Health and Social Care Levy Bill

Baroness Kramer Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I am the first of the winding speakers. I have listened to many debates in this House, but it is very rare to hear speech after speech of the quality that we have had today. Frankly, it makes it even more galling that the other place dealt with this Bill so quickly, when there was so much that needed to be said and changed. It is galling that we cannot in any way directly impact the shape of the Bill, other than by hoping that we have persuaded the Government to reconsider an issue here or there, but that is the world in which we function. At least we can make sure that we are heard. I hope the Government will read today’s speeches because they have been quite extraordinary.

I come from a party that has been talking about a hypothecated tax to increase the funding of health and social care for years. We always assumed that that would be based essentially on income tax, as the broadest-based tax and the most progressive of the taxes available. Lots of other ideas have come from the Floor today, including a much more regular re-rating of property. There are many ideas to consider, but the essential principle that the increased funding for the NHS and social care should be funded by a very broadly based, progressive tax is to me fundamental and sensible.

One of the reasons we as a party have gone in the direction of a hypothecated tax is to keep the Treasury’s sticky fingers off the additional money. It will be important to hear an answer from the Minister on the question that the noble Lord, Lord Eatwell, raised about how long this levy will be hypothecated. We need some assurance and a fuller understanding of that issue.

When I first heard that the Government were going to consider a levy, never in my wildest dreams did I consider that it would be put on national insurance. It would be hard to find a more unsuitable basis for raising this kind of funding. Many people have made the fundamental point that the threshold for paying national insurance is much lower than that for income tax, so this falls on the poorest in our society. The levy has a rate step-down for people earning higher incomes and of course it does not touch unearned income. We understand that there will be some sort of dividend tax but, as others have said, unearned income, whether on property, pensions or savings, is not captured. The Government talk constantly about levelling up, but they plan to put a tax on those with the lowest incomes, while excluding the sources of income of many of those with the highest incomes. How on earth does this contribute to levelling up?

It is normal for us to see a distributional analysis—this was raised by the noble Lord, Lord Eatwell, and others—to show where the costs fall. I would be very interested to see an analysis which separates out where the costs and the benefits fall. That information will be critical. As many have pointed out, those who will be able to benefit from the cap will be some of the biggest winners in all this, rather than people who are currently struggling because the social care on offer to them is completely inadequate and needs to be better funded. We need that distributional analysis, broken out in an appropriate way.

Context matters when we consider increasing something such as national insurance. Context always matters. The context in this case is a rapidly rising cost of living. I read today that inflation is now anticipated to reach 6% by the spring and to fall back only to about 3% for the remaining decade. That will be an incredible hit for individuals, and much of that inflation will be embedded in essentials such as food and energy. Bitterest of all for almost everybody on low incomes is the £20-a-week cut in universal credit, coming as part of this overall package. It is described by the Resolution Foundation as a “toxic” combination, and that is perhaps the most accurate phrase.

If we look back at the work done by the House of Commons Library just to give people a sense of exactly how that works, we see that a typical NHS worker is on something like £19,330 a year, and many such workers rely on universal credit. They are about to see their income fall by almost £80 a month at this time of rising prices. That is despite the 3% pay increase that they have been awarded, because the increase in national insurance and the cut in universal credit are dwarfing the pay increase. The Government must have known that when they agreed to the 3% pay increase, and frankly, it makes me absolutely furious that we did not have full honesty, transparency and openness at that time.

I have a particular question to ask the Minister because I would like some clarity on this. The Government intend to reimburse government departments for the increase in national insurance contributions for those whom they employ directly. But many departments, and far more especially local government, contract out services, and indeed, the Conservative Government have pressured them to keep contracting out services for a long period. What happens when that increase in national insurance hits the cost of outsourced services? Will the Government pick up that added bill? As many others have said, we now see local authorities considering a 5% increase in council tax just to cover the underfunded cost of social care, and I do not think that includes the additional impact of the national insurance contribution on the cost of outsourced services. We absolutely have to get some sense of an answer.

We all know—we have heard again today from speaker after speaker—that this levy is far from adequate to solve the problem, not just of social care but even of the NHS, especially with its post-Covid backlog. Social care is again pushed into the Cinderella role. We know also that over the next three years, of the £36 billion raised, it is anticipated that at best only £5.4 billion will go to social care. That is a drop in the ocean in many ways, particularly listening to the numbers that the noble Lord, Lord Forsyth, quoted on the need for an £8 billion-a-year increase; others updated those figures to something closer to between £9 billion and £14 billion. Like many others, I am absolutely convinced that we will not see the NHS claim this money just for a short two or three-year period. When I talk to people in the NHS, they are very clear that they will need to claim the lion’s share of all that money for more than a decade to be able to bring the National Health Service to the level that will enable it to deal with its current and anticipated burdens.

