Health and Social Care Levy (Repeal) Bill

Lord Tunnicliffe Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 17th October 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, I am grateful to the Minister for introducing this Bill, and to the other noble Lords who have contributed to this debate. It is somewhat natural that the debate has strayed beyond the narrow measures in the Bill before us; that is an inevitable consequence of the chaos that we have seen in recent days, with the departure of one Chancellor and the unprecedented Statement from his successor. If it had not been for the explicit commitment to continue with this U-turn, I would have been tempted to ask the Minister whether he was completely sure that the Bill remains government policy. It does—and, for reasons I shall come on to, I am pleased this measure is one of the few to survive the shambles that has been the mini-Budget.

The Chancellor may not have said it in his Statement this morning but let us be under no illusion: this was, at long last, an admission from the top of government that the recent economic crisis was made in Downing Street. Liz Truss may have thrown her first Chancellor under the bus on Friday, but we must remember that it was she who proposed much of the mini-Budget during the recent leadership election. She created it, she endorsed it and she defended it, and no amount of spin can change that—and the public, who are paying higher mortgage bills as a result, will not forget it.

On the subject of spin, the Prime Minister has been keen to present Labour’s support for this legislation as an endorsement of her discredited economic policies. It is anything but. We back this Bill because it will put money back into the pockets of working people, at a time when they need it most. It is money that should never have been deducted from pay packets in the first place. Labour has always opposed the Conservatives’ national insurance hike. We support the repealing of the 2021 Act because it should never have reached the statute book in the first place.

Noble Lords will remember the Labour Party spending much of 2021 warning that, with a cost of living crisis brewing, this legislation was the wrong policy at the worst possible time. Many Back-Bench Conservatives privately agreed; their postbags had convinced them of the very serious financial struggles being faced by their constituents. Crucially, this was all brewing long before Putin’s invasion of Ukraine and its impact on energy prices. Those MPs agitated behind the scenes, but the former Prime Minister pressed on regardless, and the current Prime Minister supported him every step of the way. As a member of Johnson’s Cabinet, she was an enthusiastic supporter and staunch defender of the very levy that she is now scrapping.

The NICs rise was never the right way to address issues with our health and care systems. However, the NHS and social care are, under the Conservatives, at breaking point. The need to support them is clear. Several NHS trusts have declared major incidents or introduced special measures in recent weeks, and we are only just into the autumn. Although Covid infections and admissions are increasing, we have not yet encountered a significant wave of coronavirus or flu. There is, unfortunately, a chance that both—a so-called twindemic—will hit at once.

Why are hospitals and other NHS settings struggling so badly right now? Despite the incredible efforts of doctors and nurses, the NHS has the longest waiting lists since records began. Thanks to successive Health Secretaries undermining the strong record of the last Labour Government, waiting times are up across the board: in A&E; in urgent referrals; for routine treatments; for GP appointments; and for ambulances. This is, in part, because of the Conservatives’ recruitment and retention crisis. They cut bursaries for nursing courses and wondered why so few people wanted to train. They work doctors and nurses to the point of physical and mental exhaustion and wonder why staff leave their posts. They refuse to reform GPs’ prohibitive pension arrangements and wonder why they opt not to return to the profession or commit to extra hours. Labour has a plan to expand the NHS workforce, so that our beloved health service has the doctors and nurses it needs. Rather than taxing working people, we will scrap the controversial non-dom status and use the proceeds to fund thousands of additional nursing and midwifery placements, and to double the number of medical students.

Despite Boris Johnson’s very first address as Prime Minister promising a plan for social care, we have seen things worsen. The sector is desperately in need of extra staff, yet is haemorrhaging personnel to supermarkets and other businesses which pay higher wages. Hospitals are increasingly unable to discharge patients with care needs, blocking beds that are so badly needed to clear backlogs or improve A&E waiting times. This is not a new phenomenon; it has been happening for years. The fact that it is still happening points to another example of Conservative failure to grip the problems facing our country.

Among other things, a Labour Government will ensure that care workers get the pay they deserve. That will not only help to alleviate the staffing crisis but lead to better outcomes for patients. Until then, and following the passage of the Bill, who or what will pay for the Government’s health and social care policies? The Treasury expects the funding which replaces the levy to come from general taxation, although Ministers have acknowledged that additional borrowing may be required in the short term. Will the Minister outline how much higher the cost of borrowing is at present, compared to the weeks or months before the disastrous mini-Budget? We may have seen the markets responding relatively positively to today’s announcement, but we know that recent events have increased the effective cost of borrowing.

