Health and Social Care Levy (Repeal) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 11th October 2022
(2 years, 2 months ago)
Commons ChamberHealth and Social Care Levy (Repeal) Act 2022 Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 11 October 2022 - (11 Oct 2022)
This text is a record of ministerial contributions to a debate held as part of the Health and Social Care Levy (Repeal) Act 2022 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
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The Chief Secretary to the Treasury (Chris Philp)
I beg to move, That the Bill be now read a Second time.
Let me start by reiterating that the central and defining mission of this Government is growth. This Government are completely and unashamedly committed to achieving that objective—economic growth. However, we are not committed to it simply for its own sake or for some abstract reason; we are committed to growth because of the impact it will have in so many ways on people’s lives.
Growth brings higher wages, bringing prosperity to our constituents. Economic growth will create new and better-paid jobs and, critically, economic growth will create a sustainable tax base that will fund public services into the future. Without strong economic growth, we cannot have well-funded health services, education and police. It is quite clear that, with economic growth, everyone benefits—not in some trickle-down sense, but because it will elevate salaries for everybody, create jobs the length and breadth of the United Kingdom, and generate the tax income that will fund our public services.
Crucially, this growth agenda set out by the Chancellor two or three weeks ago will pursue growth in a way that is fiscally responsible, and on 31 October—in just under three weeks’ time—the Chancellor will set out in detail how that will take place, buttressed by a full scoring and forecast produced by the Office for Budget Responsibility.
The growth plan announced by the Chancellor just a fortnight ago is crafted to achieve 2.5% growth year on year. It aims to do so in a host of different ways. First, it will do so through lower taxation, because with lower taxation we incentivise companies to invest, we incentivise people to get into work, and we encourage companies and high-potential individuals to choose to locate in the United Kingdom as opposed to somewhere else. Many successful companies, and indeed successful people, have a choice about where they locate, where they do business and where they work, and by having internationally competitive rates of personal and corporate taxation we are encouraging them to make the choice to locate in the United Kingdom, all of which improves and increases economic growth.
There is of course more to the growth plan than just that. We are working on infrastructure—whether road, rail or energy infrastructure—and speeding up its development, as well as supporting skilled employment, removing barriers to investment, getting the housing market moving and removing obstacles, such as the recent IR35 changes that have caused difficulties for many self-employed people and contractors. Critically, the growth plan has moved at pace to help both households and businesses with the terrible crisis posed by Putin’s illegal invasion of Ukraine and its consequences for energy bills.
Just a few weeks ago, households and businesses in the United Kingdom were faced with the realistic prospect of domestic energy bills going up to £5,000, £6,000 or even £7,000 per year. The energy price guarantee takes that possibility off the table, not just for six months but for two years, ensuring that the average household will pay no more than £2,500.
Peter Grant (Glenrothes) (SNP)
Does the Minister accept that, regardless of what the Government have done, my constituents can expect to pay double for their energy bills this year compared with what they paid last year?
Chris Philp
The energy price guarantee ensures that the average household pays no more than £2,500 a year. The hon. Gentleman is correct that that is higher than average bills this time last year, and that is why the comprehensive package was put in place earlier this year. It amounts to a further £37 billion, and ensures that households on the lower one third of incomes receive £1,200 per year, which pretty much fills the gap that he described. The energy price guarantee, combined with that £37 billion intervention, is the kind of thing we can do as a Union and as a United Kingdom. It is the kind of thing we can do together that would be so much harder apart, and that is one of the benefits of our precious Union. There is a lot more in the growth plan, but I will not labour the point because we are here to talk about the health and social care levy.
Hywel Williams (Arfon) (PC)
Growth in Wales has for a long time—for many decades before and after devolution—been based partly on the idea of attracting high-worth individuals to invest in Wales. The mixed result of that gives me pause for thought as to that strategy. Does it do the same for the Minister?
Chris Philp
We will deliver growth if we encourage people across the whole income spectrum—people doing jobs on lower incomes, those on higher incomes, businesses big and small alike. We need to encourage the entire economy, which is why tax cuts in the growth plan are broadly based, like the tax cut we are debating now. We need to encourage them all, which includes companies and people who are internationally mobile. I used to be technology Minister, and most technology businesses have a choice about where they locate. They are very internationally mobile. They could go to New York, San Francisco, Singapore—they could go anywhere in the world. We need to ensure that every part of the United Kingdom is attractive to such businesses, and the growth plan intends to create those conditions that make us attractive as a nation.
Alex Cunningham (Stockton North) (Lab)
The Minister seems to have mentioned everything except the need for a healthy workforce. Local authorities spend £1.2 billion every year on social care needs caused by smoking, and that will get more expensive if the Government fail to address the issue of tobacco. This morning the Health and Social Care Secretary hinted that she will do less, not more, to tackle the dangers of smoking. Will the Minister join me and press her to bring forward the tobacco control plan, to help protect the health of the nation and save health and social care costs?
Chris Philp
I do not think I should trespass into the realm of my right hon. Friend the Secretary of State for Health and Social Care and Deputy Prime Minister. She will make her own views and policy on that issue without intervention from me. We are ensuring that the NHS is well funded so that it can provide the treatment our constituents need. Our commitment to NHS funding is undiminished.
