The Growth Plan

Clive Betts Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

I would be very interested in having a conversation with my hon. Friend about that, and I refer him to my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities, who is engaged in these conversations as we speak.

[Mr Clive Betts (Sheffield South East) (Lab)]

So after 12 years of failure, the answer, apparently, is first to blame workers and their trade unions, and then to blame the planning system—the system for which the Government have been responsible for the past 12 years. On the new investment zones, which sound rather similar to the failed enterprise zones of the 1980s, will the Chancellor explain what planning requirements will be abolished? Will that include the abolition of the requirement to build affordable homes for those who cannot afford to buy? Has he done a detailed cost-benefit analysis of the proposals, and if so, will he put that assessment in the Library by the end of today?

[Kwasi Kwarteng]

As I said, the core principle of the investment zones is consent; they will not be imposed on people. Actually, there have been successes with the enterprise zones—I look at places such as Canary Wharf—and I think that the investment zones will also be successful and we will look back fondly.

Oral Answers to Questions

Clive Betts Excerpts

Tuesday 28th June 2022 Commons Chamber

[Lucy Frazer]

The Government recognise that accounting for VAT can be a burden on small businesses. That is why we maintain the highest VAT registration threshold in the OECD and as compared with EU member states. At spring Budget 2021, to give businesses certainty, it was announced that the VAT threshold would be maintained at its current level until March 2024. Although there are no plans to change the VAT threshold at this time, we keep all taxes under constant review.

[Mr Clive Betts (Sheffield South East) (Lab)]

Last year, at the spending review, the Government announced that after years of austerity there would be a small real-terms increase in local authorities’ spending power—but that was when inflation was around 2% to 3%. Has the Chancellor seen the recent assessment from the Local Government Association showing that, with inflation at a somewhat higher level now, it will cost local councils £2.4 billion extra this year? What steps will he and the Levelling Up Secretary take to have talks with the Local Government Association about extra help for local authorities so that we do not get another round of austerity imposed on our constituents?

[Mr Simon Clarke]

Of course, we invested £1.6 billion in local authorities in each year of the spending review precisely to help them with all the responsibilities that they must discharge. I would say to all Departments and devolved Administrations that, if we are to live within the spending review, it is vital that they make responsible choices about how to deliver services at best value to the taxpayer. We cannot be in a situation where we chase after inflationary pressures as that will only worsen and prolong the crisis that we face.

Economy Update

Clive Betts Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

I am grateful to my right hon. Friend for his question. He and I have talked about inflation for quite a while. He will know that I have long been concerned about the potential of rising inflation and interest rates. It is something that he and I discussed very early in my time in this job. That is why, from the beginning, I have been careful to protect our public finances against the costs of rising inflation and interest rates. I am glad that we took those decisions. Now, because of that, we are in a position to act and to support people.

[Mr Clive Betts (Sheffield South East) (Lab)]

I have a specific question about the household support fund. The Chancellor says—I think he is saying this—that, wherever people live, if they are in the same circumstances, they will get the same help from this fund. In other words, local authorities will have no control over how much money is spent from the fund. Will he therefore guarantee that councils will get pound for pound from the Government every pound they have to spend for the people who need it?

National Insurance Contributions (Increase of Thresholds) Bill

Clive Betts Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[Mr Clarke]

The hon. Gentleman is a fantastic contributor to this place and he takes a keen interest in looking after people, including the most vulnerable people, in his constituency. I absolutely recognise that we want to make sure that families right across the income spectrum are supported. That is why, as I say, we have put in place a package of measures that has at its heart a desire to make sure that we have a strong safety net in place. We have to consider all the decisions we take in the round. To put it in some context, the United Kingdom spends £243 billion a year on our wider welfare spend, including pensions. This is a country where we do a huge amount to make sure that everyone is supported. We have to consider all our decisions in the context of both wider affordability and how the system operates. The welfare system always operates on the basis of an uprating in September for changes in the ensuing April. If there is high inflation during the course of 2022, as is forecast, that will be reflected in the uprating figures for April 2023, and the triple lock will be in place to protect families.

[Mr Clive Betts (Sheffield South East) (Lab)]

The Minister has talked about one side of the budget. The other side of the budget is spending. Local authorities provide incredibly important services that are of particular benefit to the poorest in society. Local authorities have suffered more than any other part of the public sector from the austerity period. The Government claimed that local authorities would get an increase in their spending power this year, but will he now confirm that, with the predicted level of inflation, they face a significant real-terms cut to their spending that will affect all the services that they provide?

[Mr Clarke]

As a former local government Minister, I hope the hon. Gentleman knows that I do value the impact that good local government can have on people’s lives, which is why we apportioned £4.8 billion extra at last autumn’s spending review to support local authorities in delivering vital services. It is of course the case that all the budgets that we announced at the spending review are affected by inflation, but the Chancellor is rightly clear that we cannot keep on simply mechanically adjusting the spending review decisions in the light of inflation, because that option would not be affordable within our headroom and would obviously not be open to family budgets either.

All Departments—national and local—will have to play their full part in managing the impact of inflation. There is much that can be done in this space through improved innovation and driving down costs. That is why a new Cabinet committee has been established in the last week that will squarely address how we can drive efficiency, including, for example, by doubling NHS efficiency targets so that we can deliver better value for money for the taxpayer. These are difficult times, but we have to ensure that we live within our means.

Financial Statement

Clive Betts Excerpts

Wednesday 23rd March 2022 Commons Chamber

[Rishi Sunak]

I thank my right hon. Friend for his support; I know that this is an area of particular interest and concern for him. The 2.4% comprises two things: what the Government spend and what private businesses spend. I can reassure him that we are more than on track for the Government bit of it: we already spend the OECD average on the 2.4%, and that spending will go up by 50% over this Parliament, so the Government are doing our bit. As I said in my statement and in the Mais lecture, the private sector lags significantly internationally in how much it spends.

The changes that we are making to R&D will all come into effect in the spring next year and will be announced finally in the autumn Budget. My right hon. Friend wrote the foreword to a very helpful report on this topic. I look forward to working with him, with his Committee—the Select Committee on Science and Technology—and with others so that we get these changes right and drive up private sector investment in R&D.

[Mr Clive Betts (Sheffield South East) (Lab)]

May I draw attention to two stories in the Sheffield Star today? Sheffield is still a city of steel. Ben McIvor, president of Forged Solutions Group, which employs 400 skilled workers in the steel industry, is begging for help with the rise in energy costs, because the company simply cannot pass on those costs to its customers. Workers at Liberty Steel are protesting about the Prime Minister’s broken promise that if we left the EU, he would cut energy bills for steel companies. Why has the Chancellor chosen to break the Prime Minister’s promise?

[Rishi Sunak]

No, we have provided over £2 billion-worth of support for energy-intensive industries over the past several years—including, I believe, over £600 million for the steel industry. That support comes in a variety of ways, including free allowances and compensation for the emissions trading scheme and other carbon price mechanisms. We also announced hundreds of millions of pounds in the spending review to support the industry to make the transition to using cleaner energy.

