Employer National Insurance Contributions

Andrew Murrison Excerpts

Wednesday 4th December 2024 Commons Chamber

[Mel Stride]

The simple fact is that, at the time of the general election, we had the fastest-growing economy in the G7. The simple fact is that the Labour manifesto said it would deliver precisely that, yet we have heard very little about that commitment in recent days and weeks—I wonder why.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Does my right hon. Friend agree that it is important to set the facts right? It is important to reflect on the fact that, during our 14 years in government—despite the 2008–09 financial crisis, despite the pandemic and despite the energy crisis—more than 1 million jobs were created, and 4 million people were in employment who were not in employment when we took office.

[Mel Stride]

My right hon. Friend is absolutely right. Our record on employment shows that we were a job-creating machine after 2010, and the statistics he cites are quite right.

When it came to business—this is a killer worthy of a stand-up comedy routine—the manifesto said:

“Labour will…support business through a stable policy environment”.

Of course, we know that all sorts of businesses have been hit by this tax increase, including many that directly support our public services: our hospices, our GPs and our pharmacists. Marie Curie has said that it is about to get a tax bill for an additional £3 million. Just think of the impact that will have.

The question that many are now feverishly and worriedly asking is whether there is more to come. Are the Government going to run out of road with their approach to our economy, and will they come back for more? Well, the Chancellor recently told the CBI that the Government will not be

“coming back with more borrowing or more taxes.”

Yet when the Leader of the Opposition put this assertion to the Prime Minister at Prime Minister’s questions today, we heard no answer. When I twice asked exactly that question of the Chancellor yesterday, we heard no response. Currently, these businesses do not know whether the Chancellor’s assertion that there will be no more borrowing and no more taxes is true or false.

Farming and Inheritance Tax

Andrew Murrison Excerpts

Wednesday 4th December 2024 Commons Chamber

[James Murray]

My hon. Friend is absolutely right to highlight the fact that some of the features of the current inheritance tax relief system mean that it is an attractive vehicle for tax planning to reduce inheritance tax liability. People who have wealth who have never been farmers and do not intend to become farmers have been using it as a way to avoid inheritance tax. In fact, reducing that should take some of the pressure out of agricultural land values and, I would hope, help to make a more sustainable farming sector in the future.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

It is important to get the facts right and to get the right number of farms in frame. The Minister must know that the CAAV has said that the Government estimate is down by a factor of five. According to its impartial independent review, 75,000 farms will be in frame for this tax, not the figure the Minister is relying on.

[James Murray]

My response to the right hon. Gentleman is the same as that to the right hon. Member for South Holland and The Deepings (Sir John Hayes). I believe he is looking at the data for the total value of farms, rather than for inheritance tax claims. The two are different things. For instance, a farm worth £5 million owned in equal shares by five individuals would have no inheritance tax liability because of the way claims work. That is where I think some of the confusion has come from. There is different data around the value of farms and around the value of inheritance tax claims. For the purpose of today’s debate, it is the inheritance tax claims that are the right data to focus on.

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[Dr Andrew Murrison (South West Wiltshire) (Con)]

I must begin by drawing attention to my entry in the Register of Members’ Financial Interests.

I rise to support the land-based and agrifood sector in my constituency, a sector that stands bewildered at what this Government are doing to it—a Government who it thought had its back, and that were going for growth. A farmer constituent wrote to me shortly after the Budget, saying:

“All these changes have meant that our already tight margins are non-existent. The next few months are going to be spent calculating if it would be better to just sell up and no longer farm.”

That is hardly surprising, given that the average salary of a farmer in this country is a little over £22,000, although farmers are described by many as being multimillionaires.

My constituents’ disappointment is heightened by the Government’s assurances before the election, and the specific promise that they made on APR and BPR. I think that, if I may say so without damning his career too much—I see that he is no longer in the Chamber—the hon. Member for Penrith and Solway (Markus Campbell-Savours) did us a service by reminding us of that promise. However, we should not be surprised. My hon. Friend the Member for North Norfolk (Steff Aquarone) and the hon. Member for Perth and Kinross-shire (Pete Wishart) have already drawn attention to John McTernan, who very helpfully allowed the mask to slip when, referring to farmers, he said that we should

“do to them what Margaret Thatcher did to the miners.”

He went on to say that farming was

“an industry we can do without… we don’t need small farmers.”

I hope that when the Minister winds up the debate, he will do us a service by distancing himself completely from those sentiments.

The Government’s estimate of in-scope farmers is either incompetent or tricksy and duplicitous. Setting aside Ministers’ apparent confusion over what constitutes an acre and what constitutes a hectare, we are of course indebted to the Central Association of Agricultural Valuers, which says that 75,000 farms over a single generation will be affected—five times the Government’s estimate. I think the Minister should reflect on that, because there is no shame in admitting that the Government and their officials have got this wrong. There is time to fix it, and there is time to look at such independent sources, to compare and contrast their data with the data that the Government’s officials have produced, and to tack accordingly. Were the Minister to do so—I appreciate the Treasury pressures that he is under—his stock among the farming community would rise substantially in these early few months of his tenure.

I have a helpful suggestion: the Government have picked the wrong target. I think that many Members of this House would be perfectly happy for this Government or any Government to target those who have, over years, used land to avoid inheritance tax, particularly institutional investors, hedge fund managers and oversea investors, who have artificially put up the price of land in this country, which forces new entrants out of the market and distorts it. That is a perfectly legitimate thing for any Government to do, but what this Government are doing is picking on small and medium-sized farms, many of which have been in families for generations. The Government are doing the productive sector of our land economy in this country a massive disservice and, frankly, are acting in a way that is unfair and unworthy.

I implore the Minister, who I know is a good man, to think again. He should talk to the Treasury, and turn his fire on individuals and institutions using land to avoid tax, which forces up land prices. Hands off our family farms!

Finance Bill

Andrew Murrison Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[James Murray]

I will come to the energy profits levy in a moment, but we have engaged with the oil and gas industry to ensure that we raise the money we need for the clean energy transition while supporting investment and jobs in that industry. We recognise that oil and gas will play a part in the energy mix for years to come, but we also recognise that the industry must contribute to this essential transition.