Let me turn to the Bill, which repeals the health and social care levy. Members will recall that the health and social care levy was originally announced in September last year, and the Health and Social Care Levy Act 2021 received Royal Assent on 20 October last year. The levy had two phases: first, a temporary 1.25% increase for employers and employees in the current tax year; and then from April 2023 a formal surcharge of 1.25%, which would have affected not just those of working age but also those of state pension age. The Bill repeals that Act with elegant simplicity. Clause 1 states simply:
“The Health and Social Care Levy Act 2021 is repealed.”
James Cartlidge (South Suffolk) (Con)
This is my first opportunity to congratulate the Chief Secretary on his appointment. What he said on the energy support for my constituents and all our constituents is very important, and I very much welcome that. However, on repealing the levy, he is of course aware that one of the most important things that it was going to fund was the welcome cap on care costs introduced by the Government, which had been promised by successive Governments with many a White Paper and many a Green Paper. How will we now pay for that?
Chris Philp
I thank my hon. Friend for his kind words. We are long-standing colleagues, and I look forward to working with him for many years to come. To be clear, the funding that was to be provided via the levy for both health and social care, which in the case of social care amounted to £5.4 billion over the three-year spending review period, is completely unaltered. There is no change to that funding at all.
My hon. Friend asked about funding for social care. The funding envelope for all public services will be set out by my right hon. Friend the Chancellor on 31 October via his medium-term fiscal plan. We will ensure that we are responsible custodians of the public finances by sticking to the spending plan set out in spending review 2021. We will be disciplined about doing that. We will ensure that we generally exercise spending restraint, mindful of the fact that we cannot have public spending forever increasing at faster and faster rates. We will be disciplined about how we manage the public finances.
I also point to economic growth. If, or rather when, we are successful in delivering the growth plan’s mission to elevate trend growth from 1.5% to 2.5%, with an extra 1% per annum over a consistent period of time—for example, five years—by the fifth year that additional growth will deliver about £47 billion of extra tax revenue, as set out in the table on page 27 of the Blue Book that accompanied the growth plan. I hope that gives my hon. Friend a hint about our thinking, but really the medium-term financial plan on 31 October will provide the most complete answer.
Hywel Williams
The Chief Secretary is being generous with his time. I should say that the table on page 27 shows a target, rather than anything that will stand closer examination. However, in respect of the decision to increase national insurance to pay for social policy—in England, I might add—the Welsh Government had no say whatsoever, just as they had no say in the now paused policy of scrapping the additional rate of income tax. Does the Minister not think that the Welsh Government, who are, after all, responsible for social care in Wales, warrant consultation on a fundamental matter such as this?
Chris Philp
I do not think that the Government in Wales complained too loudly when they were provided with extra money to fund social care in Wales. On the hon. Member’s point about page 27 of the growth plan, he is right that it is a target, but it is a target accompanied by a plan to deliver it. There is a clear path to how we will achieve the increase in growth that I referred to.
Let me return to the repeal of the health and social care levy. To be clear, the Bill will repeal the legislation from last year, reversing the temporary increase in national insurance contributions from 6 November—in just a few weeks’ time. Additionally, it will ensure that no new levy comes into force in April 2023. Members will understand that it takes a little time for His Majesty’s Revenue and Customs and businesses to prepare their systems for such tax changes. That is why we chose 6 November as the date of implementation, but that will ensure that the extra money gets into people’s pockets as quickly as possible.
That brings me to the rationale for why we are repealing the levy. First, it is so that people can keep more of their own money, particularly at this time when that is so critical with the cost of living. In Treasury questions earlier today, many Members on both sides of the House referred to the cost of living challenges, most of which follow from Putin’s illegal invasion of Ukraine. By reducing this tax and urgently alleviating the tax burden on our constituents, that will immediately assist with cost of living pressures. I am not saying that it will solve them, but it will certainly assist with them.
John Glen (Salisbury) (Con)
I, too, congratulate my right hon. Friend on his new role.
I acknowledge the narrative of growth and the therapeutic effect of the combination of supply-side reforms and tax cuts to generate growth. My concern is the interval between his assertions today and the medium-term fiscal strategy that will be announced on 31 October, and the markets’ confidence in that interval. Today we see a welcome announcement by the International Monetary Fund on the enhancement to growth, but we also see reference to the enduring effect of inflation. We have also seen in recent weeks the effect of interest rate changes on the cost of living challenges for families up and down this country. Will my right hon. Friend please take account of the interaction of those two conflicting realities?
Chris Philp
I thank my hon. Friend for his question. I pay tribute to him for his extraordinary service as City Minister. I think I am right in saying that he is the longest-serving City Minister ever—I think it was four years—and, I should say, he is the best to date. I pay tribute to him for his long and distinguished service.
My hon. Friend raised a couple of points. One was the interaction between the announcements and the OBR’s scoring. There was a desire to get the growth plan done quickly and with a sense of urgency, and the energy price guarantee was something we wanted to do straight away. Families were genuinely worried. They had huge anxiety about the prospect of facing £6,000 or £7,000 bills this winter. We wanted to take that off the table immediately. We also wanted to alleviate the tax burden that we are discussing today as quickly as we could. By doing this so quickly, assuming the Bill passes, on 6 November—in just a few weeks’ time—our constituents will be alleviated of this burden at this time of cost of living challenges.