National Insurance Contributions Increase

Clive Betts Excerpts

Tuesday 8th March 2022 Commons Chamber

[Rachel Reeves]

The hon. Gentleman speaks powerfully on behalf of his constituents, who are struggling with the double whammy of prices increasing, particularly gas and electricity bills, at the same time as this Government are piling on pressure after pressure with higher taxes on the same people who are paying those higher bills. He is absolutely right that people can only take so much, and the national insurance contribution tax hike is, as he says, potentially the straw that breaks the camel’s back.

Politics is about priorities, and it is about choices. So who has the Chancellor chosen to protect—not to tax more? Those who earn huge incomes from a large portfolio of buy-to-let properties or those making large sums from selling stocks and shares will not pay a penny more tax on that income. The super-rich will not be paying more. Roman Abramovich and billionaire oligarchs are not being made to pay more tax. In fact, some of those trying to relinquish their assets now appear to be using offshore vehicles to avoid paying tax. Lubov Chernukhin, wife of Putin’s former finance Minister, and mega-donor to the Tory party, has reportedly lobbied Ministers against higher taxes for the wealthy. As luck would have it, she will not be paying any more tax, unlike people across Britain who work for a living and keep our economy going.

[Mr Clive Betts (Sheffield South East) (Lab)]

My hon. Friend has mentioned not taxing buy-to-let landlords who have a number of properties. I do not think she is aware that the permanent secretary for the Department for Levelling Up, Housing and Communities came to the Select Committee yesterday and confirmed that, where properties are let with council tax and rents being paid in the same bill, the council tax rebate of £150 will go not to the tenant, but the landlord. If the landlord owns multiple properties, as long as they are not owned by a corporate entity, they will get multiple amounts of £150. Some of the landlords are going to be extremely well off, and tenants will have to go and apply to the discretionary fund to get any help at all.

[Rachel Reeves]

I thank my hon. Friend for bringing that to the House’s attention. It is exactly why Labour said that the warm home discount should be expanded to ensure that the money goes to the people who need it, not the landlords.

At the same time as the Government are asking hard-working British people to pay more in tax, they are writing off billions of pounds in fraud. Ordinary people are paying for this Government’s waste. The Chancellor repeatedly ignored warnings about the holes in his covid business support schemes, resulting in £4.3 billion of public money being written off. That does not even include the amounts lost to bounce back loan fraud, including taxpayer cash handed out to drug dealers and organised criminals. That fraud currently stands at £4.7 billion, so that is £9 billion and counting handed to fraudsters. Then there is the colossal Government waste during the pandemic, with £8.7 billion lost on unusable personal protective equipment, all paid for by the taxpayer. Billions has been spent on crony contracts that have not delivered, and every single cheque has been signed by the Chancellor.

--- Later in debate ---

[Dr Caroline Johnson]

Will the Minister give way?

[Mr Betts]

Will the Minister give way?

[Mr Clarke]

I will take one more intervention and then I will make some progress.

--- Later in debate ---

[Mr Clarke]

I heard a lot of warm and fairly vague phrases, but I did not hear a concerted plan, and that of course goes to the heart of this question. The hon. Member for Leeds West said in her speech that the voters are smart and savvy, and I agree with her, but they know an Opposition playing politics when they see it.

The £12 billion average annual investment, which is of course a recurring investment—that is the crucial point—to meet a recurring need, will tackle the elective NHS backlog, while ensuring that the health service has the resources it needs over the coming years. It will strengthen our adult social care system, allowing us to invest at least £500 million to give our army of extraordinary social care workers new skills, and it will enable the Government to roll out the long-awaited reforms to funding for families through a cap on adult social care costs.

This is a transformative policy that will tackle serious and long-standing issues, but to fund such a significant increase in permanent spending we have had to make the tough but responsible choice to increase taxes. Only a broad-based tax such as income tax, VAT or national insurance can raise the sums needed for such significant investment. Using NICs as the base has several advantages. First, it means the levy will be paid for by employers, employees and the self-employed, including, from April next year, by workers over state pension age.

Secondly, this is a progressive way to raise funds because those who earn more will pay more: the top 15% of taxpayers will pay half the revenue. A basic rate taxpayer will pay about £3.49 per week, while 6.2 million—6.2 million—of the lowest earners will be exempt entirely from the levy and most small businesses will not be affected at all.

[Mr Betts]

Will the Minister give way now?

[Mr Clarke]

I will give way.

[Mr Betts]

The Minister talks about health and social care, but will he confirm that there is not a single penny in this extra funding to enable local authorities to cover their social care costs in their budget, which they are struggling with, or to improve the level of the social care they are offering? This crisis has now been going on for years and years, and the Government have promised to fix it. Given that this is a permanent increase in funding, will he also confirm that we are not going to see a tax cut in the next couple of years, just before the election—up today, down tomorrow?

[Mr Clarke]

On the hon. Gentleman’s point about our support for local authorities, we are giving £1.6 billion extra in each year of the spending review we announced in October to support local authorities with the challenges they face. Of course, the levy will fund £5.4 billion of investment in social care over the next three years, so it is a serious response to a serious challenge.

To return to the advantages of the way we have structured the levy, the third design advantage that stands out is that we have also announced an equivalent increase in dividend tax rates. There is therefore fairness across the spectrum in how this is being paid for.

I know there are some who ask why we need to raise tax at all, and instead say that we should borrow to fund permanent increases in spending. Throughout this speech I have outlined all that the Government have done to protect people’s finances as we recover from the pandemic and deal with the rising cost of living, and those actions mean our economy has made a strong recovery from covid-19. Our GDP has rebounded, and over the past months job vacancies have hit record highs, while the unemployment rate has fallen sharply. However, it is easy to forget that all those steps come at a huge cost. Covid casts a long shadow across our economy. Indeed, our debt is at its highest since the early 1960s. As I have reminded the House on many occasions, that high level of borrowing leaves us susceptible to shocks, including changes in interest rates and inflation.

--- Later in debate ---

[Jerome Mayhew (Broadland) (Con)]

When we discuss whether we should have the national insurance contribution rise, we ought to look at what we intend to use the money for, because, after all, as my hon. Friend the Member for Gloucester (Richard Graham) mentioned, it is a hypothecated tax. The Government are looking to address two crucial elements to improve to our society, which are the covid backlog—currently more than 6 million people are waiting for treatment, of whom 310,000 are waiting for more than a year—and adult social care, where there is a desire widely held by constituents of hon. Members across the House to cap care costs. Such reforms would assist 150,000 people with their care costs at their time of greatest need. There is a degree of consensus that they are good proposals and must happen—we need to spend the money—so the real question is not whether we spend the money but how we pay for them.

[Mr Betts]

The hon. Member mentioned the 150,000 people who will benefit from the cap on care costs, and they are disproportionately people in more expensive homes. Where in that funding is the help for the 1.5 million people that Age Concern has assessed should be entitled to social care but have now been excluded from the provisions?

[Jerome Mayhew]

The hon. Member made a number of interventions on the Minister, and I refer him to the full responses that were given.

