Health and Social Care Levy Bill

House of Commons, 14 September 2021.

Rosie Winterton (Labour, Doncaster Central)

The reasoned amendment in the name of the Leader of the Opposition has been selected.

Steve Barclay (Conservative, North East Cambridgeshire)

I beg to move, That the Bill be now read a Second time.

Last week the Prime Minister announced a plan to tackle the NHS backlog, put the adult social care system on a sustainable long-term footing, and end the situation in which those who need help in their old age risk losing everything to pay for it. The Government’s plan will make an extraordinary difference to the lives of millions of people across the country, and it will be funded with a record £36 billion investment in the NHS and social care. In order to pay for a significant increase in spending in a responsible and fair way, the Bill introduces a new 1.25% health and social care levy based on national insurance contributions.

John Baron (Conservative, Basildon and Billericay)

We need to give credit where it is due, and the Government are absolutely right to try to grasp this nettle, but many of us are concerned about the haste with which it is being done. Does my right hon. Friend think it is a good idea to raise taxes on jobs ineffectively, and risk choking off an economic recovery before we have even got to know the details of the social care reforms?

Steve Barclay (Conservative, North East Cambridgeshire)

My hon. Friend, and good friend, has raised two connected points. The first was dealt with earlier in points of order: it is the will of the House that decides the timings of debates, and the Chair addressed that point. As for the second, we discussed it at length during last week’s ways and means debate. We discussed the wider purpose in dealing with the consequences of covid and the backlog in care that needs to be tackled, but we also discussed grasping the nettle in relation to the long-term challenges surrounding social care—challenges that the House has debated repeatedly over many years.

The levy will apply UK-wide to taxpayers liable for class 1 employee and employer, class 1A, class 1B and class 4 self-employed national insurance contributions. However, it will not apply where taxpayers pay class 2 or class 3 NICs. It will be introduced in April 2022, and from April 2023 it will also apply to those working over the state pension age. As my right hon. and hon. Friends will understand, it takes time for Her Majesty’s Revenue and Customs to prepare its systems for such a major shift. That is why, as set out in clause 5, in 2022-23 the levy will be delivered through a temporary increase in NICs rates of 1.25% for one year only.

Geraint Davies (Labour, Swansea West)

Does the Secretary of State agree that in principle hypothecation is to be avoided, and that what we should be doing is defining what spending is financially desirable and economically effective, and then asking a separate question: what is a socially equitable and effective tax regime? Those are two different issues, but we are smashing them together, and we do not even know what we are spending the money on. This is farcical, and it is being done in a mad rush.

Steve Barclay (Conservative, North East Cambridgeshire)

There is a precedent in the form of what the hon. Gentleman’s party did in 2002-03. I do not think it is fair for him to say it is farcical to do something which was done by the Government whom he supported. He has opened up a much wider question about hypothecation, on which many a former Treasury official has commented, and I think that that is a separate debate; but there is a precedent for the use of national insurance in the way that my right hon. Friend the Chancellor has set out.

Let me stress that all revenues generated by this increase will be ring-fenced and paid not just to the NHS in England, but to NHS Scotland, NHS Wales, and the equivalent in Northern Ireland.

Andrew Mitchell (Conservative, Sutton Coldfield)

I have a great deal of sympathy with what my right hon. Friend is saying, and I think the Government deserve considerable credit for grasping this nettle at last, but may I ask for an assurance? When the charge has been introduced, will he ensure that every six months a Treasury Minister comes to the House and tells us what results are being achieved—what money has been raised through the levy and what results have been delivered; in other words, what additional treatment has been achieved—so that we can see and show our constituents why it was right to raise this levy and what they are getting for the money?

Steve Barclay (Conservative, North East Cambridgeshire)

As a former Chief Whip, my right hon. Friend knows better than most that it is for the House to decide which Ministers come to the House and provide updates. Obviously, in respect of regular fiscal events and others—[Interruption.] It is. The right hon. Member for Leicester South (Jonathan Ashworth) chunters from a sedentary position, but through urgent questions and other such devices it is always for the House to decide which Ministers come here and, of course, there are regular events such as Treasury and other departmental questions. [Interruption.] He chunters but, as I have said, there are many procedures through which updates—[Interruption.] The procedures to which I referred.

Under clause 2, this revenue will be ring-fenced for health and for social care—

Andrew Mitchell (Conservative, Sutton Coldfield)

Will my right hon. Friend give way?

Steve Barclay (Conservative, North East Cambridgeshire)

I will make a little progress. I have taken a number of interventions, including one from my right hon. Friend.

Existing NICs reliefs and allowances will also apply to the levy. That will mean that 40% of all businesses will not be affected owing to the employment allowance. When it comes to individuals, those earning more will pay more. Indeed, the top 14 per cent. of taxpayers will pay about half the revenues. Conversely, at least 6.2 million people earning less than the NICs primary threshold will not pay the levy at all.

Catherine West (Labour, Hornsey and Wood Green)

rose—

Steve Barclay (Conservative, North East Cambridgeshire)

I am sure that the hon. Lady rises to welcome the progressive nature of that measure.

Catherine West (Labour, Hornsey and Wood Green)

Does the Secretary of State accept that, if 40% of businesses or employers are not affected, the other 60% therefore will be? What assessment has the Treasury made of the number of jobs that employers will not create because of, apart from anything else, the introduction of this measure at a time when the recovery from covid is fragile?

Steve Barclay (Conservative, North East Cambridgeshire)

It is not just that the first 40% will not pay anything, as my right hon. Friend the Chancellor mentioned. The next 40% will pay less than 1% of their wage bill, and indeed 70% of the employer contribution comes from just 1% of business. To some extent, the hon. Lady’s point was also picked up by the Monetary Policy Committee in its evidence to the Treasury Committee, when it said, “You should not ignore one half of the policy announcement.” Of course, one needs to look at the spending implications of the measures, not just—

Steve Brine (Conservative, Winchester)

In my experience of being a Minister at the Department of Health—with my right hon. Friend, indeed—Treasury Ministers do not like to spend billions of pounds without knowing exactly what they are getting for their money, and rightly so: it is our constituents’ money. We know that there is a very carefully worked out plan that the Secretary of State for Health and Social Care has agreed with the NHS for the catch-up programme. Will the Minister help us to see that published, so that we as representatives can hold the NHS to account for the money that this levy is raising and our constituents are therefore spending?

Steve Barclay (Conservative, North East Cambridgeshire)

I could probably go slightly further—Chief Secretaries do not like to spend, not necessarily just on any particular area of Government policy—but my hon. Friend is absolutely right about the importance of delivery and how the money is spent, particularly the £8 billion allocated to electives catch-up. Just yesterday I was at a meeting in No. 10 with the leadership of the NHS, discussing that issue with the chief executive of NHS England and other senior health leaders. I know that it is an issue of concern to a number of Members, but ultimately it is an issue of concern throughout the House, because through our constituency surgeries we see the consequence of the backlog in terms of electives. That is, I think, an area of common ground.

Christine Jardine (Liberal Democrat, Edinburgh West)

Will the Minister give way?

Steve Barclay (Conservative, North East Cambridgeshire)

I will give way once more.

Christine Jardine (Liberal Democrat, Edinburgh West)

The Minister has made the point that we see the impact in our constituencies. Yes, we do, but we are also seeing the impact in our constituencies of the pandemic on business. What would the Minister say to the Federation of Small Businesses, which, notwithstanding what he has just said, believes that

“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished”?

The FSB sees this as a jobs tax, and we will see that impact in our constituencies as well.

Steve Barclay (Conservative, North East Cambridgeshire)

First, in order to meet the quantum of spend, one needs a broad-based tax. That is a point that my hon. Friend the Member for Wycombe (Mr Baker), who is not in his place, raised in the debate last week. Secondly, I would point to the more than £400 billion—[Interruption.] I do not know why SNP Members are laughing at £400 billion of support. I do not think that this is a point of difference. I think we can all agree across the House that there has been huge fiscal support across the UK through the broad shoulders of the United Kingdom to support business, at a cost of £400 billion to businesses, public services and individuals, and that has a consequence. Most of the business leaders I speak to recognise that, and recognise that the backlog in the NHS needs to be dealt with. I would add the further point that those businesses benefit from the NHS clearing its backlog because it is members of staff in those businesses that are affected.

Jonathan Edwards (Independent, Carmarthen East and Dinefwr)

What analysis has been undertaken of the long-term sustainability of this policy, which targets working-age people at a time of an ageing population? There will be 10 million extra pensioners within 20 years, which means that the pool of people who are paying in is shrinking in relative terms while demand is increasing.

Steve Barclay (Conservative, North East Cambridgeshire)

Again, this is why, as is standard practice, my right hon. Friend the Financial Secretary to the Treasury has published the tax information and impact note on the tax change. Of course, that will be dynamic because it will interact with the fiscal forecast that the Office for Budget Responsibility will set out alongside the Budget on 27 October. So that is dealt with in the normal way for measures such as this—

John Redwood (Conservative, Wokingham)

rose—

Geraint Davies (Labour, Swansea West)

rose—

Steve Barclay (Conservative, North East Cambridgeshire)

I want to make some progress, and I have already given way once to the hon. Member for Swansea West (Geraint Davies).

Let me remind the House why this levy is necessary. As the Prime Minister and the Chancellor have said, the levy will enable the Government to provide additional funding to the NHS so that it can recover from the pandemic. Senior NHS leaders have made it clear that, without additional financial support, we will not properly be able to address the significant backlog in the national health service. However, it is going to take time to get everyone the care they need. In addition, our social care plan will create a dramatically expanded safety net for people in their later life. This means that, instead of individuals having to bear the financial risk of catastrophic care costs themselves, we as a country are deciding to share more of that risk collectively.

Munira Wilson (Liberal Democrat, Twickenham)

Could the right hon. Gentleman explain to people up and down the country who are either in receipt of care now or will need to start care between now and October 2023 and are facing catastrophic care costs what they are meant to do? Does he accept that there will be a massive cliff edge? Lots of people will try to avoid coming forward for care in the months before October 2023, and there will then be a massive surge. How do the Government plan to deal with that?

Steve Barclay (Conservative, North East Cambridgeshire)

In a number of ways. First, this fiscal support is not in isolation. There is £33.9 billion of additional support going into the core NHS budget over the five years of the long-term plan. That has had a significant impact. On top of that, significant covid support has gone into the NHS. One of the points that came out of the debate on the ways and means last Wednesday was the interrelated nature of the impact on the NHS and on social care. That is why it is right that we are gripping this issue, but it is alongside the wider financial support that the Treasury has offered.

Steve Barclay (Conservative, North East Cambridgeshire)

Given that we need to progress on to Committee, I shall just point out that this is a permanent new role for the Government and a structural increase in the size of the British state. We therefore need a permanent new way to pay for it. The only alternative would be to borrow indefinitely, but that would clearly be the wrong course of action when our national debt is already at the highest it has been in peacetime. Borrowing even more today would just mean higher taxes in the future.

Richard Drax (Conservative, South Dorset)

With money tight, did the Treasury support the appointment of, I think, 43 new executives on £270,000 a year to check where all this money is going?

Steve Barclay (Conservative, North East Cambridgeshire)

I think one needs to see whether these are roles that are driving efficiency and creating savings elsewhere, or whether they are viewed in isolation. That is why one needs to understand the workforce as a whole, where there are overlaps within the NHS but, above all, how we deliver reform, which is something I know that the Secretary of State for Health and Social Care is passionately committed to doing. That relates to the point that was rightly raised by my hon. Friend the Member for Winchester (Steve Brine) on the delivery of reform in order to maximise the value for money of the spend that the levy will unlock.

Finally, we need to fund our vision for the future of health and social care in this country over the longer term. As the Prime Minister said, with proper funding, we can not only tackle the NHS backlog and expand the social care safety net but afford the nurses’ pay rise, invest in the best equipment and prepare for the next pandemic. We can provide the largest investment ever to upskill social care workers and build the modern, more efficient health service the British public deserve.

Clive Efford (Labour, Eltham)

It seems to me that we are spending this money twice, so can the Minister tell the House specifically how much will go into the NHS from this increase and how much will go into social care? What I am hearing from him is that we are going to deal with the backlog, which will take us back to pre-pandemic levels. That will leave us with a 2 million waiting list, so can he tell us specifically how much is going into the NHS and how much is going into social care?

Steve Barclay (Conservative, North East Cambridgeshire)

Of the £36 billion, £5.4 billion is going to adult social care, with the rest going into the NHS or through Barnett. That is over three years.

Andrea Leadsom (Conservative, South Northamptonshire)

Does my right hon. Friend think that the Government could consider different bands for frontline staff in the NHS and management staff in the NHS, to get away from the concern that so many of my constituents have that any pay rises in the NHS will be taken up by managers over frontline operators?

Steve Barclay (Conservative, North East Cambridgeshire)

In the public sector pay agreement that we reached, we accepted the recommendations of the independent pay review body. That is why we decided on 3% and why the NHS was treated differently from other areas of the public sector such as the police and teachers. This recognised the importance of those frontline workers and it was why those under the threshold of £24,000 were carved out. This recognises the point that my right hon. Friend has raised.

In conclusion, this levy will enable the Government to tackle the backlog in the NHS. It will provide a new permanent way to pay for the Government’s reforms to social care and it will allow the Government to fund our vision for the future of health and social care in this country over the long term. I commend the Bill to the House.

Rosie Winterton (Labour, Doncaster Central)

Before I call the shadow Minister, I should say that there will be a six-minute limit on Back-Bench speeches to start with. If anybody wishes to speak, they should catch my eye, and to do that it is important to keep standing. If colleagues have not put in to speak but wish to do so, it would be helpful to let me know. They will have to have been here from the beginning of the debate, and they will be expected to be here for the wind-ups, which will start at approximately 4.45. Bearing all that in mind, I now call the shadow Minister, James Murray.

James Murray (Labour/Co-operative, Ealing North)

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give a Second Reading to the Health and Social Care Levy Bill because, notwithstanding the need to increase funding for health and social care, the Bill raises money for an approach announced by the Government that fails to set out a plan to fix the crisis in social care, improve pay and conditions for social care workers, or clear the NHS waiting list backlog by the end of this Parliament, while breaking the Prime Minister’s promise that no one will have to sell their home to pay for care; because it lacks a guarantee that Parliament will vote on a social care plan before spending the money it raises; and because it breaks the Government’s promise not to increase National Insurance, raising taxes on employment that will disproportionately hit working families, young people, those on low and middle incomes and businesses trying to create more jobs in the wider economy, whilst leaving income from other sources untouched.”