This Bill maintains the 25% cap on corporation tax that we set out in our manifesto. It also makes no changes to the permanent full expensing regime or the annual investment allowance.

Before turning to other measures in the Bill, I note that the Leader of the Opposition has already committed to reversing several of them. If Conservative Members disagree with the difficult but necessary choices that this Government have had to make to repair the public finances and protect working people, they have every right to oppose our plans, but they must explain what choices they would make instead. So far, their new leadership has fallen at the very first hurdle of being a credible Opposition by trying to have it both ways. [Interruption.] They make plenty of noise, but I do not hear any alternatives.

The Leader of the Opposition has said that she opposes the measures in this Bill, but she also claims to support the investment that those measures fund. She says that reintroducing the VAT tax break for private school fees would be the very first thing she does if she became Prime Minister, yet she also appears to support the extra £2.3 billion that our Budget puts into state education. In fact, we have calculated that she has made unfunded pledges worth £12 million for every hour since she was appointed. By my reckoning, that is £1 million-worth of pledges since I began speaking five minutes ago.

By behaving this way, the Conservatives simply remind people how very far away they are from being a credible Opposition, and they are getting further away by the day.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The then Leader of the Opposition, and now Prime Minister, rightly said that his Administration would go for growth. He made it his No. 1 priority, and he inherited the fastest-growing economy in the G7. [Interruption.] The Minister shakes his head, but this is a fact. Can he say what has happened to growth since 4 July?

[James Murray]

Every business knows that we can make investment decisions only on the basis of secure public finances and economic stability, which is why this Government’s first priority has been to wipe the slate clean of the mess we inherited from the Conservative party, to deliver economic stability and to provide the environment for businesses to make the investments on which we will grow the economy. That remains our No. 1 mission.

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[James Murray]

My hon. Friend is right to point out that the lack of funding that the previous Government put into the state sector has implications. It takes a toll on children if schools are not properly funded. If the capital budgets for schools are not properly funded, as well as their revenue budgets, that has an impact on children’s lives. That is why the funding that we are putting into schools is something for which I will make no apology. The fact that we are having to take difficult decisions to fund it is the nature of government. I note that Conservative Members are happy to support our investment in state schools, but they refuse to support the difficult decisions necessary to generate that funding. Frankly, that underscores how far away they are from even being a credible Opposition.

[Dr Murrison]

On that point, will the Minister give way?

[James Murray]

I have already given way to the right hon. Gentleman, so I will make some progress.

Within the policy, provision for pupils with special educational needs is an important matter that a several right hon. and hon. Members have raised with me. The Government recognise the importance of that too, and I am glad to confirm that where pupils have special educational needs that can only be met in private schools, as determined by an education, health and care plan in England or its equivalent in Scotland, Wales and Northern Ireland, local authorities and devolved Governments that fund those places will be compensated for the VAT they are charged on those pupils’ fees.

Fourthly, this Government are delivering on the manifesto commitments to increase the energy profits levy by three percentage points, from 35% to 38%, and to extend the period over which the levy applies by one year. The Government are also ending unjustifiably generous allowances by removing the levy’s core investment allowance, which was unique to oil and gas taxation and not available to any other sector of the economy. We are, however, providing stability within other features of the system, by maintaining the level of tax relief available for decarbonisation investment, by setting the rate of the allowance at 66% and by maintaining the availability of 100% first-year allowances.

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[Mel Stride]

It is not a binary decision like that. The hon. Gentleman is clever enough—[Interruption.] I am sorry, but I will not disrespect him by claiming that he truly believes that. Had the Government brought forward a Budget that would have grown the economy, as the Conservatives would have done, the Government would have more money. Had Labour grasped the nettle of welfare reform, as we did when we were in office, and we had very clear plans in our manifesto for a saving of £12 billion a year, the Government would not have to go around caning companies, beating up on pensioners and so on as an alternative. There are better ways of doing things, and we had a much better way.

[Dr Murrison]

Earlier this week, the Chancellor of the Exchequer said in her conversation with the Confederation of British Industry, which did not go terribly well, that her tax-raising days are over. Yet significantly, the Exchequer Secretary to the Treasury failed to reiterate that assertion. Does he believe her?

[Mel Stride]

My right hon. Friend raises an interesting point because the Chancellor did say at the CBI conference, when asked, that she would not raise taxes in the future, but this very afternoon, at the Dispatch Box, the Prime Minister appeared to resile from that. We now do not even have clarity on that vital point.

Surely the point is that the Chancellor is no economist, no matter how much puff one applies to try to disguise the fact. I thought I would take a leaf out of her book, even though that page was apparently written by somebody else. I can inform the House that I am an economist. Speaking as a former Governor of the Bank of England and president of the International Monetary Fund, and having run the World Bank and the World Trade Organisation at the same time—yes, for 10 years—I have as much experience as our Chancellor. That flight of fancy is, of course, all mine, but the inspiration came from the Government Benches.

This is a Finance Bill of broken promises and breathtaking incompetence—a Finance Bill that represents a present danger to the future of our economy. Was there ever a Bill more injurious to what we Conservatives love—to our pensioners, our farmers, our businesses, the poor, the vulnerable and, yes, working men and women right up and down our country? They say that astrologers are there to make economists look good. Well, they cannot make this lot look good. It is written in the stars—it is a story foretold—that unchecked, this Budget and this Finance Bill would take Britain down. That is why we will never tire of the trials of opposition, and why we will be the party that stands up for working men and women across our country, and fights this Government.

Financial Services: Mansion House Speech

Andrew Murrison Excerpts

Monday 18th November 2024 Commons Chamber

[Tulip Siddiq]

I know that my hon. Friend is an active member of the co-operative and mutuals movement. The Government have already taken the first step, with two statutory instruments laid on 14 October. We are committed to progressing the remaining changes to the Building Societies Act 1986 following Royal Assent of the Building Societies Act 1986 (Amendment) Act 2024. I will look at further SIs to try to further the work here, but I want to support the industry-led council, and I welcome the opportunity to work with it and discuss and test policy proposals with representatives and experts from across the sector. I know that view is shared across the Treasury, including by the Chancellor, who asked about it this morning in our ministerial meeting.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Investing in small pension funds is boring, because it is risk-averse, safe for beneficiaries and principally concentrated in this country. While investment in UK start-ups and tech through venture capital and other vehicles is to be warmly welcomed, if it happens, there is nevertheless a very real risk that funds will simply be invested overseas, and the Canada experience suggests that that may very well be the case. What assessment has the Treasury made of the extent to which the small pension funds that the Minister envisaged being amalgamated will simply have their capital and investments lodged overseas in the tech and start-up companies of other countries and deprive our own of the same?