As companies make decisions about where to invest—in the UK or elsewhere—they can do so in the knowledge that corporation tax in the UK will remain low. That is why we acted so quickly. I do, however, recognise my hon. Friend’s point about the need for market confidence, and that is why my right hon. Friend the Chancellor announced just yesterday that the medium-term fiscal plan would be brought forward from 23 November to 31 October. He recognised exactly the point that my hon. Friend made and similar points made by my right hon. Friend the Member for Central Devon (Mel Stride), the Chair of the Treasury Committee.
The point about inflation came up repeatedly in Treasury questions earlier. We should be clear that we are in a global interest rate up cycle. In, for example, the United States of America, base rates set by the Federal Reserve have increased by three percentage points this year—from 0.25% in January to 3.25% now. The equivalent interest rate set by the Bank of England, the base rate, has also increased, but only by two percentage points from 0.25% to 2.25%. So we have seen higher base rate increases in the USA in the year to date than we have here. As a consequence, the base rate in the USA is a full percentage point higher than in the United Kingdom, and we should keep that international context firmly in mind.
As I explained, we are repealing the levy so that people can keep more of their own money and so that we can help with the cost of living challenges at this time as a matter of urgency on 6 November and not delay any longer. I and the Chancellor think it is also important to boost incentives to work. We want to make sure that working is as attractive as possible and, by lowering the taxes on work, I believe that we will do that.
Steve Brine (Winchester) (Con)
I add my voice to those who have welcomed my right hon. Friend to his role. I think he will do a good job.
Here is what is worrying me. Yes, we want work to pay, but we also want work to be available. There are lots of vacancies in the labour market, but there are also labour shortages. Lots of people, as we have heard today, are economically inactive, many of them because they are on the NHS waiting list. As my right hon. Friend the Chief Secretary will know, the first part of the levy was to fund the catch-up programme. I was in my local hospital on Friday to see how we are getting on with the catch-up programme. We are still waiting for news of our elective hub at the Royal Hampshire County Hospital in Winchester, which would help with the catch-up and get people back into the workforce. Is that affected by my voting for this repeal today?
Chris Philp
I can categorically assure my hon. Friend that that is not affected. The £8 billion that was allocated over the spending review period to catch up on the elective backlog is completely unchanged by this measure, and the funding for social care—£5.4 billion over three years—is also unaffected. The rest of the money, because that is not all of it, will continue to be available to the Department of Health and Social Care to spend on the NHS and social care precisely as was intended. As a result of repealing the Health and Social Care Levy Act 2021, not a single penny less will go to social care or the NHS, or in particular the elective programme that he refers to. I cannot answer on Winchester hospital, but I am sure that the Health Secretary would be delighted to discuss that with him.
My hon. Friend also made a good point about vacancies. We have a lot of vacancies in the economy. Earlier this year, I believe for the first time in history, there were more vacancies than there were people in unemployment. If we are keen to tackle poverty and help people into a more prosperous future, getting them off benefits and into work is clearly the answer.
Karin Smyth (Bristol South) (Lab)
To follow on from the former Health Minister, the hon. Member for Winchester (Steve Brine), if it is true that the levy was essentially not needed for the social care reforms and the catch-up, and that everything is still staying, will the Minister tell us what advice he has had from the DHSC about what it will not do now that, presumably, there is less money for the other things that it was going to do?
Chris Philp
The funding provided by the Treasury to the DHSC is completely unchanged as a result of the reversal of the NIC increase. That applies both to the money that was essentially hypothecated to the DHSC and its other budget. It is completely unaffected, so we are not moving money from one part of the health service budget to backfill something else. The complete health service budget is unchanged. There is not a penny less for the health service in any way as a result of the changes, but we are changing the way we fund the expenditure. Instead of funding it from the health and social care levy, it will be funded differently, partly by general taxation and other means, which will be set out in the medium-term fiscal plan. However, not a single penny less will go to the health service as a result of this change.
Several hon. Members rose—
Chris Philp
I am spoilt for choice; I will start with my hon. Friend the Member for South Suffolk (James Cartlidge).
James Cartlidge
I am lucky to have a second intervention already. I know that as a former businessman, the Minister cares passionately about growth, and I respect that. However, as a businessman, he must also know that the single most important factor for business is confidence and stability. When we speak to businesses at the moment, we hear that they are worried about the lack of stability. They want certainty and confidence. He needs to explain the basic question about the £17 billion of revenue from the levy to fund social care and the NHS. If the levy is going, surely that implies that borrowing fills the gap or some other change fiscally. Is it the case that that will be confirmed on the 31st?
Chris Philp
Yes, it is. My hon. Friend is asking entirely reasonable questions, but we have to look at this issue in the round across the entirety of public expenditure. The Chancellor will set that out in detail on 31 October to the House, accompanied by the OBR scoring.
Alex Cunningham
The hon. Member for South Suffolk (James Cartlidge) has made this point: if £17 billion is being removed from the Exchequer, how can we have all that extra spending on the NHS and on social care if there is no additional taxation?
