Health and Social Care Levy (Repeal) Bill

Peter Grant Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

Does the Minister accept that, regardless of what the Government have done, my constituents can expect to pay double for their energy bills this year compared with what they paid last year?

[Chris Philp]

The energy price guarantee ensures that the average household pays no more than £2,500 a year. The hon. Gentleman is correct that that is higher than average bills this time last year, and that is why the comprehensive package was put in place earlier this year. It amounts to a further £37 billion, and ensures that households on the lower one third of incomes receive £1,200 per year, which pretty much fills the gap that he described. The energy price guarantee, combined with that £37 billion intervention, is the kind of thing we can do as a Union and as a United Kingdom. It is the kind of thing we can do together that would be so much harder apart, and that is one of the benefits of our precious Union. There is a lot more in the growth plan, but I will not labour the point because we are here to talk about the health and social care levy.

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[James Cartlidge (South Suffolk) (Con)]

It is fair to say that it is a bit of a novelty for me to be called so early, and without a time limit, in a debate. I am very grateful, not least because how we pay for healthcare is one of the single most important subjects in British politics. That is essentially what we are debating today, and I feel strongly on this subject. The core principle must be one that I have always held as a Conservative, which is that we are fiscally responsible. As with the environment, we must aim to leave things in a better condition for future generations and, with the public finances, have in mind at all times the impact on those yet to be born—on our grandchildren—so that we are fiscally responsible. That is the fundamental belief of my party, in my view.

With that in mind, there is a lot of excitement about what the OBR will say on Hallowe’en, but it has already pronounced on the matter of health expenditure. In July it published “Fiscal risks and sustainability”, a fascinating bedtime read. The crucial thing is what it says about the OBR’s estimate for the future cost of healthcare in this country. It predicts that the current spend on health and adult social care will go from around 10.3% of GDP to 17.5% of GDP in 50 years’ time. That is an extraordinary increase—almost double—and it would take up so much more of our wealth and public expenditure. The OBR’s track record is very accurate on estimating health spend. It is based on a lot of cautious variables that are obviously difficult to predict, but essentially this is, if you like, cutting the mustard in telling us the future cost we have to face up to.

To put this in context, the OBR estimates that the headline estimate for public debt that we will be passing to our grandchildren will be 100% of GDP in 30 years’ time and that in 50 years’ time it will be 267% of GDP. That is what it says in this document. If we carry on as we are, we will have a national debt of 267% of GDP because of the rising cost of what is called demographics. That is mainly healthcare but also the state pension and other aspects of the pensions system. Overwhelmingly, however, it is healthcare. Adult social care will double as a percentage of GDP as well.

I should declare an interest in the sense that I had an indirect role in the creation of the health and social care levy, and it is fair to say that I have many reservations about what we are doing today. As colleagues know, the former Prime Minister—who deserves great credit for this—was determined that we would not just have another Green Paper or White Paper on social care. He wanted to actually deliver something for the country and he introduced the cap that had been promised by successive Governments, so that although people who have saved hard and have assets have to contribute to their care, they know that there is a limit. It is incredibly important that we brought that forward, and I sincerely hope that in removing the funding mechanism for the cap, the Treasury will resist the temptation to water it down. Local authorities are not yet aware of exactly what the cap will cover, and with the funding stream gone, the Treasury must resist the temptation to water the cap down. That is absolutely paramount.

When the Prime Minister came forward with wanting to pursue the cap, it was the view of the then Chancellor —my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who I had the privilege of being Parliamentary Private Secretary to throughout the pandemic—that it must be funded, and that it could not just go on the national credit card. The social care cap on its own is massive rising liability. I have just set out what is going to happen to health costs more generally. So, how to fund social care? The most common suggestion was an increase in national insurance, for the simple reason that it applies to businesses and individuals and so raises the sorts of revenue we can get. It is not easily avoided, and it can give us the money in the bank to pay for these expensive costs that we face.

However, I submitted a paper to the Chancellor at the time and suggested that, rather than having just a narrow national insurance levy—a social care levy, as it were—we should have a full health and social care levy that should be hypothecated and appear as an explicit line on people’s payslips. It will be there on our payslips until November. I accept that we have not made the most of it, and there has been almost no enthusiasm from any quarter—possibly only from the social care sector—but with a transparent, hypothecated statement on payslips, if the NHS came back to us two years into a five-year funding settlement saying, “We need this additional big item,” we could say, “Fine, but it will come out of the levy.” That would be transparent, and it would have provided the discipline that we have terribly lacked in health spending for many years, under successive Governments. I thought it had great potential, but it is being vapourised today. The Prime Minister has a mandate for it and the whole House seems to support that view, as does the Labour party even though it does not have the foggiest idea how it would fill the gap.