[Tulip Siddiq]

We are looking at a diverse portfolio of assets, and the pension funds mentioned by the right hon. Gentleman have already pooled and are investing in the UK.

VAT: Independent Schools

Andrew Murrison Excerpts

Tuesday 8th October 2024 Commons Chamber

[Damian Hinds]

My hon. Friend is absolutely right. As things stand, those who get the continuity of education allowance would be hit, in part, by the tax.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

In the calculus that my right hon. Friend rightly asks the Government to publish, can we include the foreign receipts that the independent sector generates? The roll of a school in my constituency includes a very large number of children from overseas whose parents pay directly into the UK economy. That school is now under threat. The loss of that revenue will be substantial, and the local impact huge. May we have that factored in, given that, so far, we have not seen any figures on the loss of money and reputation that the closure of many such schools will entail?

[Damian Hinds]

My right hon. Friend is correct: substantial export earnings come from the sector, and from a globally mobile set of families. But I would go further; in addition to the direct export earnings effect, there is also an indirect effect. For companies deciding where to site their European headquarters, English education is a big factor. That is partly because of our brilliant state schools, which have improved so much over the past 14 years, but the availability of independent schools is also a factor.

Winter Fuel Payment

Andrew Murrison Excerpts

Tuesday 10th September 2024 Commons Chamber

[Mel Stride]

My right hon. Friend makes a powerful point. This is a very serious step that the Government are taking. Of all the steps that should be properly scrutinised, surely this is one of them. I remember when I was sitting on the other side of the Chamber, I could barely breathe without the cry going out that an impact assessment should be held. It is extraordinary that on such an important measure as this, affecting millions of the most vulnerable, the Labour party should be utterly silent on this issue.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Old people die in cold homes, and they die particularly if they are very old. Does my right hon. Friend think that if the Government are not minded to change their mind entirely, they might look at those aged over 80? Those people are in receipt of the higher rate of winter fuel payment, and paragraph 3 of the regulations points out that there is a difference between those over 80 and those under 80. That might be one way that the Government could make this slightly less worse than it otherwise is.

[Mel Stride]

I thank my right hon. Friend for his intervention. It has been suggested that the Government are examining ways of ameliorating some of the harshest effects of this policy, and that might be one of the things they consider. On that particular point, we cannot escape the fact that, whatever age people are, over two thirds of those who are currently pensioners below the poverty line will lose their winter fuel payments under the current arrangements.

Covid-19: Government Support for Business

Andrew Murrison Excerpts

Thursday 16th December 2021 Commons Chamber

[John Glen]

As I have said, the Government are meeting a dozen representatives from the sector this afternoon to assess the latest situation and see what more can be done.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I sympathise with my hon. Friend and good neighbour in having to deal with data that is changing extremely rapidly. We know from South Africa and southern Africa that things may be changing, perhaps for the better, but we cannot rely on that, so the cautious words of Ministers and officials and the measures that we passed earlier this week are absolutely appropriate. Does my hon. Friend agree that, at a time of change such as now, it is important that the House is convened to debate the issues and that we should seek an opportunity next week and the week after for us to meet again so that Ministers can update the House on the current situation and change what is required one way or the other, if that is necessary? The public expect that level of leadership.

[John Glen]

I thank my right hon. Friend and neighbour for his question. As I think he will appreciate from his time in government, some of those decisions come from those above me. It is critical that we are clear about what we are doing and why we are doing it, and the basis for the decisions that we are making.

Northern Ireland Protocol: EU Negotiations

Andrew Murrison Excerpts

Thursday 18th November 2021 Commons Chamber

[Michael Ellis]

We did not wait. This House was in recess and a written ministerial statement was tabled yesterday.

On the hon. Lady’s substantive points, of course people are concerned about the cost of living, but the Northern Ireland protocol has real-life consequences for the cost of living. Businesses know that using article 16, should we have to do so, would alleviate pressure on the movement of goods. It is a safeguard mechanism to improve an unsatisfactory situation; it is there not to cause disruption but to do the exact opposite. It is a mechanism agreed to by both parties to the withdrawal agreement, and it is an active part of an agreement with multiple articles—it is one article among multiple others. Article 16 is perfectly valid and available to use. However, we want a negotiated outcome. Our policy remains the same: acting within the law at all times, we are willing to use article 16 should we need to do so.

My noble Friend Lord Frost was in Northern Ireland on Tuesday and Wednesday of this week, and he met all sides. I am advised that he met representatives of the Social Democratic and Labour party, the Alliance party, the Democratic Unionist party, the Ulster Unionist party and Sinn Féin. He is, of course, keeping everyone fully informed, and he travels regularly to do so. The basis of our negotiations is contained in the July Command Paper, which this House has seen.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Will my right hon. and learned Friend reaffirm that the priority for Her Majesty’s Government remains upholding the Belfast agreement, even if the European Union appears to hold it so lightly? On the subject of bad faith, cited by the right hon. Member for Orkney and Shetland (Mr Carmichael), what does my right hon. and learned Friend make of the fact that 20% of the European Union’s checks still occur in relation to goods going from GB to NI, despite Northern Ireland having the equivalent of 0.5% of the European Union’s population? Does he agree that the bad faith the European Union is exercising in this matter makes it absolutely essential that we continue to keep under consideration the rescinding of articles 5, 7, 8 and 10, as outlined by the July Command Paper?

[Michael Ellis]

My right hon. Friend is a former Northern Ireland Minister, so he speaks with authority in this House. He is right that it is of paramount importance, as I am sure all sides would agree, that the Belfast agreement is respected and protected. That is certainly the motivation of Her Majesty’s Government.

It is right to say that the Northern Ireland Executive estimate that, from January to March, about 20% of all EU checks were conducted in respect of Northern Ireland, even though Northern Ireland’s population is just 0.5% of the EU’s as a whole. That speaks for itself.