Today, the Government are pushing through a new tax on working people and their jobs. All scrutiny by the House of Commons of the Government’s manifesto-breaking plans has been squeezed into a single day. As Conservative Members have said, we have just a few hours of scrutiny on this entire Bill, just one week after the Government first revealed their intentions. Why the sudden rush? The truth is that the Prime Minister and the Chancellor are desperate to avoid giving their own side enough time to push back. They want to make sure that, by the time it sinks in with their own MPs what a mistake this tax rise is, it will be too late for their Back Benchers to mount any opposition.

Perhaps it is also sinking in with Conservative Back Benchers that the Prime Minister and the Chancellor are pushing through these plans for a tax rise without having a plan for social care. If we are to believe the Prime Minister, and there is absolutely no reason why we should, he had a plan for social care two years ago. We are still waiting to see it. All we have today is a tax rise for working people and for businesses that are creating jobs.

Catherine West (Labour, Hornsey and Wood Green)

Does my hon. Friend agree that these problems began in 2010? The NHS’s satisfaction rate in 2009 was 80%, and now it is way lower. In fact, they might have got rid of all the satisfaction surveys so that we do not know what people really think.

James Murray (Labour/Co-operative, Ealing North)

My hon. Friend makes an important point about the Conservative Government’s impact on the national health service over the last decade, running it into the ground and leaving it in such a state when the covid pandemic hit.

As my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, said last week:

“There are two tests for the package announced yesterday. First, does it fix social care? Secondly, is it funded fairly?”—[Official Report, 8 September 2021; Vol. 700, c. 327.]

Looking at the Bill, it is clearer than ever that the answer to both those questions remains a resounding no.

Gary Sambrook (Conservative, Birmingham, Northfield)

On the basis of those two tests, which tax would the hon. Gentleman increase to pay for social care?

James Murray (Labour/Co-operative, Ealing North)

We are clear that taxes will have to rise to pay for social care, but we are also clear that this increase in national insurance contributions is not the way to raise the money fairly. When it comes to funding the NHS, social care and all our public services, we are clear that those with the broadest shoulders should be asked to contribute more.

This five-page Bill contains nothing at all about a plan to fix social care; it does not even mention a plan. Put simply, there is no guarantee that a plan for social care will be in place even when the levy comes into force.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I was going to pose this question to the Minister, but he would not take my intervention. Last week I was told by the insurance arm of a major bank that the Government are actively encouraging it to produce insurance products specifically for health and social care. Is my hon. Friend as concerned as I am not only about who is encouraging such developments but about what it means for the acceleration of privatisation not only in social care but in the health service?

James Murray (Labour/Co-operative, Ealing North)

My hon. Friend makes us think about what we have read recently about what the hon. Member for Yeovil (Mr Fysh) has been saying about a rebate from this tax for those who take out private insurance. Make no mistake, that is a slippery slope towards a two-tier healthcare system.

Andrew Murrison (Conservative, South West Wiltshire)

The hon. Gentleman has been speaking for some time, but he has not said what taxes he would raise. Why was it okay for Labour to raise national insurance to pay for healthcare in 2003, when there was not a pandemic and we did not have the scale of social care need that we have today? If it was right then, why is it not right now?

James Murray (Labour/Co-operative, Ealing North)

The right hon. Gentleman speaks about a tax rise 20 years ago, following a decade of wage growth, and it came with a plan for how the money would be invested. In stark contrast, this Government’s tax rise hits working people after a decade of stagnating wages, after we have been hit by a global pandemic and after years during which where people get their money from has changed. Above all, the Conservatives’ tax rise comes with no promise that it will clear the NHS waiting list backlog in this Parliament and no promise that any money will be seen by the social care sector.

Despite all that has been said, there is no guarantee in the Bill that social care will benefit from the Government’s tax rise. In fact, the Bill explicitly rules out any money going towards social care in the first year, and there is nothing to guarantee that a single penny of this new levy will ever go into the social care sector.

The Association of Directors of Adult Social Services realises this, and it said on Monday that

“it is not clear that there is any new money for adult social care to help improve care and support from April 1st next year… It will not add a single minute of extra care and support, or improve the quality of life for older people, disabled people and unpaid carers.”

As the association rightly points out, this could leave councils with no option other than to raise council tax. Indeed, the Government have admitted that they expect councils to cover increasing need and rising costs. Despite £8 billion having been cut from local council care budgets by a decade of Conservative Government, there is no money for councils that need it now.

In truth, this levy does not set out to fix the crisis in social care. It seeks only to be a political fix for the Prime Minister. I suspect Conservative Members know that, and I suspect the Prime Minister is noticing that his attempt at a political fix is quickly becoming a political headache.

Although some Conservative Members may be worried about how to explain to their constituents that they have broken their manifesto promise and still failed to fix social care, others have a different agenda. The hon. Member for Yeovil, as I mentioned earlier, has been reported as saying that he wants people with private social care insurance to get a rebate from the new tax. As my right hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary has said, this looks very much like a “slippery slope” towards a two-tier healthcare system and privatisation.

Marcus Fysh (Conservative, Yeovil)

My comments have been misreported. The origins of the Labour movement and the Liberal movement are in trade unions, co-operatives and friendly societies that came together to look after each other. What I am suggesting is that we get money into such systems to help people look after and pay for themselves in older age. There are myriad ways in which the system can be made much more progressive, and I am on their side in trying to make this more progressive than it is at the moment.

James Murray (Labour/Co-operative, Ealing North)

As the hon. Gentleman is on our side, I look forward to him joining us in the Lobby this evening.

Will the Chief Secretary to the Treasury or the Financial Secretary to the Treasury put it unequivocally on the record that no rebate from the health and social care levy for those with private insurance will ever be entertained? A two-tier healthcare system is the very last thing we need. What the social care sector desperately needs is guaranteed funding and a plan to transform the sector. This Bill delivers neither.

Craig Mackinlay (Conservative, South Thanet)

The hon. Gentleman is talking about a two-tier system. Is he saying that the millions of people in the public sector and the not-for-profit sector who have auto-enrolled pensions are rather daft to have a sensible pot under their own name, with the flexibility that it brings? Are you calling millions of taxpayers daft?

Rosie Winterton (Labour, Doncaster Central)

Order. The hon. Gentleman is experienced enough to know that he should not speak directly to another Member.

James Murray (Labour/Co-operative, Ealing North)

The hon. Member for South Thanet (Craig Mackinlay) knows full well that his question is not relevant to this discussion. We are talking about the NHS and the social care system, and we need reassurance from Ministers that they will not entertain a two-tier healthcare system on the back of comments made by Conservative Members.

We need to transform social care into the service that people want, need and deserve, which is why our plan for social care would include: enshrining the principle of home first; making a fundamental shift in the focus of support towards prevention and early intervention; getting care workers the pay, terms and conditions they deserve—at the very least, a real living wage of £10 an hour—while transforming training to improve the quality of care; and, crucially, making sure that England’s 11 million unpaid family carers get proper information, advice, breaks and the workplace flexibility they need to balance work and caring responsibilities.

Of course, today we are not discussing how to transform social care. We are debating a Bill that introduces a tax rise that may never go towards helping social care, and one that is raised on the backs of working people and businesses that are creating jobs.

Andrea Leadsom (Conservative, South Northamptonshire)

What would the hon. Gentleman do about the backlog of 5 million people, as a result of covid, waiting for procedures and operations in the NHS? Does he not want that backlog to be dealt with?

James Murray (Labour/Co-operative, Ealing North)

The right hon. Lady raises points about the backlog in the NHS. We have had 10 years of a Conservative Government, of whom she has been a key part. She is responsible for the backlog, along with all her colleagues on the Conservative Benches. They should take some responsibility for the mess they have caused.

We know that social care desperately needs more funding, but are the Government raising taxes for those with large portfolios of stocks and shares? No. Are they increasing taxes on landlords who rent out multiple properties? No. Are they going further to tackle large online multinationals that shift their profits overseas? No. The Government have gone for a tax rise on working people and businesses creating jobs.

Last week, the Government tried to soften the blow by claiming that their tax plans are fair because this tax rise on working people is accompanied by a tax rise on dividends. So where is the tax rise on dividends? The Government’s proposal documents last week admitted that that might be legislated for in the next Finance Bill, and indeed there is nothing on raising taxes on dividends in the Bill in front of us today. They are pulling out the stops to increase taxes on working people as quickly as possible, ramming this legislation through in one day, but when it comes to dividends and a tax that the Prime Minister acknowledged last week would affect

“better-off business owners and investors”—[Official Report, 7 September 2021; Vol. 700, c. 154.]

suddenly there is no rush. Let us not fall for the claim that the dividend tax rise will make the Government’s proposals fair. The dividend tax—if it ever happens; we have only the Prime Minister’s word for that, after all— would raise only 5% of the total revenue. Some 95% of the tax bill would land on employment.

If we want to understand the impact of this tax rise on people and their jobs, let us start by looking at the Government’s own view. Their own tax information and impact note on this tax rise was signed off personally by the Financial Secretary to the Treasury and published on 9 September—curiously, this was a couple of days after the Government’s proposals were announced. It says in no uncertain terms:

"There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”

Five years ago, the Prime Minister’s predecessor began her time in office claiming to be an ally for people who are “just about managing”. Now we have the Government’s own report admitting that they are the ones who will suffer.

The report is blunt too about the impact of this tax rise on businesses. It makes it clear:

“Behavioural effects are likely to be large, and these will include...business decisions around wage bills and recruitment.”

It is there in the Government's own analysis: this will be a tax blow to jobs and wages. Others agree, with the chair of the Federation of Small Businesses saying last week:

“Breaking a manifesto promise by increasing National Insurance Contributions just at the moment when firms are struggling to get back on their feet would be devastating for small businesses and the local communities they serve...If this hike happens, fewer jobs will be created by the UK’s small business community over the crucial months ahead.”

The British Chambers of Commerce agrees, warning:

“A rise in National Insurance Contributions would represent a hammer blow to jobs growth at this crucial point in the UK's economic recovery.”

The CBI president said:

“National Insurance increase will directly hurt a business’s ability to hire staff, at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages.”

Do the Financial Secretary and the Chief Secretary think the Federation of Small Businesses, the British Chambers of Commerce and the CBI are all wrong? Perhaps the Financial Secretary will get up to tell me the answer to that. [Interruption.] Sorry, I thought the Financial Secretary was keen to get to his feet to respond to my question. He does not want to, no. He does not want to answer whether he thinks the FSB, the BCC and the CBI are all wrong. Do other Members from his party think they are wrong?

Andrew Griffith (Conservative, Arundel and South Downs)

rose—

James Murray (Labour/Co-operative, Ealing North)

Perhaps the hon. Gentleman would like to intervene to answer that question.

Andrew Griffith (Conservative, Arundel and South Downs)

I am just wondering whether the hon. Gentleman’s tax primer in low corporate taxes has enlightened him with any ideas of his own as to how his party would propose to fund this. The proposal on the table is a broad-based tax. How would he fund this?

James Murray (Labour/Co-operative, Ealing North)

We have been absolutely clear that when it comes to funding the NHS and social care, those with the broadest shoulders should pay the most. The idea that this is a “broad-based” tax rise is completely wrong. The hon. Gentleman knows that, we know that and the British public know that. I note that when he got to his feet, he did not answer the question as to whether he thought the FSB, the BCC and the CBI are all wrong. Next time another Conservative Member gets to their feet, I would like to hear their answer to that. I would also like to know whether they think TUC general secretary Frances O’Grady was wrong when she said last week:

“We know social care needs extra funding. But the prime minister is raiding the pockets of low-paid workers, while leaving the wealthy barely touched.”

That is the fundamental unfairness at the heart of this Government’s tax rise.

The Prime Minister and Chancellor are desperate to pretend this is the only way to raise the money, but that simply is not true. A fairer approach would see funding for the NHS, social care and all our public services borne by those with the broadest shoulders—this would include those with incomes from large financial assets, multiple rental properties, and other income from wealth contributing more. But they have not been considered by this Government, who would prefer to hit workers instead.

This Government are landing a tax rise, which they claim will go toward social care, on low-paid social care workers themselves. The truth is that this is a tax on working people and their jobs. This tax rise tells us nothing about how the Government plan to fix social care, but it tells us everything we need to know about the instincts of the Tories when they are in power. That is why it is wrong. That is why we will be voting against this Bill. And that is why Conservative MPs would do well to join us tonight if, come the next election, they want to be able to look their constituents in the eye.

Jeremy Hunt (Conservative, South West Surrey)

Select Committee Chairs have to hold the Government to account, but just occasionally they also have to hold the other parties to account. I am afraid that today is one of those days, because the opposition of the parties on the Benches opposite to this Bill does not bear any scrutiny at all. That is not just because Gordon Brown proposed an increase in national insurance in 2002 to fund the NHS or because senior members of those parties have supported NI as a way of funding the social care system as recently as three years ago; it is because for more than a decade the parties opposite have argued, with some justification, that more money needs to go into the health and care, and this Bill will add £12 billion every year into our health and care system. That is more than any wealth tax would generate—to my knowledge, it is more than any of them have been arguing—and it is more progressive than using plain NI, because it is progressive between the generations. That is because, for the first time, working pensioners will be paying this tax, as well as people who pay dividends.

I may not make friends on my side of the House either, because while I commend the courage of a Conservative Prime Minister and a Conservative Chancellor, supported by his team, in doing what we find extremely difficult, for the right reasons—increasing taxes—I fear that if what we have done so far is tough, what is to come will be tougher still. I say that because if you put your hands into people’s pockets and take money out of them, and they do not see visible improvements in the services they receive, they get very angry indeed.

Steve Brine (Conservative, Winchester)

Will my right hon. Friend use his position on the Select Committee and his vast experience to scrutinise this plan, which I mentioned to the Minister but which I know the Secretary of State has agreed with NHS England and me, as to how exactly they are going to spend every penny of our constituents’ money on this catch-up programme? Will my right hon. Friend’s Select Committee scrutinise that for us?

Jeremy Hunt (Conservative, South West Surrey)

As it happens, we are currently conducting an inquiry into how to deal with the covid backlog, so I commit to my hon. Friend, with whom I so enjoyed working at the Department of Health and Social Care, that we will certainly do that.

Clive Efford (Labour, Eltham)

rose—

Jeremy Hunt (Conservative, South West Surrey)

I will give way and then make some progress.

Clive Efford (Labour, Eltham)

I have heard what the former Secretary of State has said about the record on social care, but can he explain what he did to try to prevent the Conservative Government from taking £8 billion out of social care?

Jeremy Hunt (Conservative, South West Surrey)

First, we passed the Care Act 2014, which put in place the legislative foundations for the proposals that we are now going to fund. Secondly, I happen to agree with the hon. Gentleman: the social care system has needed more money for some time. That is why it is so extraordinary that his party is to vote against this Bill.

