Health and Social Care Levy (Repeal) Bill

Richard Fuller Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[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?

--- Later in debate ---

[Richard Fuller]

I will come to the hon. Gentleman if I have time.

The Liberal Democrat spokesperson gave a very good speech and raised important broader issues. She welcomed the measure and spoke about the costs that have been paid by people and businesses—she gave the figures £2.5 billion and £3.8 billion. That underlines the important contribution this measure will make by putting money back into the pockets of households as they face the winter crisis and into the hands of businesses as they make their investment decisions.

The hon. Lady kindly spoke about her past as an accountant—not everyone would necessarily volunteer their past as an accountant. She spoke about some of the disruption there has been. I assure her that I have spoken, as has HMRC, to payroll software companies to assess what the level of disruption has been and whether this additional change will cause further disruption. In my conversations with them, they have said that there have been minimal costs to date and that the reversal will have minimal costs for them. That is just a selection of payroll software companies—there are others—but I can give her some assurance that there has perhaps been less disruption than she feared.

[Sarah Olney]

I thank the Minister for that assurance, but the point I was making was not so much about the technical implementation; I totally take his point that it is a software change. The point I was making was more about headcount forecasts and how many staff businesses can afford to take on. Changing the national insurance contribution that businesses make has a material impact on those forecasts and will have had an impact on how many new jobs have been created.

[Richard Fuller]

That is an interesting point, and it probably is worthy of further investigation. On the day when we have announced that the country has more vacancies than unemployment, and unemployment is at a long-term low, one would think that that impact has not been significant, but it is an issue that is worthy of further investigation. The other point that the hon. Lady made about the impact that hospital discharges may be having on social care—she talked about the hospital in her constituency—is a relevant one, and I am sure that it will be taken up by my right hon. Friend the Secretary of State for Health and Social Care.

The hon. Member for Liverpool, Riverside (Kim Johnson) asked, as others did, whether the changes to the levy will change the funding previously announced. I can assure her that the levy change makes no difference to the funding outlined.

Other points were made, and we will have further discussions in Committee. My right hon. Friend the Chief Secretary to the Treasury made the point that the reversal of the levy is part of a much greater sum. Above all, it is about achieving the sustainable growth that this country needs and deserves. That is our mission as a Government, and it is the purpose of the Bill. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

Further proceedings on the Bill stood postponed (Order, this day).

Health and Social Care Levy (Repeal) Bill (Money)

King’s Recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Health and Social Care Levy (Repeal) Bill, it is expedient to authorise:

(a) the payment of sums by the Secretary of State out of money provided by Parliament to His Majesty’s Revenue and Customs for payment into the National Insurance Fund, and

(b) the payment of sums out of the National Insurance Fund into the Consolidated Fund.—(Amanda Solloway.)

Question agreed to.

Health and Social Care Levy (Repeal) Bill

Richard Fuller Excerpts

Committee stage
Tuesday 11th October 2022 Commons Chamber

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

I rise to support new clauses 1 and 2, and I suspect we will soon vote on new clause 1. Let us be clear: the economic issues we are now facing—rising interest rates for homeowners, and a crashing of confidence in the British economy—are partly because the Government will not produce proper, transparent plans about how they are managing tax and spend.

New clause 1 would force the Government to publish proper documentation on how they will manage that expenditure. We cannot scrimp and save any more on social care, and while it is right to reverse this tax, which was pernicious and hurt the poorest the most, the Government’s failure to outline how they will raise the revenue and properly spend it will cause more chaos and more lack of confidence in the Government. It will contribute to the ongoing crisis in interest rates, and it will end up hurting hard-working people in this country again. Although the reversal of this tax is welcome, without proper analysis the danger is that people in this country will still pay, but they will be paying not through tax to the Government, but through pernicious interest rate rises to lenders and banks. That would be worse than the current situation.

Social care needs to be funded. Brighton and Hove City Council spends £154 million a year on adult social care. That is care for older and disabled people—social care in all its forms. It only raises £160 million through council tax and the precept, so it has only £10 million discretionary funding, although of course it gets grants for schools and other non-discretionary funds. That is the same up and down the country. It is no good just finding Treasury money to support an expanding need for social care; it is a scandal that any penny of council tax is going on adult social care at all. No voter I ever speak to thinks it is appropriate for council tax to be spent on adult social care. Council tax should be for council services, universal services, and ensuring that our local areas are better, more prosperous and thriving. Every person I speak to thinks that social care should be centrally financed. Yes, councils should deliver it, just as they do with education and other services, but the grant must be fully funded by the Government. That the Government have not outlined how they will do that, or have even a long-term plan to do that, continues the pressure and burden on councils and is wrong.

