Health and Social Care Levy

Kevin Hollinrake Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Rachel Reeves]

I would go further than my hon. Friend: neither of those things were true, because the Government have no plan for social care and we have a tax increase. The sad truth at the heart of this so-called health and social care levy is that it will not deliver on social care for at least three years from now, and even then it is uncertain when the Government might allow some money to trickle down. Under the Prime Minister’s plan, many will still face the threat, as my right hon. and learned Friend the Leader of the Opposition set out today, of selling their home to fund care. Many of those with a house worth £186,000—that includes many constituents of Conservative Members—will still have to sell their home to fund £86,000, within the cap. That is before the costs of living in a care home. How does the Minister expect his constituents to pay for care without selling their home? I will happily take an intervention from him—

[Kevin Hollinrake (Thirsk and Malton) (Con)]

rose—

[Rachel Reeves]

Perhaps the hon. Member for Thirsk and Malton (Kevin Hollinrake) will explain what he put in his manifesto to his constituents.

[Kevin Hollinrake]

I was delighted to sit on the Housing, Communities and Local Government Committee—the Chair of the Committee is in his place now—during its joint inquiry with the Health and Social Care Committee. Some 24 Committee members, 12 of whom were Opposition Members, recommended a solution based on national insurance. The shadow Secretary of State for Health and Social Care also proposes a solution based on national insurance. Why does the hon. Lady now say that that is the wrong option, and what is her plan if it is the wrong option?

[Rachel Reeves]

We should be looking at all forms of income, not just income from people who go out to work. A landlord who rents out a number of properties will pay nothing, whereas his tenants in work will. That is not fair, and that is why we cannot support the motion this evening. The Minister told us three important things today.

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[Alison Thewliss]

My hon. Friend speaks the absolute truth. There is a huge contrast between what the Government propose and what is already being delivered in Scotland.

Some have said, “What’s your alternative?” Well, fixing England’s social care crisis is not for the SNP to decide, quite frankly. Having heard evidence when I sat on the Select Committee on Communities and Local Government some years ago, I know that successive UK Governments have failed to act and have ignored the evidence as difficulties mounted. Now the Prime Minister has come to this House in haste, shamelessly using covid as cover.

[Kevin Hollinrake]

Will the hon. Lady give way?

[Alison Thewliss]

I will, because we served on the Communities and Local Government Committee together.

[Kevin Hollinrake]

I am very grateful. In respect of the sufficiency of Scottish social care budgets, there is now an 11-week wait in parts of Scotland for discharge from hospital into a care home. Is the hon. Lady honestly saying that she does not need extra resources for Scottish health and social care?

[Alison Thewliss]

The hon. Gentleman should look at the comparative figures in his own constituency. I am not saying for one second, and I would never say, that everything in Scotland is perfect, but we are making good progress on that, and we intend to make more progress.

The social care funding announced by the Government may in the end amount to as little as 20% raised by this tax hike, and not even for a few years. The British Association of Social Workers has said that this raises more questions than answers, and that it needs the funding for services right now, not at some point in the future. The early analysis across the board today demonstrates that the sheen is already coming off this policy. In contrast, the SNP has used its time in government to introduce health and social care integration, self-directed support and the Carers (Scotland) Act 2016. We have health and social care partnerships on the ground working away to deliver more integrated services to our constituents. Free personal care has been available in Scotland for adults aged 65 or over since 2002, extended in 2019—as was pointed out by my hon. Friend the Member for Central Ayrshire (Dr Whitford)—to people of all ages who require it. Yesterday the Scottish Government’s programme for government set out the timetable for establishing our national care service, the most significant public service reform since the creation of the NHS.

This is a Westminster power grab on devolved healthcare and the democratic institutions of Scotland, Wales and Northern Ireland. The Government are taxing our people to pay for their chaotic mishandling of health and social care in England. They are undermining our recovery by putting a tax in employers. They are punishing working people on low pay by cutting their universal credit and hiking taxes on their meagre wages. This is no Union dividend, as the Prime Minister likes to claim; it is a Union dead end, and the people of Scotland must have the choice to take the fastest road out of here to independence.

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[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.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to follow my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton). I absolutely agree with him that the Government’s proposal is probably the least worst option.

When it comes to this debate, I feel saddest for the many constituents who have come up to me in recent years and said, “When it comes to the big issues—the issues of national interest—why is it that you lot can’t work together and come up with a solution?” Clearly, this issue is of huge national interest and has been debated in this House many times over recent decades. I have been involved in debates dozens of times in the six years I have been here. I blame colleagues from either side of the House—from both the Labour and Conservative parties. Whether it is the “death tax” or the “dementia tax”, people have come forward with proposals only to be rubbished by the other side for political purposes.