If we are going to take £12 billion a year out of people’s pockets, we need to avoid falling into three traps—and I say this as someone who has fallen into more traps in this policy area than anyone else in this House. The first trap that we need to be careful of is the workforce. If we put an extra £8 billion into the NHS but we do not have £8 billion-worth of additional doctors and nurses to do the extra treatments, the risk is that that money will hit the ground without touching the sides. That is why we need a workforce plan.

The Health Foundation says that the backlog will require 4,000 more doctors and 18,000 more nurses, but we have not had any workforce plan from the DHSC. I suspect that in the short term we will have to relax all the immigration requirements for doctors and nurses. That will not be great for developing countries, but it may well be our only choice. In the medium term, the best suggestion is what my Select Committee and many others have proposed: we should give Health Education England the statutory responsibility to produce independent workforce estimates and create a discipline, a bit like the OBR does for Budgets, to make sure that we are training enough doctors and nurses. That is the first trap.

John Redwood (Conservative, Wokingham)

rose—

Jeremy Hunt (Conservative, South West Surrey)

I will make some progress, if I may.

The second trap is that we must not inadvertently sleepwalk into another Mid Staffs. People forget that when Mid Staffs happened, NHS budgets were actually going up. There was huge pressure to reduce waiting times and that ended up creating a targets culture in which numbers matter more than people. We have to be very careful that we do not make the same mistake again. I know that my right hon. Friend the Chief Secretary to the Treasury, who worked with me at the Department of Health and Social Care, understands that because of his commitment to patient safety.

The third trap involves social care funding. Although the settlement we are discussing is generous, if we are honest, in the next three years social care will not actually get as much money as it needs. The truth is that there is a risk that the NHS will continue to gobble up the lion’s share after that, which is why it is essential to ring-fence the amount of money that goes to social care after those three years.

Marcus Fysh (Conservative, Yeovil)

rose—

Jeremy Hunt (Conservative, South West Surrey)

I am going to make some progress, if I may.

Finally, let me say this. We, as Conservatives, criticised the Labour party in the 2000s for pouring money into the NHS without a proper plan. We were wrong to say that the NHS did not need more money, but we were right to say that there needed to be a proper plan. We must learn the lessons of history; that is the least we can do for frontline workers in the NHS and care system.

Alison Thewliss (Scottish National Party, Glasgow Central)

To start where the right hon. Member for South West Surrey (Jeremy Hunt) left off, in the Bill before us this afternoon we have the lack of a proper plan. We have a means of raising taxes, but absolutely no detail whatsoever on how the money is to be spent.

Let me start with a useful note sent round by the Hansard Society, which says:

“Parliament’s scrutiny of financial matters is generally poor, and the treatment of the new Health and Social Care Levy demonstrates many of the worst aspects of both the financial and legislative scrutiny processes: acting at speed with insufficient policy detail available for MPs to consider; important constitutional questions brushed aside; and broad powers delegated to Ministers with a lack of clarity about how they are to be used in future.”

I agree with every single word of that.

Scrutiny and accountability are absolutely key to this issue, because we have been presented with a huge additional spending commitment but no detail whatsoever as to how it will actually be spent on the other side. I know that there are Conservative Members who are extremely nervous about this levy; far be it from me to agree with them, but I am right to agree with them on that, because we do not know how this money is going to be spent. People are incredibly nervous that health and social care will be at the back of the queue when the money is to be spent.

As the hon. Member for Basildon and Billericay (Mr Baron) pointed out earlier, we are considering this Bill in unseemly haste. Is this to do with the election cycle, testing the loyalty of Government Back Benchers or making sure that people are loyal in the run-up to any reshuffle? We cannot see the real reason for this haste. If we could wait, we could see a little more detail as to exactly why we have to proceed in this way. There is also a difficulty in scrutinising the spending of the levy because it is outwith the usual estimates process and the usual Budget process. We cannot have any real clarity in that respect.

Most worryingly of all, the Government have—as they have done in so many different ways—taken back control only to give all the power back to themselves and their cronies. A lot of the work in respect of the Bill will be done through regulations. Clause 4 gives the Government very wide scope to make regulations on this matter later, which means we will lose all sense of scrutiny from this place. It will all go to civil servants rather than to Parliament. That is entirely undemocratic and wrong. Yet again, there is a wide-ranging power grab from this place and in respect of our job as Members of Parliament here. I cannot see the justification for that in the Bill; it would be interesting to hear why Ministers intend to do that.

We on the SNP Benches demand urgent clarity about every penny of Barnett consequentials that will be given to the devolved Administrations. In line with our manifesto, any additional money that Scotland gets will be spent on health and social care, but there must be no attempt by the UK Government to sell Scotland short by clawing back our share through cuts in other devolved policy areas. It would be just like Government colleagues to give money with one hand while pinching money out of our back pocket with the other. The UK Government must give urgent assurances that we will get every penny we are due—as should Wales and Northern Ireland.

Last week, the Secretary of State for Health and Social Care told “Good Morning Scotland” that, ultimately, it will be for the Scottish Government to decide how the money raised is spent, but that is not what the Prime Minister said. In his statement last week, he said:

“Although Scotland, Wales and Northern Ireland have their own systems, we will direct money raised through the levy to their health and social care services.”—[Official Report, 7 September 2021; Vol. 700, c. 154.]

To direct money would be to override the devolved settlement. It would override our Scottish Parliament and our Scottish Government. It is also unclear where it is intended that that money should go. Will it go to NHS Scotland or to the health boards, the integration joint boards or the health and social care partnerships that sit underneath? Will the formula by which funding is distributed in Scotland be disrupted?

We need certainty as to how the money will be spent, and the Bill currently does not give that. All the Bill says is that money will be paid

“in such shares as between health care and social care, and in such shares as between England, Wales, Scotland and Northern Ireland, as the Treasury may determine.”

That means more power for Treasury Ministers, which I am sure they will enjoy having, but less power for this Parliament and even less power for the devolved institutions. It is their right to know how that money is to come to them and how it is spent. We should not get one penny less than we were due.

Many analysts have pointed out that other parts of devolved spending have been cut because of, for example, the Barnett consequentials of the cuts to local government or to justice. Such cuts mean that we get less money coming through, even if the Government like to pretend, through things such as this levy, that there will be more. It is unclear in the documentation published by the Government exactly what the Barnett consequentials will look like. Their plan for social care says that the Barnett consequentials will be £2.1 billion in 2022-23, drop to £1.7 billion in 2023-24 and be £1.9 billion in 2024-25. If the money that comes is going to jump about by such significant amounts over those years, we will not know exactly how things are going to look, what the certainty is and how we can plan. The Scottish Government deserve certainty so that they can plan for services.

Let me highlight some of our other major issues with the proposals, which are a tax on the poorest working people in this country. They are completely unjustifiable on that basis. The levy is disproportionate and unfair. There is a bit of brass neck from Government Members: they howled when Scotland put money on income tax—a progressive system in which those at the wealthier end of things paid a little more into our system for our services in Scotland. They said it was terrible and awful, yet today there is not a peep out of them to complain about the lack of progressive taxation and the fact that Scotland will have to pay for England’s social care crisis, which is completely unjustifiable. This is also a tax on jobs and the recovery. Reflecting on the ONS figures that show that the recovery is now stalling, the Federation of Small Businesses says that this tax on jobs will mean 50,000 more people becoming unemployed. That is 50,000 people losing their jobs as a result of this Government’s incompetence in taxing jobs and the recovery. We really could not make this up. From every angle that we approach this tax, it makes absolutely no sense whatsoever.

I will talk in greater detail about our amendments when we come to the Committee stage, but my reflection for now is that we have Scottish taxpayers paying for England’s health and social care crisis, and an undermining of devolution in Scotland, Wales and Northern Ireland and of the services that our Parliaments are democratically elected to provide.

Christine Jardine (Liberal Democrat, Edinburgh West)

Can the hon. Lady explain how Scottish taxpayers, of which I am one, are paying for this levy? I am confused by the thinking. We either agree with the fairness of the levy or we do not. In Scotland, we would get more than we paid in, so I am confused by her thinking.

Alison Thewliss (Scottish National Party, Glasgow Central)

The point is that we do not know what we will get out of this. We do not know because it is not clear in the documentation that has been provided. We also do not know what will happen on the other side of that equation—money in other devolved areas could be whipped away from us at our expense. Organisations such as the British Association of Social Workers have pointed out that cuts to local government will fundamentally undermine the social care provision in England. Authorities will not receive anything for three years, which will also have an impact on the money that we have to spend in Scotland.

These moves tax the poorest. They come at the same time as £20 a week is being removed from universal credit. Some 2.5 million people across the UK will be affected by both of those policies at a time when they can least afford it. The tax on jobs will stifle the recovery. Rather than being a Union dividend as Ministers like to try to claim, this is a Union dead end.

Rosie Winterton (Labour, Doncaster Central)

In order to try to get everybody in, I will reduce the time limit to five minutes, and I have been able to warn the next speakers of that. If people do not get in, let me remind them that there is a Committee stage to follow and they might like to bear that in mind.

Marcus Fysh (Conservative, Yeovil)

I will not speak for long now because I want to speak at the Committee stage later on.

We all want better health and social care and we understand that that comes with a cost. I am concerned that the plan does not make sufficient provision for allowing the discharge of patients from hospital into social care, which will be so critical when it comes to dealing with the backlog of cases. I want to work with the Government on trying to find ways of getting more money into social care earlier. We will get more money through the health provision for supporting the health needs of patients in residential care, but that is not the same thing. In the meantime, our adult social care system is creaking, with 30% more demand than there was before the pandemic. Many local government leaders are very worried about where they will find the money in the meantime to pay for this.

I rise to speak in support of those who will be affected by this national insurance rise. As we have heard, it is very broad based, but it is not the most progressive way to deal with this matter. I do not like the fact that this is the choice that we have made. It is wrong to be raising taxes at this point, particularly taxes on jobs and employment, when both are so central to spending in the economy. It is ordinary people having the confidence to go out and spend money that makes the most difference to our economic performance. At the end of the day, it is that economic performance that will grow the other tax revenue lines and it is those tax revenue lines that will make the most difference to how much money that we, as a nation, have to spend on these massively important priorities.

I want to compliment the Government, and the Prime Minister personally, for raising the issue of adult social care to the top of the national agenda, because they are absolutely right that we do need to sort this matter out. I also stand here for the people in that system now who are being short-changed in one way or another, whether it is on the services or on the way that the financing occurs. We need to work together, across the House if possible, to find innovative new ways of creating a long-term plan to get that service operating better.

John Redwood (Conservative, Wokingham)

Does my hon. Friend share my surprise that the Treasury can be precise in saying that it needs £12 billion from a new tax when it overstated the budget deficit by £90 billion last year, which shows that it does not have a clue about how much money will come in anyway?

Marcus Fysh (Conservative, Yeovil)

My right hon. Friend makes a good point. Yes, it would have been great to have had more detailed context of where we can get to in this economic recovery so that we could know where we were in terms of revenue before we make such momentous changes that affect the aspirations and potential of so many people within the economy. We also need to look at whether this measure will increase costs and cost pressures within the system that we are trying to help. Many local authorities outsource provision of social care to private contractors, and these private businesses will be very much affected by these plans for the tax. We have also heard that the plan will mean that private providers cannot cross-subsidise their state provision of residential care places with private places, which could risk taking capacity out of the system at exactly the wrong moment when we want to get health and social care operating correctly. There are ways of making this measure more intergenerationally fair and I look forward to trying to work with the Government on different and innovative ways of doing that.

Going back to my original point, I think that we marry in haste and repent at leisure. Let me be clear that I am not referring to my own marriage; it is a very successful one and I love my wife dearly. None the less, it would have been much better to have had more time to think about all the ramifications of this Bill and the associated plan. I hope the Government will engage positively with our ideas about how we can evolve things whatever the outcome today.

Margaret Hodge (Labour, Barking)

I hope that the hon. Member for Yeovil (Mr Fysh) will join the Opposition in the Lobby tonight given what he has just said in his contribution.

We should give credit where it is due. We are starting a debate not on whether we can rescue our broken health and social care services, but on how we do so. These services were damaged not just by covid, but by a decade of savage cuts. Tragically, the Government are flinging away this once-in-a-lifetime opportunity to do something that will endure, that will tackle the underlying problems facing these critical services, and that will be fair to us all—whatever our age, wherever we live and whatever our income.

These shambolic proposals will not meet the needs of the elderly and disabled who depend on social care. They will not properly protect our NHS. They will further ravage struggling local authorities, and the tax proposals are needlessly regressive.

I wish to focus on the tax. The health and social care levy is an unfair hike that will hit younger working people the hardest.

Taiwo Owatemi (Labour, Coventry North West)

Does my right hon. Friend agree that it is completely unfair that a graduate nurse who works a night shift as an Uber driver now faces a £12,500 tax hike over their working life due to this new levy? That is the reality facing many of my constituents. It is high time that we start calling this measure what it is. This is not a social care levy; this is the workers’ tax.

Margaret Hodge (Labour, Barking)

My hon. Friend makes the point very powerfully. I was going to illustrate it more generally by saying that families whose personal allowance will be frozen, such as the one she mentioned, and who lose the £20 a week from universal credit cuts—the very families that the Government proclaim they want to level up—will suffer.

Do not just listen to me. I am going to re-quote the quotation that my hon. Friend the Member for Ealing North (James Murray) used in his excellent speech. Listen to what the Government’s tax authority, HMRC, says:

“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”

Is that what the Government really want?

Half the revenue will be paid by people who are under 45, most of whom will be hit by a 10% rise in NICs. That is regressive. National insurance kicks in at a lower level of earnings than income tax. That is regressive. The self-employed pay a lower rate. That is regressive. Income from assets such as rent from property remain untouched. That is regressive. And squirreled away in the policy document, the Government say that they expect that

“demographic and unit cost pressures will be met through council tax…and long-term efficiencies.”

That means further cuts and a hidden hike of the outdated council tax—a tax that hits those in Barking and Dagenham harder than those in Kensington and Chelsea. That is also regressive.

I am rather tired of being told by the Government that there is no alternative. There are plenty. For a Government committed to fairness between individuals, fairness between generations and fairness between income secured through wealth as well as work, there is a raft of better ways to fund health and social care. Put a penny on income tax and equalise rates for dividend and income tax: £13 billion. Equalise capital gains and income tax rates: £14 billion. Or, as suggested by academics Advani, Summers and others, plug the unfair gaps in national insurance by extending it in full—not just the levy, but all of it—to all investment income and working pensioners: £12 billion. If we scrapped the upper earnings limit and equalised the rates of NICs paid between high and low earners, we would not just raise enough to meet roughly the same amount as the Government propose; we could cut the main rate of NICs by 1.25 percentage points.