The question that I take from that is: how we will pay for the proposals? It seems to me that there can be only three answers. We can take money from other priorities in Government, we can borrow, or we can increase taxation. So far, I have heard no suggestions of other areas of Government spending that should be reduced. The Opposition typically move to defence spending as a simple way of extracting money for other commitments, but that is unlikely to be an area of future reductions in today’s environment; in fact, I submit that it will be the opposite.

--- Later in debate ---

[Mr Clive Betts (Sheffield South East) (Lab)]

The idea of trying to raise a specific allocated funding source for social care came from a report in 2018 jointly done by then Housing, Communities and Local Government Committee—it has changed his name so many times, I have to think what it was called at the time—and the Health and Social Care Committee. We raised the idea of a national insurance increase but we were very specific about the caveats. We said that no one under 40 should pay it, because young people have been disproportionately hit by the impact of the banking crisis, the austerity measures and then covid. That is exactly the same way the Japanese raise their funding for social care. We said that the threshold at which people start paying national insurance should be higher, which this proposal does not do, and that the ceiling should be raised, which I think the Government now accept should be done. We also said that people on a high private pension should pay, but there is no proposal from the Government for that.

The Government are saying that when the levy comes in formally next year, people of pensionable age who are working will pay, but for this next year, 2022-23, those of pensionable age will not pay anything at all for the national insurance rise, which seems particularly strange as the money that will be spent will disproportionately help older people. We also said that people who are getting unearned income should pay. The self-employed pay national insurance based on their profits but not on a whole range of self-employed income, which would be a very different tax—a very different premium indeed. The changes to the cap will disproportionately benefit people in the most expensive homes, who will pay less of their asset when they die than people with lower value homes. We said that, rather than deal with this convoluted arrangement with the cap, everyone above a certain threshold of home value should pay a percentage of that asset towards the social care premium on their death. That again would be a much fairer way to raise money.

What we have here is a regressive form of taxation. I accept that people at the lower end—the people at the very bottom—on a £10,000 income will not pay, but beyond that, the hit to family incomes is going to be much greater for a family earning £30,000 than for a family earning £130,000. And at the end of the day, this does not deliver more money for social care. It should not be called a social care premium. It delivers the money through the disproportionate raising of the cap, which I have explained. It does not give any extra money for councils to fund the gap in social care funding, which has grown wider over the last 10 years. As social care funding has gone up and council budgets have shrunk, the amount for other services has shrunk with cuts of up to 50%—the National Audit Office has done an excellent report on this—whether it be planning services, environmental services, bus services, libraries or road repairs. We are looking for a funding stream that will stop that happening. There is no more money for local authorities to provide social care to the 1.5 million people that Age UK believes would have been entitled to social care 15 years ago and do not get it now.

At the same time, we will see a disproportionate rise in national insurance premiums hitting some of the poorest families hardest. What else will the Government do to fund local councils? They will make sure that councils have to put up council tax by around 3%. Council tax is a disproportionately unfair tax for poorer families. Look at the relationship between the value of homes and the amount of council tax people pay. The Resolution Foundation did a very interesting analysis five years ago showing that the level of council tax paid by those at the top end was 3.3 times higher than those at the bottom end, but the value of homes was, on average, 6.8 times higher at the top end, and that gap has grown larger as the value of houses has grown over the years and there has not been a council tax revaluation since 1991.

We have a double whammy. On top of the increases in food and fuel prices, which are disproportionately hitting poorer families, we have a disproportionate national insurance rise and disproportionate council tax increases, too. The Government should stand back and consider how we fund social care properly and fairly on a long-term basis, while at the same time addressing the problems of unfairness in council tax through revaluation and reconsidering the bands so that people in lower-value homes do not pay a disproportionate amount of council tax compared with people in higher-value properties. That would be fair. Let us see some fairness from the Government in addressing our future funding needs. They should not continue with the national insurance rise and the council tax increase this year, as they disproportionately hit the poorest families hardest.

Economic Update

Clive Betts Excerpts

Thursday 3rd February 2022 Commons Chamber

[Rishi Sunak]

I can confirm that the Welsh Administration will receive £175 million or so in Barnett consequentials, which will enable them to provide a similar discount. The Chief Secretary to the Treasury will speak to the Welsh Government later and will very much make the point that we would like to see that happen, to the benefit of all my right hon. Friend’s constituents and people throughout Wales.

[Mr Clive Betts (Sheffield South East) (Lab)]

On the council tax rebate, some of the poorest families do not pay significant amounts of council tax because they are on council tax support schemes. Even if their council tax bills are less than £150 a year, will they still get the full £150? Will their local authority pay that to them in cash in April? On the £150 million discretionary fund, will it truly be at the discretion of councils to decide how they spend it, or will the Government direct how it is spent?

[Rishi Sunak]

The hon. Gentleman is, of course, well informed on these issues. Our intention is that those people will benefit from the £150, which is why we are providing the discretionary fund. It has been sized with a sense of who those people are and how many they are. We will of course provide some guidance to local authorities on whom we would expect the support to go to, but ultimately they will be able to make those decisions for themselves.

Covid-19: Government Support for Business

Clive Betts Excerpts

Thursday 16th December 2021 Commons Chamber

[John Glen]

I thank my hon. Friend for his question. He is absolutely right to draw the House’s attention to the wider impact across related businesses, which is why Ministers will this afternoon meet a range of representatives, to ensure that the full understanding of the Government is grasped.

[Mr Clive Betts (Sheffield South East) (Lab)]

I simply say to the Minister that unless he acts today to help hospitality businesses they will not be there next year to be helped—that is the simple reality. People choosing not to go to hospitality events, following guidance not to go to the office, is having a big impact on the revenues of public transport operators—bus, coach and Supertram operators in Sheffield. Will he have urgent conversations with the Transport Secretary about extra help for those operators—already we have seen massive cuts to services—and give the money to the transport authorities so that it can be best spent in the interests of passengers?

[John Glen]

Of course discussions will take place across government. The hon. Gentleman draws attention to the transport sector, where of course significant support has been given. However, I take on board his point.

Climate Goals: Wellbeing Economy

Clive Betts Excerpts

Tuesday 30th November 2021 Westminster Hall

[Mr Clive Betts (in the Chair)]

I remind hon. Members of the guidance from the Commission and the Government about wearing face masks when they are not speaking, giving space to other Members and staff, and testing twice weekly with lateral flow tests, either on the estate or at home.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I beg to move,

That this House has considered a wellbeing economy approach to meeting climate goals.

It is a pleasure to serve under your chairing, Mr Betts. I am grateful for the opportunity to debate why the Government should embrace a wellbeing economy if they are serious about meeting their climate goals. Beyond the climate emergency, there are many other reasons to move beyond our current extractive, exploitative and growth-addicted economic system: tackling inequality, stopping the destruction of the natural world and preventing future pandemics, to name just three.

Crucially, the discussions in and around the COP26 summit remind us that those issues cannot be separated and siloed. If we keep decimating the natural world, we will not meet climate goals. If we do not put equality and justice at the heart of climate action, we will not make the shift to a greener and fairer economy. Pandemics, meanwhile, in the words of some of the world’s leading scientists, are

“a direct consequence of human activity—particularly our global financial and economic systems, based on a limited paradigm that prizes economic growth at any cost.”