The reality is that this issue is one of many challenges that we are going to face over the next few decades. According to the Office for Budget Responsibility, if we do not change our tax system, our debt-to-GDP ratio will be 400% of GDP by 2060, because of pension, healthcare and social care costs. We must sort out this issue on a cross-party basis so that we have a long-term solution.

The reality is that we have had cross-party consensus. As I have said several times in the past couple of days, I have taken part in two Select Committee inquiries on the issue, the most recent a joint inquiry by the Health and Social Care Committee and the Housing, Communities and Local Government Committee. There were 24 Members on those two Select Committees, 12 of whom were from the Opposition Benches, and we strongly recommended a solution based on national insurance. We can of course argue about some of the detail of the national insurance proposal, which has been changed in some positive ways over recent days, but simply to dismiss it out of hand for political purposes is irresponsible. I understand that the shadow Minister for social care, the hon. Member for Leicester West (Liz Kendall), has also proposed a solution based on national insurance. It does not make sense simply to say for political purposes that the proposal is wrong—

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

indicated dissent.

[Kevin Hollinrake]

The shadow Minister on the Front Bench can shake her head, but that is the reality behind the proposal. The Chair of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), said clearly that he still supported a solution based on national insurance.

I agree with my hon. Friend the Member for Stoke-on-Trent South that this solution is the least worst option, but we can develop better solutions down the line. I agree with my hon. Friend the Member for Bexhill and Battle (Huw Merriman) that the German solution is better. In Germany, they came together across party lines, based on the national interest, to solve this issue. It was very similar in respect of employer and employee. The key benefit of the German solution is that when a person comes to be defined as in need of care, instead of the local authority allocating care, they can choose to take a monthly cash payment, so they can pay a relative, a neighbour or whoever to care for them. A person can be cared for by the people who know them the best, who understand them the best and love them the most, which must be better than some of the stories that we hear about care providers who give a pretty poor service, with a 15-minute package now and then.

This must be a better solution, but I have one concern. I understand why the scheme has been brought forward like this, using national insurance. It is because it is quick and easy, and we need the money today, but the concern is about hypothecation, which many Members have mentioned. This was a social care levy, but already some of it is going to the health service. That is our understanding at the start. Hypothecated taxes simply do not work, and we see that time and again. It would be better to develop this into a proper social insurance system with not-for-profit providers, so that it does not go into the private sector, but instead the money could be paid in on a proper hypothecated basis to deal with the long-term problem of social care.

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[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

It is customary when closing a debate to say that we have had a good debate, and indeed we have, but what has been most striking is how inadequate a basis it has been for a change of this magnitude to the tax system of our country. I intend to come back to that point.

We have heard a number of extremely sharp and insightful contributions, including from my hon. Friends the Members for Wallasey (Dame Angela Eagle) and for Nottingham East (Nadia Whittome), who talked very powerfully about how what has been set out does nothing to improve the working conditions facing social care workers, many of whom will now themselves be facing a tax rise. I would just like to say that it is wonderful to see my hon. Friend the Member for Nottingham East back in her place in this House.

We have heard contributions from the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), and the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), who asked very important questions of Ministers. We did not get answers to those questions, and I hope the Chief Secretary will address the really important points that were raised. I will touch on those a little later.

We also heard from my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe), for Eltham (Clive Efford), for Bedford (Mohammad Yasin), for Brighton, Kemptown (Lloyd Russell-Moyle), for Bristol South (Karin Smyth), for Lewisham East (Janet Daby) and for Hornsey and Wood Green (Catherine West). They covered a range of different points, but they were all clear that this does not represent a proper plan for the NHS or for social care. It is, instead, a broken promise. Two and a half million working households will be hit by the Tory double whammy of cuts to universal credit and an increase in national insurance.

Understandably, I have focused on contributions from Labour Members, and I am sad that, except for a few Conservative Members—notably the right hon. Member for Rossendale and Darwen (Jake Berry)—many of those who bravely stated their reservations over the weekend to the Sunday newspapers have been strangely silent this evening. I hoped we might have heard from whichever Tory MP said that putting up national insurance would be “morally and economically wrong”, and that:

“It kicks in at a low level…If you get all your income from investments and property you don’t pay a penny, but if you work your guts out for minimum wage you get clobbered.”

I could not agree more.

[Kevin Hollinrake]

That point about rental income has been made on a number of occasions. If someone holds their properties in a limited company and they take their profits through dividends, those dividends are taxed to include the social care levy. Will the hon. Lady put the record straight and accept that that is the case?