This unfair plan is simply not fit for purpose. The numbers do not stack up. The poor will pay for the rich. The young will pay for the old. The struggling tenant will pay for the wealthy landlord. The asset-poor worker will pay for the asset-rich retiree. Make no mistake: these are political choices—choices that fail working people, fail our NHS and fail those in desperate need of quality social care. I cannot support them.

Rosie Winterton (Labour, Doncaster Central)

Obviously we have had one or two interventions along the way, so after the next speaker I shall reduce the time limit to four minutes, but I think that it should be fairly consistent from then on.

Paul Bristow (Conservative, Peterborough)

I refer the House to my entry in the Register of Members’ Financial Interests. As a member of the Health and Social Care Committee, I rise to support the Bill and to argue that the money raised by this levy be spent well. I commend my right hon. Friend the Member for South West Surrey (Jeremy Hunt) on his chairmanship of the Committee, in which we are conducting those lessons-learnt inquiries to ensure that our money is spent well. I want to mention three areas; if we focused on them, we could ensure that this money is spent well and get the desired outcomes.

The first is capacity in the acute sector. It is clear that the NHS needs to strike a long-term deal with the independent sector to try to power through the backlog of elective procedures. We are talking about hips and knees, hernias and cataract operations. I read and hear reports, with alarm, that the independent sector capacity that the NHS has bought is being underused—or, if it is not being underused yet, there is a fear that it may well be—because of ideological reasons that the independent sector should not be used and we should be funnelling all these procedures into the NHS. If we do not use the independent sector, we will not have the desired outcomes. We cannot let ideology dictate, as this will ensure that people are left in pain for longer and do not have the right quality of life. We need to ensure that the independent sector is used to its full capacity, so that we can get through this elective backlog.

Similarly, we need to ensure that initiatives such as “Getting It Right First Time”, or GIRFT, are used properly. The NHS has spent money, resources and experts’ time on understanding which procedures work at high volume and low risk. We should use the lessons learnt from GIRFT to deal with the elective backlog. Let us not reinvent the wheel, but let us ensure that we do learn those lessons. Ultimately, these are usually minimally invasive techniques and technologies for procedures that can be done as day surgery, and this will ensure that we power through the backlog and get the elective procedure waiting list under control.

The second issue that the Health and Social Care Committee has heard about is the importance of the diagnostic sector. In the past, I think the NHS has been guilty of focusing on the treatment of conditions, rather than on prevention. If we get the early diagnosis correct and invest in diagnostics technology, we can find out who is at risk of suffering from cancer, heart disease and other long-term conditions before they present at an acute level. It is really important that we invest in that sort of technology, so that we can save money in the long term.

Finally, let me turn to innovation in our NHS in general. I have worked in health politics, if you like, for 20 years. As I said last week, there is a cultural aversion to the private sector, technology and innovation in our NHS. That aversion may be at the margins, but it is at least having an impact, and it needs to be dealt with straight away. If we do not adopt innovation—new technologies, pathways and ways of doing things—we are not going to ensure that this money is spent well.

I would challenge that something that should come out of the health service reforms that we are looking to introduce is the appointment of an innovation officer, or someone who is responsible for innovation in every NHS trust. Let us make it their job. I welcome the fact that we are at last beginning to ensure that the NHS will have a degree of accountability again, and that politicians will have the ability to challenge NHS trust managers to ensure that this money is spent well. One way to do that is by having an innovation officer who is responsible for reform and innovation, ensuring that new pathways are adopted and this money is spent well. If we do not, we could be here again in three or four years’ time, and the money that we want to transfer to social care in due course could have been gobbled up by the NHS, which my right hon. Friend the Member for South West Surrey said was a real risk.

As far as I am concerned, those are the three real challenges: acute capacity; investment in diagnostic capability; and ensuring that innovation is properly recognised in our NHS.

Mick Whitley (Labour, Birkenhead)

I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

More than two years ago, the Prime Minister promised that he had a plan to fix our country’s broken social care system. It was something that my constituents in Birkenhead so desperately needed—from the elderly people denied the most basic right of dignity in old age, to the dedicated but overworked carers earning less than the minimum wage and forced to turn to universal credit just to get by.

After a decade of brutal austerity measures and chronic Tory mismanagement, there is absolutely no doubt that we need a funding settlement for social care, but the Prime Minister’s announcement last week will have provided no relief to the people I have the privilege of representing. Instead of asking those with the broadest shoulders to contribute just a little bit more, the Government are intent on pursuing an utterly regressive tax on hard-working families and British businesses. Charities working on the ground in my constituency predict that the impending cut to universal credit, coupled with soaring energy bills, will force another 6,500 people living in the Wirral into poverty. Now, many of those families will be bracing themselves to lose even more in increased national insurance contributions, while the very wealthiest in our society are left untouched.

Not only will this tax bombshell make it even harder for thousands of my constituents to make ends meet; it will also deal a devastating hammer blow to many of the small and independent businesses that play such a precious role in the life of our town. It will cost jobs and dangerously undermine a very fragile economy. Let us be clear: this tax hike makes a mockery of the Government’s promises to level up and build back better.

We do need solutions to the crisis in social care, but these proposals just are not fair or credible.

John Redwood (Conservative, Wokingham)

I urge the Government to think again about the health plans. On the Treasury figures, this year the health budget in the public sector overall is £230 billion—£64 billion higher than the 2019-20 budget pre-pandemic. I understand that there were lots of one-off and special costs in setting up and dealing with procedures for tackling the pandemic, and I, like everybody else, am very grateful for the work that went in from health staff and experts. But that cost will drop away, so what happens to that money when it is no longer pre-empted by the special costs of the pandemic, and can it not be applied?

I hope the Government will listen to the Chairman of the Health Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt), about the need for a manpower plan, because if we wish to clear the backlogs it is quite obvious that more nurses and doctors are going to have to carry out more treatments and procedures. Some of that will be possible through reallocation and improved working of the staff we already have, but a lot of it will require additional recruitment.

I am also very worried about the lack of a detailed social care plan, particularly for my own area of Wokingham. We have a large number of self-payers at the moment. How could I be sure that if we went for this levy scheme, which is still not properly detailed, sufficient money would come from it to a local authority like Wokingham, already under enormous pressure on its social care budget?

I am very suspicious of hypothecated levies. It is particularly dangerous to hypothecate a levy that is a tiny fraction of the budget one is trying to improve. That will give some people the misleading impression that the social care levy will pay for social care, whereas, on the numbers, the levy would be able to match under one fifth of the total public social care budget. Pitted against the huge numbers for the NHS and wider public health budget, that is just over 4% of the total, so it is a very insignificant amount in relation to the huge sums we are already talking about for the health budgets. However, it is a big sum of money when it is broken down and becomes a tax burden on people on quite modest incomes and those struggling in self-employment or trying to get their little businesses going. The last thing they need, when we need rapid growth and a faster recovery, is a tax rise.

The economy does not need sandbagging with austerity economics; it needs promoting for faster growth. It is still below the levels of output before the pandemic hit. Up until this point, the Treasury has been magnificent in making an avalanche of money available to get us through a most difficult time. We have got away with it. It has been borrowed at very close to zero interest. In these unique circumstances, it was possible to take extraordinary monetary measures that one would not normally be able to rely on and would not want to, and I am very grateful that that was done.

I say to the Government: it is too soon to start braking the economy. The growth rate almost disappeared in the last month. I am hoping it is going to look a bit better in the next month or two when we get more opening. But before the economy is completely opened up, and people have stabilised their businesses and repaired some of the balance sheet damage that the pandemic measures did, is not the right time to take money off them. We need more spending power, not less; more demand, not less. If the Government back that, the revenues will come tumbling in to a much greater extent than if we put rates up. Do they not understand that they were £90 billion wrong last year because there was more recovery than expected? They are already £26 billion under this year because there was a fast recovery in the first few months. Do not kill the recovery and you will get the money.

Helen Hayes (Labour, Dulwich and West Norwood)

I rise to speak as a co-chair of the all-party parliamentary group on adult social care. Since the Prime Minister’s statement last week, I have been in touch with a number of members of the APPG’s working group, which has very wide membership from across the social care sector. There is absolute consensus that the Prime Minister’s plans simply do not deliver for social care. The first clue to this was the total absence of meaningful reference to social care in the Prime Minister’s statement itself. He did not say anything about the importance of adult social care or acknowledge the diversity of the sector and the need to fund care for both working-age adults and older people, nor did he pay any tribute to the hard work and sacrifice of social care workers during the pandemic or to the vital importance of their role.

The social care sector sees through this plan. Our NHS and social care are both in desperate need of additional funding now. Funding one and pretending that that will help the other is an insult to a social care sector full of brilliant, dedicated, highly skilled staff that has been brought to its knees by this Government’s neglect and complacency.

The Prime Minister’s proposals fail to make any commitment to a pay rise for social care staff. One of the members of the APPG working group, not-for-profit care provider Community Integrated Care, recently commissioned a benchmarking exercise to assess the value of social care work compared with other related professions such as healthcare assistant roles in the NHS. Its report, entitled “Unfair To Care”, found that the skills and tasks required by a social care worker employed in a care home were on a par with those of a level 3 healthcare assistant working in the NHS. The healthcare assistant receives a renumeration package worth £30,000 a year, but the social care worker receives just £17,000 on average. The social care sector has 114,000 unfilled vacancies at present—and is it any wonder when there is no parity for social care workers, and when in many parts of the country you can earn more working at the local supermarket than you can caring for our most precious loved ones?

Instead of committing to a pay increase, the Government are penalising the very care workers who are the backbone of social care, hitting them with a national insurance increase and many also with a £1,000 cut to their universal credit. How do the Government think this is in any way fair? Social care workers are not the only valued public servants who will face the punitive consequences of this Bill. Teachers, classroom assistants, social workers, prison officers, youth workers and many others will all face a cut in their take-home pay as a consequence of this wrong-headed plan.

This Government inexplicably persist in ignoring the need for real and fundamental social care reform. The Health and Care Bill proposes to integrate health and social care without reforming social care, failing to give proper voice to the sector or place it on a sustainable footing for the long term, and this Bill raises revenue without specifying how, when or where it will be spent. The Government must also acknowledge the diversity and fragmentation of the social care system, the need for a clear and comprehensive regulatory framework that includes supported living, and the need for a much greater voice for people who rely on social care and much more co-production of support services.

It is deeply regrettable that the Government have chosen to ignore decades of cross-party work on social care. They have chosen to ignore a constructive and serious piece of work by the Housing, Communities and Local Government Committee in 2018 in favour of their own ill-considered and half-baked plan. Social care and our NHS both desperately need additional funding, but this Bill delivers no firm commitment to the social care sector. It is an insult to dedicated social care workers across the country, and I will be voting against it tonight.

Ruth Edwards (Conservative, Rushcliffe)

It started with a series of bizarre reports from my grandmother. My grandfather had started to put on his coat in the middle of the night and insist on going for a walk. She found plates of cheese in the airing cupboard, instead of the fridge. It was not long before he needed constant residential care for the last four years of his life. I have always thought that dementia is one of life’s cruellest diseases, both for the sufferer and their family. The reality is that you lose your loved one long before they actually die.

Sufferers of dementia and their families have their lives turned on end, sometimes in quite short spaces of time. The last thing they need is uncertainty and financial worries to add to that. Here in the UK, we have an ageing population—and with that come complex, long-term physical and mental health conditions—which means that the length of time people may require care if they are hit by dementia or similar conditions later in life is increasing, as are the numbers of people needing that care.

It is an urgent problem, yet for decades, Governments of all parties have pushed the issue down the road or to one side. Our health service and councils across the country have started to see the impacts of this increase in demand without an increase in ring-fenced resources. I am therefore glad to see the Government tackling this head on, both with the social care levy set out in this Bill and the planned White Paper in the autumn. Only through a system that encourages long-term planning for social care will we achieve a sustainable care sector.

Like with pensions, we should be thinking about care provision, planning and taking responsibility for that provision from the start of our working lives. We need to change the culture around how we talk and think about care, and this Bill is the first plank of that new platform. It has been written in a way that means that people on higher salaries will pay more. It is also the first part of a broader new care settlement that, as my hon. Friend the Member for Peterborough (Paul Bristow) said, must see reform and innovation throughout the NHS and our social care system, and proper integration between the two, if it is to have public support.

Raising taxes is not something I take lightly, but the public know we have just been through the most unprecedented 18 months in more than half a century. Those on the Opposition Front Bench have criticised the Government for taking two years to put forward a plan. They have taken 24 years, and they still have no plan, unless we are counting the broad shoulders tax, which I am sure we all look forward to hearing more details on. Will it be a tax on income, on assets or on literal shoulders? I wait to see.

Words are easy; decisions are hard. That is why the public voted this Government into office: to make those tough decisions and plan for the long term. That is what we are doing today.

Christine Jardine (Liberal Democrat, Edinburgh West)

I do not believe there can be many issues on which this House is more intent than ensuring the future of our national health service and social care for the good of every person in this country, but sadly this Government, who have procrastinated over every possible thing for the past two years, instead of taking time to consider this properly are bouncing Parliament into a hurried decision—a decision that has met with condemnation across the country. It is a proposal that the Federation of Small Businesses has described as a “jobs tax”, which the British Chambers of Commerce has described as an “anchor” on jobs growth, and which the Confederation of British Industry has said

“will directly hurt a business’s ability to hire staff at a time when businesses have faced a torrid 18 months”.

But it is much worse than a job tax—it is a tax on nurses, who on average will pay an extra £270 a year. It is a tax on our teachers, police and care home workers—the very same people who have kept the country going throughout this pandemic. It is a tax that will disproportionately hit low earners, at a time when families are already seeing their income squeezed by the pandemic. This is the worst possible time to be hitting families and businesses with a crippling and unfair tax hike. Instead of boosting hiring and spending, it will damage confidence and investment. The Government are not only breaking their promise to the electorate; they risk breaking the backbone of our economy.

Instead of rushing us into this, the Government could have taken the time to have cross-party discussions and come up with a proper, detailed plan, which I believe would have had the support of everyone in this place, because we all want to see a good, sound, constructive plan for the national health service and social care. Sadly, this is not it.

Andrew Griffith (Conservative, Arundel and South Downs)

I pay tribute to my hon. Friend the Member for Rushcliffe (Ruth Edwards) for her remarks.

