Health and Social Care Levy Bill

Marcus Fysh Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[James Murray]

I thank the right hon. Gentleman for his intervention, but I do feel that there is a broad consensus across this country that those with the broadest shoulders should make more of a contribution. It is quite clear from the reaction that people have had to the Government’s proposed increase in national insurance and new levy that this is falling on working people and jobs rather than taking other sources of income from wealth into account.

I have just spoken about the massive impact that this will have on inequality between different regions of the country. I therefore ask Conservative Members to guess how many times last Tuesday, when the Prime Minister announced his approach here in the House of Commons, he used the phrase “levelling up” in that 90 minute statement. It was zero. Last Wednesday, when the Financial Secretary had to take the rap here on this tax rise, how many times did he use the phrase “levelling up” in a six-hour debate? Zero. The truth is that we are a very long way from the levelling-up agenda that we hear, or at least used to hear, so much about.

Of course it is not just workers and the self-employed who will feel the direct impact of the Government’s tax rise in this Bill. This tax rise will hit businesses that want to create jobs too. That is why we have tabled new clause 4 to show the impact it will have on businesses, and on small and medium-sized businesses in particular. There will be no point in the Financial Secretary denying the impact of this measure on businesses creating jobs: it is set out starkly in the Government’s own tax information impact note that he approved last week and that we have referred to several times today. I set out earlier how this note admits that the Government’s approach will impact business decisions around wage bills and recruitment. It goes on to explain how this measure

“is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”

No wonder the Government have managed to unite business groups, workers and trade unions against their plans. At just the time when we need to see job growth, and when furlough is ending, the Government impose an extra flat cost on getting people into work. The Federation of Small Businesses has shown that this move could lead to 50,000 more people being left out of work. Yet again, small and medium-sized businesses least able to afford this tax rise will be hit hardest while online multinationals continue to dodge their tax on this Government’s watch.

The Government’s justification for much of the Bill is that they claim the levy will fix the crisis in social care. As we made clear on Second Reading, however, there is no plan to fix social care, nor even a mention of or reference to one, in this Bill. Fundamentally, despite all the rhetoric from the Prime Minister and the Chancellor, there is no guarantee that social care will benefit from the Government’s tax rise in any way at all. In the first year, the Bill explicitly rules out any money raised going toward social care. Beyond that, when the levy comes into force, it is entirely possible that not a single penny of any money raised will ever go towards the social care sector. I know that Treasury Ministers will deny that this is the case, so we ask them and Conservative Members to back our straightforward new clause 6. I note the Financial Secretary’s comment that the new clause would simply require the Chancellor to report transparently and straightforwardly on the share of the levy spent on social care each year so that we can all see what proportion of the money raised is going to the social care sector.

Finally, I turn to our new clause 7. Nothing could sum up the intrinsic unfairness at the heart of this Bill more than the case that this new clause points towards. The unfairness of the Government’s approach is impossible to ignore when we realise that this tax rise, raising money the Government claim will go towards social care, will not see those with the broadest shoulders paying their fair share but instead hit low-paid social care workers themselves. Our new clause asks the Government to be transparent and honest about this by requiring the Chancellor to report on how much revenue the levy raises from those working in the social care sector. This Government’s choices to raise national insurance, to cut universal credit and to freeze personal allowances mean that a social care worker will pay £1,108 more in tax a year. The Chancellor once clapped for key workers; now he is taxing key workers. This will hit working people hard, and we will not let voters forget it.

[Mr Fysh]

My intention with amendment 7, which I have tabled with esteemed colleagues, was to try to get the Government to focus on a way of looking at the future costs of social care and how to finance them more creatively. I have to ask: if not now, when?

We know that the most powerful way to address costs in the future is to provide for them in the present and to have the power of compounding investment returns over a period of years to meet the liabilities that people have. I am passionate about encouraging the Government to look at ways to encourage people across the board, with progressive incentives in different ways, to make provision for themselves with support from the state.

People think that they pay a contribution into national insurance that rolls up over time and gives them an entitlement to a pot of money—I have heard constituent after constituent talk about that—when we in this place know that that is not in fact the case. In fact, my right hon. Friend the Minister confirmed that that is not the Treasury’s view and that national insurance is a tax collected in-year that must be spent in-year.

There is a big opportunity for reform and innovation that could be useful and get very much back to the ethos behind the Beveridge report and the origins that I spoke to in the Second Reading debate. There was a radical movement trying to help individuals and groups provide for each other. Lloyd George and the Liberal Government’s 1911 Act was about getting national aid into the system in a creative way. I think there is an opportunity for us to talk as one whole House about innovating for the modern world in that way. What was wrong with some of those older schemes and co-operatives, friendly societies and such things in the old days was that sometimes people ran off with the money. That was one reason why there was a need to put more of a national embrace around it and administer it that way. In the modern world, we can do it differently.

All I was trying to do with the amendment was give scope for the Government to think about applying some of the funds from an element of national insurance or something related to it—that is, the levy, which clause 2 sets out—to help incentivise such pooled saving schemes. That is not necessarily insurance or private insurance with a middleman; it could be national schemes or community schemes that are properly co-operative and very low-cost. There are many modern approaches to that in the digital world, such as digital autonomous organisations, where there are no middlemen at all and people do not have to rely on a contract.