[Peter Grant]

The former Prime Minister had a mandate to do what he did last year. The hon. Member for South Suffolk (James Cartlidge) says the new Prime Minister has a mandate to do this. Where did that mandate come from? I do not remember Parliament being dissolved for a general election in the last couple of months.

[James Cartlidge]

The new Prime Minister would rightly say that our manifesto said we would not increase national insurance, so she can draw on the mandate of the general election. We also seem to have vapourised our memory of the pandemic, but I would argue that it changed everything. The enormous borrowing accrued to this Government during the pandemic, which everyone supported—everyone wanted even more spending and even more support for businesses and individuals, as I remember because I was the then Chancellor’s PPS—made it exceptional, and we had to balance the books. I make it clear that this was not my preference, as I would not have wanted a levy to fund the NHS and social care. Given the politics of the time, it was the best way forward.

This is my personal view about how we should move forward. The key point is that the NHS is free at the point of delivery, which means we pay with time. When something is free, people wait and there are massive queues. Of course, those queues have been massively exacerbated by the pandemic, which is why the backlogs are so big, but it is blindingly obvious that the pressure on the NHS is overwhelming. There is almost infinite demand on finite capacity.

Labour Members will say in any election campaign, as we will. “We will do everything possible to increase capacity.” The Deputy Prime Minister and Health Secretary will, of course, do everything possible through her ABCD—ambulances, backlogs, care, doctors and dentists —strategy to improve outcomes in the NHS, but when we talk about funding the NHS, when we talk about the obligation to our grandchildren and the next generation, we have to be more radical, frankly.

In my view, we need a core NHS that is free at the point of delivery, but as a country we need to drive up the use of the independent sector and of private healthcare from all those brilliant companies that are seeing take-up shoot through the roof because of the backlogs. I know some of this territory is difficult to talk about, but I will give three key reasons why we should go down this route. First, every single person who pays to go private is freeing up space on the backlog. They are also boosting NHS capacity.

Secondly, this is standard in comparable countries. The Republic of Ireland, Australia and Germany have tax incentives for people to pay for their healthcare. There is an understanding that people who go to that trouble should have some kind of rebate, because they are doing everyone else a favour.

Thirdly, this is already happening. The post-Beveridge revolution is happening, and it is happening silently. There has been a massive surge in the number of people paying privately for healthcare. The Guardian recently published figures estimating that one in 10 adults in the UK has paid for private healthcare in the past 12 months, primarily because of the backlogs. Use has surged, according to the Independent Healthcare Providers Network. The number of people paying for hip replacements was up 193% in January to March 2022 compared with January to March 2019, and the number of people paying for knee replacements was up 173%. This is a huge surge in the number of people paying privately. It is true that many of them will not have wanted to do so, and I am not suggesting that they will have been delighted. Of course, we all want everyone to be able to use the NHS without long waits—that is clearly the ideal scenario—but it is not deliverable any more, not least with the demographic pressures we face.

We should look at the surging use of the independent sector and embrace it as a policy opportunity. Research from the Independent Healthcare Providers Network shows that 48% of people in this country will consider going private in the next 12 months because they know about the waits. This is about choice, and the most important thing is to have greater tax incentives for people to use the independent sector, so that people think about making a realistic choice. We should not settle for long waits for care any more. This is standard practice in comparable European and Australasian countries.

To be very specific, going back to the OBR document I mentioned, as a country we face a huge liability for health and social care. We should target increasing the percentage of our healthcare spend that goes to the independent sector so that we have a better balance, more like the balance in comparable European countries. If we did that, we would get much better outcomes, we would have more choice and we would finally have a 21st-century healthcare system with diversity of provision, which is the best way forward.

We should recognise that the revolution is happening, and it needs to happen with the Government’s backing and support.

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[Peter Grant (Glenrothes) (SNP)]

I do not often say this, but I welcome the decision that the Government have taken, which is to U-turn on their increase in national insurance contributions, although I utterly reject any suggestion that it should be coupled with any watering down of the previous commitments on funding for health and social care services.