My constituency has a disproportionately older demographic—those who live there are 50% more likely to be over 65 than the national average—but I want to lay to rest the misperception on both sides of the House that social care is simply about the older generation. More than one in three people in the system is under the age of 65, and because younger adults are in the system for longer, spend on them is proportionately greater, so this is not just about a battle of the generations.

I pay tribute to the millions of unpaid carers in society who for years have been papering over the cracks in the system and the capricious nature of continuing healthcare assessments. I have personal experience of some of that as for many years my father was my mother’s unpaid carer and had to deal with that at the sharp end. For that reason, I celebrate the fact that this is a nettle grasped. It is not necessarily the whole solution but it is the start of a package of measures that moves forward a debate that has been stalled for too long. That is one reason why we should all come to the House and use our voice and platform on the hard issues that we face in society.

I applaud the Government on their selection of national insurance, which is the tax with the broadest reach. It is progressive, and that is why so many of our European neighbours have chosen to fund their social systems through similar measures. It is a chimera to think that there is another way—perhaps Opposition Members have been taking medicinal hallucinogenics—because the national insurance take is more than 10 times that of capital gains tax and inheritance tax combined. No mythical tax on wealth will give us anything like what we need to take this issue seriously—and we should take it seriously.

Anthony Browne (Conservative, South Cambridgeshire)

Does my hon. Friend agree that it is the height of political cynicism for Opposition parties to campaign repeatedly to increase taxes to spend money on health and social care and then, when the Government introduce such measures, oppose them? Does he think that they should commit themselves to scrapping the health and social care levy once it is introduced?

Andrew Griffith (Conservative, Arundel and South Downs)

My hon. Friend, as ever, makes an important point. We should be on a quest for consensus, and it would be useful to hear more from Opposition Members in the wind-ups.

I pay tribute to the many dedicated workers in care homes across my constituency as well as their residents—from Barlavington Manor in the north to Valerie Manor in the south and from Villa Adastra in the east to Westergate House in the west. They are just four of the 28 care homes in my constituency providing fantastic quality care. It would be lovely to see more resources pumped into them as well as their staff.

Let me conclude broadly where I started. This is a down payment on a process of reform in our healthcare systems, building on the innovation that we have seen. However, a health and social care system cannot be managed permanently on an exceptions basis. We need reorganisation, better data and better decision making to build the high-quality health and social care system that both sides of the House want to see.

Rosie Winterton (Labour, Doncaster Central)

Order. Before we move on, I remind colleagues—I am sure they know—that it is very courteous to listen to a lot of the debate before intervening, because many colleagues have sat here from the beginning and are waiting to speak.

Rachael Maskell (Labour/Co-operative, York Central)

Take no comfort, nor relief. Those things you dread will still be true. But now, poorer through life and poorer through death. Through life, you will pay. When frail, you will pay. Disabled people will pay and pay and pay. For what? None of us knows. Time and again, we have been promised that social care plan. Like the emperor’s new clothes, there is nothing to show. But, rest assured, things are about to get tougher, budgets tighter and ends not meeting. That personal debt will grow.

Two weeks ago, there was no plan. The Prime Minister tossed a coin, and this is where it has landed. Now he is rushing through this Bill with no pre-legislative scrutiny, no impact assessment and no plan to fix the care crisis for those already in the system or the 1.5 million longing for help. There is nothing for unpaid carers, and £8 billion has been cut from the system. As ever, the Prime Minister is throwing out the headlines with little thought and then moving on, leaving a path of destruction behind him for someone else to clear up and, in this case, to pay up.

This will not clear the NHS backlog. As we have heard today, the staff shortages are not being addressed, and how can they be in such a short period. Just this weekend, we were 74 nurses short in York. That is the scale of the challenge, and one that the Government have not answered.

A decade into this Tory Government, there is still no plan. We just pay up, and one day we may learn what for. For starters, if someone holds assets above the thresholds, they will still pay £86,000—the vast majority of average care costs—and will still need to sell their home. Then there will be accommodation, if needing residential care, and living costs on top, and no cap until October 2023. This is why we need a public national care service that is free at the point of use and fairly contributed to by all.

With 84% of care home beds owned by private investors, including private equity firms, who are not paying this levy and whose sole purpose is to profit—profit from the frail—it is the social care reform we need that we should be debating today. Just one provider in my constituency made a 25% profit increase ahead of the pandemic, but it will be its staff, who were promised a pay rise while clapped by the Prime Minister, who will now have to pay the levy instead. But we have been denied the opportunity to debate what this nation is paying for.

The Labour party cannot consent. We believe that those who have more, should pay more. Take the London School of Economics wealth tax commission, which reported last December. It found that a tax on assets worth over £500,000 at 5% would draw a pot of £260 billion, which would pay for health and social care and that much-needed pay rise. The tax would be assessed on individuals rather than households, with the rate of tax being 5%, albeit with a standard payment period of five years, allowing a tax rate of 1% to be paid for each of those five years. The amount raised is the equivalent of income tax at 9%. Alternatively, if the threshold was £2 million, £80 billion would still be raised.

That would start another conversation: instead of low-paid workers funding the social care of the wealthy, the wealthy would be funding the social care of all. I ask Members: is this fair? This may not be the full answer, but it starts a different conversation—one that, in rushing through the legislation today, the Government are running away from.

John Baron (Conservative, Basildon and Billericay)

I join many Members who have already spoken in wholeheartedly supporting the Government in trying to grasp this nettle, which has been pushed into the long grass for too long by too many Governments of all persuasions. However, I think many of us are concerned about the haste with which this reform—or this funding, certainly—is being introduced. Parliament has little time to scrutinise the details properly, and there are so few details out there. Questions to the Prime Minister only last week, in a letter copied in to the Chancellor and indeed to the Secretary of State for Health, have been left unanswered.

I would ask those on the Front Bench what other types of funding for social care systems have been considered. Have they looked at the insurance-based systems on the continent? Why not a public insurance system, which has many merits? We are unclear about the exact improvements to social care, yet today we are signing off a massive tax increase—bigger than that raised by some Budgets.

I would also suggest that this is the wrong approach to the funding. The Conservative party has traditionally referred to national insurance as a tax on jobs. The Prime Minister, when opposing Labour’s increase from the Back Benches in 2002, called it regressive. He was right then, and I am afraid that he is wrong now in introducing this national insurance contribution tax increase.

The core of my one nation Conservatism is a belief that, in order better to help the more vulnerable and ensure that we maintain low unemployment, we should encourage economic prosperity. Low taxes help businesses, encourage prosperity and keep unemployment down—they certainly help to. Yet here we are, increasing taxes at a time when the recovery is still fragile after the pandemic. This will cost jobs, and it will result in lower pay and higher prices. I also to a certain extent question the fairness of this increase in our national insurance contributions, which will disproportionately fall on the lower paid. Why should wealthy non-working pensioners be exempt? If this were a truly broad-based tax, we would be answering that question, but there is nothing but silence from the Government on that point.

I am concerned about the lack of response from the NHS with all this extra funding going in and the lack of accountability. I was chair of the all-party group on cancer for 10 years. We continue to point out that we are failing to match international averages when it comes to our cancer survival rates. We have a mass of process targets that create myriad bureaucracies, but we are still not catching up when it comes to average cancer survival rates. Only half the NHS workforce is medically trained. We need to address that, because more money alone is not the answer. We need genuine reform that focuses on outcome measures, not process targets. So we need more time to consider the proposals and I will not be supporting the Government in the Lobbies tonight.

Tim Farron (Liberal Democrat, Westmorland and Lonsdale)

I probably agreed with at least three quarters of what the hon. Member for Basildon and Billericay (Mr Baron) just said. One thing I did not agree with him on was his belief that the Government have grasped the nettle. I believe they have walked past the nettle, barely nodding at it, and the people who will be stung are the people still in social care, the people working in social care, and the people who will disproportionately pay for what the Government are proposing.

Conservative MPs and the Conservative press are concerned about the Prime Minister breaking his promise on taxation, but the promise he has most definitely broken is the one he made during the leadership contest in 2019, when he said he would

“fix the crisis in social care once and for all”.

He has done no such thing; that proposal is not before the House today. There was a promise not to raise taxes. If the Government chose to break that promise, I would be happy to provide them with cover for that. Labour may have dodged the issue, but I am clear that we should raise income tax so that this is paid for by people who have the wealth and ability to pay for it—not by national insurance, which often will disproportionately fall on younger working-age people. What do those people tend to have in common? They cannot afford a home, or at least a house that they own. What will we be asking them to do? To fund those who have a home to have the right to leave it to those who come after them.

Nobody should be forced to sell their home to pay for care. Just a few weeks ago, I was talking to a friend of mine who sadly has cancer. This was a terrible thing to say, but he said, “I feared cancer and I feared dementia, but I’ve got the least bad of the two.” He is living with cancer now. The reality is that, for many reasons, his care is paid for, but for those like my father-in-law, my grandfather and others who suffer from dementia, that care is not provided for. So it is right to have radical reform of social care, but this is not it. It is right that all the parties should get together to ensure we have a common approach to this, but this proposal has been dreamt up and issued as a press release—it is not the reform of social care we need.

This reform of social care does nothing to tackle the 120,000 care assistant vacancies in our country, or to give social care staff the pay and esteem they deserve. One reason there is a crisis is that wonderful people can earn more money stacking shelves than they can caring for our loved ones, of whatever age. This plan will do nothing to give local authorities the money they need to backfill the terrible backlog and black holes that the Government have left them. Again, they are taking unpaid carers for granted and—the hon. Member for Arundel and South Downs (Andrew Griffith) rightly mentioned this earlier—not addressing the needs of those in care who are not of retirement age but significantly younger. This is a massive missed opportunity that will be paid for by people who have the least.

In my community in Cumbria, we are about 10 years above the national average age. We have a smaller working-age population and a disproportionately large population in need of care. We have colossal staffing shortages as things are. This measure does nothing to meet the needs of the people in my community, because it does nothing to invest in the quality and standard of the care that they will receive.

Andrew Murrison (Conservative, South West Wiltshire)

I am loth to give the hon. Gentleman an extra minute, but I must ask him how much he would put on income tax. I know that his party was famously keen on putting a penny on income tax, but he has just made a whole load of spending commitments—particularly raising incomes for care staff. I assume he has costed that. If so, will he say how many pennies on income tax he proposes to burden our constituents with?

Tim Farron (Liberal Democrat, Westmorland and Lonsdale)

We would need to raise income tax to do what the hon. Gentleman’s Government say they need to do in the short term to get through, and then we would have a ring-fenced, bespoke tax that would deal with social care. If people had lived to the age they do now when Lord Beveridge, the fine Liberal who came up with the welfare state and the NHS in the first place, wrote his plan, there is no doubt that social care would have been part of that package, and we would be paying more tax now as a consequence. I say we should be doing what we were doing around Dilnot a few years ago, when we were moving in the right direction, sworking often across the House, and coming up with a package that we would pay for. In the short term, though, we would immediately raise a tax that is affordable and fair and does not just clobber those people on low wages and people of working age. That is the right thing to do.

That is why this measure is not just the wrong way of going about this but a colossal missed opportunity. We were promised something like the Beveridge report, and we ended up with something written on the back of a fag packet. We need something that means people will look back on this generation the way people still do on the generation of politicians post war who built the welfare state in the first place.

Craig Mackinlay (Conservative, South Thanet)

In common with my hon. Friend the Member for Basildon and Billericay (Mr Baron), I am wondering—I think many of us are—why we are here today. We have a fiscal event, the autumn Budget, in just six weeks’ time, which would seem to be the right forum to discuss these matters. One cannot help but wonder: why the haste.

We had the Dilnot commission report in July 2011, 10 years ago. Arguably, even then, that was 10 years too late. It was intended to solve the inherent unfairness between two people who were on similar incomes throughout their lives, one who rented and one who bought their home, whereby one lost everything and one got everything for free. That is at the heart of these issues and of affordability in the longer term. I get that, and the Government have to be applauded for finally thinking about these things, but haste is not due at this time.

I am sad that we are just reaching for the tax lever. That is not what Conservatives do. We are going to end up with a tax take at the highest level of GDP for 70 years. Since we are raising NICs—particularly employer’s NICs—it stands to reason that any employer with a pot that they were thinking about using to increase general salaries across their workforce will reduce that pot by 1.25%.

Let us concentrate on NICs. On our first day back at school last Monday, we debated the National Insurance Contributions Bill, which exempts from NICs veterans and potentially new freeport businesses. We have employer’s NIC relief for the under-21s and for those under 25 on apprenticeships. We have an employment allowance to exempt employers from national insurance. That was at £3,000 for all small employers, and it has now increased to £4,000, because exempting employers from national insurance is deemed to be a good thing.

I say to those on the Treasury Bench: please help me. We tend to tax things that are deemed to be bad. We tax things such as alcohol, cigarettes and fuel because we want lower use of them. They are deemed to be bad. Increasing a tax on jobs, something we want a lot of, seems rather bizarre.

I serve on the Public Accounts Committee, and just last week we did an investigation into the Department for Work and Pensions. Last year alone, there was £8.3 billion of fraud and error in its payments out. Obviously, the pandemic had something to do with that, but there is an in-built annual loss of £5.5 billion through fraud and error. That is something approaching half of what we are looking for here to solve these problems.

As Conservatives, we grasp difficult problems. We grasp and understand the problem of an ageing demographic in our populations. On pensions, we did something novel. We could have just reached for the tax lever, but we did not. We introduced auto enrolment pensions, where the employer and the employee contribute and every employee in the land earning above a certain amount has a pot that they can call their own, with the flexibility that that has. To me, that is the type of thinking we should be doing now. I am very concerned that we will just sink another load of tax into the Department of Health and Social Care and hope for a different outcome, when we have been throwing money into these Departments for many years, yet our waiting lists are at the highest ever.

Her Majesty’s loyal Opposition have been howling, “Let’s have wealth taxes.” Well, I am very pleased to tell them that, yes, we have a very substantial wealth tax in play and it is called inheritance tax. It has doubled since 2011, from £2.7 billion to £5.4 billion today, and that will be going in one direction, given asset value inflations and the fiscal drag within the IHT system.

Andrew Murrison (Conservative, South West Wiltshire)

Of course, we have also had a wealth tax in the form of the removal of indexation allowance on capital gains tax for some years now, which is very substantial over time.

Craig Mackinlay (Conservative, South Thanet)

I am very grateful to my right hon. Friend for highlighting some of the fiscal drags that have been beneficial to the Treasury. In terms of asset price inflation, which has nothing to do with the activities of the taxpayer, other factors of low interest rates are involved. There are big windfalls coming towards the Treasury, in terms of IHT and capital taxes, which were never really forecast and are now bearing some substantial fruit. So I would have hoped that the Treasury Bench might have thought, “Where are those taxes going? Where are the other losses within the system across different Departments? Are there procurement gains? Are we really saying that the way the NHS is run today is the best way of running it?” I would have hoped that that could have formed the new pot to solve our social care problem.