Chris Philp
As I pointed out, we will set that out on the 31st. The Chancellor has a number of measures in mind to make sure, over the medium term, that this is fully funded, and critically, so that we can do this and the other things in the growth plan—this is obviously only one measure among many—to make sure that we get debt falling as a proportion of GDP. Hon. Members are asking entirely reasonable questions, but the point of the medium-term fiscal plan, and the details that will accompany it on 31 October, is to answer precisely those questions.
Let me set out the benefits that the move will confer on employees earning more than £12,570 and self-employed people earning more than £11,909. The average saving for people in work who are earning more than those thresholds will be approximately £330 next year. Combined with the increase in the threshold that took effect last July, the saving for the average worker earning above those thresholds will be £500 next year. That will clearly be welcome at a time of economic challenge. Moreover, almost a million businesses—920,000—will get an average tax cut of just a shade under £10,000 next year: £9,600, to be precise. That will be very welcome indeed.
It is worth being clear that the increase in the threshold that was put through a few months ago means that people on lower incomes pay very little in national insurance or income tax these days. I am sure that Members of this House who want to see the burden of taxation made as light as possible, particularly for those with lower incomes, will strongly welcome the increase in the threshold. It follows the very substantial increases in the income tax threshold over the past 12 years, from about £6,500 back in 2010 to £12,500 today, which have lifted people on the lowest incomes out of national insurance and out of income tax entirely.
I have already made the point that the reversal of the levy is part of a much wider plan. Over the coming days and weeks, my colleagues the Secretaries of State for various Departments will announce further supply-side measures to stimulate growth in our economy, including by making the planning system faster, making sure that business regulations are not unduly onerous, improving childcare, addressing questions concerned with immigration and agricultural productivity, and improving digital infrastructure. As I have said, we will do so in a way that makes sure that debt over GDP falls over the medium term.
Chris Philp
I was about to finish, but as the hon. Member is an old friend, I will give way one last time.
Alex Cunningham
I am grateful; I enjoyed my time dealing with justice issues opposite the right hon. Member. Twelve years ago, one of his predecessors—a Lib Dem, in fact—cancelled the new hospital for Stockton. The need for one is far greater than ever and the Chief Secretary seems very capable of splashing the cash, so will he finally approve funding for a new hospital in Stockton?
Chris Philp
The Government have a commitment, which we stand by, to build I think 40 new hospitals in the coming years. Of course, the details of that programme are in the hands of my right hon. Friend the Secretary of State for Health and Social Care. I am sure she would be happy to discuss a hospital for Stockton with the hon. Member, who is an eloquent advocate for his home town, as ever.
Making sure that we act in a fiscally responsible way is a responsibility that falls partly on me as Chief Secretary. I have already said that we intend to stick to the limits set out a year ago in the comprehensive spending review—a three-year spending review, of which we are in the first year. We will exercise restraint in public expenditure, because we simply cannot have a state that continues to consume ever larger proportions of national income. Of course we need to make sure that public services are properly funded, but we need to do so in a way that does not impose excessively onerous burdens on taxpayers—our constituents who work hard day in, day out to earn a living and pay their taxes.
Growing our economy is our central and defining mission. The United Kingdom needs a Government who are wholeheartedly and unequivocally committed to economic growth. We stand committed to growth in a way that the anti-growth coalition arrayed against us does not. This Government have a very clear growth plan. The reversal of the levy and of the temporary national insurance increase is an important part of that growth plan, which is at the heart of this Government’s mission. I commend the Bill to the House.
James Murray
My hon. Friend is right to point out that the Conservatives’ sums simply do not add up. However, you do not have to take our word for it, Mr Deputy Speaker. Just look at the markets: they have issued their own judgment on the Conservatives’ so-called economic plan, and they are not convinced.
As we consider the repeal of the Health and Social Care Levy Act, it is important to remember how the Government’s decision to bring in this national insurance hike came to pass in the first place. Over the last 12 years under the Conservatives, we have been stuck in what the Chancellor himself rightly described last month as a “vicious cycle of stagnation”. With tax revenues stagnating under low growth, the Government made it clear that they felt the only way to raise more funds was to raise taxes on working people.
On Second Reading of the legislation that is being repealed today, the then Chief Secretary to the Treasury tried to defend the Government’s approach, saying that this new charge would
“enable the Government to provide additional funding to the NHS so that it can recover from the pandemic.”—[Official Report, 14 September 2021; Vol. 700, c. 843.]
We argued at the time that if the Government felt that they had to raise taxes, those with the broadest shoulders should contribute more, but the Government refused. They pushed ahead with this tax rise on working people and their jobs, and they refused throughout the debate on the original legislation to ask those with the broadest shoulders to take more of the burden. Now, as they repeal the legislation for the national insurance increase, they have abandoned any attempt at fiscal responsibility altogether, with an economic approach that has borrowing at its heart.
In a letter sent to the shadow Chancellor and the shadow Secretary of State for Health and Social Care on 22 September, the Economic Secretary to the Treasury wrote:
“The additional funding used to replace the expected revenue from the Levy will come from general taxation and may require further borrowing in the short-term.”
