Health and Social Care Levy Bill

– in the House of Commons at 2:08 pm on 14th September 2021.

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Votes in this debate

Second Reading

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury 2:10 pm, 14th September 2021

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.

Photo of John Baron John Baron Conservative, Basildon and Billericay

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Geraint Davies Geraint Davies Labour, Swansea West

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.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Andrew Mitchell Andrew Mitchell Conservative, Sutton Coldfield

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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. 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—

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I am sure that the hon. Lady rises to welcome the progressive nature of that measure.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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—

Photo of Steve Brine Steve Brine Conservative, Winchester

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Christine Jardine Christine Jardine Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union), Liberal Democrat Spokesperson (Treasury)

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.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

First, in order to meet the quantum of spend, one needs a broad-based tax. That is a point that my hon. Friend 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.

Photo of Jonathan Edwards Jonathan Edwards Independent, Carmarthen East and Dinefwr

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.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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—

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I want to make some progress, and I have already given way once to 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.

Photo of Munira Wilson Munira Wilson Liberal Democrat Spokesperson (Health and Social Care)

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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—

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Richard Drax Richard Drax Conservative, South Dorset

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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 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.

Photo of Clive Efford Clive Efford Labour, Eltham

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

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?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

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.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

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.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury) 2:28 pm, 14th September 2021

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.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

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.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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 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.

Photo of Gary Sambrook Gary Sambrook Conservative, Birmingham, Northfield

On the basis of those two tests, which tax would the hon. Gentleman increase to pay for social care?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

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?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

My hon. Friend makes us think about what we have read recently about what 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.

Photo of Andrew Murrison Andrew Murrison Conservative, South West Wiltshire

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?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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 Jonathan Ashworth, the shadow Health Secretary has said, this looks very much like a “slippery slope” towards a two-tier healthcare system and privatisation.

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil

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.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

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?

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Gentleman is experienced enough to know that he should not speak directly to another Member.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

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?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

Perhaps the hon. Gentleman would like to intervene to answer that question.

Photo of Andrew Griffith Andrew Griffith Conservative, Arundel and South Downs

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?

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

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.

Photo of Jeremy Hunt Jeremy Hunt Chair, Health and Social Care Committee, Chair, Health and Social Care Committee 2:46 pm, 14th September 2021

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.

Photo of Steve Brine Steve Brine Conservative, Winchester

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?

Photo of Jeremy Hunt Jeremy Hunt Chair, Health and Social Care Committee, Chair, Health and Social Care Committee

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.

Photo of Clive Efford Clive Efford Labour, Eltham

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?

Photo of Jeremy Hunt Jeremy Hunt Chair, Health and Social Care Committee, Chair, Health and Social Care Committee

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.

Photo of Jeremy Hunt Jeremy Hunt Chair, Health and Social Care Committee, Chair, Health and Social Care Committee

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.

Photo of Jeremy Hunt Jeremy Hunt Chair, Health and Social Care Committee, Chair, Health and Social Care Committee

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.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury) 2:53 pm, 14th September 2021

To start where 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 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.

Photo of Christine Jardine Christine Jardine Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union), Liberal Democrat Spokesperson (Treasury)

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.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury)

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.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

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.

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil 3:02 pm, 14th September 2021

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.

Photo of John Redwood John Redwood Conservative, Wokingham

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?

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil

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.

Photo of Margaret Hodge Margaret Hodge Labour, Barking 3:07 pm, 14th September 2021

I hope that 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.

Photo of Taiwo Owatemi Taiwo Owatemi Labour, Coventry North West

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.

Photo of Margaret Hodge Margaret Hodge Labour, Barking

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 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.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

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.

Photo of Paul Bristow Paul Bristow Conservative, Peterborough 3:13 pm, 14th September 2021

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 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.

Photo of Mick Whitley Mick Whitley Labour, Birkenhead 3:18 pm, 14th September 2021

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.

Photo of John Redwood John Redwood Conservative, Wokingham 3:20 pm, 14th September 2021

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 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.

Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood 3:24 pm, 14th September 2021

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.

Photo of Ruth Edwards Ruth Edwards Conservative, Rushcliffe 3:28 pm, 14th September 2021

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 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.

Photo of Christine Jardine Christine Jardine Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union), Liberal Democrat Spokesperson (Treasury) 3:31 pm, 14th September 2021

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.

Photo of Andrew Griffith Andrew Griffith Conservative, Arundel and South Downs 3:34 pm, 14th September 2021

I pay tribute to my hon. Friend 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.

Photo of Anthony Browne Anthony Browne Conservative, South Cambridgeshire

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?

Photo of Andrew Griffith Andrew Griffith Conservative, Arundel and South Downs

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.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

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.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport) 3:38 pm, 14th September 2021

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.

Photo of John Baron John Baron Conservative, Basildon and Billericay 3:42 pm, 14th September 2021

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.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government) 3:47 pm, 14th September 2021

I probably agreed with at least three quarters of what 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—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.

Photo of Andrew Murrison Andrew Murrison Conservative, South West Wiltshire

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?

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

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.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet 3:51 pm, 14th September 2021

In common with my hon. Friend 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.

Photo of Andrew Murrison Andrew Murrison Conservative, South West Wiltshire

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.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet

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.

Photo of Fleur Anderson Fleur Anderson Shadow Minister (Cabinet Office) 3:57 pm, 14th September 2021

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.

Photo of Mike Penning Mike Penning Conservative, Hemel Hempstead 4:01 pm, 14th September 2021

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 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 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.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 4:04 pm, 14th September 2021

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.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes 4:09 pm, 14th September 2021

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 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.

Photo of Geraint Davies Geraint Davies Labour, Swansea West 4:13 pm, 14th September 2021

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 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.

Photo of Andrew Murrison Andrew Murrison Conservative, South West Wiltshire 4:17 pm, 14th September 2021

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.

Photo of Kim Johnson Kim Johnson Labour, Liverpool, Riverside 4:21 pm, 14th September 2021

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.

Photo of Richard Drax Richard Drax Conservative, South Dorset 4:25 pm, 14th September 2021

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.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs) 4:29 pm, 14th September 2021

I must agree with 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.

Photo of Matt Rodda Matt Rodda Shadow Minister (Work and Pensions) (Pensions)

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?

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

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—

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

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.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

I am sure that when the shadow Minister, my hon. Friend 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 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.

Photo of Duncan Baker Duncan Baker Conservative, North Norfolk 4:35 pm, 14th September 2021

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 James Murray would not put a marker in the sand and explain what he would do.

Photo of Geraint Davies Geraint Davies Labour, Swansea West

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?

Photo of Duncan Baker Duncan Baker Conservative, North Norfolk

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.

Photo of Nigel Evans Nigel Evans Deputy Speaker (Second Deputy Chairman of Ways and Means)

To resume her seat no later than 4.45 pm—we will put the timer on—I call Nickie Aiken.

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster 4:41 pm, 14th September 2021

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.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury) 4:44 pm, 14th September 2021

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 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 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 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.

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 John Redwood and Mr Baron. I hope they will join us in the Lobby tonight.

As the shadow Chancellor, my hon. Friend Rachel Reeves, set out last week, and as my hon. Friend 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.

Photo of Gary Sambrook Gary Sambrook Conservative, Birmingham, Northfield

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?

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury)

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. 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 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.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 4:53 pm, 14th September 2021

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 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.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

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 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.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

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?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

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.

Photo of Paul Holmes Paul Holmes Conservative, Eastleigh

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?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

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 Duncan Baker and 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: 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 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 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.

Division number 68 Health and Social Care Levy Bill

Aye: 249 MPs

No: 326 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

The House divided: Ayes 249, Noes 327.

Question accordingly negatived.

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.

Division number 69 Health and Social Care Levy Bill

Aye: 316 MPs

No: 255 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

The House divided: Ayes 317, Noes 256.

Question accordingly agreed to.

Bill read a Second time.