The Chancellor acknowledged earlier that growth requires “confidence and stability.” It is increasingly clear that the Conservative Party, with a fourth Chancellor in four months and a third Prime Minister in just over three years, is unable to provide either. We welcome this specific U-turn, but the truth is that the Government have lost all credibility. It is not for today, but there are serious questions for the Government to answer about their climbdown on energy, which will cause alarm in households across the nation. Shelving the mini-Budget was not supposed to involve shelving the two-year energy commitment too. We will support the Bill, but this whole episode demonstrates that only Labour offers the leadership and ideas that Britain needs to fix the economy and get us out of this mess.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

I do not believe the noble Lord and I will agree on this. It could be that we write a letter to spell out exactly what we mean by this, because I have spelled out the facts. To say a little more on this, cutting NICs from November will provide an average tax cut of around £135 for workers this year, and £330 next year. Taking into account the increase to NICs thresholds in July and the levy reversal, almost 30 million people will be better off by an average of over £500 in 2023-24. So, this directly affects lower economic groups rather than the higher ones. I think there is a lot more I could say in a letter because, as I say, I do not think that the noble Lord and I will end up agreeing on this particular matter.

[Lord Tunnicliffe (Lab)]

As this debate is getting increasingly interesting, will the Minister copy that letter to all who have participated?

[Viscount Younger of Leckie (Con)]

Absolutely; I am more than happy to do that for the noble Lord and for the whole House.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

That is another question which I shall add to the letter that I intend to write.

[Lord Tunnicliffe (Lab)]

It will be a long letter.

[Viscount Younger of Leckie (Con)]

I thank the noble Lord, Lord Tunnicliffe.

I will go into a deeper and important issue, which was raised by a few Peers but in particular the noble Lord, Lord Sikka, with regard to what we are doing to help the poorest. It is important to broaden the scope of this debate. As I said earlier, we understand that many people across the UK are very worried about the cost of living and are seeing their disposable income decrease as they spend more on the essentials, which of course include energy. That is why we have taken decisive action to get households and businesses through this winter and the next while ensuring that we act in a fiscally responsible way.

I will not go through everything because the House will know about the energy price guarantee, which means that a typical UK household will pay no more than £2,500 a year on its energy bill. That is in addition to the £400 discount already announced through the energy bills support scheme, and we also have the energy bill relief scheme, which will provide a discount on wholesale gas and electricity prices. In short, therefore, these measures will save the average household around £1,000 per year from October, so that protection is there in that respect.

The noble Lord, Lord Davies of Brixton, basically stated that the levy was not a tax cut and went on to say that the funding has not supported the HSC—health and social care—levy. However, it is a tax cut for people and businesses this year, who are already paying an extra 1.25%. The average saving for people is £135 this year, and I believe it has helped the NHS, particularly in helping it through the recovery from Covid.

I was grateful for the remarks the noble Lord, Lord Tunnicliffe, made. My remarks now also take into account the points raised by the noble Baroness, Lady Brinton, and, once again, the noble Lord, Lord Sikka. The comments were broader, on the capacity of the NHS, current Covid infections rising and waiting lists generally, as well as NHS recruitment and retention, which I touched on slightly earlier, and, crucially, the adult social care sector. The 2021 spending review allocated £188 billion in total to the Department of Health and Social Care, which includes helping to tackle elective backlogs in the NHS and plans to spend £8 billion by 2024-25; these were raised during the debate. That includes an 50,000 extra nurses in the NHS. The Government accept in full that this year’s recommendations from the independent NHS pay review bodies are in stone—a pay rise, that is, for over 1 million staff.

On the social care side, the Prime Minister and the Secretary of State for Health and Social Care announced a £500 million adult social care discharge fund; I have mentioned it at least twice in this debate, I think, but it is worth mentioning it again. This will bolster the social care workforce, which the noble Lord, Lord Tunnicliffe, raised as a concern. It will also help people out of hospitals and into crucial social care support.

In what was a rather downbeat speech, if I may say so, the noble Baroness, Lady Bennett of Manor Castle, raised issues including stability, businesses and individuals who are not able to make decisions, and spending cuts and austerity. As always, I listened to what she said. My response is that the Chancellor has taken swift action today precisely to ensure that the country’s economic stability is sound and to show commitment to sound public finances. That is very important. This matter will be discussed further when the Statement is made to the House. I say again that spending restraint is needed. Departments have been asked to find efficiencies. Priority will be given to those at the vulnerable end of society.

The noble Lord, Lord Tunnicliffe, spoke about fiscal sustainability. He asked whether I could outline how much higher the cost of borrowing is at present compared with in the weeks and month before—as he put it—the disastrous mini-Budget. The Government are taking action to assure the markets of their credibility and reduce the amount of borrowing needed. In his Statement today, the Chancellor made it clear that the UK’s public finances must be on a sustainable path in the medium term.

I will finish on this note: to state the obvious, as we all now know, the Chancellor will publish his medium-term fiscal plan, including a fully costed plan, on 31 October. I will leave it there. Once again, I thank noble Lords for taking part in this short debate.