Labour takes a different approach. Our pledges are fully and fairly funded. As the shadow Chancellor has set out, we would boost NHS investment by ending the outrageous non-dom tax loophole exploited by the super-rich. We will use money from what is saved by scrapping that arcane practice to double the number of district nurses qualifying every year, to train more than 5,000 health visitors, to create an additional 10,000 nursing and midwife placements every year and to double the number of medical students so that our NHS has the doctors it needs.
Chris Philp
I think I heard the shadow Chancellor on television a week or so ago saying that her proposals on non-doms would raise about £2 billion. The cost of this measure is about £15 billion, so where is the other £13 billion going to come from?
James Murray
The Minister must not have been listening carefully enough to the shadow Chancellor setting out Labour’s plans, because we have set out how we would scrap the non-dom status, which it is completely irresponsible to keep in the current context, and to use some of that money to set out our plans for investment in the NHS. The difference between the Government and the Opposition is that the Government make promises and use throwaway comments about how they might fund this with general taxation or through extra borrowing, whereas when we set out our pledges, we set out exactly what we will pay for. They are fully costed, fully funded and paid for through fairer taxation.
David Rutley (Macclesfield) (Con)
I am grateful for the chance to speak on Second Reading and to follow considered speeches by right hon. and hon. Members. I am particularly pleased to see the Economic Secretary to the Treasury, my hon. Friend the Member for North East Bedfordshire (Richard Fuller), in his place. I knew him for many years before coming to this place and he brings real expertise to the Front Bench, notwithstanding the fact that he has very big shoes to fill—that’s for sure.
The repeal of the health and social care levy is part of the Government’s growth plan. The key elements of the plan to address cost of living challenges, caused largely by President Putin’s savage attacks on Ukraine, are most welcome. The energy price guarantee helps to limit the price of fuel bills for households across the country for two years, while the energy bill relief scheme provides similar support for businesses right across the country. Those steps are particularly welcome to the small and medium-sized businesses, both in Macclesfield and across the country, which have felt particularly exposed to the sharp increases in energy costs.
I understand the desire for greater growth and for reducing the tax burden. I recognise that many businesses and working people will be pleased to see the health and social care levy being reversed. They will be able to keep more of what they earn and decide how best to use the saving for their own business or household. I acknowledge that many business owners will welcome another element of the growth plan: the planned rise in corporation tax will not go ahead either. That said, I believe it is important to see the removal of the health and social care levy, and other proposed tax reductions, in the context of the wider economy and our public finances.
Financial markets have shown concerns about the cumulative effects of the policies set out in the growth plan, as was eloquently set out by my hon. Friend the Member for Salisbury (John Glen) earlier, and the lack of an associated OBR forecast to help set out an independent view has been unsettling. The forecast will help provide an independent view of the plan’s impact on our public finances and on the levels of the Government’s borrowing and debt. That is why I was pleased to learn that the Chancellor will bring forward to 31 October his statement on the medium-term fiscal strategy, and that Treasury Ministers and officials will, as is necessary, work closely with the OBR over the weeks ahead. It is vital that the Chancellor sets out his fiscal strategy soon, to help explain how the measures in the growth plan, including the impact of reversing the levy, will be funded and what they will mean for the Government’s spending plans, such as the funding for NHS backlogs and social care that the levy sought to address, as highlighted very well by my hon. Friends the Members for Winchester (Steve Brine) and for South Suffolk (James Cartlidge).
The latest timing also means that documents will be available before the next meeting of the Bank of England’s Monetary Policy Committee on 3 November. They will help provide additional, much-needed information for the markets, to colleagues here in Parliament and, of course, to our constituents. As the Prime Minister has said, in hindsight more could have been done to roll the pitch and communicate the growth plan before the Chancellor’s statement on 23 September.
In addition to the steps to lower taxes, such as the reversal of the levy, and to tackle energy cost challenges, the growth plan includes several innovative plans, such as the investment zones to help drive growth. In Cheshire East, our vibrant life science sector and industrial hubs would represent an exciting opportunity for such a zone to drive sustainable economic growth. That is just an idea, of course, for the Chief Secretary.
I wish that we could spend more time talking about such opportunities, but we have to accept that we cannot wish away market concerns. We have to recognise where we are, and the Treasury needs to take the time to communicate and explain its plans in more detail and in the context of the wider economy. With that in mind, I am pleased that the Chancellor earlier agreed with the Chair of the Treasury Committee on the need to further engage with and counsel colleagues in this House over the weeks ahead.
To conclude, this Bill will see the health and social care levy reversed. That policy and the implementation and phasing of other measures in the growth plan aim to help lift growth and will have wider economic consequences, so let us take the time to understand them more fully. Like many colleagues, I am a strong supporter of free enterprise. I recognise that lower taxes have a role to play in driving growth. As is often said, there is a time to every purpose, and at heart I am a fiscal conservative.
The Economic Secretary to the Treasury (Richard Fuller)
It is a pleasure to close this debate on behalf of the Government. I thank all hon. Members for their contributions to this relatively short debate. I think it is fair to say that none of us came here expecting to find a perfect consensus, but it was rather pleasing to hear the measure welcomed by the Opposition spokesperson, the hon. Member for Ealing North (James Murray), the SNP spokesperson, the hon. Member for Gordon (Richard Thomson), the Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney), and the hon. Member for Glenrothes (Peter Grant). I thank all those Opposition Members for their support.