I am very concerned that this is going to be wasted cash. I am very unimpressed and I will not be supporting the Government tonight.

Fleur Anderson (Labour, Putney)

I would like to declare an interest, as my daughter is a care worker.

I pay tribute to care workers across the country for all the additional work they have been doing throughout the pandemic, to unpaid carers and to community care services run by amazing staff and volunteers, such as Regenerate-Rise in my own constituency and the Katherine Low Settlement, where I used to work, running services for older people, before I became an MP.

This is definitely a problem that needs fixing, but I am really hoping for another Government U-turn on this issue today. There are 300,000 people on waiting lists for care services. There is a huge disconnect between the NHS and social care services. There are delays in getting care plans, community services are patchy across the country because of different funding and activities for adults with disabilities are being cut across the country, too. Mencap reports that one in three local authorities have closed day services for people with learning disabilities and that 57% of people with learning disabilities no longer receive any day services. Family carers are having to give up work and people cannot lead the full life that they want. There is an increase in isolation and a massive increase in requests for care services. At the same time, there are soaring budgets and shrinking budgets.

I have three problems with the issue today. One is the deferred payment. This is not solving the adult care crisis because it will go to fix the NHS backlog. How will we be able to cut that crisis in future years? In two or three years’ time, there will be increased staff, resources and facilities—absolutely needed after 10 years of underfunding—but how will we cut that in two or three years? This is absolutely a jam tomorrow policy and I do not know how it will work. We need money for adult social care services now. This will really frustrate people who are receiving care as well as those working in the care sector.

Secondly, this is the wrong way to raise the funds.

Back in March, the Chancellor said:

“We’re not going to raise the rates of income tax, national insurance, or VAT…It is a tax policy that is progressive and fair.”

So by his own admission, this is a tax policy that is not progressive or fair. It is taking from the poorest and leaving the wealthiest relatively untouched. It is a tax on jobs and disproportionately on working people. Why not tax dividends, capital gains or income from property?

Some 2.5 million families across the country face a double whammy of a national insurance rise and the £1,000-a-year universal credit cut at the same time. Care workers will not be getting a pay rise. They are promised some changes down the road, but nothing now, and yet they will have a tax rise. The £86,000 cap will still leave people having to sell their house. Inequality will increase and what will the levy fund? Where is the plan?

We need to transform access to care. There needs to be a home-first policy. Prevention is so important and, as I said, we need to join up the NHS with social care policies. One of the biggest frustrations I faced as an adult care worker was that we did not have a continuity of care between the two. It is not just about money; the systems must be reformed. Why should we have to pay for it when we do not know what systems will be changed? This huge tax increase cannot be guaranteed to fix the adult social care problem, because we have not been told what on earth it will be spent on. It is unfair, it will not fix the crisis and I hope to see that U-turn very soon. I cannot support this Bill.

Mike Penning (Conservative, Hemel Hempstead)

It is a pleasure to follow many colleagues who have talked from the heart about the great concerns that their constituents and we as family members have about the health and social care framework.

I will be supporting the Bill tonight because, as I said last week, kicking the can down the road, as several Governments have for years and years, is not the answer, but I have a couple of questions that I would like the Treasury Minister to address. I completely agree with the Chair of the Health and Social Care Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt) that if we just throw this money into the NHS and social care, it will not even touch the sides. It will just disappear. Previous Governments have done it up to now, so we have to be really careful about how the money is hypothecated and where it goes.

I am particularly worried that the top management, who earn so much, will not actually address the issues that we are talking about today. Naturally, I pay tribute to all the frontline workers in social care, all of our emergency workers and those in the NHS, but I worry about the decisions that are made and the salaries that some chief executives of trusts are on. Frankly, they are not only miles above what the Prime Minister gets, but miles above what even those in the City get. It is absolutely mind-boggling, so we have to be really careful about that and about the trusts doing what Parliament tells them to do. I know that will be addressed in the Health and Care Bill. We cannot have a situation again like the one I mentioned last week, where the Prime Minister came into my part of the world and said, “You are going to get a new hospital.” That was fantastic news; I put out press releases galore. We have been campaigning for that for years, but what we are going to get is a refurbished Victorian hospital in the middle of Watford. That is not the answer. The trusts need to do what they are told.

I will touch on one other area—dementia—which is the elephant in the room, and which my hon. Friend the Member for Rushcliffe (Ruth Edwards) mentioned. There is a lottery for our constituents and our loved ones when we are trying to sort out the difference between personal care and healthcare when it comes to dementia and Alzheimer’s. What goes on is immoral: one silo, the Department of Health and Social Care, fights against another, the Ministry of Housing, Communities and Local Government, about who might pay for that care. We have seen it in my family, in my constituency and in my surgeries. We have been fighting to appeal. People seem to be encouraged to appeal, so people appeal, but by the time the situation is dealt with, many of our loved ones and many of those in care have passed away. Only then do people win, so something is seriously wrong.

As we look at the extra money that is going in, we must break down the silos and the really immoral way—postcode lotteries are going on around the country today—that we judge who is entitled to healthcare and who is entitled to personal care. Dementia and Alzheimer’s—I always mix up the two—are illnesses, not something that people want or have brought on themselves, yet many people are having to fight to show that they have a condition so that the Department of Health and Social Care might pay for care. I hope that as we look forward we can try to address that. These are difficult conundrums, but we cannot put our constituents with Alzheimer’s or dementia—our loved ones, in my case and that of other hon. Members—in a position where they have to beg because their care relates to a different condition.

Jim Shannon (DUP, Strangford)

Thank you for calling me to speak, Mr Deputy Speaker. Like many others, I am put in a difficult position by the Bill. I believe that there must be big changes to create an influx into the NHS for the reform that we are desperate for, but I have seen too many broken families who have lost a loved one who was waiting for mental health support, who could have been saved if their cancer diagnosis had come in time, or who are awaiting support to make their child’s educational journey positive, not a hellish nightmare without the support that they need.

I am torn, because I see the need for reform. I see mentally and physically exhausted staff at the end of themselves, trying to meet their obligations in the NHS, and desperate trusts putting up advertisements for off-duty staff to come in because of dangerously understaffed wards. All those things tell me that there is need for reform, but I do not and cannot support this method. I cannot support the middle class and the small businessman bearing the brunt of the cost again. I cannot wrap my mind around the concept that someone earning £15,000 a year will have the same amount taken away in national insurance contributions as someone on £150,000 a year.

I make it clear that I am not a socialist; there is nothing wrong with being a socialist, but I am a capitalist. I believe that the system that we have is important. I understand that big business must have big results to support the big workforce, but I believe that when raising money, the easiest way is not always best.

We must ensure that we do not continue to squeeze the middle class. The Government have not been able to assure me or my colleagues that their proposal is the best way or that it is better than a graduated system whereby those on huge wages paid an extra amount that they would not overly notice, instead of families on the brink having to sacrifice and struggle each day.

I speak to constituents who are earning too much for support but not enough to live comfortably. They are the group who will be most affected, but the burden could and should be more judiciously shared. For those middle-class families, for the small businesswoman employing 11 staff and for the pensioner who has been taxed for their entire life, I do not think that the proposed method is the best one, and I do not feel that I can support it.

From the refusal to lift the child benefit threshold above £50,000, which is preventing families from taking a pay rise for fear of losing the monthly child benefit payment that pays for necessities for their children, to the situation facing pensioners who thought that they had set aside enough to last, only to deal with an increase in the cost of living along with a raid of the pension in their savings account, life is uncomfortable for those who have worked hard and who believed that they would retire in peace. Those people are all willing to make a contribution to the NHS, but is it fair that they should feel the brunt alone? I feel that that is what is happening; it is not right and I cannot support it.

I have one more small comment to make, which is about the £420 million that will be allocated to Northern Ireland through the Barnett formula. Whatever process the moneys come through, I would like to see them ring-fenced, because as Departments bid for funding, there is every possibility that the money will be deflected from doing good to simply being abused. In Northern Ireland, it could be used for the machinations of other parties, while teenagers suffer from eating disorders and while child and adolescent mental health services teams cannot prevent children from hurting or abusing themselves. I have watched as the Northern Ireland Office has been strong-armed into funding endless legacy investigations to the tune of Sinn Féin, which wishes to rewrite history.

I have not heard that the Bill will prevent the misappropriation of central funding, so I cannot support it. That goes against the grain for me, because I believe in the principle of reform. I would welcome reform if a different method of raising funding were put forward, but I simply cannot agree with the Government’s method. I ask them, even at this late stage, to revisit the methodology and allow us all to support our NHS, as people want to, without further squeezing the middle class. That cannot happen.

Martin Vickers (Conservative, Cleethorpes)

As someone with naturally Conservative instincts, I am inclined to say no to tax increases, and to greatly prefer the options that allow the Government to create the economic conditions for growth in order to fund our public services. We have to recognise, however, that the expectations of the public are much greater now than they were a relatively short time ago. Whether we approve or not, the Government are now expected to provide more and more services, and the public do recognise that there is a cost to that.

I am a child of the 1950s. At that time, it was expected that the family would look after children—not necessarily just the parents, but the wider family, and the next-door neighbour might be involved as well. Now, however, there is an expectation that the Government must fund facilities for childcare. The same applies to adult care: that, too, was something that families took on. It was a burden, there is no denying that, but one that was expected, and, in the family context, accepted. It was not ideal then, and what the Government are proposing now, I suspect, will also not be ideal. It will have imperfections. Our surgeries will be full of people saying, “My neighbour is getting this and I am not.” We all hear of such anomalies from constituents. There will be the issue of differences in property prices, for example. My part of the world has low property values: for £350,000, one can buy a nice four-bedroom executive property; that is not the case here in the south. There will be anomalies that need further consideration.

Then we need to ask, “How are we going to do this?” The Government need money now. That is the expectation of the general public. Yes, there is a danger that the money could fall into a black hole, but we all have the ability to challenge our local health trusts. My hon. Friend the Member for Great Grimsby (Lia Nici) and I have regular meetings with our hospital trust. We must expect the Government to challenge the NHS senior management at national level, but we all have a role to play. Our local authorities have scrutiny panels that can ask questions, but we as individual Members of Parliament can take part in detailed scrutiny. We want to know what has been done to improve dementia care in, for instance, Grimsby and Cleethorpes. We want to know what has been done to improve cancer care. Is the stroke unit better located at Scunthorpe General Hospital, which is the case in our district? There is much that we can all do to aid the Government, and, more important, to aid and help our constituents.

This is a massive challenge for Governments. Governments have to accept the world as it is, and not as they would like it to be. I urge my colleagues who have expressed perfectly legitimate reservations about supporting the Bill to have a rethink. The Government are delivering on what the public expect. The public know that massive amounts of money have gone into dealing with the pandemic, and they recognise that if they want a better health service—which they all do—and better social care, there is a cost. It is not a cost that I like, but it is the best way forward at the moment.

Geraint Davies (Labour, Swansea West)

The only way to sustainably finance the costs of social care and the NHS for an ageing population is a growing economy, so why is the Chancellor taxing work? He said at the last Question Time that the only way to tackle poverty was to encourage work, but he is taxing work, and specifically he is taxing poorer, younger workers who do not have assets to pay for the care costs of often richer, non-earning, asset-rich people. It is not fair, it is not economically effective, it is being rushed through—it is wrong in so many ways that it should just be scrapped.

Obviously, we need to pay for care costs. It is appalling that one in four people will be hit with massive care costs through no fault of their own, and we need a system that is fair in terms of taxation to pay for that. I am not a great fan of hypothecation, because we should be deciding how to tax in a fair and economically sensible way and setting out precisely what we are going to spend our money on, neither of which has been done. If we want to grow the economy and tax things that we do not want to occur—people have talked about alcohol and cigarettes—we should be tackling, in particular, air pollution. I say this as the chair of the all-party parliamentary group on air pollution. Air pollution costs us £20 billion in lost productivity and health costs, so why do we not have some sort of escalator on diesel? Why do we not have an incinerator tax? The plan is to double incineration by 2030, yet we read from the latest medical reports that a very small increase in NOx massively increases dementia and mental health issues by something like 32%, with an 18% increase in hospital admissions. We have heard new research about ultrafine particulates from incinerators in urban environments getting straight into the bloodstream and causing problems for the heart, the mind and the lungs in particular, but there has been no mention of any of this.

And what about plastics? There will be more plastics than fish in the sea by 2050. We plan to tax plastics at £200 per tonne, but in the EU the figure is £685 per tonne. If we put an extra £400 per tonne on the 12 million tonnes of plastic we produce each year, we would generate £5 billion. Why should we not be able to get a cheaper cup of coffee in a china cup than in a plastic one? That would save the environment.

I support the points that were made by my right hon. Friend the Member for Barking (Dame Margaret Hodge) and others on progressive taxation. Gordon Brown had a national insurance increase all the way up the income scale. Obviously we need a threshold if we are going to use national insurance. Lord Hendy is now putting forward the Status of Workers Bill, which would capture large numbers of people who are currently deemed to be self-employed so that their employers do not have to pay national insurance. In that way, we could have a larger tax footprint, which would be fairer.

Obviously companies such as Amazon should pay more and there should be a transactions tax. Landlords have made capital gains through stamp duty holidays and with interest rates at low levels, and we should also look at a carbon border tax at a time when China is producing more emissions than the United States and the EU combined.

We should tax the bad things—namely, climate change and pollution—not the good things such as work and the economy. On debt costs, the interest rates have been low—they are down £14 billion year on year—and this looks like another attempt to bring down the debt. We must tax the right things, not the wrong things, to sort out the problem.

Andrew Murrison (Conservative, South West Wiltshire)

I will certainly be supporting the Government in the Lobby this evening, and the reason is this: in 1948, we instituted a system of socialised medicine, which has the support of all major political parties in this country, for all medical conditions save just a few. They tend to be things such as dementia, the general frailty of old age and associated conditions such as Parkinson’s. Nobody in this place has any cause to hector or lecture on these subjects unless they have had personal caring experience for somebody with that spectrum of conditions, because I can tell them that it alters your perspective dramatically on what is needed to improve services for an increasing proportion of our population. It is no good Opposition Members professing their support for our model of socialised medicine while excepting the growing burden of ill health that tends to attend advanced years. That is chiefly what lies at the heart of this measure today.

