 18 months have taken so much out of those providing social care that any talk of sustainability begs the question: sustaining what? Things have been dire. A 95% increase in insurance has had to be borne as a result of the pandemic, £2 million per year was needed to purchase PPE, there has been staff sickness, overtime, bank agency staff, restricted movement between care homes and so and so forth. Care homes have barely managed to hold the show together under the pressures that they have been feeling in these last 18 months. So when the Prime Minister got up and made the announcement he did—and we all hope there will be however many millions it is in two years’ time—we have to ask ourselves, “What about now? What about repairing the damage that has just been done and is still being suffered?”
The thought that the mandatory vaccination status for care home staff which is not required in the health service could see a labour shift from care homes to hospitals seems really rather perverse. We simply have to recognise that many of the care institutions that we are talking about are in a dire, dire state. There is a dependency and a relationship between them and the local authorities that are being looked to, to anchor the proposals that are being made. MHA has contacted local authorities to see how to take advantage of the £3.2 billion that was given to local authorities to respond to Covid-19 pressures. Of the 188 local authorities that it works with, only 5% gave a 10% increase, there was a smaller uplift from 35% of local authorities, and 60% gave no uplift at all. You just wonder how much of this money that was supposed, through local authorities, to improve the situation financially for social care got to the front line. The conclusion from MHA is that almost none at all got there.
We also have the whole question of recruiting and retention. On this workforce business, perhaps if there are any HGV drivers who are surplus to requirement now that we are training them all ourselves and producing them for supply chains and all the rest of it, we could get them qualified to work in our care homes, because there is a desperate need. Across social care, so many years of low pay have been compounded by valued staff leaving, due—as I say—to Brexit and exhaustion from the pandemic, and now some staff leaving and moving to the NHS, as I have suggested.
The last 18 months have left the social care sector in dire straits. The next two years—until whatever, if anything, filters through from the latest arrangements—will have to be survived. Clearly, from the evidence I have been adducing, local authorities are not in a position to play their part. Frankly, to talk about the future of the social care sector seems redundant; survival is the very first thing, as well as a carefully thought-through policy. We have heard so many hints of good ideas that have been in circulation in cross-party committees which have worked on these issues. Therefore, this little piece of legislation seems tawdry.
I hope the Minister will recognise that, lovely man as he is, we want him to be the channel through whom we declare our displeasure to the Government he serves.
Baroness Altmann (Con)
I regret being unable to support this Bill and will try to articulate some of my reasons. There are so many, and I will not detail them all. I associate myself with every word of my noble friend Lord Forsyth’s remarks.
While we debate this Bill, the care sector is marching ever closer to disaster. The measures we are debating—but of course are unable to amend—are nowhere near what is needed to fulfil the 2019 commitment to sort out the social care crisis. No help is guaranteed at all, near-term. The claims that these reforms demonstrate the courage to tackle the difficult issues that other Governments have ducked simply do not stand up to scrutiny. I wish they did, and I wish I could stand here and support a bold initiative to get to grips with a situation that is, frankly, a monumental national and social failure that has already, and will continue to, cost the lives of many vulnerable British citizens.
The challenges of social care are significant. This Bill simply fails to address them. It merely repeats the Dilnot-style measures already legislated for by the Care Act 2014, with a cap that still does not cover all the care costs and still leaves vital funding elements to cash-poor local authorities, which will keep having to ration, reduce or deny care for those in need.
Even the funding promised in this Bill is not ring-fenced to pay for care. It will first prop up the NHS, which already receives the lion’s share of taxpayer money and has itself worsened pressures on social care through the pandemic and proved, yet again, the second-class treatment—for example, by discharging Covid-positive patients, refusing to admit elderly people to hospital and cutting the previous regular visits by GPs to care homes.
This Bill does little or nothing to address so many of the basic fundamental social care sector failings and will still leave ordinary families facing massive costs to subsidise local authorities, which underpay for council-funded residents. There is nothing to address the artificial distinction between free at the point of need NHS care for, for example, cancer, and the hugely expensive social care for, for example, dementia patients.
It does nothing to help reduce staff shortages, which are real and rising right now. In that context, I ask my noble friend to reconsider the proposal for mandatory vaccination. This measure will make the situation worse. There are currently more than 150,000 vacancies in this sector in England. Care staffing shortages have already been compounded by post-Brexit migration rules, as carers from overseas do not reach the new higher income threshold to be eligible to work in the UK. The Government themselves estimate that at least 40,000 CQC-registered care home staff will refuse the vaccine and risk being forced out on 11 November if mandatory vaccination is introduced.
Without staff, how can homes look after people needing care? Many care homes are on the brink of bankruptcy after pandemic costs, with high staff turnover and competition from the NHS and hospitality sectors, as the noble Lord, Lord Griffiths, just outlined. They do not demand vaccination. Care workers may therefore just move to different or better jobs, but the staff shortages run risks with people’s lives. People have a right to refuse the vaccine. After all, even when vaccinated, they can catch and transmit Covid. I ask my noble friend the Minister to consider the case of a Ms Waite from Preston, who was dismissed from her care home job for gross misconduct for refusing the vaccine, despite having documented medical reasons for doing so.
This Bill will not reduce unmet needs or the financial fragility of care home operators. It will not end the current rationing of care, nor the ongoing reduction of preventive measures. The national economic model of social care relies on councils’ public funding paying below costs of delivery. I am afraid this is simply not a meaningful commitment to social care. It encourages short-term use of this money, supposedly designed to improve social care for the NHS. This obviously needs to be facilitated—reducing the backlog in the NHS is important—but social care underfunding is equally serious for the health and lives of our nation.
I cannot agree that national insurance is an appropriate mechanism for care funding. There will be no contribution from pensioners’ pensions, buy-to-let landlords or capital gains. This hardly spreads the burden widely or fairly across society. It may be rather better than the current costs falling entirely on those who are so frail or unwell that they cannot look after themselves and do not qualify for NHS help until they have used up most of their savings or assets to get public funding, but it will not stop people selling homes to pay for care. Indeed, if domiciliary care takes home value into account, it will increase the numbers of those who need to pay for care by selling their homes, although I do not believe that is an important yardstick in this debate.
This national insurance change is a regressive tax, which breaks a manifesto commitment and penalises the lowest earners and businesses already struggling to recover from the pandemic. Of course, as we emerge from Covid-19 disruptions, additional funding for both NHS and social care is needed, but the care crisis predates this period. Why should businesses pay for this?
I am disappointed to hear some on the Benches opposite turning this into a political issue. This is a social policy issue of the utmost importance, which has been neglected by successive Governments for decades. Worthy words, reviews, royal commissions and more have made recommendations for urgent change, but action on the ground was ducked. Even legislation has lain unimplemented, despite rising need and the financial collapse of major operators. Funding the NHS is still being prioritised over funding social care.
I have a few important questions for my noble friend. How much of the money raised by this levy is guaranteed for social care? Will the Government commit to abandoning their plans for mandatory vaccination for care staff? Can my noble friend give the House the estimated numbers of people requiring care over the coming years, as baby boomers now just starting to enter their 70s reach their 80s and demographic pressures mean a sharp increase in need relative to today’s rather small cohort of more elderly people, with which this country is currently not even coping?
Have the Government considered introducing incentives for families to save for future care needs? I do not mean just insurance but actual savings, a tax incentive for those with pensions, such as tax-free withdrawals to keep money earmarked for their later life, in case they need care, and incentives for people to earmark their ISAs for care—for example, a maximum amount of ISA that could be passed on free of inheritance tax if set aside for care. More than 8 million over-60s hold a total £300 of billion, an average of £35,000 to £40,000 each, in ISAs, and those are 2018 figures which have probably increased since then. These are not necessarily earmarked for any purpose, and before the money is spent on cars, cruises or other goods, introducing an incentive not to spend it could benefit both families and the financial services industry.