I thank my hon. Friend the Member for South Suffolk (James Cartlidge) and my long-standing hon. Friend the Member for Macclesfield (David Rutley) for their speeches and my hon. Friends the Members for Winchester (Steve Brine) and for Salisbury (John Glen) for their interventions. If there was one message from the four of them, it was on the importance of fiscal responsibility. That was heard loud and clear, and it has been resonated by the Chancellor again and again, including today. Truly, it is the essence of conservatism, as my hon. Friend the Member for South Suffolk said. I noted what my hon. Friend the Member for Macclesfield said about the Treasury working more closely with the OBR and about the engagement requested by the Chair of the Treasury Committee. I assure him that the Treasury team will engage as he has suggested.
This has been a serious debate for the most part. It looked like it was getting into levity at one point, when the hon. Member for Arfon (Hywel Williams), who unfortunately is no longer in his place, volunteered to be a member of the anti-growth coalition. He said it was important that there was a free lunch. The hon. Member for Gordon spoke about not joining a club and invoked Marx, although not the Marx who was the favourite of the former Opposition spokesperson on finance.
At times, there were clear points of ideology in respect of the plan. It is clear that the purpose of the Chancellor’s growth plan is to improve lives across the country over the long term. Growing the economy must be our guiding mission, and with this Government it is. We will do so through lower taxes, through improved infrastructure, by supporting skilled employment, by removing barriers to investment, by getting the housing market moving, by making Britain an even better place to do business and by ensuring that people who earn money keep more of it so that they can make their own decisions—that includes our businesses.
I heard from the Opposition spokesperson that their plan comprises two aspects. First, it is the Government—a Labour Government—who should decide the right way to achieve growth in this country, rather than the wealth creators and businesses. Labour wishes to make those decisions on behalf of all of us. Many of us on this side of the House know where that sort of central planning ends up.
Secondly, those with the broadest shoulders should bear the burden. I just warn hon. Members to measure how broad their shoulders are. My fear is that it is not those with broad shoulders but anyone with shoulders who bears the burden. My point is this: the starting position for Labour’s plan is that this year, 2022-23, those in the top 1% of the income distribution are estimated to receive 13% of all income, but already pay 30% of all income tax liabilities. Those in the bottom 50% of the income distribution are estimated to pay only 8.3% of all income tax. When Labour says that it wants to fund its plans through general taxation, it is not looking for the 1% to pay; it is looking for people on average and low incomes to pay. The Conservative party does not think that is the right way to achieve growth.
Richard Fuller
I will come to the hon. Gentleman if I have time.
The Liberal Democrat spokesperson gave a very good speech and raised important broader issues. She welcomed the measure and spoke about the costs that have been paid by people and businesses—she gave the figures £2.5 billion and £3.8 billion. That underlines the important contribution this measure will make by putting money back into the pockets of households as they face the winter crisis and into the hands of businesses as they make their investment decisions.
The hon. Lady kindly spoke about her past as an accountant—not everyone would necessarily volunteer their past as an accountant. She spoke about some of the disruption there has been. I assure her that I have spoken, as has HMRC, to payroll software companies to assess what the level of disruption has been and whether this additional change will cause further disruption. In my conversations with them, they have said that there have been minimal costs to date and that the reversal will have minimal costs for them. That is just a selection of payroll software companies—there are others—but I can give her some assurance that there has perhaps been less disruption than she feared.
Sarah Olney
I thank the Minister for that assurance, but the point I was making was not so much about the technical implementation; I totally take his point that it is a software change. The point I was making was more about headcount forecasts and how many staff businesses can afford to take on. Changing the national insurance contribution that businesses make has a material impact on those forecasts and will have had an impact on how many new jobs have been created.
Richard Fuller
That is an interesting point, and it probably is worthy of further investigation. On the day when we have announced that the country has more vacancies than unemployment, and unemployment is at a long-term low, one would think that that impact has not been significant, but it is an issue that is worthy of further investigation. The other point that the hon. Lady made about the impact that hospital discharges may be having on social care—she talked about the hospital in her constituency—is a relevant one, and I am sure that it will be taken up by my right hon. Friend the Secretary of State for Health and Social Care.
The hon. Member for Liverpool, Riverside (Kim Johnson) asked, as others did, whether the changes to the levy will change the funding previously announced. I can assure her that the levy change makes no difference to the funding outlined.
Other points were made, and we will have further discussions in Committee. My right hon. Friend the Chief Secretary to the Treasury made the point that the reversal of the levy is part of a much greater sum. Above all, it is about achieving the sustainable growth that this country needs and deserves. That is our mission as a Government, and it is the purpose of the Bill. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
Further proceedings on the Bill stood postponed (Order, this day).
Health and Social Care Levy (Repeal) Bill (Money)
King’s Recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Health and Social Care Levy (Repeal) Bill, it is expedient to authorise:
(a) the payment of sums by the Secretary of State out of money provided by Parliament to His Majesty’s Revenue and Customs for payment into the National Insurance Fund, and
(b) the payment of sums out of the National Insurance Fund into the Consolidated Fund.—(Amanda Solloway.)