Health and Social Care Levy Bill

Andrew Murrison Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[Jesse Norman]

My hon. Friend has successfully dragooned a topic that has nothing to do with national insurance contributions or the levy into the debate, but let me reassure him that the Treasury seeks to exercise a hawk-like vigilance over all public spending. I do not think it would be appropriate to think of the response to the pandemic of the past two years as characteristic of the Treasury’s overall largesse, and we look very closely at the spending on HS2, which is the specific responsibility of my right hon. Friend the Chief Secretary to the Treasury and one that I know he takes with great seriousness.

[Dr Murrison]

The fact that the social care levy will be introduced in 2023 and not 2022, and that in the interim we will have to rely on national insurance, suggests that creating it will involve quite a lot of work and expense. How much is it going to cost to introduce the levy, beyond national insurance? Based on that, we will need to make an assessment as to whether it is worth while putting the 1.25% levy on people who are past state retirement age. If it is costly, we should not do it and simply rely on national insurance contributions. Allied to that, how much does my right hon. Friend think the 1.25% levy is going to raise from people who are beyond state retirement age?

[Jesse Norman]

That was a series of questions. The payslips that people are given will be generated by their own companies in the large part, and it is therefore important to think not only about the changes that HMRC will have to make but about the changes to be made by companies in order to reflect the amendment to payslips. In the case of HMRC, the Government have clarified in a letter to the Treasury Committee that, although it is very early days, HMRC provisionally estimates the operational costs of implementing the levy at between £50 million and £60 million, which is not nothing but it is not substantial in the context of the overall amount to be raised. I think the final part of my right hon. Friend’s question related to the amount that would be attributed to the over-65s. One would expect that to be relatively modest, because the number of qualifying people will not be enormous and because they generally have a high propensity to manage their work-life balance, meaning that there might be a dynamic effect from the levy. I am not aware that we have put that number into the public domain, but if we have it, I will see if we can publish it, probably at a future fiscal event—at the Budget or thereafter.

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[Dr Murrison]

rose—

[The Second Deputy Chairman]

Order. Just before Dr Murrison makes a further intervention, can I ask the Minister please to face the microphone? Otherwise, Members will not be able to hear his responses; I have found it difficult to hear him.

[Jesse Norman]

I do apologise, Mr Evans.

[Dr Murrison]

Just to clarify my thinking on this matter, is that £50 million to £60 million a one-off or a recurring feature?

[Jesse Norman]

I think it is the set-up cost, although it may be incurred over more than one year. As I say, it is a very preliminary number that we have tried to get for the purposes of responding to the Treasury Committee’s inquiry.

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[Jesse Norman]

The Treasury already consults the devolved Administrations very closely on many aspects of tax policy and there is no reason to think, and the Bill does not suggest, that there should be any other reason for handling this. On the contrary, following an existing hypothecation gives direct support to devolved Administrations that they will be able to receive the Union dividend, which is generated and delivered by this policy.

Clause 2 creates a legally binding obligation to use the funds raised by this levy for the purposes of health and social care, and sets out that HMRC will direct funds to the Secretary of State to be used for the cost of health and social care in England, Wales, Scotland and Northern Ireland. The funds from the levy will be shared between healthcare and social care, and will be shared between each nation in a proportion determined by the Treasury. The Treasury has used the long-standing Barnett formula to fund devolved Administrations and will continue to do so for the proceeds of this measure. Clause 2 goes further and ensures that any interest or penalties that can be attributed to the levy will also be used to fund health and social care. However, any expenses incurred by HMRC in collecting the levy will be deducted from the proceeds, which ensures that HMRC has the ability to collect and police this levy properly. I therefore ask Members to allow clause 2 to stand part of the Bill.

[Dr Murrison]

On clause 2, in 2014 we passed the Care Act and accepted the Dilnot proposals; slightly less than two years later, we canned the central part of the Dilnot proposals, in that it was decided that local government should in fact have the social care uplift, which had been anticipated in 2014. What certainty do we have that the measures we are passing today will not be dealt with in a similar way if, in two or three years’ time, we find that the pressures on local government are so acute, which they may well be, that we have to can some of the measures we discussed earlier?

[Jesse Norman]

I thank my right hon. Friend for his question. I think the point is perfectly clear: this levy is intended to be and will be a long-term, permanent funding arrangement to support health and social care. The plan includes a component that is designed to support local government in the delivery of care services without distorting markets that are already in existence. There is no reason to think, and we do not anticipate, that there will be specific issues that cannot be addressed at the time. The commitment to provide a longer-term funding settlement that can be reviewed and considered by individuals when they pay their national insurance contributions, and to do so in a way that gives them comfort that that same settlement will be in place, in a way similar to the state pension system, so that they can plan against it, is manifest. The Government have made that clear.

Clause 3 specifies that any provisions that apply to a qualifying national insurance contribution are to apply to equivalent payments in respect of the health and social care levy. It also sets out the limitations of such provisions applying to the levy.

Clause 4 provides for regulations for the purposes of the health and social care levy to be made under the Bill and specifies the parliamentary procedure that will apply to those regulations.

Clause 5 sets out the transitional arrangements for the measure and specifies that they will apply only for the 2022-23 tax year. Its effect will be to increase temporarily the rates of classes 1, 1A, 1B and 4 NICs by 1.25% for one year. There will be a corresponding temporary increase in the amount of contributions allocated to the NHS by the same amount.

Clause 6 defines various terms used in the Bill. Clause 7 specifies the short title of the Act as the Health and Social Care Levy Act 2021 and states that the levy is payable by or in relation to employees of the Crown. I commend all those clauses to the House.

Let me turn to new clauses 1 and 2, tabled by the SNP, and clauses 3 to 5, tabled by Labour. These new clauses ask the Government to review and report on the impact of the revenue effects of the levy, its impact on business and its impact on equality. I wish to explain why they are unnecessary.

The Government have already provided a number of assessments of the levy’s impact, including a distributional analysis of the impact of the combined tax and spending announcements that shows that lower-income households will be large net beneficiaries from the package, with the poorest households gaining most as a proportion of income. It also shows that the 20% of highest-income households will contribute more than 40 times the contribution of the 20% of lowest-income households.