As the care cap will start accruing only when needs are substantial, there is nothing to help those with moderate needs, and the cap will cover only local authority-approved rates. Many families will want to have some money to help them before the care cap even starts counting, and as more people have used their pensions or ISAs while relatively young, future taxpayer costs will be higher, because people will have exhausted their savings before they need care and will have no opportunity themselves to help support preventive measures, higher standards of care or care earlier than is otherwise the case.
This is a national policy issue. It is not about politics. I hope that my noble friend responds to cross-party offers of co-operation on this important issue.
Lord Sikka (Lab)
My Lords, I declare my interests as set out in the register. I am an unpaid senior adviser to Tax Justice Network and will be referring to some taxation issues.
I cannot support this bad and cruel Bill. It does not address the Government’s failures on social care or the NHS. Local councils, which are responsible for social care, have seen their budgets plummet by up to 38% in real terms, and the Bill still does not provide the funding needed to reduce the NHS queues or improve social care. It does not create an integrated healthcare system in which social care is free at the point of delivery. It does not challenge profiteering by private equity, hedge funds and corporations from their involvement in social care and the NHS.
The 1.25 percentage point hike in national insurance, which I would like to popularise as “the Johnson tax”, as that is what we should be calling it, hits the poorest the hardest. Following the Bill, people’s wage packets will show deductions for three direct taxes: income tax, national insurance contributions and, from 2022-23, the newly invented health and social care levy, better known as the Johnson tax in many circles. This is from a Government who promised that there would be no increase in income tax or national insurance contributions.
Before the pandemic, the poorest 10% of UK households paid 47.6% of their income in direct and indirect taxes, compared to 33.5% by the richest 10% of the households. This regressive Bill does not provide any relief for the people at the bottom of the pile. People on the minimum wage will pay the additional national insurance. An employee on a £20,000 wage would pay £130.40 more each year, an effective increase of 10% in the amount of national insurance. This is in addition to the higher income tax which they will need to pay because the Government have frozen the personal allowances, while, at the same time, universal credit is cut by £1,040 for 5.5 million people. Did the Government ever wonder how people will survive? What will happen to social stability?
Many retirees are already struggling on the average state pension of around £8,100 a year and have sought to supplement this meagre pension through part-time jobs. This Bill will force retirees to pay more national insurance on their earned income. The national insurance hike will reduce people’s spending power and have a negative impact on the local economy and household budgets. Levelling up it is not; kicking down it certainly is.
The Government’s PR machine has made much of the 1.25% increase in dividend tax from April 2022. After the increase, dividends will be taxed at marginal rates of 8.75%, 33.75% and 39.35%, compared to marginal rates on earned income of 20%, 40% and 45%. So the tax privileges of the rich continue. At the same time, those receiving unearned income in the form of capital gains and dividends will pay zero national insurance, because it is not charged on unearned income.
Earlier in the debate, the noble Lord, Lord Eatwell, referred to the HMRC policy paper Health and Social Care Levy, which states:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
Why are the Government hell-bent on hitting the poorest when they will also be facing higher inflation, including higher food and energy prices?
The Government claim that the national insurance hike will raise an additional £11.4 billion a year over the next three years. This could easily have been done without hitting the less well off, and in ways that reduced inequalities and unfairness. Earlier, the Minister said that there is no alternative other than borrowing. He is 100% wrong. For example, by taxing capital gains at the same rates as earned income, the Government could have raised an additional £17 billion a year, plus national insurance contributions of £8 billion. This reform alone would have generated more than double the amount generated by the Johnson tax. The capital gains tax regime benefits only 265,000 taxpayers, mostly resident in London and the south-east of England, so that reform would also have reduced regional inequalities. Again, the Government do not really wish to address that.
By taxing dividends in the same way as earned income, another £5 billion a year in revenue could have been raised, plus the increase in national insurance contributions possibly hitting between £600 million and £1 billion.
I ask the Minister to explain why billions of pounds in unearned income from the sale of second homes, speculation on stock markets and dealings in foreign exchange, commodities, artworks, land and other markets are not subject to national insurance. Does he agree that those tax perks for the rich are unfair and should be eliminated altogether?
Currently, employees generally pay 12% in national insurance on incomes up to £50,270. As other noble Lords have pointed out, the rate on incomes above that is only 2%. This means that high earners pay a lower proportion of their income in national insurance compared to the less well off. By extending the 12% rate to all earned income—just earned income, not including what could be collected from unearned income—an additional £14 billion a year could be raised. Again, the Government do not wish to do that.
I ask the Minister once again to explain why he is content with such a regressive system of national insurance, and why the Government have chosen to hit the less well off rather than inconvenience the rich.
Let us look at the tax relief on pension contributions. Around £41 billion a year is given; most of it goes to people on 40% or 45% marginal rates. Some 1.5 million people get zero tax relief on their pension contributions because their income is less than the personal allowance. Simply ensuring that everybody gets just 20% credit—equivalent to the basic rate of income tax—would leave the Government £10 billion spare.
I have referred to only four ways of raising tax revenues to fund social welfare without adding anything to the basic rate of income tax, the 40% rate of income tax or national insurance contributions for the masses. There are dozens of other ways and if I had more time I would be delighted to go through them. Hurting the less well off is a deliberate choice by the Government, because they have numerous other options available. I cannot really support the Bill as it is very cruel and bad.
Lord Naseby (Con)
My Lords, it is clear that there is an understanding across the House that there is a crisis in social care. We all know that. We all campaigned in recent elections and we know that it is a real crisis. However, it does not help to come up with all sorts of wizard new taxes, as the noble Lord did just now. If I may say so to the noble Lord, Lord Eatwell, who I respect as an economist from the college next door to mine, he can analyse and criticise, but equally it behoves the spokesman from the Opposition Benches to put forward the alternative. The noble Lord knows that there is a crisis but there was not a word from him about what the answer is to meet it. It was, of course, a Labour Government who put up national insurance in 2003 for matters they considered at that point to be absolutely vital. I have been a leader of a local authority and I understand social care. My view is that, at a time of real emergency in social care, which this is, we have to find something simple that can be done quickly. That is why I support the Bill.
My noble friend Lord Forsyth, in what I thought was a really good speech, made it clear that there is a crisis. The question to my noble friend on the Front Bench is, if I read this Bill correctly, that it is the Treasury that will determine the share of the extra money that will go to social care. I find that profoundly unsatisfactory. If social care is the one key element of the problem, which we all recognise it is, surely Her Majesty’s Government should decide, whatever money is raised—it will be a huge sum once it is up and running—that social care will get a ring-fenced proportion of that budget that shall not be leached away to something else in the National Health Service. That is fundamental.
I declare an interest: I am married, for 61 years now, to somebody who trained as a medical student across the road when I was courting her. She became a doctor. She did her house jobs in Calcutta. She set up her practice in Biggleswade when somebody died. She ran the biggest practice in that part of Bedfordshire, had three children and was a wife to a politician. She worked full-time. I have a son who is not dissimilar: he is a doctor and now a deputy coroner.
The other element of the problem lies principally with our general practice today. It is a shambles. Just to take my particular practice where I am a patient—which I obviously know in some depth—there are six doctors, one full-time and five part-time, four of which are ladies and one a gentleman. You cannot run any medical practice anywhere in the world—and I have worked in India, Canada and Sri Lanka—on the basis of part-time medical practitioners. The system does not work that way: people do not get ill on a part-time basis; people get ill and want attention. It has been made worse—and I can understand why, as my noble friend Lord Bethell set out. With the challenges they faced in the pandemic we had to have the triage. That I accept. It worked to a degree, but that is gone now. It did not work for the elderly or the infirm and it does not work for them now. The general practice in this country has got to the stage where it is no longer fit for purpose.
