Health and Social Care Levy Bill

Geraint Davies Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[Steve Barclay]

My hon. Friend, and good friend, has raised two connected points. The first was dealt with earlier in points of order: it is the will of the House that decides the timings of debates, and the Chair addressed that point. As for the second, we discussed it at length during last week’s ways and means debate. We discussed the wider purpose in dealing with the consequences of covid and the backlog in care that needs to be tackled, but we also discussed grasping the nettle in relation to the long-term challenges surrounding social care—challenges that the House has debated repeatedly over many years.

The levy will apply UK-wide to taxpayers liable for class 1 employee and employer, class 1A, class 1B and class 4 self-employed national insurance contributions. However, it will not apply where taxpayers pay class 2 or class 3 NICs. It will be introduced in April 2022, and from April 2023 it will also apply to those working over the state pension age. As my right hon. and hon. Friends will understand, it takes time for Her Majesty’s Revenue and Customs to prepare its systems for such a major shift. That is why, as set out in clause 5, in 2022-23 the levy will be delivered through a temporary increase in NICs rates of 1.25% for one year only.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the Secretary of State agree that in principle hypothecation is to be avoided, and that what we should be doing is defining what spending is financially desirable and economically effective, and then asking a separate question: what is a socially equitable and effective tax regime? Those are two different issues, but we are smashing them together, and we do not even know what we are spending the money on. This is farcical, and it is being done in a mad rush.

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[John Redwood (Wokingham) (Con)]

rose—

[Geraint Davies]

rose—

[Steve Barclay]

I want to make some progress, and I have already given way once to the hon. Member for Swansea West (Geraint Davies).

Let me remind the House why this levy is necessary. As the Prime Minister and the Chancellor have said, the levy will enable the Government to provide additional funding to the NHS so that it can recover from the pandemic. Senior NHS leaders have made it clear that, without additional financial support, we will not properly be able to address the significant backlog in the national health service. However, it is going to take time to get everyone the care they need. In addition, our social care plan will create a dramatically expanded safety net for people in their later life. This means that, instead of individuals having to bear the financial risk of catastrophic care costs themselves, we as a country are deciding to share more of that risk collectively.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

The only way to sustainably finance the costs of social care and the NHS for an ageing population is a growing economy, so why is the Chancellor taxing work? He said at the last Question Time that the only way to tackle poverty was to encourage work, but he is taxing work, and specifically he is taxing poorer, younger workers who do not have assets to pay for the care costs of often richer, non-earning, asset-rich people. It is not fair, it is not economically effective, it is being rushed through—it is wrong in so many ways that it should just be scrapped.

Obviously, we need to pay for care costs. It is appalling that one in four people will be hit with massive care costs through no fault of their own, and we need a system that is fair in terms of taxation to pay for that. I am not a great fan of hypothecation, because we should be deciding how to tax in a fair and economically sensible way and setting out precisely what we are going to spend our money on, neither of which has been done. If we want to grow the economy and tax things that we do not want to occur—people have talked about alcohol and cigarettes—we should be tackling, in particular, air pollution. I say this as the chair of the all-party parliamentary group on air pollution. Air pollution costs us £20 billion in lost productivity and health costs, so why do we not have some sort of escalator on diesel? Why do we not have an incinerator tax? The plan is to double incineration by 2030, yet we read from the latest medical reports that a very small increase in NOx massively increases dementia and mental health issues by something like 32%, with an 18% increase in hospital admissions. We have heard new research about ultrafine particulates from incinerators in urban environments getting straight into the bloodstream and causing problems for the heart, the mind and the lungs in particular, but there has been no mention of any of this.

And what about plastics? There will be more plastics than fish in the sea by 2050. We plan to tax plastics at £200 per tonne, but in the EU the figure is £685 per tonne. If we put an extra £400 per tonne on the 12 million tonnes of plastic we produce each year, we would generate £5 billion. Why should we not be able to get a cheaper cup of coffee in a china cup than in a plastic one? That would save the environment.