Many colleagues will be well versed in why GDP growth has always been a terrible measure of a nation’s economic progress—I will not go into the detail now. However, it cannot be overestimated how critical shifting from growth to wellbeing is from a social and equity perspective. As a report by leading economists for the OECD finds, patterns of economic growth have generated significant harm over recent decades. That includes rising inequality, not just catastrophic environmental degradation—which itself hits the most vulnerable the hardest.

I want to focus on the climate imperative of transforming our economic system, and on the wellbeing economy as a specific, practical and positive alternative to economics as usual. I will start by mentioning a recent parliamentary petition that called on the Government to shift to a wellbeing economy and put the health of people and planet first. It has been linked to this debate on today’s Order Paper; I want to thank the many thousands of people who supported that petition. It was started by a young Brighton constituent, Skylar Sharples, and it begins like this:

“We urgently need the Government to prioritise the health and wellbeing of people and planet, by pursuing a Wellbeing Economy approach. To deliver a sustainable and equitable recovery, the Treasury should target social and environmental goals, rather than fixating on short-term profit and growth…Two thirds of the public want the Treasury to put wellbeing above growth. Scotland and Wales are already part of the Wellbeing Economy Governments alliance. As host of the COP26 climate summit, the UK Government should build and champion a Wellbeing Economy—at home and globally.”

That petition did tremendously well to get almost 70,000 signatures. Even though it was not enough to secure a debate via the Petitions Committee, I am very grateful that through the ballot process we were able to hold today’s debate.

In turning to the climate imperative for switching from growth to wellbeing as the purpose of our economy, I will start with the science. If we take the global climate goal of reaching net zero by 2050—leaving aside the injustice and inadequacy of that as the UK’s goal—economic growth is still the elephant in the room. During that same 30-year period, between now and 2050, the global economy is set to nearly triple in size. That means three times more production and consumption than we already have each year. It is enough of a challenge to decarbonise an economy the size of the current one in such a short time span; it will be virtually impossible to do it three times over. If we carry on with growth as usual, then halving emissions by 2030 would require that rich countries like the UK decarbonise their economies at a rate of more than 12% per year. That is more than five times faster than the historic rate of decarbonisation, and about three times faster than what scientists project is possible, even under highly optimistic conditions. The most “successful” rich countries are decarbonising at only around 3.4% a year; the performance of average rich countries is much worse. The gap is huge, and however heroic one’s assumptions are about the potential for decoupling growth from carbon emissions—an argument that I am sure we will hear from the Minister—there is no evidence that there can be absolute decoupling in anything like a fast enough timeframe.

The bottom line is that the GDP figures that we are using to measure economic success are also measuring the rate at which we are barrelling towards climate catastrophe. It is little wonder that the voices around us are saying that we need to end our addiction to GDP growth to tackle the climate emergency. Those voices—from climate scientists and environmentalists to economists, health professionals and business leaders—are becoming louder. I want to give two examples.

There was a recent joint report from the Intergovern-mental Panel on Climate Change and the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services—an intergovernmental body that assesses biodiversity. The report calls for

“a profound collective shift of individual and shared values concerning nature—such as moving away from the conception of economic progress based solely on GDP growth, to one that balances human development with multiple values of nature for a good quality of life, while not overshooting biophysical and social limits.”

That is pretty clear, and it is coming from the world’s most respected scientists.

To take one example from the business world, former Unilever CEO, Paul Polman, recently wrote about the World Economic Forum’s 2021 global risks report, in which four of the top five risks to our economies are coming from the environment—including climate change and biodiversity loss. He said that

“the estimated $300 billion annual cost of natural disasters caused by ecosystem disruption and climate change”

highlights

“the risks of unbridled economic growth. Thinking beyond GDP and short-term profit is therefore essential in order to restore our relationship with the planet and transform our system into a viable one.”

So, wellbeing within planetary limits, not infinite GDP growth, is the new economic goal we urgently need. If the boss of a massive multinational can get that, I have to ask why can’t Treasury, especially when its own Dasgupta review of “The Economics of Biodiversity” made the case so well, too. It reads,

“GDP does not account for the depreciation of assets, including the natural environment. As our primary measure of economic success, it therefore encourages us to pursue unsustainable economic growth and development.”

The Dasgupta review also calls for an

“urgent and transformative change in how we think, act and measure economic success to protect and enhance our prosperity and the natural world”.

Yet the Treasury response to that key recommendation does little more than refer to a review of GDP that was done six years ago. That is not “urgent and transformative change”.

I hope the Minister can convince us today that the Treasury is not as cavalier and complacent as it would appear. Will she confirm that the Government accept the need to adopt new measures of economic success beyond GDP to give climate, nature and collective wellbeing the priority they deserve? What work is taking place on that? It will not be good enough to say that the Office for National Statistics has developed natural capital and wellbeing indicators, because those indicators are not just out of date; they are clearly not being used in policy making, least of all inside the Treasury where GDP growth reigns supreme. It is a bit like claiming that you have adopted a healthy diet because you have some flaccid carrots in the fridge but meanwhile you are chomping down on a box of Mars bars. It does not wash.

Similarly, the inquiry by the Environmental Audit Committee, of which I am a member, into biodiversity and ecosystems concluded:

“Alternatives to GDP urgently need to be adopted as more appropriate ways to measure economic success, appraise investment projects and identify sustainable development.”

So will the Minister today accept that cross-party recommendation and set out a timeline for progress?

The wellbeing economy is not just a brilliant idea; it is already being implemented in the UK and around the world. At local, national and international level—beyond Westminster—the green shoots of a new economic paradigm fit for the age of climate emergency are already emerging. In the short time that I have, it is impossible to mention more than a fraction of the researchers, campaigners, practitioners and others who make up the movement for a new economy, designed to serve people and planet—from community wealth building to the Doughnut Economics Action Lab.

The wellbeing economy is one example. It is being taken forward by the Wellbeing Economy Governments partnership, a collaboration of, so far, five national and regional Governments. In Finland, the world’s youngest Prime Minister, Sanna Marin, heads up a Government who are outspoken on the principle that,

“Economic growth is never an end in itself and well-being is not just an item of expenditure for public finances”.

In Iceland, indicators for wellbeing guide Government decision making. Scotland has a national performance framework centred around wellbeing, and with Greens now in government we can expect even more leadership on the post-growth wellbeing economy. Wales has the first ever Well-being of Future Generations (Wales) Act, a version of which many of us have been championing in this House as well, and New Zealand is home to the world’s first ever wellbeing budget and a Finance Ministry that uses a living standards framework to shape all economic policy making.