I do not know for how many years there have been no home visits, but it must be at least a decade. That is social care as much as anything because a home visit from a general practitioner helps prevent someone going into more extensive social care. There are no home visits even now: even people who have come out of hospital having had terrible Covid have no visit from the general practitioner to check whether they are recovering properly. I know that because actually—and I do not want to get too emotional about it—my wife nearly did not come back. There was no visit.
What, therefore, are the answers? I will suggest a few simple ones because this is not a broad debate on healthcare, but it is so important that it must get a little bit on the record. We need more doctors, which means more students going into medical college, and it has to comprise roughly 50% men and 50% women. If we look at the countries that are successful in retaining doctors, we should look at the case history of Singapore. If you are a medical trainee in Singapore, you are required to work for five years in the national health service there or pay back the cost. That is not new to this country: my elder son happened to be sponsored by the Army. He had to sign on for five years as a medical doctor in Her Majesty’s forces, or else pay back the grant. I think we should have a long, hard look at that.
We now have a situation where, while pre-pandemic, 80% of consultations were in the surgery, today that figure is, sadly, 58%. That does not work. We now have the Royal College of General Practitioners stating that the model of the full-time GP is probably something that we will never see again. That is absolute utter rubbish; I find it totally unacceptable and if he feels that way, I suggest that it is time he stood down and let somebody else lead the general practitioners of this country back to full-time practices.
Baroness Bennett of Manor Castle (GP)
My Lords, in following the noble Lord, Lord Naseby, I wish to entirely dissociate myself from anything he said about general practitioners. That was an unacceptable attack on people who have given so much to our society under the extreme pressures of pandemics. The gendered nature of his remarks was particularly disturbing. I do not know if it is something that the House authorities will look at, but I certainly think that they should.
To go back to what I was going to say, it is a great pleasure to take part in this mostly extraordinarily high-quality debate, and its fine level of forensic scrutiny—most notably the tour de force from the noble Lord, Lord Forsyth of Drumlean, who is not currently in his place. I also applaud the contribution of the noble Lord, Lord Sikka, who rightly labelled this as a Johnson tax, with the poorest hit hardest. I will circle back at the end to the reasons why I think that is a particularly accurate label.
We must look at what is happening here in this debate: we have a huge democratic deficit. We in your Lordships’ House have torn this plan to shreds, but we cannot do anything. Such is the state of our antique, dysfunctional political system, Boris Johnson won 44% of the vote in 2019 and now he can do what he likes on anything at all, including taxation. The phrase “no taxation without representation” comes to mind, because the strange thing is that your Lordships’ House is more representative of the country than is the other place. If we had a vote in your Lordships’ House, it would be the Cross-Benchers—the non-party people—who would have the deciding votes.
It is worth thinking about what the words “social care” actual mean. Nobody that I have heard has really defined this or looked in detail at what it means; we tend to talk in the abstract. So I decided to look at Scotland’s definition, where, of course, social care—in a far more democratic political system—is free.
Baroness Bennett of Manor Castle (GP)
It is a lot freer than it is here. What does it cover? Personal hygiene, assistance at mealtimes, immobility problems, medication and general well-being. In Wales—also more democratic—there is a cap on how much can be charged weekly for such provision, similarly defined. Just imagine for a second being in the position of not being able to get or afford such care—to eat, to bathe, to take your medication with confidence you are taking the right pills at the right time. It is really stressful to need that care, and to not be certain that it is available to you is very distressing and, indeed, unconscionable.
In the course of this debate, I also find myself unable to resist challenging a statement made by the noble Lord, Lord Hannan of Kingsclere, that this is taking money from the productive bit of the economy. I challenge the noble Lord’s definition of “productive”. A carer ensuring that a frail elderly person is able to feed themselves; an assistant enabling a profoundly disabled young person to live a full life—that surely is the definition of a productive use of the resources of our society. We come back to a really fundamental question: is the economy there to serve us, or are we slaves to the economy? This is where I disagree with the noble Baroness, Lady Altmann—not currently in her place—who suggested that social care should not be a political issue. This is absolutely political; it is about the way people, particularly our most vulnerable, are able to live in society.
I want to address one crucial issue before I get to three points about the structure of the Bill and the way it works. Here I echo the words of the noble Baroness, Lady Brinton, who asked the Minister to disavow the claim from the Health Secretary that social care should be provided by families. I very much hope the Minister will directly address this point and will disavow that comment, because it suggests that the Government indeed regard this, as many have suggested from different angles, as a temporary measure; that they plan for the state to eventually step back from any kind of provision for social care at all.
We heard from the right reverend Prelate that he takes a share, entirely commendably, of the care for his 93 year-old father. But how many families are in a situation to do that? The pension age is rising; many people who might have provided care for elderly relatives are now in paid employment—they have to be to meet their costs. It is a standard assumption that both members of a couple, where people are in couples, will work. Also, sadly, we are seeing the level of disability among middle-aged people rising. There is also the question of space: 1.5 million people who live in social housing are already in overcrowded conditions, which means circumstances such as children sleeping in the living room. Where are you going to put an elderly relative you are caring for—in the bathroom? I very much hope that in addressing this issue, the Minister will answer the questions at greater length than when he introduced the Bill.
We have heard some noble Lords refer to the idea of funding social care through individuals paying insurance, although most have accepted that is unviable. However, we should regard being a member of what we would hope is a decent, caring society as an insurance against hard times, illness and disability. That is why social care should be available without challenge at the point of use to all who need it.
I will address three specific points about the structure of this proposed Johnson tax: who is paying, how the money will be raised and where it is going. The noble Lord, Lord Eatwell, referred to how costs fall particularly on low-paid workers. He made some further interesting and disturbing points about the way the Government’s illustrative analysis seems to put the idea of paying for healthcare linked directly to payment.
I want to pick up a couple of groups to see what that actually means. I credit the Liberal Democrats in the other place for uncovering the fact that NHS and social care workers will be paying 12% of the £7.4 billion expected to be raised from employees through the tax—£900 million. That does not include self-employed healthcare workers and social care workers, so the real figure is even higher—call it £1 billion. These are often low-paid workers, carers and nurses, far too many of whom we regularly hear are dependent on food banks to feed themselves. They are having money taken from them so that possibly a little more money goes into the system. I will quote an unusual source for me, Fraser Nelson in the Spectator:
“How can you justify increasing taxes on the working poor to safeguard the assets of the stonkingly rich?”
What we are seeing—I think the public is often not well aware of this, because for many it is an academic point which will never come into view—is the fact that the national insurance employee contribution falls from currently 12% of income to 2% of earnings over £50,270 a year, so that high-earners pay a lower proportion of their earnings in national insurance contributions than low earners.
Of course, national insurance contributions also kick in around £9,500, which means that even some people too poor to pay income tax are paying into the system. When we think about our broadly-speaking young people—the graduates paying back student loans—they will be taxed at 50% on any increase in salary above £27,288.
So, those are the people who are paying. How is it being arranged? I refer back to the excellent speech by the noble Lord, Lord Forsyth of Drumlean, who spoke about the need to combine income tax and national insurance and the missed opportunity for a simpler, fairer, flatter tax system. The noble Lord, Lord Naseby, was looking for an alternative solution. I can point him to the Green Party manifesto of 2019, which goes even further than the noble Lord, Lord Forsyth. It merges employee national insurance, capital gains tax, inheritance tax, dividend tax and income tax into a single consolidated income tax. All income is treated the same way for tax purposes. This ends the injustice of people who work for their income being taxed more lightly than those whose income is derived from wealth, frequently arrived at by accident of birth or blind luck. I also note that our manifesto provides free social care to the over-65s.