There is a further assessment in a technical annex in the Government’s plan for health and social care. It sets out the impact on the Exchequer, individuals and businesses and shows that 70% of the money raised from businesses will come from the largest 1% of businesses, while 40% of all businesses will pay nothing extra.

The tax information impact note is a third form of assessment. It sets out the equality impact of the levy specifically rather than of the overall package of measures.

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[James Murray]

I am going to make some progress now; I have given way to the hon. Gentleman already.

As I said, although new clause 8 has not been selected today, I hope that Government Back Benchers have seen it on the amendment paper and will perhaps raise the matter with their colleagues on the Front Bench.

I hope, however, that there will be a vote this evening on new clause 5, and I urge Government Members to join us in voting for this crucial review of how the Bill will make inequality worse. We know how widespread and deep rooted inequality has become in our country. The latest bulletin from the Office for National Statistics on household income inequality in the UK for the financial year ending 2020 confirms what we all know: the income gap between the richest in society and the rest of the population has widened over the last decade. A tax rise that singles out income from employment can only make this inequality worse, and new clause 5 seeks to expose this.

Not only does inequality manifest between people who may live in the same area, it also creates divides between different nations of a country and the regions within them. In areas where average wages are lower and fewer people get income from other assets, the impact of the national insurance rise and the levy will be more acutely felt. Recent analysis in the New Statesman suggested that within the regions of England, it is people in the north-west and the west midlands who will take the greatest hit to their disposable income as a result of the Bill.

Data from the Office for National Statistics’ wealth and assets survey shows that the south-east is home to well over 3 million adults living in families with net wealth per adult of more than £250,000. That is roughly six times the number in the north-east. A tax increase that ignores income from renting out properties and selling financial assets, and that seeks to fund a plan that ignores differences in house prices and care costs between different regions, is destined to make inequality worse.

[Dr Murrison]

We are getting more granularity in the proposals that Opposition Front Benchers have in their heads for funding the uplift, which I think we all agree is necessary for health and social care, but can I probe the hon. Gentleman to describe the nature of the landlords or property-based businesses he has in his crosshairs for the levy of the moneys that he has in mind? Does he mean, for example, the mom and pop organisation that has bought a small residential property because it has no public sector pension, for example, and is relying on that for income in old age, or does he have in mind a business like any other business that has large numbers of commercial properties? How much does he think he is going to raise from the alternative that he has suggested?

[James Murray]

I thank the right hon. Gentleman for his intervention, but I do feel that there is a broad consensus across this country that those with the broadest shoulders should make more of a contribution. It is quite clear from the reaction that people have had to the Government’s proposed increase in national insurance and new levy that this is falling on working people and jobs rather than taking other sources of income from wealth into account.

I have just spoken about the massive impact that this will have on inequality between different regions of the country. I therefore ask Conservative Members to guess how many times last Tuesday, when the Prime Minister announced his approach here in the House of Commons, he used the phrase “levelling up” in that 90 minute statement. It was zero. Last Wednesday, when the Financial Secretary had to take the rap here on this tax rise, how many times did he use the phrase “levelling up” in a six-hour debate? Zero. The truth is that we are a very long way from the levelling-up agenda that we hear, or at least used to hear, so much about.

Of course it is not just workers and the self-employed who will feel the direct impact of the Government’s tax rise in this Bill. This tax rise will hit businesses that want to create jobs too. That is why we have tabled new clause 4 to show the impact it will have on businesses, and on small and medium-sized businesses in particular. There will be no point in the Financial Secretary denying the impact of this measure on businesses creating jobs: it is set out starkly in the Government’s own tax information impact note that he approved last week and that we have referred to several times today. I set out earlier how this note admits that the Government’s approach will impact business decisions around wage bills and recruitment. It goes on to explain how this measure

“is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”

No wonder the Government have managed to unite business groups, workers and trade unions against their plans. At just the time when we need to see job growth, and when furlough is ending, the Government impose an extra flat cost on getting people into work. The Federation of Small Businesses has shown that this move could lead to 50,000 more people being left out of work. Yet again, small and medium-sized businesses least able to afford this tax rise will be hit hardest while online multinationals continue to dodge their tax on this Government’s watch.

The Government’s justification for much of the Bill is that they claim the levy will fix the crisis in social care. As we made clear on Second Reading, however, there is no plan to fix social care, nor even a mention of or reference to one, in this Bill. Fundamentally, despite all the rhetoric from the Prime Minister and the Chancellor, there is no guarantee that social care will benefit from the Government’s tax rise in any way at all. In the first year, the Bill explicitly rules out any money raised going toward social care. Beyond that, when the levy comes into force, it is entirely possible that not a single penny of any money raised will ever go towards the social care sector. I know that Treasury Ministers will deny that this is the case, so we ask them and Conservative Members to back our straightforward new clause 6. I note the Financial Secretary’s comment that the new clause would simply require the Chancellor to report transparently and straightforwardly on the share of the levy spent on social care each year so that we can all see what proportion of the money raised is going to the social care sector.

Finally, I turn to our new clause 7. Nothing could sum up the intrinsic unfairness at the heart of this Bill more than the case that this new clause points towards. The unfairness of the Government’s approach is impossible to ignore when we realise that this tax rise, raising money the Government claim will go towards social care, will not see those with the broadest shoulders paying their fair share but instead hit low-paid social care workers themselves. Our new clause asks the Government to be transparent and honest about this by requiring the Chancellor to report on how much revenue the levy raises from those working in the social care sector. This Government’s choices to raise national insurance, to cut universal credit and to freeze personal allowances mean that a social care worker will pay £1,108 more in tax a year. The Chancellor once clapped for key workers; now he is taxing key workers. This will hit working people hard, and we will not let voters forget it.

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[Mr Fysh]

I thank my hon. Friend for his intervention. The truth is that, yes, I have thought about that, and I must emphasise that I am thinking about this measure only in terms of social care costs and liabilities. We have heard how residential care living costs will be excluded from the funding produced by the levy. Pooled savings schemes or liability defrayal schemes could easily include such elements and make a really big difference. I am not talking about the costs of healthcare in the healthcare system.

