Health and Social Care Levy Bill

Debate between Nigel Mills and Nadia Whittome

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

[Nigel Mills]

I assume that my right hon. Friend is right that, if we reduce the number of people in work or reduce their pay rises, that will work its way through the system. The Minister may be better placed than I am to work out an answer to that question.

The nub of my argument, and the reason for amendment 8 and new clause 10, is that we have 18 months before the new levy comes into force—we accept that we cannot bring it into force in six months’ time, presumably because it is so hard to get the systems in place, and that we have to raise national insurance for the first year and move to the levy after that—so perhaps if we had all the information in front of us in the next six months or year, we could make a choice whether to go ahead with the new levy for the small amount of extra income, or whether to stick with the national insurance rise and find other ways to explain to people what they are paying their taxes for.

I think the Minister accepted that HMRC will publish its estimate, and I am sure we could find a way of getting an accurate estimate of the cost to business of complying with the levy. We could then take an informed decision before we finally introduced the levy. I think that would be a positive step in tax policy. However, if we really believe that we want a separate levy to show what people are paying directly for health and social care, I think that we should move the existing 2% of national insurance that goes directly to the health service into the levy, so there is one hypothecated payroll tax that goes to the NHS on people’s payslips, rather than it being hidden in a part of national insurance. I cannot see any reason why, if we go down the line of introducing a new health and social care tax, we would not want to have all the hypothecated payroll taxes going into the NHS or social care to get any of the advantages of that.

I will not be pressing my two new clauses to a Division, but I urge the Minister to give some serious consideration—I suspect he did not know about this new levy until around about last weekend, when it was probably dreamt up in No. 10 as a way of selling a tax rise—to using the 18 months he has before the levy comes in to try to work out whether the costs of collecting it are worth the small change. If he really does think there is a compelling argument for charging people over retirement age national insurance if they stay in work and are earning, let us charge them the full rate, rather than 1.25%. I cannot see how we can justify that they do not pay the existing 2% that goes to the NHS but they do pay the 1.25%. There seems to be no logic in that at all to me, so perhaps we should think properly and coherently about the tax system. Let us have the full rate in that situation.

Let us have a decision when we get around to the Budget in 2022. Is going ahead with this levy going to raise more money than it costs? If it is not, let us just leave it on national insurance where it will be sat at that point. That would be a more coherent way of running our taxes.

[Nadia Whittome]

With your permission, Dame Eleanor, I will speak to new clauses 3 and 5, tabled my hon. Friends the Members for Ealing North (James Murray) and for Erith and Thamesmead (Abena Oppong-Asare). New clause 3 requires the Chancellor to assess the impact of the Act on tax revenue from different sources of income and new clause 5 calls on the Government to publish an equality impact assessment of the Act.

Dame Eleanor, given that even in Committee this has been a wide-ranging and broad debate, I hope you will allow me to set out the context of those new clauses. It is people in poorly paid jobs who will bear the brunt of the national insurance increase, at a time when in-work poverty is already at a record high. How can it be right to ask those who are already saddled with extortionate housing costs, poverty wages and mountains of debt to pick up the tab for this Government’s failures on social care? To put it simply, the Government are choosing to protect the interests of the wealthy who fund them at the expense of low-income workers and renters. While landlords and the super-rich who are hoarding wealth and housing pay nothing under this new tax, my constituents will be having their pockets raided.

Since 2010, under this Government’s watch, £7.7 billion has been cut from social care budgets. If I could sum up this policy—if we can call it a policy—in one word, it would be “unfair”: unfair on the working people who are funding the tax rise; unfair on the care workers who will not see their pay and conditions improve; and unfair on those relying on social care, whose needs will continue to be unmet. Figures released this week show that nearly 70,000 people in England could die waiting for social care before these changes even come into force.

If the Government were interested in fairness, they would tackle the soaring housing costs, low-paid jobs and inadequate benefits that my constituents are facing. Instead, their policy agenda is fuelling inequality and impoverishment. As we heard from the hon. Member for Aberdeen South (Stephen Flynn), 2.5 million working households will be hit by the cut to universal credit and the increase in national insurance. Working families will be losing, on average, over £1,000 next year. Meanwhile, the furlough scheme is ending and evictions are resuming.

There is, however, a group of people who have benefited from the pandemic—who have done very well, in fact: British billionaires. They have increased their wealth by over £100 billion. That is why now is the time to get serious about taxing wealth. The Chair of the Health and Social Care Committee, the right hon. Member for South West Surrey (Jeremy Hunt), said earlier in the debate that this tax hike would raise more than a wealth tax, but I am afraid that that is not true on any measure. City A.M.—this is City A.M., not “Das Kapital”—calculated that one wealth tax option would be to tax wealth progressively between £1 million and £10 million, with all wealth beyond £10 million taxed at 3%. That would bring in a total of £55 billion over five years. Alternatively, the economist Richard Murphy calculated that, if wealth was taxed at the same rate as income, that could raise up to £174 billion a year.

Will the Minister explain why none of those options was considered and what the Treasury makes of those calculations? And perhaps the Chancellor could explain to us, as a multimillionaire, why he cannot dig deep into his own pockets and why it has to be my constituents—in fact, all our constituents—instead. I think that this House and working people across the country deserve to know why a wealth tax was dismissed in favour of a tax on the poorest and the lowest paid, and what is more, to fund a plan that will not even work.

We have heard during this Committee that the Government’s excuse for not ring-fencing the money raised for social care is that health and social care are interlinked. I agree, to an extent, and that is why, to fix our social care system, we need a national care service, like our national health service, which is free at the point of use. We need to redesign the system so that the needs of care users, for want of a better word, and care workers are at its heart. The money to do that is there but it is in the pockets of the richest and it is the political will from this Government that is sorely lacking. Anything less than a national care service, funded by a tax on wealth, not on workers, would be a great disservice to the people we are elected to this place to represent.