Finally, I get to the point about where the money is going, and this picks up points made by the noble Lord, Lord Sikka. A large amount of this money is going into a privatised, financialised sector—large chains of care homes with hedge fund owners taking returns of 12% or more a year out of the provision of care for our most vulnerable citizens. I very much enjoyed and commend the contribution of the noble Lord, Lord Griffiths of Burry Port, who talked about the commendable work of MHA and gave us an insight into just how difficult that work has been, particularly in the last couple of years. We also heard about the excellent work MHA is doing through music therapy. All the funds it gets go towards providing care. Think about what would happen if you scooped out 12% or more in financial returns and then still tried to meet the basic needs of residents—that is certainly all you would be able to do.
Of course, that is academic because, as many noble Lords have said, while this is talked about as being for social care, the money, for the next foreseeable time, will go into the NHS. With one more executive power grab, from 2025 the Chancellor will decide what happens then.
It is often suggested that there should be a “truth in advertising” rule for government policy. If we were to see that, we might see a total gridlock of government—one to rival the chaos in our supply chains—as opposed to the tangle of unpublished strategies, undeliverable targets and fantasy announcements that we have now. Were trading standards and the Advertising Standards Authority asked to cover the announcements of government, I think their websites would do down in seconds.
This is billed as a health and social care levy; it is clearly nothing of the sort. It does nothing to fix the enormous financial and structural issues in our care system. It leaves underpaid, overstressed workers seeking to care for underserved, neglected patients while private profits are scooped out of the system. It does not even do more than apply sticking plasters across some of the gaping gaps in our NHS.
I conclude by referring back to that term, “Johnson tax”. It is misleading in its claims, it is fragile in its structure and it does not create any kind of solid framework for the future. I cannot help thinking of the London garden bridge, the Irish Sea bridge, the “Boris buses” and the so-called Emirates Air Line. It is misbegotten, unreliable and fundamentally unsound.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate the Government on at least tackling what is a very vexatious part of government policy. I refer to my interests: the work I do with the Dispensing Doctors’ Association and the fact that I was a dispensing doctor’s daughter and a dispensing doctor’s sister.
There has been very little focus today on the delivery of care in people’s own homes, as opposed to care homes. Through dispensing doctors and rural practitioners generally, and indeed those delivering care in people’s own homes, I am very familiar with the fact that delivering NHS and social care in rural areas is more challenging and therefore costs more than in more urban settings. How do my noble friend the Minister and the Treasury expect that to be addressed through both the raising and the spending of the money raised through the levy? There used to be a sparsity and rurality factor in NHS funding, and it would be very welcome to return to that if we can. How will funding apply to and be highlighted for the delivery of care to the elderly in their own homes in rural settings?
I come to the points raised by my noble friend Lord Lansley about those who are elderly with comorbidities, who are often taken into hospital as an emergency and then find it difficult to be released from that setting into their own homes. I regret the fact that many of the community hospitals and wards that used to take them as a step-up, step-down halfway house before they were deemed safe to return home have disappeared. It is important that the release of these patients and their discharge from hospitals to their own homes is highlighted in the way the levy can be used.
Therefore, I would particularly like to ask my noble friend what proportion of the extra money raised in the earlier years will be allocated to the health service especially. How will that money be distributed between primary and secondary care? At the moment, we are seeing that, where primary care does not have the resources to deliver, people of whatever age—but particularly the elderly, with comorbidities—are turning up and being treated as an emergency in hospitals.
I would also like to ask, because the Bill does not set this out, at what point my noble friend will address the urgent problem of staff shortages, which a number of noble Lords have addressed this afternoon. There is clearly a shortage of nurses, and I saw that as recently as last week, when a family member was treated, excellently, by the NHS; there is clearly a shortage of nurses and doctors, and, I may add, carers too. When will my noble friend address that and when will the Government come forward with proposals for our consideration?
Finally, I would like to say how regrettable it is that this regressive form of tax is being chosen. There are alternatives. The least favourable option for me would be an insurance scheme, which I know operates in many parts of continental Europe, such as Denmark. I find it quite alarming that, when a member of my family in Denmark calls an ambulance, they have to produce the payment and show they have the coverage before they are whisked off to hospital. For me, that is probably the least favourable option. But I regret that the form that has been chosen in this Bill is the most regressive. As the noble Lord, Lord Shipley, pointed out in the Government’s own tax information and impact note, it will impact on those who are just about managing at the moment.
I would like to point out something that the Government do not seem to have any recognition or cognisance of at all. By raising the levy on national insurance, the Government are taking money out of care and hospital care. Who are the largest employers in the country at the present time? The NHS and local authorities, and many noble Lords have referred to the fact that council budgets have already come under severe restraint. They are our two largest employers at the moment. The same tax information and impact note refers to the fact that:
“This measure is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”
What the note and the Bill fail to reflect is that both the NHS and local authorities will have to find this money.
My final question to my noble friend is this: what estimate have the Government made of the cost to the NHS, local authorities and other employers of this additional 1.25%? How are the Government going to make good that money to make sure that patient care is not depleted in the same degree?
Lord Desai (Non-Afl)
My Lords, an advantage of being the last speaker is that everybody has to come back into the Chamber to listen to you, because that is part of the rules of the game.
Let me say first that this has been a good debate. I mean, it is pointless, because we cannot amend a money Bill. The Commons has passed it, and the Government want to rush it through. Whatever we say, no notice is going to be taken, so we can be completely disinterested and make good suggestions—nothing partisan.
This is a bad Bill and a bad proposal. It is bad not so much from the point of view of the people who are going to bear the burden but from the point of view of the Government proposing it, because it is not very elastic in terms of raising revenue. It is procyclical, so the collections will fall any time life is hard and there is unemployment. Then we will have to do what Pitt the Younger set a good tradition for and raise the rates, so 1.25% is not the end of it. It is just the beginning and it will happen steadily if this tax stays on the books—and I am sorry to say that it will.
It is not to finance social care. Let us get it absolutely straight: social care is in the title of the Bill but this is not to finance it. It is to make up the NHS gaps, but they can never be filled. That is very clever, because people have this folk memory that the Beveridge plan created national insurance to finance the National Health Service when it was set up. That is the folk memory I was brought up on. So, everybody will say, “This is quite a nice tax because we will finance our NHS” and even poorer people will say, “I am willing to pay a little bit more to finance the NHS because it is very close to me.” As the noble Lord, Lord Hannan, said, people will be asked, “Will you pay extra tax?” They will say, “Of course I will pay extra tax for the NHS” because, as people have said, we only have one religion in this country and that is the NHS.
Financing social care will have to be done later on and I will come on to that. We have this tax, and lately there has been a flurry of excitement in the newspapers that the Tories are becoming a high-tax party and people are asking what will happen. Do not worry, I say to these Benches; you are not being taxed—the poor are being taxed. That is what the Conservative Party came into power for, so relax, you are all safe. The question of how we will finance social care will remain. How will we organise social care is for another day, but how are we going to fund it?
Before I get into those sorts of things, I have a technical question for the Minister, and I would like a reply. I have been working hard. Will the carried interest of private equity firms be subject to the levy or not? I would like an answer to that because that may bring in a bit more money. The noble Lord, Lord Sikka, shakes his head. I can see that he knows the answer. I do as well, but I will not go into it. He suggested various schemes in which money can be raised. I have always thought that I have a very clever device to raise money. I do not think anybody would like it and I have a record on this; I was sacked twice from the Opposition Front Bench for proposing new taxes nobody liked. Here goes, as I am no longer on the Front Bench.
The original problem is this: the better-off middle classes have property, and they do not want to sell the property to finance old-age care. I think the noble Lord, Lord Hunt, pointed this out. Instead of tackling that problem, the thinking is, “Oh, the poor better-off people want to hang on to their house and pass it on to their children. How can we save them from the terrible problem of having to sell a house?” Fine—let us respect that wish. People do not want to sell their house. The house is the one asset more widely owned in this country—not by the majority but more than any other asset. Quite rightly, people want to hang on to their house. Houses are a very good investment because you have an unrealised capital gain. My question is: how do you tax unrealised capital gains? That is the essence of the problem: making sure that people do not have to sell their house but pay part of its unrealised capital gain. Your Lordships can see where this is going and no one is going to like it, but it is very lucrative for raising money.