Those nations are working together to share expertise and advance a shared ambition to build wellbeing economies. Will the UK join them? If the Minister cannot quite commit to that, will she at least commit to carrying out a major review of what the Wellbeing Economy Governments partnership is doing, and the benefits of the Treasury taking a similar approach, ideally in time for the next Budget to be the UK’s first wellbeing Budget? As a first step, the UK’s first wellbeing Budget could swap the focus on GDP and change it for GDWe, or gross domestic wellbeing, as developed by Carnegie UK. No one is saying that untangling our growth addiction is simple, but we can no longer delay. As the economist Kate Raworth puts it, we need to create

“economies that make us thrive, whether or not they grow”

rather than having economies that grow whether or not they make us thrive.

Drawing to a conclusion, I want to quickly share some views from members of the public on the topic of today’s debate. They were gathered via a survey over the weekend, thanks to the parliamentary digital engagement service. It has had more than 1,000 submissions and shows how severely our current economy is failing on the basics. Hazel, for example, wrote about what a wellbeing economy could prioritise. She suggests:

“Ensuring everyone’s basic needs are met, including any additional needs resulting from disability. Such needs include access to healthy food, safe, warm homes, and access to health care (both physical and mental). Nobody in the developed world should need to rely on food banks.”

Natalie wrote:

“Aiming for constant financial growth cannot be sustained on a planet of finite resources…The health and well-being of our shared planet and all beings who reside here should be our priority. The way and extent to which we care for it and for each other should be key. Wastefulness should be seen as the loss that it truly is. Ecology and economics should not be at odds; the words both derive from the concept of looking after our home.”

The responses are another sign that, far from delivering on the famous “people’s priorities,” as the Government like to say, the Treasury is completely ignoring them by sticking to an outdated and dangerous fixation on economic growth. It is time for global Britain to become a global leader, fit for the age of climate emergency, rather than a laggard in a shift to a wellbeing economy. For the sake of climate justice today and for the lives of future generations, I look forward to the Minister’s response and to working with Members across the House to prove that another economy is not just possible; it is on its way.

[Several hon. Members rose—]

[Mr Clive Betts (in the Chair)]

There are six Members still to speak, so Members have around three minutes.

[Kirsty Blackman (Aberdeen North) (SNP)]

I am delighted to be called to speak first after the hon. Member for Brighton, Pavilion (Caroline Lucas), who I thank for securing this debate on the most important issue. I genuinely cannot imagine two more important priorities for an independent Scotland than ensuring that we have action on climate change and that we put wellbeing at the front of everything we do.

We are lucky in Scotland that we are already on this road. We have begun to make the changes that are required to move away from focusing entirely on economic growth and toward looking at the wellbeing of our population. When we are looking at budgets, such as the national performance framework, as was mentioned, our decisions are looked at through a lens. Do they improve wellbeing? Do they reduce our negative impact on the planet? I think it is wonderful that we do that.

There are also good things happening in schools. Bairns throughout Scotland are aware of their rights under the UN convention on the rights of a child. It is taught throughout Scottish schools. I can speak to kids as young as five and ask them about their rights. It is important for people’s wellbeing that they are aware of their rights and are able to fight for the rights that they deserve. It is important that they are able to make their voices heard. The only way we are going to get to wellbeing is to ensure that everybody is empowered to get those rights.

There is absolutely no point in focusing on economic growth for economic growth’s sake. The UK economy has been growing, but inequality is still stretching. We have still seen an increase in inequality. People who are on the bottom of the pile continue to be on the bottom of the pile. We are not improving societal wellbeing if we are not ensuring that decisions benefit everybody, rather than those currently at the top of the pile. For all our constituents, we need to ensure not just growth, but fair growth. We must focus on reducing inequality—and focus on everything that the hon. Member for Brighton, Pavilion said—and on making sure that decisions, particularly budgetary decisions, are taken with the wellbeing of people in mind, not simply growing the money of this country’s richest people.

[Mr Clive Betts (in the Chair)]

The guideline is that Members have around four minutes.

--- Later in debate ---

[Claire Hanna]

The hon. Member is absolutely right. We have proven that the theories he outlines, which are supposed to be in place, have not worked, and that our economy has not worked. The kind of model that he suggests, which allows people to flourish, is desirable and achievable.

As with addressing climate breakdown, we know what has to be done; we just have to decide to do it. While it is tempting and valid to protest and rage against the machine on this, it is very encouraging to see some of the practical initiatives that people are taking across their constituencies and in other regions. I pay tribute to groups such as the Carryduff Regeneration Forum, the Conservation Volunteers, Open Ormeau, Repair Café Belfast and many others in my own corner of the world who are showing what is possible when people try to slow down, clean up and build cohesion, and what is possible through care, education and creativity.

Northern Ireland is among the most nature-depleted regions in the world. Currently, we have no binding environmental targets, no environmental protection agency and no coherent plan to address that. We do not even have any certainty that the Assembly will stay up long enough to pass the Climate Bill that the Green party, my own party and others are bringing through at the moment.

Members have outlined some of the many solutions that are in place and some of the Bills that are currently working through that can help us achieve environmental and generational justice, because the impacts on future generations are very real. We need to be real about the possibilities and limitations of green growth and rescue technologies. As the hon. Member for Norwich South (Clive Lewis) outlined, some of these have been demonstrated to not necessarily have the solution to all our problems.

We need to embrace lower labour productivity at times, and accept that long hours and low-reward jobs, where people are working just to stand still economically and consume, are not good for them or for the planet. We also need to encourage reporting of non-GDP measurements. The ONS records these, but we do not use them and they do not get reported in the media, and we know that, unfortunately, what gets reported, gets done.

Members have rightly referenced initiatives in New Zealand, Scotland and Wales, and I look forward to hearing from the Minister how the UK Government as a whole intends to step up in this regard.

[Mr Clive Betts (in the Chair)]

We are going to start the winding-up speeches at 5.36 pm.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful to the hon. Member for Brighton, Pavilion (Caroline Lucas) for this hour to reflect on a different economic model—an hour that should pivot the wanton greed of state to one of restoring the scars of its heritage.

Leaving Glasgow with our planet heating at a dangerous rate and the failure to slam the brakes on climate destruction, the Government were given a year to reset. COP27 will be their reckoning. Right now, the global south is paying for the exploits of the global north, and this generation is paying for centuries of colonialisation, industrialisation and exploitation, as people and planet were exploited, minerals, crops and humanity were exploited, and carbon and hope were burnt. In this generation, it is our duty to restore. We have no choice.

Kate Raworth’s work on doughnut economics shows us a path out. York Central development, at the heart of my constituency, could be the first doughnut development, where we see the planned luxury apartments becoming sustainable housing that meets need. We could see that site being car free, wellbeing communities being built and a carbon negative future with our green new deal.

As I set out in my Adjournment debate last week, York is seeking to lead. Our green new deal, BioYorkshire, will create 4,000 green-collar jobs and upskill 25,000 people as it takes 2.8 million tonnes of carbon out of our atmosphere and repurposes 1.2 million tonnes of landfill. With research and development of new precision-farming agricultural practices, it is the point where international development will meet international trade. While partners from the University of York, Askham Bryan College and Fera Science have reached out into the region, it is my hope that this green new deal will reach out across the globe, such is the power of its science.

