Health and Social Care Levy Bill

Lord Lansley Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very pleased to follow the noble Baroness; I agree with her on one or two items I will come to in a minute. She had some ideas about how these revenues might be otherwise achieved. I will not offer my own ideas, but there is a question here; I wondered whether the noble Lord, Lord Macpherson of Earl’s Court, might have said this. It seems very misplaced to have a fiscal effect of this scale in September when the Chancellor should be on his feet in late October with what ought to be the fiscal event that gives us the OBR’s judgments, which enables us to see the whole panoply of revenue and expenditure, and I am surprised that it was done this way. It is obviously done for political reasons; it has enabled the Treasury to distance itself somewhat from the decision that led to this. I am grateful to my noble friend on the Front Bench for introducing the Bill in this way. He set out the Treasury’s arguments in favour of the Bill; it was therefore necessarily a short speech.

The noble Lord, Lord Eatwell, is not in his place at the moment but I was surprised that he did not refer to Gordon Brown’s hypothecation of a national insurance increase to the NHS. As a subsequent Secretary of State, I can say that this was important only in so far as it made the accounting for the NHS in the departmental accounts more complicated. It had no impact whatever on the decisions made about revenue and expenditure in the Department of Health, as it then was. This will not have an impact either. The NHS will continue to be funded out of general taxation, and the only impact of this increase is that it further reinforces the misplaced belief on the part of the general public that the NHS is funded out of national insurance contributions and it is therefore a contributory tax. It is not like that, has not been like that and will not be like that. The noble Lord, Lord Eatwell, made a point about whether people think that they have access to the NHS because they pay for it. They have free access to the NHS because they pay for it through general taxation, not because they pay for it through national insurance contributions, and the extent of their national insurance contributions has no impact, and should have no impact, on their access to the NHS.

I have two problems with using national insurance contributions in this way for the National Health Service. The first is that it is a tax on jobs. This is happening in the week after the Prime Minister has told the business community that it is going to have to pay higher wages, so it may well say, “If we have to pay higher wages, you might not impose on us additional costs of employing people”, which is exactly the point that the noble Lord, Lord Macpherson, made. There is a gap at the moment between the cost of employing people in this country and the cost of employing people in, for example, continental Europe. However, we cannot be complacent about that, because there is a different gap and a cheaper cost of employing people in many of our other competitor countries. We have to be very aware of the risks associated with continuously increasing the cost of employment.

All that said, increasing national insurance is an inappropriate way of funding social care. Like my noble friend Lord Forsyth of Drumlean, I welcome the fact that the Government are addressing the funding of social care. They have done so in the past, through one or two mechanisms, but at no stage have we seen the increases in resources for social care keep pace with the rising cost. That is where we need to be. The NHS, as I know perfectly well from past experience, needs, broadly speaking, a 4% per annum increase in real terms to keep pace with demand. Social care is getting nothing like that, but the increase in demand for social care is very like that for the NHS.

More of these resources should go to social care than the Government intend—not all of them, but perhaps one-third over the next three years—and that should start now. If you ask people in the NHS whether funding for social care and funding for the NHS are separate, they of course understand the essential link between them. Funding social care now, so that we can remedy some of the lack of access to local authority-funded social care and enable people who have substantial, not just critical, care needs to get access to social care, will do a great deal to reduce the crisis in demand for the NHS.

This is particularly true of accident and emergency units, which are often presented with older, frailer people with comorbidities—incredibly difficult patients with whom to work. The NHS does not want to discharge such patients to their homes with comorbidities and unresolved issues, so the cost to the NHS is very high. But such patients can be managed through the social care system and in primary care—we just need to make sure that they have fewer crises that have not been anticipated and dealt with.

Speaking as the Secretary of State who asked Andrew Dilnot to form his commission and prepare his report, I note that it is now over 10 years since it was presented. We legislated for it in 2014. It is available and it could be implemented now, but in my view it should not be paid for out of the national insurance increase. I proposed, more or less 10 years ago, that it should be paid for by removing the exemption for people’s principal private residence from the means test for domiciliary care. My noble friend Lord Forsyth of Drumlean asked this question. Now, it would, I think, raise something like £1.3 billion a year. If, in addition, higher-rate taxpayers who are pensioners were not to receive the winter fuel allowance, we would have about the amount of money necessary to pay for the cap on care costs and the changes to the means test.

That is how it should be paid for—within the system, essentially by those who will benefit from it, because they have the underlying resources to do so, not least in the properties that they own. So let us not go down the path of unfortunate intergenerational impacts, particularly for younger people, of putting this on to national insurance contributions.

My final point is that a White Paper on social care and healthcare is coming. We already have the Health and Care Bill. The integrated care in that Bill is not integrated care between health and social care. When we talk about integrating health and social care, what we need is not institutional integration but integration around the care user and patient themselves. That is the only integration that will really work: integration around the person themselves. Whether it is done by personalised care or self-directed care, it needs to be supported by pooled budgets and joint commissioning. Fundamentally, it is about giving patients and care users themselves, and their families, much greater control over the nature of the services provided to them by the NHS and social care. I hope that is what we shall see in the autumn.