I shall take my own example because that is a very simple thing to do; I am not making up the numbers too much but I will not give your Lordships the true numbers. I have a house, which I have had for 17 years, and it has quadrupled in price. No other asset that I know of would give me that high a return, and every middle-class family knows this. However, I have paid the same council tax based on the original price at which I bought the house so I have pocketed all of its unrealised capital gain. The poor council has not got anything out of it, even though it has higher expenditure for collecting my garbage and so on.
How can we release that unrealised capital gain to councils? The answer is very simple. You do not have to raise a council rate; you have only to raise the value of the base on which the tax falls. Since I am a very ambitious person when it comes to imposing tax, I would do this annually but you could do it quinquennially: we could have a national commission for valuing property that valued all properties across the country by different types—one bedroom or two, garden or no garden, SW1 or NE17 or wherever—and it would announce a number for each type of house where the price had gone up by X per cent.
The base of the council tax for those kinds of houses would go up. I would not be taxed fully for the quadrupling of my house price but I might be taxed for its doubling, so I would pay more council tax while I was living in the property. When I came to sell, I would make a capital gain. I would not lose money. My children, or whoever I wanted to pass my property on to, would get the property. The property would not be gone, it would stay with its owner, but we would milk a little bit of the capital gain that accrues every year because of inflation and growth. People think that is impossible but it is not. Anyway, I am not running the country.
I believe that some sort of flexible, elastic tax like that is required. To take care of the problem of the postcode lottery which the noble Lord, Lord Forsyth, mentioned, where a poorer council would not get it but a richer council would, one could equalise because the increase in the base rate would be national. There would be some partial exchange. I cannot solve all problems in this short speech but I can solve some.
I urge the Government to consider this, although not now because they do not have the opportunity. In fact, if not the Government then perhaps, as the noble Lord, Lord Forsyth, said, we in the House of Lords ought to form a committee to solve this problem. Members down the Corridor are not going to solve it because they do not have the time, but we do, and being elderly is our problem so we have a stake in this. We ought to genuinely look for elastic, high-yielding ways of taxing property without, as far as possible, affecting people’s desire to hang on to their property while they live. If we could do that—and only the House of Lords could; no one else can—that would be a very good thing. I urge the Government to make room to implement that proposal and then take our propositions seriously.
Baroness Kramer (LD)
My Lords, I am the first of the winding speakers. I have listened to many debates in this House, but it is very rare to hear speech after speech of the quality that we have had today. Frankly, it makes it even more galling that the other place dealt with this Bill so quickly, when there was so much that needed to be said and changed. It is galling that we cannot in any way directly impact the shape of the Bill, other than by hoping that we have persuaded the Government to reconsider an issue here or there, but that is the world in which we function. At least we can make sure that we are heard. I hope the Government will read today’s speeches because they have been quite extraordinary.
I come from a party that has been talking about a hypothecated tax to increase the funding of health and social care for years. We always assumed that that would be based essentially on income tax, as the broadest-based tax and the most progressive of the taxes available. Lots of other ideas have come from the Floor today, including a much more regular re-rating of property. There are many ideas to consider, but the essential principle that the increased funding for the NHS and social care should be funded by a very broadly based, progressive tax is to me fundamental and sensible.
One of the reasons we as a party have gone in the direction of a hypothecated tax is to keep the Treasury’s sticky fingers off the additional money. It will be important to hear an answer from the Minister on the question that the noble Lord, Lord Eatwell, raised about how long this levy will be hypothecated. We need some assurance and a fuller understanding of that issue.
When I first heard that the Government were going to consider a levy, never in my wildest dreams did I consider that it would be put on national insurance. It would be hard to find a more unsuitable basis for raising this kind of funding. Many people have made the fundamental point that the threshold for paying national insurance is much lower than that for income tax, so this falls on the poorest in our society. The levy has a rate step-down for people earning higher incomes and of course it does not touch unearned income. We understand that there will be some sort of dividend tax but, as others have said, unearned income, whether on property, pensions or savings, is not captured. The Government talk constantly about levelling up, but they plan to put a tax on those with the lowest incomes, while excluding the sources of income of many of those with the highest incomes. How on earth does this contribute to levelling up?
It is normal for us to see a distributional analysis—this was raised by the noble Lord, Lord Eatwell, and others—to show where the costs fall. I would be very interested to see an analysis which separates out where the costs and the benefits fall. That information will be critical. As many have pointed out, those who will be able to benefit from the cap will be some of the biggest winners in all this, rather than people who are currently struggling because the social care on offer to them is completely inadequate and needs to be better funded. We need that distributional analysis, broken out in an appropriate way.
Context matters when we consider increasing something such as national insurance. Context always matters. The context in this case is a rapidly rising cost of living. I read today that inflation is now anticipated to reach 6% by the spring and to fall back only to about 3% for the remaining decade. That will be an incredible hit for individuals, and much of that inflation will be embedded in essentials such as food and energy. Bitterest of all for almost everybody on low incomes is the £20-a-week cut in universal credit, coming as part of this overall package. It is described by the Resolution Foundation as a “toxic” combination, and that is perhaps the most accurate phrase.
If we look back at the work done by the House of Commons Library just to give people a sense of exactly how that works, we see that a typical NHS worker is on something like £19,330 a year, and many such workers rely on universal credit. They are about to see their income fall by almost £80 a month at this time of rising prices. That is despite the 3% pay increase that they have been awarded, because the increase in national insurance and the cut in universal credit are dwarfing the pay increase. The Government must have known that when they agreed to the 3% pay increase, and frankly, it makes me absolutely furious that we did not have full honesty, transparency and openness at that time.
I have a particular question to ask the Minister because I would like some clarity on this. The Government intend to reimburse government departments for the increase in national insurance contributions for those whom they employ directly. But many departments, and far more especially local government, contract out services, and indeed, the Conservative Government have pressured them to keep contracting out services for a long period. What happens when that increase in national insurance hits the cost of outsourced services? Will the Government pick up that added bill? As many others have said, we now see local authorities considering a 5% increase in council tax just to cover the underfunded cost of social care, and I do not think that includes the additional impact of the national insurance contribution on the cost of outsourced services. We absolutely have to get some sense of an answer.
We all know—we have heard again today from speaker after speaker—that this levy is far from adequate to solve the problem, not just of social care but even of the NHS, especially with its post-Covid backlog. Social care is again pushed into the Cinderella role. We know also that over the next three years, of the £36 billion raised, it is anticipated that at best only £5.4 billion will go to social care. That is a drop in the ocean in many ways, particularly listening to the numbers that the noble Lord, Lord Forsyth, quoted on the need for an £8 billion-a-year increase; others updated those figures to something closer to between £9 billion and £14 billion. Like many others, I am absolutely convinced that we will not see the NHS claim this money just for a short two or three-year period. When I talk to people in the NHS, they are very clear that they will need to claim the lion’s share of all that money for more than a decade to be able to bring the National Health Service to the level that will enable it to deal with its current and anticipated burdens.
Demographics are moving against us as well. Many people talked about the fact that half of those using social care presently are adults with various forms of disability. They will be moving into old age. The demographics mean that we will see an ever-increasing social care burden, so we need a comprehensive plan, as many said—a proper framework to be able to deliver social care. I would love to know what is in that famous White Paper which was apparently in the Prime Minister’s back pocket, but we have not even seen that at this time. I also agree with so many of those who say that when you look at this package, it is clear that not only does it not fund the social care reforms that we need to deal with the desperate staffing shortages—now well over 120,000 people—but those who think that their costs will be covered will find that they are not covered for “hotel costs”. May I say what an appalling term that is? These are costs of living, not costs of luxury holidays. They are not hotel costs in the sense that anybody would ever anticipate. In addition, that the cap will be tied to costs defined by local authorities’ assessment of cost rather than the real cost puts us in an absolutely extraordinary situation.
