National Insurance Contributions Increase

Duncan Baker Excerpts

Tuesday 8th March 2022 Commons Chamber

[Mr Clarke]

We have forgone a tremendous amount of revenue through the freeze on fuel duty. On VAT, we obviously continue to look closely at the revenue situation. It is sometimes a misapprehension about the way that the VAT scheme works to the Treasury’s benefit. There is often a focus on domestic fuel and the impact that it is having on our income. To that point, the more that people spend of their discretionary income on domestic fuel costs, which are VAT chargeable at 5% as opposed to the full rate of 20%, the less that the Treasury recoups. In that regard, we have to be careful about some of the arguments around that.

Now that I have set out some of the context of the Government’s response, I will return to the specifics of the debate—the need for the health and social care levy and the rationale behind its operation. Last month, my right hon. Friend the Secretary of State for Health and Social Care explained to the House that there is now a significant backlog of elective care as a result of the pandemic, which my hon. Friend the Member for Gloucester (Richard Graham) alluded to. More than 6 million people are waiting for elective care in England and more than 300,000 people are waiting longer than a year. The Government have set out a clear plan to tackle the backlog, but we must deal with that most pressing of issues and the levy will allow us to do that.

[Duncan Baker (North Norfolk) (Con)]

Many things have happened in the last few weeks, but we must reflect on the fact that, for the last two years, we have been in the worst global health crisis for years during which the Government spent £450 billion to support people’s livelihoods. Any Government would need to look at themselves and recognise the enormous issues that that has created. It is simply unsustainable to continue to pay for services without looking at how we can gain more revenue for the Treasury. That is a sensible financial decision that any Government would have to make in the circumstances in which we find ourselves.

[Mr Clarke]

I agree with my hon. Friend. The hon. Member for Leeds West (Rachel Reeves) said that when the facts change, we should change our policy, but the point is that the facts have not changed. The covid backlog has not changed and the damage that it has done to our ability to deliver the healthcare that people need has not gone away. Governments have recognised the importance of tackling our social care issues for a long time, but there is no record of action. This time, things are different. We believe that it is only right that in an advanced and wealthy country such as the United Kingdom, people should know that their loved ones will have dignity and financial certainty if they require care. The new levy will allow us to achieve both our health and social care aims.

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[Duncan Baker (North Norfolk) (Con)]

I have said many times in this place that I represent the oldest demographic in the entire country. Hon. Members might expect me to say that North Norfolk is beautiful; it is my home and it is where I grew up. People come to live there all their lives, retire there or come back for years and years. If I knock on a door, there are two things that my constituents say they care about. They care about their health, and they recognise that with the dreadful situation we are in, the conflict we are seeing and the shifting of geopolitical plates, we have to have a competent Government looking after the economy. In pretty much any polling across the country, the most important factors that people care about are their health and the economy.

As I said in my intervention on the Chief Secretary, we have spent £450 billion, an eye-watering amount, on safeguarding the jobs and livelihoods of millions and millions of people—working-class, everyday people whose jobs have been saved. As a consequence, we are now in £2.2 trillion or so of debt. I find it staggering that the Opposition think that we can just amble out the other side of a global pandemic and everything will be normal. It simply cannot be, and we must and should be honest about it.

The health and social care levy is needed. We have heard all the statistics that show why: to repair the backlog in elective surgery and repair the social care system that we need in this country. According to reports, as my hon. Friend the Member for South Cambridgeshire (Anthony Browne) said, £12 billion a year is needed—a colossal amount of money. We cannot raise £12 billion a year by making savings or cuts to other services that have been ravaged throughout the pandemic that we have just come through.

Social care is a subject that I have spoken about many times in this Chamber—obviously I would, with the demographic I represent. We should not underestimate the herculean efforts of our carers. It is completely right that we hail our nurses through the pandemic. Imagine the care and patience someone needs to be a dementia nurse or a palliative carer. It is about time we fixed that—it is about time we grabbed the nettle and did it. This is a Government who are finally gutsy enough not to be derailed, no matter how difficult the situation. They will not be pushed off track; they will deal with it.

Before I came to the House I was a finance director, and I remember that when automatic enrolment came in, the situation was very similar. The initial levy was 1%, and what was being said then was what is being said now—people would be desperately worried about the cost, they would not pay for it, and they would opt out. What happened? Ninety per cent. of people stayed in the scheme, because they saw the value of what it was doing in the context of the marginal extra amount that they were paying.

The same will happen in this case. No one wants to see tax rises—we all agree on that—but the proof of the pudding will be in the eating. If we end up funding services properly and taking care of our elderly people properly—and we have the opportunity now to reform the social care sector and fund the NHS in this way—the 1.25% about which Members are so concerned today will dissipate, and for that reason we have to be entirely sensible.

[Anthony Browne]

My hon. Friend is making a powerful case for the need to increase spending on health and social care in the long run. Does he share my concern about the fact that, while proposing a cut in national insurance, Labour Members have no answer to the question of how they would fund ongoing health and social care services, and the fact that cutting national insurance would inevitably lead to their cutting those as well?

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[Duncan Baker]

This is the great problem in the House: we are constantly being told that what we are doing is wrong, but there are never many opportunities to ask, “What would you do?”, and that is the case again today. Yes, we have heard about the one-off windfall tax on the energy companies, but that has been dismissed for very good reasons. If anyone is able to come up with a sustainable way in which we can generate £12 billion to improve the situation that we are discussing today, I should very much like to sit here for the rest of the afternoon in order to hear it.