Demographics are moving against us as well. Many people talked about the fact that half of those using social care presently are adults with various forms of disability. They will be moving into old age. The demographics mean that we will see an ever-increasing social care burden, so we need a comprehensive plan, as many said—a proper framework to be able to deliver social care. I would love to know what is in that famous White Paper which was apparently in the Prime Minister’s back pocket, but we have not even seen that at this time. I also agree with so many of those who say that when you look at this package, it is clear that not only does it not fund the social care reforms that we need to deal with the desperate staffing shortages—now well over 120,000 people—but those who think that their costs will be covered will find that they are not covered for “hotel costs”. May I say what an appalling term that is? These are costs of living, not costs of luxury holidays. They are not hotel costs in the sense that anybody would ever anticipate. In addition, that the cap will be tied to costs defined by local authorities’ assessment of cost rather than the real cost puts us in an absolutely extraordinary situation.

I know that I should finish very quickly. From all the voices that I have heard today, I have taken that there is a huge amount of common ground across parties, Benches and ideologies. We are not all absolutely in agreement on every single point. However, it is clear that it is possible to pull all parties together and establish an underlying policy and principle that everyone can sign up to and that then guarantees that both the schemes and the funding do not become political footballs in ensuing elections. It also means that we can have in place the kind of long-term planning that is fundamental to the answers that we are searching for. Could the Minister take back or even give us confirmation today that he will be genuinely pulling together all the various voices to both establish the framework and think through the funding? We all completely admired the statement made by the noble Lord, Lord Forsyth of Drumlean, right at the beginning. We are being asked in the Bill to pay a bill but have no idea what on earth is on the menu and what services will be provided. If we do not do this on an all-party basis, we will be doing something that, frankly, has very little future.

--- Later in debate ---

[Lord Agnew of Oulton (Con)]

Yes, sorry. I lost my thread. There will be no changes to existing procedures.

Noble Lords asked about support for unpaid carers. Of course, they play a vital role in the care system. I suspect that there is hardly anyone here in the Chamber who has not been involved in the care of their parents at the end of their lives on an unpaid basis. I certainly had to—but luckily I am one of seven siblings and we all live in the same county. None the less, it is a considerable burden.

The Care Act encourages local authorities to support unpaid carers and to provide preventive care to stop people’s early care needs escalating. A new cap on care costs will offer greater certainty to unpaid carers and support informed decision-making and planning for the overall costs of care.

The Government will take steps to ensure that the 5.4 million unpaid carers have the support, advice and respite they need, fulfilling the goals of the Care Act. We will work with the sector, including unpaid carers, to co-develop more detail in our plans and will publish further detail in the White Paper for reform later this year—and on the matter of the White Paper, I say to noble Lords that it is not long now. It is only a couple of months; it has been promised before the end of the year, and I am perhaps a little more optimistic than some Members of the House.

[Baroness Kramer (LD)]

Before the Minister leaves this area of exploration, does he have an answer to my question on whether the Government will pick up the costs of the additional national insurance to be paid by those to whom local government outsources services? I believe it is a yes or no answer.

[Lord Agnew of Oulton (Con)]

I cannot give the noble Baroness a clear answer on that now. More detail will be available in the Budget and the spending review. If it does not transpire in those documents in the next couple of weeks, the noble Baroness can write to me and I will investigate further.

On the adult social care workforce, our investment is at least £500 million across the three years to deliver new qualifications, progression pathways and mental health support. This workforce package is unprecedented investment: it is something like a fivefold increase in public spending on skills and training for this sector.

The noble Lord, Lord Griffiths, asked about vaccines for NHS staff. He is correct that at the moment there is no requirement for NHS staff to be vaccinated. However, we have a consultation under way to try to find the best way through on that sensitive issue.

I have probably answered the noble Baroness, Lady Kramer, as much as I can on the compensating of NICs. Just to confirm, I say that the Government will compensate public sector bodies such as the NHS for the increased cost of employer NICs. If they did not, they would simply reduce the amount available. The Chancellor will set out more details in his spending review.

My noble friend Lord Bethell asked about NHSX funding. We remain absolutely committed to all aspects of technological improvement. Again, I am more optimistic over the long term because I believe we will find new ways of treating this sector more efficiently, and NHSX will play a part in that.

My noble friend Lord Naseby made a point about the structure of GPs’ surgeries. We will have to see some dramatic changes in that area. In my view, we cannot sustain surgeries in which five-sixths of the doctors are working only part-time, but again I think this will throw up opportunities. The two sectors will have to work much more closely together—