If we are all agreed that it is invidious to except dementia and the frailty of old age from the provision that we have celebrated since 1948, we have to find an equitable way of paying for it, and that implies the use of a broad tax base. It is not clear to me from anything that has been said this afternoon that anyone other than those on the Government Front Bench has a clue as to how that alternative balance sheet would stack up. Despite interventions that I have made, I am none the wiser about what their alternative would be. Nobody enjoys taxation. As a Conservative, I loathe putting my hand in other people’s pockets, but there is a general expectation, after the pandemic, that money will have to be raised from somewhere. The only question that I would concede is when should we do that?

I would like to put one or two points to the Minister, having given him my support. We are fundamentally changing the health and social care system by providing this increase in funds and an alternative way of paying for health and social care through a hypothecated levy. It is likely that the social care industry will respond, as all businesses will. I am ever so slightly worried that things like hotel costs will be ramped up, as they are not covered by this, to the disadvantage of our constituents, and that costs will be frontloaded to about, say, £86,000.

I hope that Ministers, in their White Paper and subsequently, will insist on some way of limiting and moderating such frontloading; otherwise I fear that many of the advantages we want for our constituents and their families in this situation will be eroded. We need an indicative sum on, for example, hotel costs. Please do not assume that all within this sector are acting for pure and altruistic reasons. They are businesses and will respond as all businesses do.

I support the levy, as it is the right thing to do. No alternative has been put forward that is remotely credible, and I will strongly support the Government this evening.

Kim Johnson (Labour, Liverpool, Riverside)

I pay tribute to the social care workers working in care homes and the domiciliary sector in my Liverpool, Riverside constituency.

This country is in the grip of a social care crisis, and this Bill needed to be a watershed moment for the sector. Instead, we have been presented with a package that neither fixes the social care system for service users and workers nor funds it fairly. Unprecedented numbers of staff are leaving the profession, with 600,000 care workers currently earning only the national minimum wage, more than 110,000 vacancies and a massive turnover of 30% a year.

We are in desperate need of a detailed plan to mend and future-proof a system broken by years of underfunding and neglect. Decent pay, terms and conditions for undervalued employees must take centre stage of any serious plan to tackle the deep-rooted structural issues in the social care sector, along with a long-term workforce strategy and improved quality and standards of care.

Instead, this plan does nothing to address the job retention and vacancy problem facing the adult social care sector by improving pay, terms and conditions. Can the Minister tell us what thought, if any, this Government have put into tackling job retention and vacancies in the social care sector?

Despite being the primary commissioner of adult social care services, local government is glaringly absent from the Government’s package. Age UK has called for a big injection of funding into councils’ care budgets, including a social care workforce strategy to meet rising demand and the needs of disabled and older people by widening the criteria for state support alongside a new deal for unpaid, informal carers.

We need a plan to fundamentally tackle the social care crisis through local government bringing services back in house, with proper funding raised by a wealth tax on the richest. Billionaires in Britain got £290 million richer every single day during this crisis. While they were raking in massive profits, millions across this country were struggling to make ends meet and many relied on food banks.

This package will leave a key worker earning £26,000 a year facing a hike in their Nl contributions, on top of a pay freeze, rising council tax, and a frozen personal allowance for income tax—and all this at a time when food, fuel and energy prices are increasing. It is obscene that, after all this, the Tories are pushing through a tax hike that will hit the lowest-paid workers while leaving the wealthy untouched.

The Prime Minister gave a strong assurance that he would fix the social care crisis after a decade of cuts by this Conservative Government, which took £8 billion out of the social care system. This plan does not come close to the additional £7 billion for social care called for by the Health and Social Care Committee, and much of the funds that will be raised risk being absorbed by a resource-starved NHS.

Social care should be universally free at the point of use, just like healthcare. Once again, we see another broken Tory promise. The lip service paid by this Government to levelling up is shown to be just as hollow as their promises not to hike taxes, and I will not be supporting this.

Richard Drax (Conservative, South Dorset)

I am a great believer in the Conservative philosophy being probably the simplest of those of all the political parties. We believe in freedom—freedom of the individual and freedom from the state. We believe in low taxes. We believe in hard work and a safety net for those who fall into it. Aping Labour by spending billions of pounds we cannot afford will not fool the electorate for long. The NHS has become a religion—no one dares take its name—but a radical review of health provision is crucial if we are not to pour money into a black hole; we have heard this expression used repeatedly today, but it is a bottomless pit. Without reform, this money, well intended by the Government, will disappear.

Interestingly, and soberingly, the Resolution Foundation estimates that shortly 40% of all government expenditure will be on the Department of Health and Social Care. We repeatedly talk about reform but nothing happens. I was shocked when last week, having finished the debate, I learned that 43 new executives—I think I am right in saying this—are going to be employed by the NHS, on £270,000 each. I just do not know what to say. There are already enough executives in the NHS to run it, so why do we need 43 more, on these huge salaries?

As has been said, we are aiming our fire at business with this NI rise, and we are doing so at a time when the Office for National Statistics shows good news: employment is back to pre-pandemic levels, with more than 1 million job vacancies. That is fantastic news and so this is not the time to raise taxes. Every instinct in me screams for us to lower them, because if we do that, we get more money—that is a fact. There is no doubt that social care and the NHS need more money, but with it must come reform, as I have said. As a colleague said so wisely in the Chamber last week, we will never win the “arms race” with Labour when it comes to pouring money into the NHS. Like any household budget, if we cannot borrow, we have to prioritise what we spend. We have to cut in other areas.

As I said last week, where is the Singapore-style, low-tax economy we were promised once free of the European Union? Where is the narrative on a way forward as this pandemic becomes endemic and life returns to normal? Where is the vision? I sympathise with the Government and the Front Benchers, as these are unprecedented times, but I urge them: don’t go Labour-lite on us now. With our finances in a perilous state, we need to work our way out of this mess, not tax our way out. We need to galvanise our economy. Courage is needed, not hesitancy. Throwing out a sea anchor—I am a sailor and I know what I am talking about—will only create a drag on our recovery. It will not help it.

Let me remind the House, in the few seconds I have left, that we are talking about taxpayers’ money, something that, as Conservatives, we should not squander. I made this point last time, but this is taxpayers’ hard-earned money. Those on this side of the House are responsible for people’s money or we are not Conservatives at all.

Catherine West (Labour, Hornsey and Wood Green)

I must agree with the hon. Member for South Dorset (Richard Drax) in one regard: we are talking today about not a small tax rise but a whopper. This levy takes us back to 1950s levels of taxation.

The post-pandemic recovery is currently particularly fragile. Usefully, the House of Commons Library sent me the statistics on the jobless figures today—I am sure many other Members have theirs—and in Hornsey and Wood Green there are 6,430 jobless people. That is 4,000 more than pre-pandemic, so the idea that the recovery is secure is for the birds. There is a real question mark in my constituency over job retention following the end of furlough, because the recovery in the service-based economy is yet to take off securely.

What is on the minds of my constituents in Hornsey and Wood Green? First, the likely cut of £20 per week for those on universal credit, which will affect 12,970 households in Hornsey and Wood Green.

Secondly, the two-child limit. If people in Hornsey and Wood Green have large families and rely on the benefit system for some assistance, only the first two children get any help. I am a third child. I do not know how many Members are third, fourth or fifth children, but they should think about their parents cursing them because they were born third, fourth or fifth.

Thirdly, energy bills are about to go up. I am sure the Minister has done his own analysis of the fact that we did not have a windy summer, which meant that the renewables did not do as much as we had hoped. We will be reliant on gas and even coal, which we should not be given all our commitments in respect of COP26. For those reasons, we will see increases in our energy bills this winter.

Fourthly, the potential for higher food costs is on my constituents’ minds—that is, if they can find the food that they like in the supermarkets after the effects of Brexit and covid.

Matt Rodda (Labour, Reading East)

I am grateful to my hon. Friend for giving way on that very good point. Does she agree that it is fundamentally unfair for hard-working younger people, who face dramatically increased costs of living and high rental costs, to have to pay more than their landlords, who will not be taxed under the Government’s proposal?

Catherine West (Labour, Hornsey and Wood Green)

My hon. Friend, who always talks about the impact of measures of this sort on those who rent, makes an excellent point. This levy is going to be very difficult for them, yet it will probably not be nearly as hard for their landlords.

Fifthly, the likelihood of a council tax increase is on my constituents’ minds. Why does council tax shoot up under Tory Governments? Because if local government is starved, council tax has to increase to cover local issues. In the case of this measure, the lowest paid will not only be paying for a whopper of a tax increase—the biggest since the 1950s—but will be faced with rising council tax bills and the precept for social care, because this measure will not adequately look after the local government aspect of social care. I declare an interest as a vice-chair of the Local Government Association and a former council leader.

I wish to make two further brief points—

Alexander Stafford (Conservative, Rother Valley)

I am listening carefully to the hon. Lady’s interesting speech and her list of what her constituents speak to her about. One of the top issues that my constituents speak to me about is the need to deal with social care and to make sure that older people and people who need social care have adequate facilities and funding, yet I have not heard about Labour’s plan to deal with this important issue.

Catherine West (Labour, Hornsey and Wood Green)

I am sure that when the shadow Minister, my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare), responds to the debate she will give the full detail of Labour’s proposals.

Let me return to my point about the important elements of reform that we need in local government. First, we need all care workers to be paid the living wage. By that I mean not Mr Osborne’s fake national living wage, which was the national minimum wage, but the real living wage, which in London is now more than £10 an hour but still languishes under £9 in other parts of the country. That must be addressed urgently. We need to look at those wages not least because of the important point that, as my hon. Friend the Member for Liverpool, Riverside (Kim Johnson) said, we are losing so many carers from the care sector. In addition, the Government are mandating vaccinations, and there is a big question mark over whether that is the correct strategy for those workers. Perhaps that is just another policy area where the Government are like a shopping trolley. Perhaps they will do another U-turn tomorrow and we will see that gone, we just do not know.

The other important element is training. Many experts have told me about the importance of training in the care sector, in the NHS, and especially in those dispersed jobs where people are actually working in the homes of those for whom they care and in our care homes. There is a desperate need for training and a proper career path in order to encourage people into the sector. Even the promise on the apprenticeship opportunities for young people to enter the care sector has been deeply disappointing in terms of the figures involved. Very few from the kickstart programme have ended up in the care sector, which desperately needs young people or people who are re-entering the workforce, but they need to be on a proper training path and in a proper career so that we have high quality care.

I hope that Members will search their consciences and think about how those leaflets will look at the next general election. We will be brutal about this, because the measure is attacking those who are least able to afford it.

Duncan Baker (Conservative, North Norfolk)

Whether it is speaking about young carers, improving the pay and conditions of our care workers or pushing social care reforms for our older citizens, I have found myself in this place speaking about social care countless times since my election. One could conclude that I am happy that the Government are beginning to tackle this issue. I might be expected to say that as the MP who represents North Norfolk, an area where the social care sector is particularly important given the demographics of my residents.

As I have said to the many people who have asked for my thoughts on this Bill, in my view the prize of fixing social care is far greater in the long term than bickering about how we pay for it. It is regrettable, obviously, that we have to increase tax, but one simply has to be able to recognise the situation that the country finds itself in. The Exchequer cannot keep funding, in the current tax take, £12 billion to £14 billion a year—not to the extent that it has already supported the country to the tune of some £400 billion. Any reasonable person can recognise that. It would be fiscally irresponsible to continue to heap debt upon debt. There is probably no right way of creating the funding that we will require—a way that will satisfy everybody. Equally, there is no wrong way either. As I have not heard of a significant amount of consensus, a marginal rise in national insurance, to which, as we know, employees as well as employers will contribute, has, to a large degree in my constituency, been met with some understanding of the conundrum that we face.

The Opposition were asked time and again about how they would deal with this matter, but the hon. Member for Ealing North (James Murray) would not put a marker in the sand and explain what he would do.

Geraint Davies (Labour, Swansea West)

I know the hon. Member said that it would be fiscally irresponsible to increase debt, but is he aware that the interest cost of debt per year has gone down by £14 billion because of historically low interest rates? Therefore, at this particular window in time, as we are coming out of a pandemic, would it not be better not to tax jobs?

Duncan Baker (Conservative, North Norfolk)

I am sure the hon. Gentleman will remember the old adage that what goes up must come down, and, obviously, it could happen vice versa as well.

This Government have been incredibly financially prudent over the years. Most constituents around the country would say, “Thank goodness that we have had a Conservative Government looking after this country as they have produced one of the best responses to the pandemic in the entire world.”

What constituents want to see now are the tangible changes on the ground and the benefits. What we see today is probably one of the greatest welfare benefits that we have—the fact that there is a cap on how much a person pays in their later life for their care costs and that they will not have to sell their home will create security for a great number of people.

As the White Paper comes forward, I want to say three things to the Treasury and get these points on the record. First, I am a patron for the Holt Youth Project, which is a marvellous young people’s charity in my constituency. It has looked after some 50 young carers throughout the pandemic. Everybody knows that the life chances of young people are significantly affected as a result of looking after a sick or debilitated parent. I want to ensure that we can channel the funding that we get from this levy; there have been many asks today, including for dementia and other incredibly important causes, but please let us ensure that we fund young carers properly.

Secondly, let us ensure that unpaid carers are properly looked after. For those who take the burden off the state to care for their loved ones, the current allowance is £67 a week, at a cost to the Treasury of £3 billion a year. This must be looked at again.

Finally, let me address the recurring problem that we hear about all the time: the shortage of care workers. These people need to have the same high status and high regard as any NHS worker. We have to tackle and get to grips with the skills required to care for somebody with dementia or to give end of life care, and ensure that those care workers are properly rewarded.

Nigel Evans (Conservative, Ribble Valley)

To resume her seat no later than 4.45 pm—we will put the timer on—I call Nickie Aiken.

Nickie Aiken (Conservative, Cities of London and Westminster)

I am a low-tax Conservative, but I have concluded over many years that if we are to resolve the social care crisis, it is necessary to raise the money to pay for it. I therefore support the introduction of a national health and social care levy. Pandemic or no pandemic, we have to raise the funds somehow. I feel that successive Governments, whether Labour, coalition or Conservative, have failed to address the social care crisis in this country because they were too scared to face the fact that we would have to raise the funds—until now. Well, the Prime Minister has made the brave decision to do it, but with that decision to raise funds must come reform.

I accept that the pandemic has meant that we now have a huge NHS waiting list of more than 5 million people. If we do not address that, it will only increase. I therefore accept that the money, in the first year or so, has to go to the NHS. However, as we have heard from across the Chamber over the last couple of hours, we must have reform. We cannot allow the money to continue to go into what has been described as a black hole.