I do not think that national insurance is the right name for this tax. It is an income tax—a jobs tax—and we should be honest about what it is doing. It is a jobs tax because if a person has a job, they pay tax on the money that they get paid for doing their job— unless they are earning way below the minimum full-time wage. If they are an employer, they pay tax on the wages that they pay someone for doing the job for them. It is only if a person is lucky enough to be able to make most of their money from owning shares or property that they can earn significant amounts of money without paying national insurance on that income. I have to say that not many of my constituents who are struggling on a minimum wage and part-time jobs are that impressed by the fact that they can get national insurance-free income from their share portfolios, because they cannot afford to buy them in the first place.

This is a form of income tax—a jobs tax—specifically targeted at working people. It is not even an insurance as such. I pay insurance on my car. If I am involved in an accident, I have a guarantee that the insurance company will pay its share of the costs. People do not get that guarantee just because they have been paying national insurance contributions all their life. Just ask the WASPI women—of the Women Against State Pension Inequality Campaign—how much of an insurance scheme guarantee they actually get from national insurance.

The legislation that we are being asked to repeal today—and it looks like it will be repealed today without a Division—introduced a form of hypothecated tax, which is not something that I would generally support. Nobody has really mentioned that in this debate, and it did not get much coverage in the debate last year. Other than for very time-limited and precisely defined purposes, hypothecated taxes do not really work. Filling in a small part of the decades-long underfunding in some of our most important public services is neither time limited nor specific.

Whatever we are going to do to change the tax system to get adequate funding for these services, a single, specific hypothecated tax is never going to be it. I have been consistent on this. I find it interesting that nobody who has spoken in this debate in favour of repealing the levy has explained why they voted for it in the first place last year. I note that sometimes people are allowed to change their minds regularly, whereas at other times people are not allowed to change their minds from eight years ago.

Our health and social care services are among our most precious public services. Universal healthcare—including free prescriptions—free at the point of delivery, based only on clinical need rather than the ability to pay, is surely an essential part of any civilised society. I would say the same about social care. I am proud that in Scotland we have free personal care for those who need it, regardless of whether they can afford to pay for it. I welcome the steps that the Scottish Government have taken to reduce the financial burden on those who need other forms of social care as well. All of these services are available to everybody and they should be paid for by everybody according to our means through general taxation. I am not ashamed to say that if I had to pay a wee bit extra tax that I could easily afford in order to provide a civilised society for my people to live in, I would do so willingly.

Those principles are now under direct attack, even more so than they were under the previous Prime Minister, and even more so than they were in the dark days of Margaret Thatcher. We now have a Prime Minister who has chosen to surround herself with people whose links to the NHS privatisation lobby are not hard to find. It does not need to be direct privatisation; it is very easy to privatise the health service by stealth, simply by strangling it of funds so that the waiting list becomes so long that people choose to pay for a health service that they have already paid for through their taxes.

That is why it is essential that we get a commitment from this Government that not only will there not be a reduction in cash terms in health service funding or in social care funding, but that those budgets will increase by enough to cover the cost of inflation as it hits those services. Historically, inflation in the health service has usually been higher than the headline rate of inflation. The headline rate of inflation is savage enough just now. It is likely that the true cost of inflation to the health service is even higher. I asked the Chancellor about this directly a few weeks ago when he issued his mini-Budget. Scandalously, he refused to give a commitment that funding in the health service will even keep pace with inflation, never mind increasing to meet what we can all see is an unmet demand.

Part of the reason that the NHS is coming under unprecedented pressure is that the policies and deliberate choices of this Government and their predecessors have forced people into poverty and destitution, and that has an impact on people’s health, which creates additional demand on the NHS. As others have pointed out, having people on health service waiting lists unable to work damages the economy. If the economy is damaged in such a way that it affects the funding of the health service—if, for example, people are given lower wages, are put under financial stress and are unable to afford the cost of living—that in turn damages our health, and to an extent that we perhaps have not properly realised until recently.

A recent study by the University of Glasgow and the Glasgow Centre for Population Health found nearly 335,000 excess deaths in the UK in the past seven years that were caused by austerity. Deliberate policy choices by this and previous Tory Governments since 2012 have killed more people than the covid pandemic. That is a scandalous thing to happen in any country that claims to be civilised. That is why we cannot fully consider the provisions of this Bill, or the provisions of the Act of Parliament that it seeks to repeal, in isolation from the wider policies of a Government who seem hellbent on plunging even more people into poverty, while lining the pockets of their own billionaire supporters and donors.