That was the pure intent of my amendment, so I am a little disappointed that the Government do not seem to want to engage with it. I urge my right hon. Friend and those on the Treasury Bench to think about ways we might do that in the future, because I can see it as a useful evolution of the policy that might bring people from all parts of the House together in the way I have been describing.

[Dr Poulter]

I am sympathetic to the point that my hon. Friend is making. In principle it is a very good point, but the practicalities are that the moment we move towards the system that he is advocating, we have to clearly define what is health and what is social care, and that makes the integration of the two systems much more challenging. In the context of better integrating health and social care, has he considered that practical element in putting forward this proposal?

[Mr Fysh]

I thank my hon. Friend for his intervention. The truth is that, yes, I have thought about that, and I must emphasise that I am thinking about this measure only in terms of social care costs and liabilities. We have heard how residential care living costs will be excluded from the funding produced by the levy. Pooled savings schemes or liability defrayal schemes could easily include such elements and make a really big difference. I am not talking about the costs of healthcare in the healthcare system.

There are ways in which the healthcare system could look at insuring itself against particular outcomes. Sometimes, unfortunate things happen in neonatology, for example, which have a long liability tail in younger people living with healthcare needs. Those are targeted things, but that is completely separate from the present need to get money into social care. That is what I am talking about, and such a scheme could get money into social care more quickly than the plan that we have heard to date.

[Dr Murrison]

I have been listening carefully to my hon. Friend and what he has said has a great deal of merit. Does he agree, however, that while the Government’s aim is to integrate health and social care, which arguably have been divorced one from the other since 1948, to the great detriment of the people we represent, the system he suggests might exacerbate that problem? That would be in contrast to the provisions of clause 2, which leave it up the Treasury to decide how moneys raised by the levy should be apportioned. Surely it is better that the Treasury can do that so that it can facilitate the integration of health and those elements of social care that relate to care as opposed to residential costs.

[Mr Fysh]

I do not think that the amendment would remove any of the Treasury’s discretion in clause 2; all it would do is specify that moneys raised could be used either in the current year or against future years’ costs. The Treasury would govern how such schemes worked and how to achieve that integration.

Since I was elected, I have been passionate about the integration of health and social care, and I anticipate that, through such an amendment, the Government could help to get money into the system to help it work well. I hope that the Government will reconsider their request for me to withdraw the amendment. I would love them to adopt it. It would be no skin off their nose to do so; the amendment would just give them a bit more flexibility in the Bill. I look forward to hearing my right hon. Friend the Minister’s response.

This is a probing amendment, and I cannot be confident that the Labour party will support it, perhaps because of their slight misunderstanding of its purpose, so this might not be the time to force the Government’s hand. However, it could be a useful evolution of the national insurance policy, given the direction in which the Government want to go on that.

[Stephen Flynn (Aberdeen South) (SNP)]

It is a remarkable feat indeed that the Government have managed to unite the left-wing press, the right-wing press, the Unionist press, the nationalist press, pressure groups in favour of ending poverty and pressure groups who want to see businesses excel, all in condemnation of the Bill. Although I do not think anyone in the House doubts that it will once again sail through the voting Lobbies this evening, I would like to put in my two cents for what little it is worth. In that regard, I commend the amendments in my name and those of my learned colleagues.

As colleagues across the Chamber will recognise, new clause 1 seeks to get the Government to provide an equality impact assessment of the effect of this Bill, by age, on people’s wealth or income. The reason they will not accept that, despite the polite remarks of the Minister, as always, is that such an equality impact assessment would put in black and white what all the pressure groups are telling us. Indeed, much of what we have heard from Members across the Chamber throughout today and last week is that the Bill, in its entirety, will hammer the youngest and those who work the hardest in society, but not necessarily those in the south-east of England who have the most to give.

I heard a remark earlier that about 50% of the income that will be generated by this Bill will come from those under the age of 45. It will be coming primarily from younger people, who are the very people whose horizons have been shortened by Brexit, and whose job opportunities, career opportunities and educational opportunities have been hammered by the pandemic. What the Government are seeking to do is impose further challenges to their lives. It is an unforgivable act, but one that they are going to push through with no contrition whatsoever, as far as I can see, and in the knowledge that they also plan to cut universal credit in the coming weeks—a double whammy on those in society who can least afford to face the real challenges in front of them, and an abdication of responsibility of the highest order.

However, it is not just individuals, young people, working people or families who will be hammered by this tax; it is also businesses. That takes me nicely to our new clause 2, which involves trying to get the Government to do an economic impact assessment of these policies. However, they will not do that either, because they know what the outcome would be, as we see in the language being used by business groups. The Federation of Small Businesses has been absolutely clearcut about its expectation that the proposal will force 50,000 into unemployment. It is a disaster for business.

The Tory party was once, when I was growing up anyway, regarded as the party of business. What has happened? Why are we in a situation now in which not only have the Government forced through Brexit in the middle of a pandemic—and businesses are having to deal with the challenges of exporting goods and the shortages of supplies, to pay back bounce back loans before they have even had the opportunity to bounce back, and to deal with the fact that furlough is going to end despite the clear uncertainty facing them—but they are seeking to impose a jobs tax? Where is the justification for that? I encourage any Government Member to rise to their feet and disagree with anything I have said, but they will not because they know that we are right in this regard.