Health and Social Care Levy

Lloyd Russell-Moyle Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Alison Thewliss]

What the hon. Gentleman fails to understand is that we are starting from very different points. He does not acknowledge that, and he does not understand it.

The response from equality and anti-poverty groups has been absolutely damning. The Women’s Budget Group has said:

“We believe there is a fairer way to fund social care. This is because, as they currently stand NICs are more regressive than income tax—with a lower threshold at which payments start, and a higher rate threshold beyond which employees pay a lower rate.”

The Resolution Foundation has described the policy as “generationally unfair”. Paul Johnson of the IFS has said:

“Remains the case pensioners will pay next to nothing for this social care package—overwhelmingly to be paid by working age employees”.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

There are many ways in which this policy could have been made progressive, one of which would have been to look at the upper threshold for national insurance, which has not been addressed. A young graduate will now have a marginal tax rate higher than a rich Conservative on the Government Benches.

[Alison Thewliss]

The hon. Gentleman makes an excellent point. For young people who have perhaps struggled through this year, who have graduated and who are going out into the world of work, it is a real hammer blow to their prospects.

Many families are already facing a historic £1,040 cut to their annual incomes and are staring down the barrel of impending cuts to universal credit and working tax credit. The Joseph Rowntree Foundation has described the new levy as adding “insult to injury”. The New Economics Foundation has calculated that 2.5 million working households will be affected by the £20 a week cut to universal credit and the increase in national insurance. On average, they will lose out by £1,290 in the next financial year. Working households are doing their very best to put food on the table and support their children, and this cruel UK Tory Government caw the legs from under them.

--- Later in debate ---

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

When I first heard that the Prime Minister was going to come forward with a plan for social care, to tell the truth I am so desperate for any improvement in social care that I even considered voting for it. Even until yesterday I would have considered voting for it. As the details came out, however, I was not only disappointed but completely devastated, as will be many of my constituents. Not only does the plan fail to deal with any of the real issues in social care, which I will come on to in a second, but it is actually just a tax hike pretending to deal with health and social care. In reality, at the beginning it is not even linked to that, and later on there is some vague promise that it might trickle down to social care if we are lucky.

This is a tax rise that will hit the youngest, the poorest and the hardest working in our communities the hardest. It exacerbates the crisis in intergenerational justice that we have in our society at the moment. Far too many young people feel that the ladder is being whipped up behind them by an older political generation that is currently in power. I think that is sometimes unfair, because actually the issue is class-based and wealth-based, but this will exacerbate that feeling. A young graduate with student loans will be paying a marginal tax rate of almost 50%, which is more than many people on £90,000 and vastly more than someone whose earnings are from property, shares or other forms of wealth.

There are other options. The Government had other options. They could, of course, have lifted the lower rate of national insurance into the higher rate. Most people do not realise—most hard-working people, of course, do not earn £50,000 or more—that those earning more than £50,000 pay only 2% national insurance. That could easily have been made 12%, or now included the additional for everyone. That would have provided £14 billion in one stroke and not affected any hard-working person in our country. It would have already raised more than this non-existent plan. They could have looked at a wealth tax for people who have wealth higher than £5 million, an amendment that I and other colleagues tabled for today; capital gains reform to bring it in line with income tax, for example; or making inheritance tax fair so it is based on what you receive, not necessarily on what you give, so that those in large families can receive a fair amount while ensuring that everyone pays their contribution.

None of those options were considered. Why? Because this Conservative party is paid for by developers, landlords and the very people this tax will not touch. It is a party not of capitalism, but of extraction: extracting the wealth from hard-working people and small and medium-sized businesses, and redistributing it to landlords and capitalists who work in the stock market and in the City, not in the factories that run our country.

[Dr Andrew Murrison]

I always listen very carefully to what the hon. Gentleman has to say. Why, then, does he think that Gordon Brown did something remarkably similar to what my right hon. and hon. Friends are proposing—on that occasion, in 2003—for exactly the same reason: to raise the spend on our national health service and care services? Was he wrong?

[Lloyd Russell-Moyle]

Because then, wages were growing and the economy and working people were doing better, and now they are not. We are coming out of a pandemic. Everyone has suffered and suddenly putting a tax on small and medium-sized businesses and on working people is the very last thing we need to do.

This is also about the lack of a plan for social care. There is no plan for social care. In fact, we have been asked for a begging bowl, but we have not really been told how the money is going to be spent. How are we going to recruit social care workers, who are currently paid miserable wages for 15-minute appointments and no travel time? How are we going to reform the sector so that is not fragmented between people? How is this going to improve someone’s grandmother’s care home or someone’s brother’s care worker? It is not, because this does not deal with that fragmentation, it does not integrate social care into the NHS, which we desperately need, and it does not relieve the burden on councils. At the moment, the truth is that council tax has to subsidise social care time and again. People complain about the roads, their parks or youth services being shut, but the reality is that it is because the Government have not dealt with funding social care properly. They have put the burden on councils and council tax, which was never designed for social care, and this does not deal with that fundamental problem. When people complain about their bins or potholes, I say to them, “It is not your council’s fault. It is the fault of this Government, failing to deal with that drain on your council.”

This levy will not aid us one bit to close the gap that has been growing. That gap will continue to grow under this Government. So holding my nose and desperately sad, I will unfortunately be voting against this, not because I think that we need no action, but because this action is the worst of all worlds.