[Bridget Phillipson]

It is ludicrous that a landlord will be paying not a single penny more, but their tenants—many of them perhaps working in the NHS or social care—are about to be clobbered by a tax rise. Some 95% of what is to be raised from this measure will come from working people and businesses. What the hon. Gentleman says is simply not right. I understand that one former Cabinet Minister used perhaps more colourful language this afternoon, and I will not test your patience, Madam Deputy Speaker, by repeating exactly what they said. Safe to say, however, that he or she is not a fan of this Tory tax hike.

It is usual for major fiscal events in the House to be timetabled in advance. Indeed, this week the Chancellor put us all on notice of a comprehensive spending review and an autumn Budget at the end of next month. It is also usual for major fiscal events to be accompanied by independent and thorough scrutiny by the Office for Budget Responsibility. It is usual for those forecasts to be published alongside the Government’s plans, so that all Members of the House can understand, in detail, what they are voting for and how it will affect the public finances, the livelihoods of our constituents and the success of the economy.

The OBR’s typically thorough work back in March produced a report with more than 130 charts and tables, but the flimsy document produced by the Government yesterday had just three. I recall when some Government Members were sticklers for the rights of this House, and sticklers for procedure and proper time to debate and consider changes that will have a huge impact on our society and the shape of our economy. It seems that those days are long gone. The change we are being asked to vote through tonight is not being introduced in this extraordinary form because that is right for the country. The House knows that. It is because it is the right approach for the Prime Minister: announcement on Tuesday, vote on Wednesday, and perhaps a reshuffle later this week—Back-Bench rebellion averted. That is no way to run a country.

Let us be clear about what is happening. This House is being asked to approve, with almost no notice, an extra £11.4 billion of taxation on workers and businesses, and an extra £600 million of dividend taxes—95% of the new revenue is to come from taxing jobs and earnings. When this Government need income, they do not turn first to those with assets, stocks and shares and property, or to those with the broadest shoulders who can afford a little more. No, they turn to working people: to those who work hard to earn their income, and their employers. They break a solemn promise that every Government Member made to the people of this country. That is a choice, and it is not a choice that the Labour party would make.

Two other major questions emerge from the contributions today. Where is the Government’s actual plan? We need a real plan for social care, not a few numbered paragraphs and a handful of case studies. Labour’s priority would be to give older and disabled people the chance to live the life they choose, shifting the focus of support towards prevention and early help. Let us not forget in this place that around half of the social care budget supports working-age adults with disabilities. They are far too often overlooked in discussions about social care, and the Government’s announcement does nothing for them.

Alongside a strong and skilled social care workforce, Labour would deliver a new deal for care workers to create a well-motivated and properly rewarded workforce, with clear support for unpaid carers—the very people who got us through the last 18 months, whom we clapped and claimed to care about. There is absolutely no sign of that plan here today or in the documents published yesterday. The document that the Government published yesterday is strikingly poor on the practicalities of delivery, not just for social care but for our NHS too.

Our national health service was chronically overstretched long before the pandemic hit. We entered the pandemic with over 100,000 vacancies. By March this year, there were 5 million people on waiting lists for NHS treatment—waiting longer for cancer care, longer for vital surgery, longer for mental health support. What we have been given today is not a plan; it is the promise—another promise—of a plan to follow. The Minister could not even tell us what the impact would be on waiting times. He could not tell us what it meant for local authorities on the frontline. He could not give us details of how public sector bodies are expected to meet the cost. It is not a plan; it is just a tax rise.

Much of today’s debate has focused on whether it is the right sort of tax rise. Sometimes it is easy to focus on the fiscal aspects and forget the economic aspects. Our recovery is still fragile. Businesses are under enormous pressure. We all know it; many are yet to fully reopen, and many are not yet operating at full capacity. Yet the Chancellor has been putting up council tax, he is slashing universal credit, he is freezing income tax thresholds—he is sucking demand out of our economy at the worst possible time.

The shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), set out powerfully what these measures mean for working people, but this is a series of hammer blows for firms, too. Small businesses, struggling to get back on track after a terrible 18 months, have been clear, in the words of the Federation of Small Businesses, that this is “precisely the wrong moment” to be putting up the cost of taking on and retaining staff. The FSB estimates that these changes could mean an extra 50,000 people out of work.

This is the wrong process to agree the wrong tax at the wrong time. It will not deliver what is promised for our health and social care sectors. The Health Secretary cannot even tell us whether it will clear the NHS backlog in this Parliament. It will not give social care the resources it needs in the next three years. There is not a plan for reform of social care. This tax rise will not create more and better-paid jobs in the wider economy, it is not fair across the regions, it will not end people having to sell their homes to fund their care, and it will not help our economic recovery. The Prime Minister cannot even guarantee that it is the last unfair tax rise of this Parliament. Tonight, we are not voting for a plan to fix social care. There isn’t one. We are voting on the third Tory tax rise on working people, and we will oppose it.