To give just one example, the Chief Secretary to the Treasury was delighted to tell us earlier that the combination of not increasing the national insurance levy and the previously announced changes to income tax thresholds will amount to a whopping £500 per year back in the pockets of my lowest-earning constituents. They are paying between £1,200 and £1,500 a year more just for the heat in their homes compared with last year, so the generous £500 a year that the Government are putting back into their pockets is less than half of what my constituents need just to stand still for electricity and gas prices. That is before they start to pay their increased costs of food, rent and mortgages for those able to buy their own homes.

That should not be inevitable. My constituents live in a country in which 85% of energy does not come from gas, so why do they see their bills doubling when there is a gas shortage? My constituents live in a country that supplies more energy than it needs and has a commodity that is in short supply, so why are they so much worse off when the value of the commodity that we have in surplus increases on the global market? Those are not questions that Treasury Ministers or other Ministers in this place do not know the answers to; they are questions that they are scared to face up to the answers to.

Repealing this legislation when the ink is hardly dry on the paper serves to illustrate yet again the total chaos that this Government are in. That chaos has spread to the whole of these islands, and they seem quite happy to inflict it on the financial markets, despite the impact they know it will have on people’s standard of living now and the pensions they will be able to rely on in the future.

The Government’s persistent refusal to provide a costed plan to ensure sufficient and sustainable funding for those vital services, directly through funding in England and indirectly through Barnett consequentials on the devolved nations, and their persistent refusal to put health and social care services on a proper and sustainable funding basis demonstrate clearly that our national health service can never be safe in the hands of this or any other Westminster Government.

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[The Economic Secretary to the Treasury (Richard Fuller)]

It is a pleasure to close this debate on behalf of the Government. I thank all hon. Members for their contributions to this relatively short debate. I think it is fair to say that none of us came here expecting to find a perfect consensus, but it was rather pleasing to hear the measure welcomed by the Opposition spokesperson, the hon. Member for Ealing North (James Murray), the SNP spokesperson, the hon. Member for Gordon (Richard Thomson), the Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney), and the hon. Member for Glenrothes (Peter Grant). I thank all those Opposition Members for their support.

I thank my hon. Friend the Member for South Suffolk (James Cartlidge) and my long-standing hon. Friend the Member for Macclesfield (David Rutley) for their speeches and my hon. Friends the Members for Winchester (Steve Brine) and for Salisbury (John Glen) for their interventions. If there was one message from the four of them, it was on the importance of fiscal responsibility. That was heard loud and clear, and it has been resonated by the Chancellor again and again, including today. Truly, it is the essence of conservatism, as my hon. Friend the Member for South Suffolk said. I noted what my hon. Friend the Member for Macclesfield said about the Treasury working more closely with the OBR and about the engagement requested by the Chair of the Treasury Committee. I assure him that the Treasury team will engage as he has suggested.

This has been a serious debate for the most part. It looked like it was getting into levity at one point, when the hon. Member for Arfon (Hywel Williams), who unfortunately is no longer in his place, volunteered to be a member of the anti-growth coalition. He said it was important that there was a free lunch. The hon. Member for Gordon spoke about not joining a club and invoked Marx, although not the Marx who was the favourite of the former Opposition spokesperson on finance.

At times, there were clear points of ideology in respect of the plan. It is clear that the purpose of the Chancellor’s growth plan is to improve lives across the country over the long term. Growing the economy must be our guiding mission, and with this Government it is. We will do so through lower taxes, through improved infrastructure, by supporting skilled employment, by removing barriers to investment, by getting the housing market moving, by making Britain an even better place to do business and by ensuring that people who earn money keep more of it so that they can make their own decisions—that includes our businesses.

I heard from the Opposition spokesperson that their plan comprises two aspects. First, it is the Government—a Labour Government—who should decide the right way to achieve growth in this country, rather than the wealth creators and businesses. Labour wishes to make those decisions on behalf of all of us. Many of us on this side of the House know where that sort of central planning ends up.

Secondly, those with the broadest shoulders should bear the burden. I just warn hon. Members to measure how broad their shoulders are. My fear is that it is not those with broad shoulders but anyone with shoulders who bears the burden. My point is this: the starting position for Labour’s plan is that this year, 2022-23, those in the top 1% of the income distribution are estimated to receive 13% of all income, but already pay 30% of all income tax liabilities. Those in the bottom 50% of the income distribution are estimated to pay only 8.3% of all income tax. When Labour says that it wants to fund its plans through general taxation, it is not looking for the 1% to pay; it is looking for people on average and low incomes to pay. The Conservative party does not think that is the right way to achieve growth.

[Peter Grant]

Will the Minister give way?