There are ways in which the healthcare system could look at insuring itself against particular outcomes. Sometimes, unfortunate things happen in neonatology, for example, which have a long liability tail in younger people living with healthcare needs. Those are targeted things, but that is completely separate from the present need to get money into social care. That is what I am talking about, and such a scheme could get money into social care more quickly than the plan that we have heard to date.

[Dr Murrison]

I have been listening carefully to my hon. Friend and what he has said has a great deal of merit. Does he agree, however, that while the Government’s aim is to integrate health and social care, which arguably have been divorced one from the other since 1948, to the great detriment of the people we represent, the system he suggests might exacerbate that problem? That would be in contrast to the provisions of clause 2, which leave it up the Treasury to decide how moneys raised by the levy should be apportioned. Surely it is better that the Treasury can do that so that it can facilitate the integration of health and those elements of social care that relate to care as opposed to residential costs.

[Mr Fysh]

I do not think that the amendment would remove any of the Treasury’s discretion in clause 2; all it would do is specify that moneys raised could be used either in the current year or against future years’ costs. The Treasury would govern how such schemes worked and how to achieve that integration.

Since I was elected, I have been passionate about the integration of health and social care, and I anticipate that, through such an amendment, the Government could help to get money into the system to help it work well. I hope that the Government will reconsider their request for me to withdraw the amendment. I would love them to adopt it. It would be no skin off their nose to do so; the amendment would just give them a bit more flexibility in the Bill. I look forward to hearing my right hon. Friend the Minister’s response.

This is a probing amendment, and I cannot be confident that the Labour party will support it, perhaps because of their slight misunderstanding of its purpose, so this might not be the time to force the Government’s hand. However, it could be a useful evolution of the national insurance policy, given the direction in which the Government want to go on that.

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As I understand it, the purpose of the policy is to increase the middle category, allowing more people to have a mixture of state money and self-funding, and reducing the number in the entirely self-funding category. If that is the purpose of the policy, it is very important to be honest about how much protection it will actually give and how easy it is for people to work out what their personal liability will be, what the legitimate calls on their capital or income will be, and what the state will do that it is not currently doing. I do not think that I have that clarity yet. We need a much more detailed paper with working examples, so that we can see what the impact will be on individuals in our constituencies who may face that problem.

[Dr Murrison]

I am listening carefully to my right hon. Friend. Does he share my concern that there may be an element of gaming by the social care sector, in so far as hotel costs are clearly exempted? Our constituents who may be listening might not be fully aware of that. There is a real possibility and risk that the sector will seek to enhance and embellish those costs so that they become a bigger and bigger proportion of the total take. Does that not need to be made explicit? Does my right hon. Friend think that in the White Paper process that we are about to embark on, there would be merit in limiting that cost in some way to ensure that the potential market exploitation of the Bill’s proposals is avoided?

[John Redwood]

I was with my right hon. Friend until his last recommendation. He had pre-empted what I was going to say next: that we need greater clarity about the three different kinds of costs that an elderly person can face.

All of us in this House agree that we believe in a health service that is free at the point of need, so that any elderly person, like anyone else, has complete entitlement to completely free healthcare if they need GP or hospital treatment. That is not in dispute. However, as my right hon. Friend has just reminded the Committee, it looks as though these proposals also say that if an elderly person is living in a care home, the board and lodging, or the hotel costs or whatever we like to call it, are not part of that kind of treatment, so if the person has money, they will have to pay for those.

I find it difficult to say that we need to pre-empt the possibility of care homes wishing to charge a bit more for that hotel accommodation, because there could be good reasons for their needing to do so, and the law is a very clumsy instrument when it comes to intervening in thousands of decisions that individuals and businesses have to make about what is a fair price. I do not think that there should be absolute price control, because it might be a period when wage costs or food costs had gone up, which the care home needed to pass on—or the care home might be improving the quality of what it was offering, in which case it would be mutually beneficial, or at any rate perfectly reasonable, for it to pass on that cost.

[Dr Murrison]

My right hon. Friend is being very generous in giving way. May I just clarify my intent? It would be reasonable to have an indicative cost. After all, in the case of most of our constituents who are living in a residential set-up—we are talking, basically, about a bedsit—what is usually involved, in my experience, is fairly basic food and some heating. The cost of that is not enormous, and it is the sort of thing that we would be expected to fund in any event were we living in our own homes; probably rather more so. Would it not be reasonable to have an indicative amount that it is felt reasonable for homes to be charging people—particularly, I have to say, if they are being funded through local government?

[John Redwood]

I do not think that that is possible at all. Property costs vary to an incredible degree across the country. Levels of staff provision are different in different homes, the quality and level of service are different, and the needs of individual residents are different. Some are in relatively good health, and do not need to find the back-up or assistance that others require. What I want to see—and I think that we need to debate this more than we have so far—is better quality for everyone who needs end-of-life care or time in a nursing home. My right hon. Friend has suggested that some are quite basic, and I think we need to worry about that and work at it.

For me, the big care problem is whether it is adequate. I am not quite as worried about the family finances as I am about the experience of the elderly person and whether it is good enough, and, where the state is the sole funder or a substantial funder of the care, whether we are doing a good enough job in allowing a reasonable quality of care in terms of staffing numbers, training of staff and staff wages. When elderly relatives in my family have been in care, we have always wanted to make sure that the staff were well remunerated, rewarded and motivated, and had proper training, support and back-up from the care home, because I wanted them to be well looked after.

There is a much happier environment if the people working in the home are proud of it and have, for instance, a decent career structure. I therefore think that we need to be very careful about a cost-down or standard-cost approach. We need to understand the variety of life, but we also need to make sure that those who rely entirely on state support, or who may be becoming more reliant on it under the Government’s likely policy, will none the less look forward to a reasonable standard of care, and that the people who work with them and for them are treated well by employers who respect them and offer them a career structure, proper training, decent support and all those other good things.

In conclusion, I hope the Government will look again at some of these points to ensure that there is no muddle over the true costs of these services and the contribution that the tax will make, if they insist on it, because it will be quite a small contribution as a proportion of the whole. Will they also look at a big care issue that does not get enough attention in the Bill, which is the quality of the care? That leads immediately into the quality of the experience for the employees, their career structure and their ability to create good atmospheres in care homes that are of a high standard. Can we also have a bit more thought and more information on what this will mean for individuals going into care homes and their supporting families? I am afraid that I still do not have a clear explanation to offer my constituents as to what their experience would be under these proposals.

