Health and Social Care Levy Bill

John Baron Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[The Chief Secretary to the Treasury (Steve Barclay)]

I beg to move, That the Bill be now read a Second time.

Last week the Prime Minister announced a plan to tackle the NHS backlog, put the adult social care system on a sustainable long-term footing, and end the situation in which those who need help in their old age risk losing everything to pay for it. The Government’s plan will make an extraordinary difference to the lives of millions of people across the country, and it will be funded with a record £36 billion investment in the NHS and social care. In order to pay for a significant increase in spending in a responsible and fair way, the Bill introduces a new 1.25% health and social care levy based on national insurance contributions.

[Mr John Baron (Basildon and Billericay) (Con)]

We need to give credit where it is due, and the Government are absolutely right to try to grasp this nettle, but many of us are concerned about the haste with which it is being done. Does my right hon. Friend think it is a good idea to raise taxes on jobs ineffectively, and risk choking off an economic recovery before we have even got to know the details of the social care reforms?

[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.

--- Later in debate ---

[Mr John Baron (Basildon and Billericay) (Con)]

I join many Members who have already spoken in wholeheartedly supporting the Government in trying to grasp this nettle, which has been pushed into the long grass for too long by too many Governments of all persuasions. However, I think many of us are concerned about the haste with which this reform—or this funding, certainly—is being introduced. Parliament has little time to scrutinise the details properly, and there are so few details out there. Questions to the Prime Minister only last week, in a letter copied in to the Chancellor and indeed to the Secretary of State for Health, have been left unanswered.

I would ask those on the Front Bench what other types of funding for social care systems have been considered. Have they looked at the insurance-based systems on the continent? Why not a public insurance system, which has many merits? We are unclear about the exact improvements to social care, yet today we are signing off a massive tax increase—bigger than that raised by some Budgets.

I would also suggest that this is the wrong approach to the funding. The Conservative party has traditionally referred to national insurance as a tax on jobs. The Prime Minister, when opposing Labour’s increase from the Back Benches in 2002, called it regressive. He was right then, and I am afraid that he is wrong now in introducing this national insurance contribution tax increase.

The core of my one nation Conservatism is a belief that, in order better to help the more vulnerable and ensure that we maintain low unemployment, we should encourage economic prosperity. Low taxes help businesses, encourage prosperity and keep unemployment down—they certainly help to. Yet here we are, increasing taxes at a time when the recovery is still fragile after the pandemic. This will cost jobs, and it will result in lower pay and higher prices. I also to a certain extent question the fairness of this increase in our national insurance contributions, which will disproportionately fall on the lower paid. Why should wealthy non-working pensioners be exempt? If this were a truly broad-based tax, we would be answering that question, but there is nothing but silence from the Government on that point.

I am concerned about the lack of response from the NHS with all this extra funding going in and the lack of accountability. I was chair of the all-party group on cancer for 10 years. We continue to point out that we are failing to match international averages when it comes to our cancer survival rates. We have a mass of process targets that create myriad bureaucracies, but we are still not catching up when it comes to average cancer survival rates. Only half the NHS workforce is medically trained. We need to address that, because more money alone is not the answer. We need genuine reform that focuses on outcome measures, not process targets. So we need more time to consider the proposals and I will not be supporting the Government in the Lobbies tonight.