Not only is it wrong, but there is another way of doing it. That is why new clause 2 is so important. It starts to set out the alternatives, and my hon. Friend the Member for Leeds East (Richard Burgon) stated that we should be looking at taxing income from wealth. It is a scandal that generations after generations have squirreled away wealth, hiding it away like Monopoly money on a Monopoly board, and they are then able to generate money from doing almost diddly squat. That is wrong when hard-working people are toiling and paying a higher rate.

There are other ways that the tax could be raised, such as abolishing the upper earnings limit and the scandal of people who earn more than £50,000 paying only 3.25%—less once the levy is abolished—on national insurance. That rich people pay less national insurance as a percentage of income than poorer people is a national scandal. Rather than a progressive tax, it is an innately regressive tax. The poorer someone is, the more they pay; the richer they are, the less they pay as a percentage. If that was abolished and we had a flat tax for everyone, that would have raised £10 billion more than this failed tax U-turn. The Government would have been able to fund all they wanted. It would have been fair, and it would not have hit poorer people. There were many alternatives and the Government did not pursue any of them.

Last week I visited my local A&E at Royal Sussex County Hospital. Fantastic nurses and doctors were working their socks off, and the management were trying to cope with reducing resources. What did I see? Tens of people in beds in corridors, and more than 30 people in waiting chairs, waiting not to be treated in A&E but to be moved on to adult social care or other wards in the hospital. One person had waited for 23 hours, and another who had been discharged the day before had been waiting in A&E for four days. Why is that? It is because our social care system is failing. People are leaving in droves because there are no national terms and conditions and no decent pay. It is a disgrace that care workers earn less than £10 an hour in Brighton and across the UK. They are on poverty wages yet they do such important work.

We need a proper plan for how social care will be paid for. It is no good for the Government to remove this pernicious tax and then come forward with no plans, no ideas, no nothing. This Government have run out of ideas, and Conservative Members have run out of a future for this country. All they are in now is a quick “grab as much as they can” in the next two years, before they lose the election. It is not right for this country. We need them to move aside because Labour has the ideas. Labour has the plan for adult social care, and for everything.

[Richard Fuller]

New clause 1 was tabled by the hon. Member for Ealing North (James Murray), and he raised two specific points. One was on the direct cost that HMRC will incur as a result of this Bill, and he is right; there will be some additional costs. It costs to make these changes, and there will also be costs in future months from additional calls that may come into HMRC. Those numbers have not yet been fully quantified, but I will write to the hon. Gentleman with those costs when we have them. I do not think this was the intent of his question, but on the changes to dividend tax rates, the 1.25% cut will be implemented from April 2023 and is not taking place this year.

Overall funding for health and social care services will be maintained at the same level as if the levy was in place, and we will do that without the tax increase. The Chancellor and the Government are committed to fiscal sustainability, ensuring that debt to GDP falls over the medium term, and the Chancellor will set out further details in his medium-term fiscal plan on 31 October. Strong growth and sustainable public finances go hand in hand, and maintaining fiscal discipline over the medium term will provide the confidence and stability to underpin long-run growth. In turn, faster growth can promote confidence in the UK economy and lead to higher tax revenues without the need to raise levels of taxation. That broader context of the medium-term fiscal plan in the round is the right way to assess these changes, not via the specific measures in new clause 1. I therefore urge the House to reject the new clause.

I will make a point to my hon. Friend the Member for Winchester (Steve Brine), who rightly spoke about the importance of prevention. To reassure him, the Department’s spending review settlement provided £2.3 billion over the spending period to transform diagnostic services and funding to enable local authorities to invest further in prevention through the public health grant.

I turn to new clause 2, tabled by the hon. Member for Leeds East (Richard Burgon) and supported by the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), who I was interested to hear advocating flat taxes—I look forward to further discussions with him about the merits of flat tax rates. There are key differences between the tax bases of earned income, capital gains and unearned income such as dividends. For example, employers also pay national insurance contributions on employment earnings, which broadens the base of revenue from national insurance contributions across employers, employees and the self-employed. In practice, if the taxation of dividends and capital gains were aligned with the taxation of earnings, we could expect to raise less than the levy was forecast to do due to the size of the tax bases and the significant behavioural responses by both tax bases. One of the key points that the hon. Member for Leeds East misses is such behavioural changes when we seek to change certain taxes in a significant way.

Unlike the Opposition, the Government are committed to lowering taxes, not raising them. We have already committed to reversing the 1.25 percentage point increase in dividend tax from April 2023, as I said, to drive growth and investment, and the Chancellor of the Exchequer will publish the medium-term fiscal plan on 31 October. I therefore urge the House to reject new clause 2. With thanks to those hon. Members for tabling their new clauses, I hope that they are satisfied with my explanations and that the hon. Member for Ealing North will not press his new clause to a Division.

Question put, That the clause be read a Second time.