Health and Social Care Levy Bill

Andrew Murrison Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[James Murray]

My hon. Friend makes us think about what we have read recently about what the hon. Member for Yeovil (Mr Fysh) has been saying about a rebate from this tax for those who take out private insurance. Make no mistake, that is a slippery slope towards a two-tier healthcare system.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The hon. Gentleman has been speaking for some time, but he has not said what taxes he would raise. Why was it okay for Labour to raise national insurance to pay for healthcare in 2003, when there was not a pandemic and we did not have the scale of social care need that we have today? If it was right then, why is it not right now?

[James Murray]

The right hon. Gentleman speaks about a tax rise 20 years ago, following a decade of wage growth, and it came with a plan for how the money would be invested. In stark contrast, this Government’s tax rise hits working people after a decade of stagnating wages, after we have been hit by a global pandemic and after years during which where people get their money from has changed. Above all, the Conservatives’ tax rise comes with no promise that it will clear the NHS waiting list backlog in this Parliament and no promise that any money will be seen by the social care sector.

Despite all that has been said, there is no guarantee in the Bill that social care will benefit from the Government’s tax rise. In fact, the Bill explicitly rules out any money going towards social care in the first year, and there is nothing to guarantee that a single penny of this new levy will ever go into the social care sector.

The Association of Directors of Adult Social Services realises this, and it said on Monday that

“it is not clear that there is any new money for adult social care to help improve care and support from April 1st next year… It will not add a single minute of extra care and support, or improve the quality of life for older people, disabled people and unpaid carers.”

As the association rightly points out, this could leave councils with no option other than to raise council tax. Indeed, the Government have admitted that they expect councils to cover increasing need and rising costs. Despite £8 billion having been cut from local council care budgets by a decade of Conservative Government, there is no money for councils that need it now.

In truth, this levy does not set out to fix the crisis in social care. It seeks only to be a political fix for the Prime Minister. I suspect Conservative Members know that, and I suspect the Prime Minister is noticing that his attempt at a political fix is quickly becoming a political headache.

Although some Conservative Members may be worried about how to explain to their constituents that they have broken their manifesto promise and still failed to fix social care, others have a different agenda. The hon. Member for Yeovil, as I mentioned earlier, has been reported as saying that he wants people with private social care insurance to get a rebate from the new tax. As my right hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary has said, this looks very much like a “slippery slope” towards a two-tier healthcare system and privatisation.

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[Tim Farron (Westmorland and Lonsdale) (LD)]

I probably agreed with at least three quarters of what the hon. Member for Basildon and Billericay (Mr Baron) just said. One thing I did not agree with him on was his belief that the Government have grasped the nettle. I believe they have walked past the nettle, barely nodding at it, and the people who will be stung are the people still in social care, the people working in social care, and the people who will disproportionately pay for what the Government are proposing.

Conservative MPs and the Conservative press are concerned about the Prime Minister breaking his promise on taxation, but the promise he has most definitely broken is the one he made during the leadership contest in 2019, when he said he would

“fix the crisis in social care once and for all”.

He has done no such thing; that proposal is not before the House today. There was a promise not to raise taxes. If the Government chose to break that promise, I would be happy to provide them with cover for that. Labour may have dodged the issue, but I am clear that we should raise income tax so that this is paid for by people who have the wealth and ability to pay for it—not by national insurance, which often will disproportionately fall on younger working-age people. What do those people tend to have in common? They cannot afford a home, or at least a house that they own. What will we be asking them to do? To fund those who have a home to have the right to leave it to those who come after them.

Nobody should be forced to sell their home to pay for care. Just a few weeks ago, I was talking to a friend of mine who sadly has cancer. This was a terrible thing to say, but he said, “I feared cancer and I feared dementia, but I’ve got the least bad of the two.” He is living with cancer now. The reality is that, for many reasons, his care is paid for, but for those like my father-in-law, my grandfather and others who suffer from dementia, that care is not provided for. So it is right to have radical reform of social care, but this is not it. It is right that all the parties should get together to ensure we have a common approach to this, but this proposal has been dreamt up and issued as a press release—it is not the reform of social care we need.

This reform of social care does nothing to tackle the 120,000 care assistant vacancies in our country, or to give social care staff the pay and esteem they deserve. One reason there is a crisis is that wonderful people can earn more money stacking shelves than they can caring for our loved ones, of whatever age. This plan will do nothing to give local authorities the money they need to backfill the terrible backlog and black holes that the Government have left them. Again, they are taking unpaid carers for granted and—the hon. Member for Arundel and South Downs (Andrew Griffith) rightly mentioned this earlier—not addressing the needs of those in care who are not of retirement age but significantly younger. This is a massive missed opportunity that will be paid for by people who have the least.

In my community in Cumbria, we are about 10 years above the national average age. We have a smaller working-age population and a disproportionately large population in need of care. We have colossal staffing shortages as things are. This measure does nothing to meet the needs of the people in my community, because it does nothing to invest in the quality and standard of the care that they will receive.

[Dr Murrison]

I am loth to give the hon. Gentleman an extra minute, but I must ask him how much he would put on income tax. I know that his party was famously keen on putting a penny on income tax, but he has just made a whole load of spending commitments—particularly raising incomes for care staff. I assume he has costed that. If so, will he say how many pennies on income tax he proposes to burden our constituents with?

[Tim Farron]

We would need to raise income tax to do what the hon. Gentleman’s Government say they need to do in the short term to get through, and then we would have a ring-fenced, bespoke tax that would deal with social care. If people had lived to the age they do now when Lord Beveridge, the fine Liberal who came up with the welfare state and the NHS in the first place, wrote his plan, there is no doubt that social care would have been part of that package, and we would be paying more tax now as a consequence. I say we should be doing what we were doing around Dilnot a few years ago, when we were moving in the right direction, sworking often across the House, and coming up with a package that we would pay for. In the short term, though, we would immediately raise a tax that is affordable and fair and does not just clobber those people on low wages and people of working age. That is the right thing to do.