I know that I should finish very quickly. From all the voices that I have heard today, I have taken that there is a huge amount of common ground across parties, Benches and ideologies. We are not all absolutely in agreement on every single point. However, it is clear that it is possible to pull all parties together and establish an underlying policy and principle that everyone can sign up to and that then guarantees that both the schemes and the funding do not become political footballs in ensuing elections. It also means that we can have in place the kind of long-term planning that is fundamental to the answers that we are searching for. Could the Minister take back or even give us confirmation today that he will be genuinely pulling together all the various voices to both establish the framework and think through the funding? We all completely admired the statement made by the noble Lord, Lord Forsyth of Drumlean, right at the beginning. We are being asked in the Bill to pay a bill but have no idea what on earth is on the menu and what services will be provided. If we do not do this on an all-party basis, we will be doing something that, frankly, has very little future.
Baroness Thornton (Lab)
My Lords, I first thank all noble Lords for their contributions. After 23 years in your Lordships House, this is the first time I have been on the Front Bench during a money Bill. I am used to, of course, at Second Reading, thinking about the legislation that might be amended and how we might amend it and put it under greater scrutiny—so more is the pity today.
During the 2019 general election, Boris Johnson said,
“Read my lips, we will not be raising taxes on income or VAT or national insurance”.
The Chancellor of the Exchequer has gone further and solemnly said,
“Our plans are to cut taxes for the lowest paid through cutting national insurance”.
After the general election, on the steps of Downing Street in December 2019 and on his return from Buckingham Palace, the new Prime Minister said,
“and so I am announcing now—on the steps of Downing Street—that we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve”.
Almost two years later we can see that there was no plan prepared or even in existence, and that it was an untruth when Boris Johnson promised that national insurance would not be raised. These two facts cannot be excused by the intervention of Covid-19. As my honourable friend Rachel Reeves, the Shadow Chancellor, said,
“There are two tests for the package announced yesterday. First, does it fix social care? Secondly, is it funded fairly? The answer to both those questions is no. It is a broken promise, it is unfair, and it is a tax on jobs”.—[Official Report, Commons, 8/9/2021; col. 327.]
After the devastating critique of the Bill and its effects by my noble friend Lord Eatwell at the opening of the debate, combined with the Adam Smith Institute condemning the Prime Minister’s speech to his own conference as “vacuous and economically illiterate”, I think it is safe to say that we are all in trouble.
At the end of the remarkable debate today, I take a moment to pay tribute to the extraordinary work and commitment of social care staff over the last year, in the independent sector and local authorities. They have been on the front line of this pandemic, going beyond the call of duty in helping hundreds of thousands of people through an extremely difficult time. I want to recognise that the vast majority of care and love provided to our vulnerable fellow citizens is from their families—unpaid and unsupported carers—and who in this Chamber has not been fulfilling that role in some way or other over the last year or so? I pay tribute to the volunteers and community activists who stepped up during the pandemic to ensure the well-being of millions of the most vulnerable in our communities.
Throughout the pandemic we saw that social care was still not funded or treated as equally important as the NHS: front-line care workers are chronically undervalued and underpaid; families, who provide the vast majority of care, get too little support in return; and an already fragile care market has been made even more susceptible to failure, with all the human consequences that that will bring.
At least we now know the Government’s underlying philosophy on social care. Sajid Javid, in his Conservative Party conference speech, said that health and social care “begins at home” and that people should turn to:
“Family first, then community, then the state.”
That tells us a great deal. Not only is it disrespectful to the millions of unpaid family carers, whom this levy does nothing to help or support—4 million of whom are children—but it is deeply ignorant to imply that people
“always go first to the state”
when family and friends do so much, increasingly during the pandemic, and so many have been pushed into poverty, even having to give up work to care for relatives in many cases.
The truth is that many people are unable to cope with their relatives’ caring demands because of other caring commitments; perhaps they do not live near enough, or are elderly, disabled and have care needs themselves; or they simply cannot cope with complex needs. It is also worth noting that unpaid social care falls disproportionately on women—72% of carer’s allowance recipients are women—so it also perpetuates gender inequality. The levy we are debating also does not address how to meet unmet care needs, which highlights the wider issue and need for reform. The Secretary of State’s “family first” line exposes the Government’s lack of policy and ambition for reform, in sharp contrast to Labour’s policy of “home first”—enabling people to receive the care they need, with dignity, in their own home.
I have come to the conclusion, sad and frightening as it is, that this Government do not understand who the cared for are and who does the caring in our society. Is the Minister aware that one-third of the users of social care—and half the social care budget goes to them—are working-age adults with disabilities? Build Back Better hardly mentions them at all; it just assumes and addresses our ageing population. Is he aware that more people get care and support in their own home than in care homes? Is he aware that one in three unpaid family carers has to give up work or reduce their hours because they cannot get the help they need to look after their loved ones? They lose their income, employers lose their skills and the Government lose their taxes.
Yet, despite social care being vital to so many people, over the last decade the Government have repeatedly failed to tackle the underlying problems in the system—a fact brutally exposed by Covid-19. It is quite reasonable for the noble Lord, Lord Forsyth, to ask what Labour would do instead. Our goal is to transform the situation for older and disabled people, as part of a much wider ambition to make Britain the best country in which to grow old. In this century of ageing, we understand that social care is as much a part of our infrastructure as our roads and railways. If you neglect your country’s physical infrastructure, you get roads full of potholes and buckling bridges, which prevent your economy functioning properly. The same is true if you fail to invest in your social infrastructure. Without a properly paid and trained care workforce, vacancy and turnover rates soar, fewer people get the support they need and families end up taking the strain.
We have been calling for a 10-year plan of investment and reform, empowering users and families to live the life they choose, ensuring their views and experiences drive change throughout the system, with a guiding principle of “home first”. We will always need residential and nursing homes, but the vast majority of people want to stay in their own home for as long as possible. Yet too many struggle to get even the basic support or home adaptations that make this possible. Greater use of technology can also help people live independently for longer, as can expanding the housing options between care at home and a care home.
Delivering on the “home first” principles requires a fundamental shift in the focus of support towards prevention and early intervention. Some 1.5 million older people need help with the basics of getting up, washed, dressed and fed but do not get any support at all. That is not good for them, or for taxpayers if they end up needing more expensive care or end up in hospital as a result.
None of these improvements will be possible without transforming the pay and conditions of the workforce. This pandemic has shown, more than ever, that front-line carers are essential to a properly functioning society and economy, yet two-thirds do not earn the real living wage and a quarter are on zero-hours contracts. So it is time for a new deal for care workers to back the aspirations of staff, tackle high vacancy rates and deliver at least 500,000 extra staff, whom we will need over the next decade just to meet growing demand.
As a starting point, Labour has called on the Government to guarantee that all care workers are paid at least a real living wage of £10 an hour in their plans for social care reform. Alongside this, families need decent support to help care for their loved ones, so that they do not put their own health and livelihoods at risk. We back a new partnership with unpaid carers, so that they get proper information, advice, breaks, and more flexibility in the workplace to help them balance their work and caring responsibilities. Our vision is for social care services to be fully joined up with, but not run by, the NHS. We have learned from the media that, as many noble Lords have said, there is likely to be a comprehensive plan for a new national care service, under which health and social care could be delivered by the same organisation, and that it is being actively considered for inclusion in a White Paper next month. Well, we have been waiting for a White Paper for two or three years, so who can say when that will happen?