I support the points that were made by my right hon. Friend the Member for Barking (Dame Margaret Hodge) and others on progressive taxation. Gordon Brown had a national insurance increase all the way up the income scale. Obviously we need a threshold if we are going to use national insurance. Lord Hendy is now putting forward the Status of Workers Bill, which would capture large numbers of people who are currently deemed to be self-employed so that their employers do not have to pay national insurance. In that way, we could have a larger tax footprint, which would be fairer.

Obviously companies such as Amazon should pay more and there should be a transactions tax. Landlords have made capital gains through stamp duty holidays and with interest rates at low levels, and we should also look at a carbon border tax at a time when China is producing more emissions than the United States and the EU combined.

We should tax the bad things—namely, climate change and pollution—not the good things such as work and the economy. On debt costs, the interest rates have been low—they are down £14 billion year on year—and this looks like another attempt to bring down the debt. We must tax the right things, not the wrong things, to sort out the problem.

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[Duncan Baker (North Norfolk) (Con)]

Whether it is speaking about young carers, improving the pay and conditions of our care workers or pushing social care reforms for our older citizens, I have found myself in this place speaking about social care countless times since my election. One could conclude that I am happy that the Government are beginning to tackle this issue. I might be expected to say that as the MP who represents North Norfolk, an area where the social care sector is particularly important given the demographics of my residents.

As I have said to the many people who have asked for my thoughts on this Bill, in my view the prize of fixing social care is far greater in the long term than bickering about how we pay for it. It is regrettable, obviously, that we have to increase tax, but one simply has to be able to recognise the situation that the country finds itself in. The Exchequer cannot keep funding, in the current tax take, £12 billion to £14 billion a year—not to the extent that it has already supported the country to the tune of some £400 billion. Any reasonable person can recognise that. It would be fiscally irresponsible to continue to heap debt upon debt. There is probably no right way of creating the funding that we will require—a way that will satisfy everybody. Equally, there is no wrong way either. As I have not heard of a significant amount of consensus, a marginal rise in national insurance, to which, as we know, employees as well as employers will contribute, has, to a large degree in my constituency, been met with some understanding of the conundrum that we face.

The Opposition were asked time and again about how they would deal with this matter, but the hon. Member for Ealing North (James Murray) would not put a marker in the sand and explain what he would do.

[Geraint Davies]

I know the hon. Member said that it would be fiscally irresponsible to increase debt, but is he aware that the interest cost of debt per year has gone down by £14 billion because of historically low interest rates? Therefore, at this particular window in time, as we are coming out of a pandemic, would it not be better not to tax jobs?

[Duncan Baker]

I am sure the hon. Gentleman will remember the old adage that what goes up must come down, and, obviously, it could happen vice versa as well.

This Government have been incredibly financially prudent over the years. Most constituents around the country would say, “Thank goodness that we have had a Conservative Government looking after this country as they have produced one of the best responses to the pandemic in the entire world.”

What constituents want to see now are the tangible changes on the ground and the benefits. What we see today is probably one of the greatest welfare benefits that we have—the fact that there is a cap on how much a person pays in their later life for their care costs and that they will not have to sell their home will create security for a great number of people.

As the White Paper comes forward, I want to say three things to the Treasury and get these points on the record. First, I am a patron for the Holt Youth Project, which is a marvellous young people’s charity in my constituency. It has looked after some 50 young carers throughout the pandemic. Everybody knows that the life chances of young people are significantly affected as a result of looking after a sick or debilitated parent. I want to ensure that we can channel the funding that we get from this levy; there have been many asks today, including for dementia and other incredibly important causes, but please let us ensure that we fund young carers properly.

Secondly, let us ensure that unpaid carers are properly looked after. For those who take the burden off the state to care for their loved ones, the current allowance is £67 a week, at a cost to the Treasury of £3 billion a year. This must be looked at again.

Finally, let me address the recurring problem that we hear about all the time: the shortage of care workers. These people need to have the same high status and high regard as any NHS worker. We have to tackle and get to grips with the skills required to care for somebody with dementia or to give end of life care, and ensure that those care workers are properly rewarded.