It is this project that will put pride back into my community—one that to this very day celebrates the Rowntree legacy of integrating good business with good employment and social practices. In parallel, York has developed the good business charter. I hope that the Minister is aware of the charter, supported by the CBI and TUC, as it sets out 10 principles, including a real living wage, employee wellbeing, environmental responsibility and ethical sourcing, resetting the terms for business, the economy and workers. Different parts of the economy should not be able to choose whether or not they opt into those initiatives. We need a comprehensive refocus. Labour in Wales was the first in the world to introduce a wellbeing Act—the Well-being of Future Generations (Wales) Act 2015—and the rest of the UK must now follow. Instead, this Government’s mantra seems to be, “Always need to take, not restore”, and that must be reversed.

Just imagine if those principles had been embedded in our approach to the covid-19 vaccine. We would not be debating omicron today. Given that the west has hoarded and destroyed global vaccine supplies—and taken at least three vaccines for each of us—the vaccine rate in developing countries is just 3%. For the sake of profit for big pharma, this Government are prepared to sacrifice the global south. However, in this interconnected world, we too will fall prey to a virus that does not play by the rules. That is why we need to change the rules that govern us. It may not be omicron that calls us short—it may be the pyro or sigma variants.

This is about moving from a mindset of economic nationalism to one of responsible internationalism. The Government were sent to Glasgow to keep the idea of 1.5° alive, but it is now in critical care. Everything must be injected into rehabilitating our economy. The cost of not doing so will be fatal.

[Mr Clive Betts (in the Chair)]

I thank hon. Members for keeping to time in this debate. We can now move on to the Front Benchers. First, I call Patrick Grady for the Scottish National party, who has five minutes.

[Patrick Grady (Glasgow North) (SNP)]

Thank you, Mr Betts, for calling me to speak, and I apologise to the Chamber that I was a couple of minutes late for this debate and so missed the opening remarks of the hon. Member for Brighton, Pavilion (Caroline Lucas). I warmly congratulate her on securing this debate and on setting out the substance so clearly, which has been echoed by all the Members who have been able to speak in the time available.

It is disappointing that there were no speeches from Government Back-Benchers, because—and I will say a bit more about this at the end of my remarks—this is not an ideological debate. This is about how we frame, or reframe, the debate. Very few people, and I believe that includes most Government Members, come into politics wanting to impoverish people or increase inequalities. The debate is really about how we get there and achieve a better society, which I hope is an aim that we all share.

One of the key points about the wellbeing economy and reframing the debate is how we measure what matters. My hon. Friend the Member for Stirling (Alyn Smith) said that and it was also echoed by the First Minister of Scotland when she gave a TED talk on this very subject back in 2019. Measuring what matters will help us to reframe the debate and reset the things that we are trying to achieve by the policies that we all want to put forward.

That is particularly important in the context of the conference of the parties and meeting climate goals, as the title of the debate suggests, because at the end of the day the costs of climate change will have to be paid for. It is a bit like covid-19: we are going to have to pay for climate change. We can either pay for it now by taking action to mitigate the damage that has already been done and adapting to the damage that is coming down the line, or we can pay for it later, once our cities are under water and there is even greater human displacement because parts of the world become unliveable.

We have been speaking in this debate today about future generations. I cannot recommend highly enough “The Ministry for the Future”, a book by Kim Stanley Robinson, which deals with an awful lot of those challenges. We also face not an ageing population per se but a longer-lived population and the risk that brings of increasing inequalities. That has to be tackled, and reframing the debate through a wellbeing approach is one of the most effective ways in which we can do that.

The hon. Member for Salford and Eccles (Rebecca Long Bailey) spoke about my constituent, Dr Katherine Trebeck, who really is a leading thinker on this matter. She talks about cornerstone indicators of how we can measure progress in society. The number of girls who ride a bike to school should be, and can be, a measure of achievement in society. It sums up the many things that have to go right—all those different things that lead to young girls being able to cycle to school, whether in this country or in sub-Saharan African—and it brings many benefits. That would be a demonstration—a real indicator —that we were using our wealth, knowledge and resources effectively, and that we were meeting the goals that will bring about a better society.

Scotland is buying into this. We can go further. We have heard about the relationship that has been established with the Greens, which I warmly welcome. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) talked about what Scotland could achieve if we were an independent country and had all the powers at our hands. Nevertheless, the national performance framework has been in place since 2007. There are 81 different national indicators that reflect the values and aspirations of the people of Scotland. They are aligned with the sustainable development goals of the United Nations and are there to help to track progress in reducing inequality. Scotland was a founding member of the Wellbeing Economy Governments partnership, which was founded in 2018 and continues to grow. It met during COP26 precisely to progress those goals.

That is why I emphasise to the Government that this is not ideological per se: it is a challenge to both the traditional left and the traditional right. If we agree that the aim is to reduce inequality, to improve wellbeing and to meet climate goals, we can have a debate about how best to do that. Perhaps there is an argument for the free market, for the leveraging of capital, for innovation and entrepreneurship; perhaps there is a greater role for the state and the investment of public money, goods and resources. That is the clash of ideas, but this is changing the goal that we are heading for, because infinite growth on a finite planet simply is not possible.

I encourage the Government to take this on and to look at what other ambitious countries around the world and their own devolved institutions are doing. If they are not prepared to do that or to follow along with the devolved institutions, we will see continued divergence, and that will only help the cause of Members such as myself in the Scottish National party, and those who want to see further devolution and ultimately independence. The Government must get into a 21st-century mindset, and that means leaving 19th and 20th-century ideas of unlimited growth as the only measure of success far behind.

[Mr Clive Betts (in the Chair)]

For the Opposition, I call Pat McFadden, and again he has five minutes.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Thank you for your chairmanship today, Mr Betts. I begin by congratulating the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and thank all the hon. Members who have taken part over the past hour or so.

The debate on the relationship between wellbeing and the traditional economic growth measure of GDP has been going on for a long time. We welcome an emphasis on wellbeing and on not measuring everything purely by traditional economic statistics. As we have heard, there are deficiencies in GDP. For example, it tells us nothing about equality or the level of social inclusion in a society. That is what it does not include, but it does include things we might not want to include, such as measures of waste or of throwaway goods that are bad for our environment.

As a material measure of output, GDP is certainly not the same as general happiness. That is why in my party, for example, my hon. Friend the Member for Wirral South (Alison McGovern) has argued that the Office for National Statistics should measure health and happiness through a healthy living index. We have heard about what the Welsh Labour Government are doing, putting wellbeing at the heart of their thinking.

As we transition to a cleaner and greener economy, we will want to take into account other things, most obviously the sources of our energy and how renewable they are. We will want to ask different questions—not just, “What did you produce?” but, “How did you produce that?” All that will have to be a greater part of our economic thinking. We do, after all, have only one planet, and we have a duty to cherish and preserve it for future generations.

This debate also forces a discussion on not only the costs of acting, but the costs of not acting. The Office for Budget Responsibility report earlier this year was very clear on that point. If we delay taking the necessary action on the transition to net zero, it will not make the costs disappear. Instead, it will increase them in the longer run, adding to our debt and our deficit, and loading further costs on the taxpayer. That is why Labour announced at our recent conference a commitment to investing in this transition year on year for a decade.

