Health and Social Care Levy Bill

Lord Lipsey Excerpts

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

[Lord Lipsey (Lab)]

My Lords, if we did not have a national insurance contribution system, no one would even think of inventing it. This debate has been a succession of hammer blows to the structure of national insurance, which is not paid on unearned income such as rent, is paid at a higher rate by the poor than by the rich, and is not paid by the elderly, who in this case will be the main beneficiaries. It is a nonsense tax, which makes it odd that even this Government should choose it as their preferred way of funding increased spending on health and social care.

This afternoon, I will not go into the social care elements. The cap introduced by the Government is nonsense, but we will debate that on Thursday. I will focus merely on this choice of method. Paul Johnson, the director of the Institute for Fiscal Studies—the Johnson who never lies—has said:

“Funding social care just from national insurance would be very inequitable. It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners”.


The Government know this and go to unbelievable lengths in their attempts to deny the clear facts. Boris Johnson said:

“The top 20% of households by income will pay 40 times what the poorest 20% pay”.—[Official Report, Commons, 8/9/21; col. 296.]


Yes, but that is because the poorest 20% pay virtually nothing because they do not earn the basic minimum for this.

Then there is the Treasury’s document, published with this, called Illustrative Analysis of the Impact of “Building Back Better: Our Plan for Health and Social Care” on Households. In general, I am that rare creature: a supporter of the Treasury—much more so than the ex-Permanent Secretary has shown your Lordships that he is this afternoon. But let me put it as mildly as I can: this document will not go down in the history of the Treasury as one of its finest bits of work. It puts together two completely unrelated bits of government spending—the bit on health and the bit on social care—and calls them “a package”. Of course, money spent on the NHS is reasonably progressive, because a great deal of it goes to poorer people, but money spent subsidising social care mostly goes to the better off. The cap will almost entirely benefit the better off, since half the population are paid for by the state anyway. It will not do to put these two things together.

Anyway, until we get this White Paper—if we ever do get it—we do not know what the Government are actually proposing. This is not just a matter of making a few broad statements that sound good on the telly interview. There is a great deal of detail on all this, and we do not know anything about that detail. There are some pretty weird assumptions in that Treasury paper. If you look down at the footnotes—the sort of thing that only I am geekish enough to do—you will see that the benefit calculation is done without including residential care. What is this whole business about? It is about people in residential care who run out of money, and yet that is excluded from the Government’s analysis. You could not make it up.

I referred favourably to Mr Johnson earlier on. It would be a favourable contribution to public debate if the IFS was to produce a more detailed and objective expert analysis which is not shaped by the instructions of Ministers to deny what clearly is the truth.

Finally, I want to say something about the Government’s procedure on this Bill. It is now more than 20 years—who would believe it—since the Royal Commission on Long-Term Care of the Elderly reported. I signed a minority report. It is a decade since the Dilnot report, which was legislated for by the Government, although the legislation was never brought into effect. Apart from those reports, there has been a non-stop flow of learned and wise contributions on the subject—well, some of them were wise.

Nearly two years ago, Boris said that it was a done deal:

“We will fix the crisis in social care once and for all with a clear plan we have prepared”—


tick, tock, tick, tock. After that, we got the September announcement. We might have expected further consultation and discussion to fill the many gaps in it. Indeed, we expected to have a White Paper, but very curiously we do not have a White Paper: we have this Bill before this House’s powerless presence. We are voting for a levy to pay a lot for something, but we really do not know in any detail whatever what it is paying for.

The Government’s excuse—I am amazed that even these Ministers dare utter it—is that it is to give time for employers to prepare for it. What about the 18 months that have passed since their plan was already fully baked, as Johnson told us on the steps of Downing Street? What about those months in the summer when, day after day, there were leaks in the newspapers about the alleged position of various Ministers on the details of this plan? Time did not matter then but, now, when they want to get this legislation through without either House of Parliament having a chance to look at it properly, time has been cut short for political reasons.

Legislating in a day should be done only in circumstances of extreme urgency. To do it for a tax that will not even bite until 2022 and for a policy that will not even be fully in being until 2024 is a travesty of democracy. Legislate first, policy later—it is Alice in Wonderland.