I hope that the noble Lord, Lord Bethell, is enjoying his non-governmental role. At no point over the past two years have he or the Government attempted to have cross-party discussions about the future of social care—not once. I am totally puzzled as to why he did not take up the good ideas in the paper led by the noble Lord, Lord Forsyth, for instance.
So we have a half-baked Bill before us today which says that national insurance contributions will rise by 1.25 percentage points from next April, to raise £12 billion a year for the NHS and social care, but social care will not get any of the funding for two or three years, if at all. The Minister must have picked up the scepticism across the House about how that will roll out. At the same time, launching the Bill before us today, Downing Street remained unclear about how an integrated system would work best. In addition, we have a huge NHS Bill in play in the Commons which says that its aim is to create integrated care systems—well, who would have thought?—for providers and commissioners of NHS services, together with local authorities and other local partners to collectively plan health and social care services. Can the Minister describe what the final outcome of all this might be, and in what kind of timetable?
My noble friend Lord Eatwell posed many questions that the Minister must address in his closing speech. My noble friends Lord Hunt, Lord Lipsey, Lord Whitty, Lord Hain, Lord Griffiths and Lord Sikka have added many important and pertinent questions, and I have added one or two of my own. The Minister now has an opportunity to persuade the House that this Bill solves at least some of the problems that face social care.
Lord Agnew of Oulton (Con)
My Lords, this has been an interesting debate. The quality of speakers has been very high, and I am aware that most of them know far more about these issues than I do—so it is with a certain humility that I attempt to reply. Also, as someone who does not appear that often, even I have noticed that I do not necessarily have the mood of the House with me on this Bill. However, I will spend longer in summing up than I spent in opening, to try to address some of the concerns and at least put the Government’s point of view on the many challenges that have been raised.
I will start with my noble friend Lord Forsyth, the noble Lords, Lord Eatwell and Lord Shipley, and the noble Baronesses, Lady Tyler and Lady Kramer, on the fundamental issue of the use of national insurance as the linchpin for this tax raising. We need a broad-based tax, such as income tax, VAT or national insurance, to raise the sums needed for such a significant investment. There is a precedent here. In 2003, the Labour Government increased the same NIC rates by 1%, specifically to increase funding for the NHS. There is an existing NIC ring-fence for the NHS. The NIC system already directs a ring-fenced proportion of receipts to the NHS. This ring-fence was established in 1948 and expanded by the Labour Government in 2003. I cannot provide the noble Lord, Lord Eatwell, with a cast-iron guarantee that the hypothecation will remain in perpetuity, but we see the principles here and, as my noble friend Lord Hannan said earlier, rarely do these taxes, once created, go away—so I hope to give some reassurance on that.
This also ensures that businesses contribute to the NHS. That is fair and reasonable, because they need a workforce that benefits from the NHS. Lastly, NICs apply on a UK-wide basis.
The noble Lords, Lord Macpherson and Lord Sikka, asked why we have not included rental income in the widening of the net. We have included dividends while excluding modest amounts of dividend, up to £2,000 a year. With regard to income from property, tax is currently levied at the same rates as income tax on earned income. Divergence in these rates would add complexity and create opportunities for avoidance. Those who earn their income from property have made a contribution to public finances. The property allowance has been frozen, as have the personal allowance higher rate and additional rate thresholds.
The Government are making sure that landlords continue to make a contribution. For example, we have restricted tax reliefs available to landlords. Over the past four years we have restricted relief for finance costs: it can now be claimed only at the basic rate, not at 40% or 45%. That has raised more than £1 billion. The higher rate of stamp duty for additional residential dwellings means that landlords now pay between 3% and 15% extra tax on those properties.
The noble Baroness, Lady Tyler, raised the issue of people over the state pension age, and noble Lords asked about the whole issue of intergenerational fairness. If we were to raise the sums required just for those over 40, the levy would need to be 60% higher, at around 2%. This would be a much larger burden on working people. Furthermore, around half of all the funding raised by the levy will go towards health and social care services that benefit working-age people, such as general NHS funding and vaccines. Working-age people will also benefit from limits on what they would need to pay if they themselves needed care in later life, and they will gain the peace of mind that comes from protecting their family members from substantial costs.
The noble Lords, Lord Eatwell and Lord Sikka, my noble friend Lord Forsyth and the noble Baroness, Lady Tyler, asked about the impact on the lowest paid. In relation to individuals, NICs are a progressive way to raise money: the highest-earning 14% will pay about half the revenues raised, while 6.2 million people who earn less than the NIC threshold of £9,500 will be kept out of the levy. I accept the points raised by two noble Lords about the cliff-edge nature of NIC contributions for higher earners, but the brutal reality is that, in the round, that top 14% will be paying around half of the total. That goes to the crux of this whole debate: we have tried very hard to ensure that this is a broad-based tax—as broad as possible.
Lower-income households will be large net beneficiaries from the package, with the poorest households gaining the most as a proportion of income. As was noted by one noble Lord, the highest 20% of households by income will contribute 40 times as much as the poorest 20%. One can make arguments about how much the bottom and top earn; nevertheless this is a highly redistributive approach to a difficult tax and an issue that all parties have dodged for 20 years. It is a genuinely progressive policy, and the distributional analysis published by the Treasury makes that clear.
Going beyond that, since 2010, Conservative Governments have consistently kept lower-paid people out of tax and kept the cost of living down. The income tax personal allowance threshold has increased by over 90%, meaning that a typical basic rate taxpayer now pays £1,200 a year less than they would have done otherwise. We also increased the NIC primary threshold by over £800, in April of last year, with a typical employee saving just over £100. In April of this year, we increased the national living wage to £8.91—an annual pay rise of £350 for someone working full time on the national living wage. Taken together, our changes to national insurance mean that someone working full-time on the minimum wage is currently £5,400 better off than in 2010.
The noble Lords, Lord Eatwell and Lord Macpherson, asked about the impact on employers. Some 70% of the money raised from businesses will come from the largest 1% of employers, and some 640,000 employers are excluded through the assistance at the bottom end. Again, as a Conservative Minister myself, I do not like raising taxes for anybody, but we have tried to broaden this tax as much as possible. Around 40% of businesses will not be affected by the levy. The noble Lord, Lord Macpherson, and my noble friend Lord Hannan, are not happy about a tax on jobs. The OBR will consider the economic effects of the levy in the light of its updated economic and fiscal forecasts, which will be published in the next couple of weeks alongside the Budget.
The noble Lord, Lord Eatwell, asked about the tax bill on the UK. We have had to take these difficult decisions because, as I said in my opening comments, this is a permanent increase in taxation for a permanent challenge that we face in a country with aging demographics. Our tax system remains competitive, with our tax take as a share of GDP lower than major international competitors, and broadly in the middle of the G7.
My noble friend Lord Forsyth asked about anti-avoidance rules, which is a very important question. I suspect, pragmatically, that there will be some fiddling around at the edges in the March/April threshold, but this whole piece of legislation will be subject to the full anti-avoidance rules that apply to NICs. Indeed, the recent work on IR35 would probably have been the biggest area of weakness had we not engaged in those reforms. The noble Lord might be interested to hear that even government departments are being threatened with fines by HMRC for non-compliance with IR35, so HMRC is out there already.
The noble Lord, Lord Eatwell, and the noble Baronesses, Lady Brinton and Lady Kramer, asked about hypothecation. I touched on this earlier. In 2022-23, all revenue from the health and social care levy will be directed to NHS England and equivalent bodies in Scotland, Wales and Northern Ireland through the existing NHS allocation. From 2023-24 onwards, levy revenue will be ring-fenced in law for health and social care. HMRC will pay the proceeds to those responsible for health and social care in all four parts of the UK, including NHS Scotland, NHS Wales and the equivalent in Northern Ireland.