Question agreed to.
Health and Social Care Levy (Repeal) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 11th October 2022
(2 years, 2 months ago)
Commons ChamberHealth and Social Care Levy (Repeal) Act 2022 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 11 October 2022 - (11 Oct 2022)
19:41 - The House divided: - Ayes: 190 / Noes: 257 - Question accordingly negatived.
This text is a record of ministerial contributions to a debate held as part of the Health and Social Care Levy (Repeal) Act 2022 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Steve Brine
Without question. We had some success with our tobacco control plan, but progress has stalled. We cannot ignore the pandemic, as the Opposition Front Benchers sometimes try to, and I understand that it disrupted the smoke-free England plans, but we need to get back to it, for social reasons, and for economic reasons relating to the health service that we seek to fund.
I am sure that right hon. and hon. Members from across the House have heard of the “Be Clear on Cancer” campaign, and of the “Touch, Look, Check” message encouraging women to check their breasts. I lost my mother to breast cancer; it destroyed much of my family. I brought a ten-minute rule Bill on the subject to the House earlier this year. Breast Cancer Now tells me that it thinks that there are 12,000 undiagnosed breast cancers in this country today. One does not need to be a genius, a former Health Minister or a breast surgeon to understand what that could mean: undiagnosed breast cancers move beyond stage 1, into 2 and 3, when they are untreatable. That is what happened to my mother, and I do not want it to happen to others. If the nanny state means implementing “Be Clear on Cancer” campaigns to help people avoid cancer, I am a nanny state-ist.
David Rutley
My hon. Friend makes an important point about raising awareness, particularly on public health, and I support the points that he makes, but does he agree that, at this time of real challenge, it is also important to drive public awareness of how to use energy more efficiently, in order to help people with their fuel bills?
Steve Brine
I know why Dame Rosie is smiling: she thinks that I have possibly attempted to fit my Second Reading speech into this response to new clause 1. If I go down the road of energy policy, I may test her patience. All I would say to my hon. Friend is that, if the energy price guarantee was a price cap, and people could not pay more than the amount at which the cap was set, there would be some argument for not having a public campaign advising people on their energy use. It is not a cap; it is an energy price guarantee. If people use more energy, they will pay for more energy. It therefore seems logical to me, on lots of levels, to help people save energy—but what do I know?
I was just coming to diabetes. The NHS spends about £10 billion a year—that was about 10% of its budget, when I was in the Department—on diabetes care. That is a phenomenal amount of money, yet type 2 diabetes is preventable and, as we have heard from Members, people can turn it around. Why would we not want to encourage people to manage their weight better, when weight is one of the big drivers of diabetes?
Finally, stoke is a big killer in this country. It costs the NHS billions. During conference recess, I visited a group in my constituency called Say Aphasia—I figured it was a better use of my time. I met a group of 15 men who had had strokes. One was two years younger than me. They had severe communication difficulties. I see my hon. Friend the Member for Bury St Edmunds (Jo Churchill), a former public health Minister, by the Front Bench. She knows what I am going to say. Why would we not want to help the NHS prevent stroke through a proper salt reduction strategy? Given my surname, when I tried to suggest one to the Department, it caused some amusement among officials, but I think it is the right thing to do. If we cannot prevent stroke, I will meet a lot more people like those I met in the Say Aphasia group last week. Their ongoing cost to the NHS is significant.
In conclusion, the point I am trying to make, and maybe I am not making it very well, is that, if we do not believe in prevention—and in my heart I believe that those on the Front Bench do believe in prevention—the costs of the NHS predicted in the OBR book are going to look quite conservative. I think I am right in saying that those projections include this levy being in place, not repealed—
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
I rise to support new clauses 1 and 2, and I suspect we will soon vote on new clause 1. Let us be clear: the economic issues we are now facing—rising interest rates for homeowners, and a crashing of confidence in the British economy—are partly because the Government will not produce proper, transparent plans about how they are managing tax and spend.
New clause 1 would force the Government to publish proper documentation on how they will manage that expenditure. We cannot scrimp and save any more on social care, and while it is right to reverse this tax, which was pernicious and hurt the poorest the most, the Government’s failure to outline how they will raise the revenue and properly spend it will cause more chaos and more lack of confidence in the Government. It will contribute to the ongoing crisis in interest rates, and it will end up hurting hard-working people in this country again. Although the reversal of this tax is welcome, without proper analysis the danger is that people in this country will still pay, but they will be paying not through tax to the Government, but through pernicious interest rate rises to lenders and banks. That would be worse than the current situation.
Social care needs to be funded. Brighton and Hove City Council spends £154 million a year on adult social care. That is care for older and disabled people—social care in all its forms. It only raises £160 million through council tax and the precept, so it has only £10 million discretionary funding, although of course it gets grants for schools and other non-discretionary funds. That is the same up and down the country. It is no good just finding Treasury money to support an expanding need for social care; it is a scandal that any penny of council tax is going on adult social care at all. No voter I ever speak to thinks it is appropriate for council tax to be spent on adult social care. Council tax should be for council services, universal services, and ensuring that our local areas are better, more prosperous and thriving. Every person I speak to thinks that social care should be centrally financed. Yes, councils should deliver it, just as they do with education and other services, but the grant must be fully funded by the Government. That the Government have not outlined how they will do that, or have even a long-term plan to do that, continues the pressure and burden on councils and is wrong.
