Funding NHS recovery and responding to our long-standing social care problem
Yesterday, I spoke about the proposals to increase funding for health and social care and to to support the NHS as it recovers from the pandemic. Following the debate, MPs voted to increase National Insurance contributions by 1.25%, to increase the tax on paid on dividends, and for working pensioners to pay the levy.
Health and Social Care Levy - debated Wednesday September 8
I am in absolutely no doubt that we need to raise money to enable the NHS to recover from the pandemic and to fund our long-standing problem in social care
5.5 million people, including many in my constituency of Penistone and Stocksbridge, are now waiting for non-urgent treatment, for conditions which, whilst they may not be imminently life threatening, can still be hugely debilitating. It would be wrong to raise this money through more borrowing; we should not expect our children and our grandchildren to settle the debt at some time in the future. We must have a plan to pay for it now. The criticisms of this motion in the media and in my inbox come not so much from the fact that the Government is choosing to raise the money, but more from the way it is being raised. These criticisms centre around one concept - fairness.
Fairness is extremely important for Conservatives.
If Government is to be the force for good that it should be, we need to make sure that our policies are as fair as possible, and that benefits and costs fall in a fair and equitable way across the population and so I welcome the fact that the highest earning 14 per cent will pay around half the revenues. I accept that there is some unfairness around using National Insurance to raise this levy, but I would challenge those who object to find a fairer way.
In order to raise the cash required, we must use a broad-based tax. A VAT rise would have a disproportionate impact on those on low incomes, and using income tax would not incur a contribution from businesses. Of course, businesses very much benefit from health and social care – large numbers of people would have to leave the workforce if these services did not exist. And only the largest businesses will see any increase in cost as a result of this levy, with 40% of firms paying nothing extra at all.
On reflection I do believe that using NI to raise this levy is overall a fair way to proceed, especially given that the Chancellor, Rishi Sunak, has made sure that working people of pensionable age, and dividends are also included. When it comes to the question of how the money is spent, we have also heard criticisms of the fairness of the plan, with concerns that a tax on low earning workers will be used to fund the care of the super rich.
Whilst these arguments must be addressed, again we need to explore if there is a fairer way, and if so, what is it.
Under the Government’s plans, those with assets of over £100K won’t qualify for any tax payer support until their lifetime expenditure of £86K has been exceeded or their assets fall below £100K. It would be helpful to know how many of those who are able to fully self-fund their care end up incurring more than £86K of eligible costs, and I have asked my colleagues in the Department for Health to provide these figures. This would tell us how many people could potentially afford to pay more, but may be subsidised by the tax payer and I acknowledge that this is where the unfairness arises.
But to raise the cap, or scrap it all together, would unfairly effect people in areas like Penistone and Stocksbridge where house prices are significantly lower than in London and the South East and where £86K already represents a significant proportion of property value. And to decrease the cap would result in far more people of substantial wealth having their costs subsidised by the tax payer. So, whilst this is not a perfectly fair solution, it is hard to envisage a fairer one. I support the motion today because I think we have to acknowledge that politics is not about striving for perfect solutions, it’s about finding the best solutions possible within the financial, practical and moral constraints that bind us all.
However, on the subject of pragmatism, I think we need to be honest about the amount of money that really is going to be needed in the coming years to provide for health and care. Whilst the money raised through this motion will be a start, it will not be enough. We have to accept that health and care costs are many times higher than they once were. When the welfare state was born, life expectancy was around 65. Many people left school in their early teens to enter the workplace. An individual might spend fewer than 20 years of their life not working. Now, many people in the 21st Century spend more than 40 years of their lives not working.
Simply put, that means that during our working lives, we must now pay double – or more, given modern living standards - in taxation, pension contributions and insurance to fund our years of economic inactivity. We can’t escape this fact.
So in raising any additional money, we must be far sighted. Over any further rises in taxation, I believe we should look to build on the success of our automatic enrolment model for workplace pensions, and consider some form of contributory insurance scheme. This would be a very fair way of making sure that an individual’s future care costs are covered from insurance to which they themselves have contributed. But we must also be clear that there are alternatives to ever increasing bills for health and care. It is estimated that up to 40% of the NHS budget is spent treating preventable diseases, so we must find better ways of helping people to be healthier. Support and accountability from friends, family and volunteers can be far more effective than a medical approach, and cheaper, so I hope to see extensive consideration of local, community and capability approaches in the white paper. We also need to set out plans for helping older people to be supported in the community for longer and there are some excellent examples from the Wigan Deal and the work of Hillary Cottam.
And we mustn’t forget the crucial role of the family. How can we help families to look after their own relatives well, for longer and with appropriate support?
I acknowledge and understand that there are criticisms of this Bill, and I share some myself.
But doing nothing is not an option, and when it comes to finding a pragmatic solution to such a difficult issue, I am convinced that this is a fair approach – for now.
The above is taken from the written speech, the speech as presented can be read here.