The noble Baroness, Lady Fraser, asked about devolution and our way of handling that. This is absolutely a UK-wide problem. We have taken the decision to act on a UK-wide basis for the benefit of citizens across the UK. Scotland, Wales and Northern Ireland will receive Barnett consequentials on the additional health and social care funding in the usual way, with exact totals to be confirmed in the SR. Early indications are that, pro rata, the populations of the devolved authorities will receive more money from this approach.
The noble Baroness, Lady Brinton, asked about the funding specifically for social care. The Government are committed to spending £5.4 billion across three years on adult social care from this levy. This funding will end unpredictable care costs and include over £0.5 billion to support the adult social care workforce, in recognition of their efforts over this terrible pandemic. It includes funding to enable all local authorities to move towards paying providers a fair rate for care, which should drive up the quality of adult social care services, improve workforce conditions and increase investments.
Several noble Lords asked about funding for local authorities. We are committed to ensuring that local authorities have access to sustainable funding for core budgets at the spending review. We will ensure that every council has the resources they need to deliver these reforms.
The noble Lord, Lord Griffiths, spoke movingly and clearly understands this sector very well. I would like to reassure him that substantial support has been provided to the social care sector through the pandemic—for example, billions of items of free PPE prioritised to care workers, residents and unpaid carers for vaccination. We have made available £2.4 billion in specific funding for adult social care. This is made up of £1.75 billion for infection prevention and control, £522 million for testing, and £120 million to support workforce capacity. This funding is additional to the £6.1 billion for local authorities to deal with the impact of the pandemic on their services, including adult social care.
I turn to some specific questions on social care spending. First, on the size of the cap, the new £86,000 cap will end unpredictable care costs so that more people can preserve their savings and assets. Andrew Dilnot’s report was published 10 years ago and reflected the circumstances in 2011. Clearly, levels of wealth and asset prices have increased since then. We think that we have set the cap broadly at the right balance of achieving personal responsibility for planning for old age but putting in place a safety net where exceptional costs or periods of care are needed.
On domiciliary care, I think my noble friend—
Lord Hunt of Kings Heath (Lab)
Would the noble Lord give the House an estimate of how much a person would really have to spend before they reach the £86,000 cap? Does he agree that it will be at least double?
Lord Agnew of Oulton (Con)
My Lords, more detail will be set out in the Budget and spending review in the next two or three weeks to address the noble Lord’s question.
The noble Lord, Lord Hunt, my noble friend Lord Bethell and the right reverend Prelate asked about help for carers specifically.
Lord Forsyth of Drumlean (Con)
I apologise. My noble friend was about to answer the question on domiciliary care.
Lord Agnew of Oulton (Con)
Yes, sorry. I lost my thread. There will be no changes to existing procedures.
Noble Lords asked about support for unpaid carers. Of course, they play a vital role in the care system. I suspect that there is hardly anyone here in the Chamber who has not been involved in the care of their parents at the end of their lives on an unpaid basis. I certainly had to—but luckily I am one of seven siblings and we all live in the same county. None the less, it is a considerable burden.
The Care Act encourages local authorities to support unpaid carers and to provide preventive care to stop people’s early care needs escalating. A new cap on care costs will offer greater certainty to unpaid carers and support informed decision-making and planning for the overall costs of care.
The Government will take steps to ensure that the 5.4 million unpaid carers have the support, advice and respite they need, fulfilling the goals of the Care Act. We will work with the sector, including unpaid carers, to co-develop more detail in our plans and will publish further detail in the White Paper for reform later this year—and on the matter of the White Paper, I say to noble Lords that it is not long now. It is only a couple of months; it has been promised before the end of the year, and I am perhaps a little more optimistic than some Members of the House.
Baroness Kramer (LD)
Before the Minister leaves this area of exploration, does he have an answer to my question on whether the Government will pick up the costs of the additional national insurance to be paid by those to whom local government outsources services? I believe it is a yes or no answer.
Lord Agnew of Oulton (Con)
I cannot give the noble Baroness a clear answer on that now. More detail will be available in the Budget and the spending review. If it does not transpire in those documents in the next couple of weeks, the noble Baroness can write to me and I will investigate further.
On the adult social care workforce, our investment is at least £500 million across the three years to deliver new qualifications, progression pathways and mental health support. This workforce package is unprecedented investment: it is something like a fivefold increase in public spending on skills and training for this sector.
The noble Lord, Lord Griffiths, asked about vaccines for NHS staff. He is correct that at the moment there is no requirement for NHS staff to be vaccinated. However, we have a consultation under way to try to find the best way through on that sensitive issue.
I have probably answered the noble Baroness, Lady Kramer, as much as I can on the compensating of NICs. Just to confirm, I say that the Government will compensate public sector bodies such as the NHS for the increased cost of employer NICs. If they did not, they would simply reduce the amount available. The Chancellor will set out more details in his spending review.
My noble friend Lord Bethell asked about NHSX funding. We remain absolutely committed to all aspects of technological improvement. Again, I am more optimistic over the long term because I believe we will find new ways of treating this sector more efficiently, and NHSX will play a part in that.
My noble friend Lord Naseby made a point about the structure of GPs’ surgeries. We will have to see some dramatic changes in that area. In my view, we cannot sustain surgeries in which five-sixths of the doctors are working only part-time, but again I think this will throw up opportunities. The two sectors will have to work much more closely together—
Baroness Thornton (Lab)
The Minister is straying into territory that I think is probably unwise. The noble Lord, Lord Naseby, made various assertions, but there is no proof that part-time doctors and GPs are less efficient or that this is a less efficient way of working. We know that this absolutely is not the case in lots of other places, and there is no proof that it is in this case. The Minister might be wise not to go there.
Lord Agnew of Oulton (Con)
I respectfully disagree with the noble Baroness on that. Your Lordships are having a much more detailed debate on health reform very shortly, so I am sure that will be teased out in those discussions.
The noble Lord, Lord Lipsey, asked about the White Paper. As I said, we certainly hope to see that out in the next few weeks.
The noble Lord, Lord Desai, asked about the taxation of carried interest and private equity firms, but I suspect he was being slightly disingenuous as he knows we are not extending this to capital gains tax, only to dividends. No doubt there is a separate debate to be had on that, but at the moment it is a capital gain.
The essence of this debate is the fairness of the way the tax is being structured—
Lord Eatwell (Lab)
It is fortunate that the Minister just brought up once again the issue of fairness and the discussion of it in the House. At the beginning of his speech, he referred to the proportion of the total raised from—I think he said—the top 14% of payers. This is a completely bogus statistic and has nothing to do with fairness. Let me give him an example. Let us suppose that someone earns £1 million and there is a 10% levy. They pay £100,000 on the levy and have £900,000 left. Then let us suppose that someone earns £10,000 a year—they would still be caught by this levy, by the way—and, to keep the numbers easy, that they still pay 10%. Their income has gone down from £10,000 to £9,000 and, as Marcus Rashford has said, they are choosing whether to eat or to stay warm. To understand fairness is to understand the impact on individuals of the measures taken. Using these absolutely bogus numbers, which are not at all representative of fairness, simply distorts and degrades the debate.
Lord Agnew of Oulton (Con)
I take on board the noble Lord’s points, but the reality is that the highest-paid in this country are paying the largest contribution to this tax and indeed PAYE itself. I accept entirely what he says about the impact being disproportionately greater on poorer people, but that is why we have designed the structure to protect as many people as possible. As I mentioned in my opening comments, some 6 million people will not be subject to this at all, and we have kept 40% of smaller businesses out of it. Those on higher earnings will pay a lot more, and that is an important principle, but I absolutely accept the point he made.
I am grateful for the opportunity to explain the Bill and address the issues that have arisen today, and I now commend the Bill to the House.
Royal Assent
Wednesday 20th October 2021
(2 years, 6 months ago)
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