Not only is it wrong, but there is another way of doing it. That is why new clause 2 is so important. It starts to set out the alternatives, and my hon. Friend the Member for Leeds East (Richard Burgon) stated that we should be looking at taxing income from wealth. It is a scandal that generations after generations have squirreled away wealth, hiding it away like Monopoly money on a Monopoly board, and they are then able to generate money from doing almost diddly squat. That is wrong when hard-working people are toiling and paying a higher rate.
There are other ways that the tax could be raised, such as abolishing the upper earnings limit and the scandal of people who earn more than £50,000 paying only 3.25%—less once the levy is abolished—on national insurance. That rich people pay less national insurance as a percentage of income than poorer people is a national scandal. Rather than a progressive tax, it is an innately regressive tax. The poorer someone is, the more they pay; the richer they are, the less they pay as a percentage. If that was abolished and we had a flat tax for everyone, that would have raised £10 billion more than this failed tax U-turn. The Government would have been able to fund all they wanted. It would have been fair, and it would not have hit poorer people. There were many alternatives and the Government did not pursue any of them.
Last week I visited my local A&E at Royal Sussex County Hospital. Fantastic nurses and doctors were working their socks off, and the management were trying to cope with reducing resources. What did I see? Tens of people in beds in corridors, and more than 30 people in waiting chairs, waiting not to be treated in A&E but to be moved on to adult social care or other wards in the hospital. One person had waited for 23 hours, and another who had been discharged the day before had been waiting in A&E for four days. Why is that? It is because our social care system is failing. People are leaving in droves because there are no national terms and conditions and no decent pay. It is a disgrace that care workers earn less than £10 an hour in Brighton and across the UK. They are on poverty wages yet they do such important work.
We need a proper plan for how social care will be paid for. It is no good for the Government to remove this pernicious tax and then come forward with no plans, no ideas, no nothing. This Government have run out of ideas, and Conservative Members have run out of a future for this country. All they are in now is a quick “grab as much as they can” in the next two years, before they lose the election. It is not right for this country. We need them to move aside because Labour has the ideas. Labour has the plan for adult social care, and for everything.
Richard Fuller
New clause 1 was tabled by the hon. Member for Ealing North (James Murray), and he raised two specific points. One was on the direct cost that HMRC will incur as a result of this Bill, and he is right; there will be some additional costs. It costs to make these changes, and there will also be costs in future months from additional calls that may come into HMRC. Those numbers have not yet been fully quantified, but I will write to the hon. Gentleman with those costs when we have them. I do not think this was the intent of his question, but on the changes to dividend tax rates, the 1.25% cut will be implemented from April 2023 and is not taking place this year.
Overall funding for health and social care services will be maintained at the same level as if the levy was in place, and we will do that without the tax increase. The Chancellor and the Government are committed to fiscal sustainability, ensuring that debt to GDP falls over the medium term, and the Chancellor will set out further details in his medium-term fiscal plan on 31 October. Strong growth and sustainable public finances go hand in hand, and maintaining fiscal discipline over the medium term will provide the confidence and stability to underpin long-run growth. In turn, faster growth can promote confidence in the UK economy and lead to higher tax revenues without the need to raise levels of taxation. That broader context of the medium-term fiscal plan in the round is the right way to assess these changes, not via the specific measures in new clause 1. I therefore urge the House to reject the new clause.
I will make a point to my hon. Friend the Member for Winchester (Steve Brine), who rightly spoke about the importance of prevention. To reassure him, the Department’s spending review settlement provided £2.3 billion over the spending period to transform diagnostic services and funding to enable local authorities to invest further in prevention through the public health grant.
I turn to new clause 2, tabled by the hon. Member for Leeds East (Richard Burgon) and supported by the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), who I was interested to hear advocating flat taxes—I look forward to further discussions with him about the merits of flat tax rates. There are key differences between the tax bases of earned income, capital gains and unearned income such as dividends. For example, employers also pay national insurance contributions on employment earnings, which broadens the base of revenue from national insurance contributions across employers, employees and the self-employed. In practice, if the taxation of dividends and capital gains were aligned with the taxation of earnings, we could expect to raise less than the levy was forecast to do due to the size of the tax bases and the significant behavioural responses by both tax bases. One of the key points that the hon. Member for Leeds East misses is such behavioural changes when we seek to change certain taxes in a significant way.
Unlike the Opposition, the Government are committed to lowering taxes, not raising them. We have already committed to reversing the 1.25 percentage point increase in dividend tax from April 2023, as I said, to drive growth and investment, and the Chancellor of the Exchequer will publish the medium-term fiscal plan on 31 October. I therefore urge the House to reject new clause 2. With thanks to those hon. Members for tabling their new clauses, I hope that they are satisfied with my explanations and that the hon. Member for Ealing North will not press his new clause to a Division.
Question put, That the clause be read a Second time.