That commitment will help to ensure that the homes we live in are heated in a sustainable way. In so doing, it will create many jobs, reduce people’s heating bills and make a material contribution to the wellbeing we have heard about today. We will also want to invest in the charging infrastructure for low-carbon transport, and many of the other changes we need. That is what we want to do.

Let us not be entirely dismissive of GDP and the importance of economic growth. For the past decade, we have had, as it were, a real-world experiment in what it is like to live through low growth. We have high taxes now because economic growth has been low. That anaemic growth over the past decade means that we are a less prosperous country than we would have been had we had higher growth rates—for example, the kind of growth rates that we had in the first decade of this century. That has borne down on real incomes and on public services and their capacity to improve wellbeing.

Low economic growth over the past decade has adversely impacted on the quality of life in places such as Wolverhampton, which I represent, the Black Country and many other parts of the country. It has left the public square impoverished and degraded. In arguing for a broader view, we should not make the mistake of thinking that low growth or no growth is a good thing. The experience of low growth over the past decade suggests that that is very much not the case. I am all for a broader definition, I am all for greener growth, but I also want to see prosperity in every part of the country.

[Mr Clive Betts (in the Chair)]

Minister, you have 10 minutes, which will leave a couple of minutes for the mover of the motion to wind up at the end.

Health and Social Care Levy

Clive Betts Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Jesse Norman]

The hon. Lady will be aware that, because of the employment allowance, the bottom 40% of businesses will pay nothing and the next 40% will pay an average of £450. So this does not fall heavily on the bottom end of businesses, and of course it comes in a context in which the Government have provided over £400 billion of support to business and to the nation as a whole in the course of fighting the pandemic. In that sense it is, and it has been recognised to be by reputable independent commentators, a broad-based approach.

From April 2023, once HMRC systems have been updated, a formal legal surcharge of 1.25% will replace the temporary increase in NICs rates, which will return to their previous level. Again, this revenue will be ring-fenced in law for health and for social care only. As the Chancellor stated yesterday, this levy is no stealth tax. That is why the exact amount that each employee pays will also be visible as a separate line on their payslip. Finally, the levy will be administered by HMRC, and collected by the current reporting and collection procedures for NICs—pay-as-you-earn and income tax self-assessment.

[Mr Clive Betts (Sheffield South East) (Lab)]

I want to ask the Minister: how much money is actually going to get to local authorities to deliver social care at the frontline? Can I refer him to paragraph 36 of the Government’s document, which we got yesterday? It says that £5.4 billion in adult social care will be provided from this levy, but that will be spent on the reforms that are in the document. It also says that all the other pressures on social care that local authorities have now, demographic and otherwise, will be paid for from council tax and the social care precept, which is council tax by another name. So are we expecting the pressures on social care to be funded not from this document, but actually from further rises in council tax? Is that the honest situation?

[Jesse Norman]

I am grateful to the hon. Gentleman, and I am also very grateful to him for actually reading the document, which many of his colleagues may not have done, and he is absolutely right to draw attention to that section. What the levy does, of course, is to provide a very substantial form of funding for social care. The question of the capacity of local authorities, which is of course a matter of great interest to Government and an area that we have supported significantly in the last year or two, will be considered in the Budget in the normal course of things.

If I may, I will now set out why a levy based on national insurance is the best way to raise the funds needed for the Government’s plan for health and social care. The first reason is that there is already a clear precedent. Indeed, in 2003 the then Labour Government increased these same NICs rates by 1% specifically to put more funding into the NHS. Within the NICs system there is, as Members across the House will know, already a long-standing ring-fenced proportion of receipts directed to the NHS.

The second reason is that this is a fair method. Businesses will play their part. In fact, the largest 1% of businesses will contribute 70% of the revenue. However, existing NICs reliefs and allowances will also apply to the levy. That will mean, as I have said, that 40% of all businesses will not be affected due to the employment allowance. When it comes to individuals, those earning more will pay more. Conversely, at least 6.2 million people earning less than the NICs primary threshold will not pay the levy at all.

The third reason why a levy based on NICs is the right approach is that it has worked elsewhere. France, Germany and Japan have all increased social security contributions to fund social care provision. Finally, the question of how to fund health and social care is one that applies to a whole nation. NICs are set on a UK-wide basis, and the levy therefore provides a clear UK-wide solution.

--- Later in debate ---

[Rachel Reeves]

I will give way to the Chair of the Select Committee.

[Mr Betts]

I bring my hon. Friend back to paragraph 36, which I asked the Minister about, which seems absolutely key. There is no clear money coming from the levy to social care. That is what the Government said. I think the Minister said it would all be revealed in the spending review. Paragraph 36 states:

“The Government will ensure Local Authorities have access to sustainable funding for core budgets at the Spending Review. We expect demographic and unit cost pressures will be met through Council Tax, social care precept”.

On top of all the other hits that working families are going to get, can they expect an above-inflation rise in their council tax next year to pay for the Government’s failure to fund social care properly?

[Rachel Reeves]

I think many councils and the people who work for them and provide social care at a local level will be incredibly worried about what they are hearing from this Government, which is that council costs are going to go up while they are getting no additional money.

--- Later in debate ---

[Paul Bristow]

We will not approach the backlog unless we have the money and capacity to fund it, and that needs to go hand in hand with what I said about innovation, new pathways and new ways of working. I remember talking to someone who told me that we had three years’ worth of innovation in the NHS in just three months because of the pandemic. New ways of working and new pathways were adopted.

Every time we talk about innovation in our NHS and new pathways—the accelerated access review, the “Innovation Health and Wealth” report and a new life sciences strategy all talk about innovation and new ways of doing things in our NHS. But those new ways of doing things need to be spread at pace and at scale. There is no excuse not to do it now. If it works in one part of the NHS, it will work in another. Culturally, the NHS needs to grasp the nettle and spread that innovation and new ways of doing things so that we can get productivity and outcomes for patients. Now is the time to do it.

[Mr Betts]

The Health and Social Care Committee, of which the hon. Gentleman is a member, estimated last autumn that there was a £3.9 billion funding gap in social care. I assume that he agreed with that report. Can he explain, therefore, how this levy will deliver £3.9 billion a year for social care? I have not seen any figures showing that at all.

[Paul Bristow]

Having no plan will not provide the £3.9 billion, and Labour Members have indicated today that there is no plan.

This is a significant tax increase. I am a Conservative, so I do not like tax increases, but I also understand that an enormous thing happened between the manifesto and now. There has been a global pandemic, and Labour Members seem to have missed that fact. We need to shorten waiting lists, we need to do something about it and we need to correct it.

--- Later in debate ---

[Mr Clive Betts (Sheffield South East) (Lab)]

It is pretty obvious that there has been a major funding crisis in local government over the past 10 years. Local councils have had bigger cuts to their budgets than any other part of the public sector, around 30%.