That is why this measure is not just the wrong way of going about this but a colossal missed opportunity. We were promised something like the Beveridge report, and we ended up with something written on the back of a fag packet. We need something that means people will look back on this generation the way people still do on the generation of politicians post war who built the welfare state in the first place.

[Craig Mackinlay (South Thanet) (Con)]

In common with my hon. Friend the Member for Basildon and Billericay (Mr Baron), I am wondering—I think many of us are—why we are here today. We have a fiscal event, the autumn Budget, in just six weeks’ time, which would seem to be the right forum to discuss these matters. One cannot help but wonder: why the haste.

We had the Dilnot commission report in July 2011, 10 years ago. Arguably, even then, that was 10 years too late. It was intended to solve the inherent unfairness between two people who were on similar incomes throughout their lives, one who rented and one who bought their home, whereby one lost everything and one got everything for free. That is at the heart of these issues and of affordability in the longer term. I get that, and the Government have to be applauded for finally thinking about these things, but haste is not due at this time.

I am sad that we are just reaching for the tax lever. That is not what Conservatives do. We are going to end up with a tax take at the highest level of GDP for 70 years. Since we are raising NICs—particularly employer’s NICs—it stands to reason that any employer with a pot that they were thinking about using to increase general salaries across their workforce will reduce that pot by 1.25%.

Let us concentrate on NICs. On our first day back at school last Monday, we debated the National Insurance Contributions Bill, which exempts from NICs veterans and potentially new freeport businesses. We have employer’s NIC relief for the under-21s and for those under 25 on apprenticeships. We have an employment allowance to exempt employers from national insurance. That was at £3,000 for all small employers, and it has now increased to £4,000, because exempting employers from national insurance is deemed to be a good thing.

I say to those on the Treasury Bench: please help me. We tend to tax things that are deemed to be bad. We tax things such as alcohol, cigarettes and fuel because we want lower use of them. They are deemed to be bad. Increasing a tax on jobs, something we want a lot of, seems rather bizarre.

I serve on the Public Accounts Committee, and just last week we did an investigation into the Department for Work and Pensions. Last year alone, there was £8.3 billion of fraud and error in its payments out. Obviously, the pandemic had something to do with that, but there is an in-built annual loss of £5.5 billion through fraud and error. That is something approaching half of what we are looking for here to solve these problems.

As Conservatives, we grasp difficult problems. We grasp and understand the problem of an ageing demographic in our populations. On pensions, we did something novel. We could have just reached for the tax lever, but we did not. We introduced auto enrolment pensions, where the employer and the employee contribute and every employee in the land earning above a certain amount has a pot that they can call their own, with the flexibility that that has. To me, that is the type of thinking we should be doing now. I am very concerned that we will just sink another load of tax into the Department of Health and Social Care and hope for a different outcome, when we have been throwing money into these Departments for many years, yet our waiting lists are at the highest ever.

Her Majesty’s loyal Opposition have been howling, “Let’s have wealth taxes.” Well, I am very pleased to tell them that, yes, we have a very substantial wealth tax in play and it is called inheritance tax. It has doubled since 2011, from £2.7 billion to £5.4 billion today, and that will be going in one direction, given asset value inflations and the fiscal drag within the IHT system.

[Dr Murrison]

Of course, we have also had a wealth tax in the form of the removal of indexation allowance on capital gains tax for some years now, which is very substantial over time.

[Craig Mackinlay]

I am very grateful to my right hon. Friend for highlighting some of the fiscal drags that have been beneficial to the Treasury. In terms of asset price inflation, which has nothing to do with the activities of the taxpayer, other factors of low interest rates are involved. There are big windfalls coming towards the Treasury, in terms of IHT and capital taxes, which were never really forecast and are now bearing some substantial fruit. So I would have hoped that the Treasury Bench might have thought, “Where are those taxes going? Where are the other losses within the system across different Departments? Are there procurement gains? Are we really saying that the way the NHS is run today is the best way of running it?” I would have hoped that that could have formed the new pot to solve our social care problem.

I am very concerned that this is going to be wasted cash. I am very unimpressed and I will not be supporting the Government tonight.

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[Dr Andrew Murrison (South West Wiltshire) (Con)]

I will certainly be supporting the Government in the Lobby this evening, and the reason is this: in 1948, we instituted a system of socialised medicine, which has the support of all major political parties in this country, for all medical conditions save just a few. They tend to be things such as dementia, the general frailty of old age and associated conditions such as Parkinson’s. Nobody in this place has any cause to hector or lecture on these subjects unless they have had personal caring experience for somebody with that spectrum of conditions, because I can tell them that it alters your perspective dramatically on what is needed to improve services for an increasing proportion of our population. It is no good Opposition Members professing their support for our model of socialised medicine while excepting the growing burden of ill health that tends to attend advanced years. That is chiefly what lies at the heart of this measure today.

If we are all agreed that it is invidious to except dementia and the frailty of old age from the provision that we have celebrated since 1948, we have to find an equitable way of paying for it, and that implies the use of a broad tax base. It is not clear to me from anything that has been said this afternoon that anyone other than those on the Government Front Bench has a clue as to how that alternative balance sheet would stack up. Despite interventions that I have made, I am none the wiser about what their alternative would be. Nobody enjoys taxation. As a Conservative, I loathe putting my hand in other people’s pockets, but there is a general expectation, after the pandemic, that money will have to be raised from somewhere. The only question that I would concede is when should we do that?

I would like to put one or two points to the Minister, having given him my support. We are fundamentally changing the health and social care system by providing this increase in funds and an alternative way of paying for health and social care through a hypothecated levy. It is likely that the social care industry will respond, as all businesses will. I am ever so slightly worried that things like hotel costs will be ramped up, as they are not covered by this, to the disadvantage of our constituents, and that costs will be frontloaded to about, say, £86,000.

I hope that Ministers, in their White Paper and subsequently, will insist on some way of limiting and moderating such frontloading; otherwise I fear that many of the advantages we want for our constituents and their families in this situation will be eroded. We need an indicative sum on, for example, hotel costs. Please do not assume that all within this sector are acting for pure and altruistic reasons. They are businesses and will respond as all businesses do.

I support the levy, as it is the right thing to do. No alternative has been put forward that is remotely credible, and I will strongly support the Government this evening.