[Imran Hussain]

My hon. Friend is right to highlight the importance of local government, unlike the Minister, who barely acknowledged its existence. Does he agree that the last decade of ideological austerity and cuts by this Government has meant that local government budgets have been slashed by up to 50%, directly contributing to this crisis?

[Mr Betts]

I have made my position clear on the extent to which local government has been unfairly cut compared with other parts of the public sector.

Across the piece, local councils of all political persuasions have done a brilliant job of protecting their communities over the past few years. They have done it by giving priority to social care, but that has still meant real-terms cuts due to the demographics, with more older people, with people with learning disabilities living longer and with increased costs and demand for children’s social care—demand for the latter two has gone up faster than the demand for elderly care over the past few years.

In protecting social care, there have still been real-terms cuts. There are 1 million more elderly people not getting care who would have received it in the past. Other services, such as parks, libraries, buses and highway safety, have all been cut by up to 50% in local authorities across the country. We are repeatedly asking our constituents to pay increased council tax, often for care services they are not receiving, when the services they do receive are being cut to shreds. That is the reality.

As representatives of both parties in the local government sector said to the Select Committee on Housing, Communities and Local Government, we cannot sort out the funding problems in local government without sorting out the funding problems in social care. That is the reality.

We are in the middle of a Select Committee inquiry, and we will be taking evidence from Ministers. I hope they will start to explain to us how the care plan will solve that problem. The Housing, Communities and Local Government Committee and the Health and Social Care Committee have received estimates that the funding gap for social care alone is between £2.5 billion and £4 billion a year, which does nothing to restore services to the level they should be at or to address the real problems of low pay, which will eventually destroy the service because it will not be able to recruit people as alternative jobs, such as at Amazon, pay so much more. That is simply the reality.

How much money will come from the levy? Paragraph 30 is the only bit that talks about money: £5.5 billion over three years. The gap is between £2.5 billion and £4 billion a year, yet we know the £5.5 billion has to fund: the cap and floor system, which will be at least half of it, maybe more; and the £500 million for workforce training, which is welcome. The money goes nowhere near funding the current gap, let alone bringing about any improvements or bringing people into the social care system who are currently excluded. It just does not do it.

The Government have said they will

“ensure local authorities have access to sustainable funding for core budgets at the spending review”.

All will be revealed in the spending review, but the key bit is that the Government say they expect

“demographic and unit cost pressures”

will be met

“through council tax, social care precept”.

We have had 5% council tax increases year on year, and a lot of it has been to fund social care, so we are going to get above-inflation council tax increases again, are we? If we say national insurance payments are regressive, council tax is now regressive, too. That is the reality.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Mr Betts]

Yes, I will give way, because I think the hon. Gentleman will ask me about the Select Committee’s 2018 report. Am I correct?

[Kevin Hollinrake]

Yes, the hon. Gentleman is absolutely right. As always, he is making some very good points. I thoroughly enjoyed my time with him on the Select Committee.

We did two reports on social care, and we made a recommendation in 2018 to fund social care through the national insurance system. Does the hon. Gentleman still support that recommendation?

[Mr Betts]

Yes. However, may I just say to the hon. Gentleman that it was a slightly different recommendation from what the Government are proposing now? I have our report here, just by chance—I thought I might be asked the question. We talked about the rate at which national insurance would be paid—this was to cover the points that the right hon. Member for Rossendale and Darwen (Jake Berry) made about low-paid areas. We talked about paying right the way up the income scale. We talked about extending it to pensions and unearned income, and about it not being paid for by the under-40s, who have been really badly hit by this pandemic, and we ought to be doing our best to protect them. In paragraph 95, we also made the important point that people should not have to sell their homes to pay for social care and proposed instead

“that a specified additional amount of Inheritance Tax should be levied”.

We all agreed to that. That system is a lot fairer; people would pay according to the value of their home and it would not be that people in constituencies such as the right hon. Gentleman’s, where house prices are relatively low, end up paying a bigger percentage of the value of their home to fund care than people in areas with higher house prices. I stand by that recommendation. It is a different proposal from the one the Government are now putting forward.

I want to come back to the point for the Minister. There is a crisis in social care, and we have all got that; we all have constituents come to us begging for social care. They are really concerned about having to sell their home, but sometimes it is about not being able to get into a care home or get the care at home they need. Most social care should be delivered in the home where people live. The reality is that there simply is not a proposal in this so-called “plan” to give local authorities that money that is needed to both fund the existing gap and to extend social care to the many people who have been denied it because of the cuts in the past few years. Furthermore, the alternatives will be: bigger rises in council tax—the Government have almost signalled that in this report; or further devastating cuts to other services received by most of our constituents, who do not get social care but have to pay for it. This is a recipe for disaster. Eventually, when it works through, everyone will see that there is no plan for social care here, because there is no funding for social care that will deliver the sort of social care system we all want to see.

--- Later in debate ---

[Steve Barclay]

I will come to the points on devolution and happily give way at that stage, but let me just deal with the Opposition amendment, which requests a distributional impact assessment. As we have covered, that has been set out today. The Government have already published a document on the impact of our health and social care plan on households, looking at the impact of the new spending and the levy, with a full distributional analysis being published at the Budget and spending review.

As for the impact on businesses, businesses will play their part in funding this plan. However, existing national insurance contribution reliefs and allowances will also apply to the levy. This means that 40% of all businesses will not be affected due to the employment allowance, and it allows eligible employees to reduce their national insurance liability by up to £4,000. Again, that point was brought out by my right hon. Friend the Member for South West Wiltshire (Dr Murrison), who highlighted the impact on business and the fact that businesses, with 1% of the highest turnover, will cover 70% of the cost.

[Mr Betts]

I think the right hon. Gentleman probably knows which point I am going to raise. I am very interested in the impact on local authorities. Out of the £36 billion that will be raised over three years, how much extra money will go to local authorities after the costs of the “cap and floor” system have been taken into account? How much extra money over three years will go to local authorities out of the £36 billion?

[Steve Barclay]

I listened very closely to the hon. Gentleman’s speech, because he is a very informed and knowledgeable commentator on these issues. He rightly pointed to paragraph 36, where we are being very clear about the role in terms of demographic and unit pressure. As he well knows, part of the discussion at a spending review is to look at local government pressures in the round. That is in the context that local authorities are getting an additional £2.2 billion of funding. I remind the House, in terms of the adult social care flexibility that was allowed for councils this year, that out of the 152 local authorities, less than two thirds actually used that flexibility. That is part of looking at these issues in context.

Let me come to the central point put forward by the Scottish National party, which was very well demolished by my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont). All parts of the United Kingdom need a long-term solution to fund health and social care. The Scottish Government’s independent review of adult social care recently noted—[Interruption.] I am quoting from their own review. I thought they would want to hear that. It stated that

“Scotland’s ageing demography means that more money will need to be spent on adult social care over the long term”—

and its recommendations to the Scottish Government are that this would

“require a long-term and substantial uplift in adult social care funding.”

In fact, in 2002, John Swinney said that a 1% increase was

“progressive taxation…required to invest in the health service in Scotland”.—[Scottish Parliament Official Report, 18 April 2002; c. 8005.]