When I was the leader of Westminster City Council, 40% of my budget was for social care and adult social services. That is an incredible amount of money. We know that people are living longer, whether in their own homes or in care homes. We have to ensure that local authorities are properly funded to provide the frontline services that they do. The Local Government Association claims that there is a gap of more than £2 billion, so I ask the Government to ensure that, in the spending review, local authorities are given the funding they need to address the immediate social care issues that they face.

During the summer recess, I was proud to spend a week looking after my father, who has advanced Alzheimer’s, while my mother had a respite holiday. It was a pleasure, but it was also very difficult. I pay tribute to all those family members who look after their loved ones who have dementia and Alzheimer’s. Our society owes them a huge debt. I hope that the money raised from this levy will go towards helping partners who look after their loved ones with respite care, and towards providing brilliant care workers—whether in care homes or providing care at home—with the pay and conditions that they deserve. Throughout the pandemic, they have shown what a brilliant service they provide.

I support the Government this evening, but I hope that we will see reform along with the tax rise.

Abena Oppong-Asare (Labour, Erith and Thamesmead)

It is a pleasure to respond to this Second Reading debate on behalf of the official Opposition. I thank all hon. Members for their contributions. As several have said, it is good that we are now debating these issues, even though the Government have provided a short time today.

We have heard some excellent contributions, including from my right hon. Friend the Member for Barking (Dame Margaret Hodge), who spoke about how unfair the new tax is on working families. She also made it clear how many alternatives there are to this tax. My hon. Friend the Member for Birkenhead (Mick Whitley) talked about how the combined impact of this tax and the universal credit cut will push more families in his constituency into poverty. My hon. Friends the Members for Dulwich and West Norwood (Helen Hayes) and for Putney (Fleur Anderson) spoke powerfully on behalf of hard-working and underpaid social care staff, pointing out that the Government are increasing their tax through this Bill. As my hon. Friend the Member for York Central (Rachael Maskell) said, there is nothing in the Prime Minister’s announcement for unpaid carers. My hon. Friends the Members for Swansea West (Geraint Davies), Liverpool, Riverside (Kim Johnson) and for Hornsey and Wood Green (Catherine West) talked about the unfairness in this Bill.

The hon. Member for Rushcliffe (Ruth Edwards) made a powerful speech about her family’s experience with dementia and reminded us about the people at the heart of this debate. Several Conservative Members also called on the Government to think again about this tax rise, including the right hon. Member for Wokingham (John Redwood) and the hon. Member for Basildon and Billericay (Mr Baron). I hope they will join us in the Lobby tonight.

As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), set out last week, and as my hon. Friend the Member for Ealing North (James Murray) said earlier, Labour has two tests for the Government’s proposals: first, do they fix the health and care crisis; and secondly, are they funded in a fair way? The answer to both is a resounding no.

Gary Sambrook (Conservative, Birmingham, Northfield)

We have had three hours of this Second Reading debate, and as far as I am concerned, not a single Opposition Member has actually said how they are going to fund their plan and how it is going to be fair, so will the hon. Lady take this opportunity now to tell the House what individual tax Labour would put up to fund it?

Abena Oppong-Asare (Labour, Erith and Thamesmead)

I am a bit concerned that the hon. Member has not been listening to the debate carefully. We have made it very clear: if a tax has to be raised, it should be fair across income groups and generations. The national insurance rise fails to pass these tests, and the Chancellor wants us to believe that there is no way to do so. That is not the case. I want to hear from the hon. Member what he is going to tell his constituents about breaking his manifesto promise, and why he has done so. What will he say to the low-paid hospital cleaners who will have to pay this tax when some of the wealthiest people in his constituency will not?

It has become increasingly clear that this Government do not have a plan to fix the social care crisis or to tackle spiralling NHS waiting lists. It is certainly not in this Bill, which only says that the Chancellor will decide how to distribute the revenues between health and care. Even if we look at the broader proposals, it is clear that there is still no plan for social care. Indeed, the Chair of the Health Committee made this point earlier. A promise of a White Paper is simply not good enough. Despite the Government repeatedly stating that they have finally grasped the social care nettle, the small print reveals that only a fraction of this spending will go to social care over the next three years—and even that is not guaranteed.

Of course our NHS needs more funding, not least because the Tories have underfunded it for a decade, but funding without a plan is not an answer. On social care, the Institute for Fiscal Studies has said that

“the extra funding will not be sufficient to reverse the cuts in the numbers receiving care”

since 2010. Under the Tories, billions have been cut from social care despite growing demand, vacancies have soared, and waiting lists have grown ever longer. This sector is in crisis and it needs help now. Instead, the Government are making it wait. The hard-working and underpaid staff in the care sector deserve better than that. As my hon. Friend the Member for York Central said, even with the new cap, hundreds of people will be left with high care costs, with many costs associated with being in a care home excluded completely from the cap. The cap does not even kick in until 2023. For those paying for social care, or those who need it but cannot afford it, this is no help at all. Even when it does start, too many will begin to face charges of hundreds of pounds a week even after they hit the cap.

The Government cannot even guarantee that this new system will prevent people from being forced to sell their home to pay for care. For those who live in the north, where house prices are generally lower, that is even more likely—£86,000 is a big proportion of house values in the north and the midlands. The plan fails on its own terms, and it is not only Labour saying that. Last week, the Conservative chair of the Local Government Association said that the Government’s announcement would make the situation worse because private care providers would face increased tax bills. Let that sink in: the leading Tory voice for local government is not only saying that the proposals will not help, but that they will make things worse, and it is not just him. The hon. Member for Stevenage (Stephen McPartland)—also a Conservative, last time I checked—said:

“The new health and social care levy provides no new money to fund social care for three years. No money for living costs, only personal care costs. Selling your home is just deferred. It is a tax on jobs.”

The Government have no plan for social care and no plan to bring down NHS waiting lists. Instead, all we are left with in this Bill is a manifesto-breaking tax rise on working people and the businesses who employ them—a tax rise that will cost a typical employee an extra £261. I say that again to the hon. Member for Birmingham, Northfield (Gary Sambrook): this tax rise will cost a typical employee an extra £261. It is a tax rise that leaves many graduates with a marginal tax rate of nearly 50% and that comes after this Government are already hitting working families with higher taxes and a freeze in the income tax personal allowance.

That is a triple whammy of taxes on working people, yet the Government have chosen not to extend the health and care levy to rental income, even though 67% of people who own buy-to-let properties are in the top fifth of income distribution. Nor have the Government looked properly at financial assets, stocks and shares, or income from other forms of wealth. The proposed dividend tax rise will raise only £600 million, compared with the £11.4 billion coming from workers and businesses, and it is not even in the Bill. Just £1 in every £20 is coming from dividends, rather than people’s wages, and the Government will not even rule out further tax rises on working people during the rest of this Parliament.

The tax rises could not come at a worse time. A fragile recovery is being put at risk at precisely the time we need businesses to create jobs. Family incomes are being hit by the universal credit cut and rising household bills. In fact, when combined with the universal credit cut, a care worker will be over £1,000 worse off a year. Let me repeat that: £1,000 worse off over a year. The Government’s own tax impact assessment, which my hon. Friend the Member for Ealing North referenced earlier, states:

“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”

That just sums up how this Government are treating workers and families.

The impact assessment also states that the new tax will affect business decisions about hiring new workers and putting up wages. It is a tax on jobs, a tax on workers, a tax rise with unfairness at its heart, and a tax rise without a plan. Politics is about choices—Labour would not have made these choices. We cannot support this Bill, and I urge Government Members to remember their manifesto commitments that they each made, to think of the lowest paid in their constituencies and those in desperate need of care today and to do the right thing and vote against the Bill on Second Reading.

Jesse Norman (Conservative, Hereford and South Herefordshire)

I thank everyone who has taken part in what has been, with one or two exceptions, a generally constructive debate. I will start with the contribution of the hon. Member for Erith and Thamesmead (Abena Oppong-Asare). She said rightly that politics is about choices, but what choice has Labour given the people of this country? Has it given the people of this country a healthcare plan or a social care plan? Has it given the people of this country any indication of what taxes it would raise? Again and again, the Opposition have been asked by Members not just on the Government Benches, but elsewhere, what taxes they would raise and what their plan is, and there is no plan.

Helen Hayes (Labour, Dulwich and West Norwood)

Will the Minister give way?

Jesse Norman (Conservative, Hereford and South Herefordshire)

There have been 27 speeches, so, if I may, I will continue for a while. I may take an intervention later if we have made a bit more progress.

I feel particularly badly for the hon. Member for Erith and Thamesmead because, when the hon. Member for Hornsey and Wood Green (Catherine West) was asked what Labour’s plan was, she said that her Front-Bench colleagues would address that in their remarks. We waited with bated breath for the moment when they would address the question of what the plan was or what taxes would fund it. I can tell you, Mr Deputy Speaker, that it will need a lot more than £12 billion of health and social care funding to repair the damage from that hospital pass from the hon. Member for Hornsey and Wood Green.

Catherine West (Labour, Hornsey and Wood Green)

I am grateful to the Minister for giving way, as he mentioned me. The UK economy has seen enormous asset price bubbles, yet not much appears to be getting back from those who have made quite a lot of money over the years through real estate. Why is he taking more money from working people instead of those who have gained enormous amounts—millions—from the asset bubble?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I am desperately sad, because I thought the hon. Lady was going to answer my questions about Labour’s plan or the taxation for it. Of course, we would expect people earning that income to pay property and income taxes in the proper way, and, if they are receiving dividends, their tax will go up as a result of the changes that we have made. [Interruption.] I am asked on what basis I say that. It is on the basis of a distribution analysis of the overall package of measures published by the Treasury in the last week, which is available for all Members to read and consult. If they do, they will see that this is a very redistributive package, with the highest-income 20% of households contributing 40 times that of the poorest 20% of households. It is a genuinely progressive policy, and the distribution analysis makes that clear.

Paul Holmes (Conservative, Eastleigh)

I do not think that the Minister will mind me saying that he has served in the House for slightly longer than me. In his time, has he ever known a situation in which the Labour party—a supposed party of the NHS—has voted against billions of pounds of investment in the NHS?

Jesse Norman (Conservative, Hereford and South Herefordshire)

It is a desperate shame that the Labour party has decided to take this party political position, because this area above all is one where we would expect it to back its own policy priorities. I remind the House that these measures are more progressive than the national insurance contribution rise of 2003 for which Labour Members enthusiastically voted, yet they are not supporting them. I find that extraordinary—[Interruption.] I am asked where my plan is. It is written down, and it is called “Build Back Better: Our Plan for Health and Social Care” That is a plan. The void that exists on the Opposition side is not just a void of a plan but a void of a tax package to pay for it.

Colleagues throughout the House have made the right and proper suggestion and implored the Government to look carefully at how the funds that we are raising can be appropriately spent. We must be careful about that. No Conservative wants to raise taxes, and indeed no Conservative would like to waste money. I want hon. Members to understand that Ministers very much take that on board. As hon. Members will know, we have a health and social care plan coming forward in a White Paper, and legislation is in place to put it on the statute book. That is the position.

My hon. Friend the Member for North Norfolk (Duncan Baker) and the hon. Member for Liverpool, Riverside (Kim Johnson) rightly made a point about younger people and support for care workers. Of course, we have not just the already published plan for jobs but £500 million of new money pledged to support social care workers, including through new qualifications, progression, and wellbeing and mental health support. That is an important part of what we are doing.

There was one Opposition Member who had genuine ideas for taxation that would support social care: the right hon. Member for Barking (Dame Margaret Hodge). She presented a whole raft of ideas. I do not accept the ideas she put forward, for different reasons, and I think the proposal that the Government have put forward is superior as a single, broad-based package of measures that has this progressive, distributional effect, but she came forward with ideas. What a void, what an emptiness, what a vacuity sat around her from the Labour Front Bench and from the rest of her party. I congratulate her on at least trying to answer the question put by the hon. Member for Erith and Thamesmead that politics involves choices; and what was the choice? The right hon. Member for Barking gave us one.

In doing so, however, I think the right hon. Lady erred. There has been some discussion about the tax information and impact note that the Treasury put out last week. Let us be perfectly clear: that is a technical document that relates only to this levy. It does not relate to the overall effect of the package of measures that it funds; macroeconomically, we expect that overall effect to be broadly economically neutral. That is the picture we are presenting, so just to look at the tax side, as the right hon. Lady did, is I am afraid to miss half the point of it. The point was made very well by Ben Broadbent, a member of the Monetary Policy Committee of the Bank of England. He said that

“one should not ignore one half of that policy announcement as far as the effects on the economy concerned”,

and he was absolutely right about that. So what we have is a balanced policy: we have a health and social care plan with a funding package that the House is considering at the moment.

Let me talk a little more about colleagues. I very much support the comments of my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) about the concern that other Members across this House have about the increase in pay at hospital trusts and in some parts of the NHS. That is a matter of concern, and we have to be absolutely clear that that money is being properly spent in the NHS and across hospital trusts. It is a very strong concern of my right hon. Friend the Chief Secretary, because he—like us, like me—is concerned to support not just our NHS, but the taxpayer in making sure that that money is properly spent.

I very much supported the points made by my hon. Friend the Member for Arundel and South Downs (Andrew Griffith) when he celebrated the adult social care workforce. He was absolutely right to do that, and I hope he will be pleased at the £500 million that we have mentioned in that regard.

May I remind the House that, in grasping this nettle, the Government have not just moved forward on an issue that has been outstanding before this House for many years, but have shown how inadequate the Labour party response was to its own royal commission of 1999, from which, as we can see, virtually no social care—no enduring social care—package followed? If you do not like that, Mr Deputy Speaker, let me direct you to the Wanless report of 2006, on the basis of which no sustainable social care package was developed. That situation is changing now. This Government are putting that sustainable social care funding in place. We are doing it with a levy that tracks many other countries that have social care levies in place. This is a progressive, long-term way to address a problem that has remained in front of us, but unaddressed, for far too long, and I commend this measure to the House.

Question put, That the amendment be made.

Nigel Evans (Conservative, Ribble Valley)

I should explain that although the Chair of the Committee would normally sit in the Clerk’s chair during a Committee stage, I will remain here in the Speaker’s chair while we still have screens around the table, although I will be carrying out the role not of Deputy Speaker, but as Chairman of the Committee. I should therefore be referred to as the Chair of the Committee rather than as the Deputy Speaker.

Clause 1 - Health and social care levy

Nigel Evans (Conservative, Ribble Valley)

With this it will be convenient to discuss the following:

Amendment 8, in clause 2, page 2, line 21, at end insert—

“(1A) HMRC shall publish a forecast of the estimated costs of collecting the health and social care levy for the tax year 2023-24 by 31 March 2022.”

This amendment would require the Government to publish in advance of the levy coming into force its assessment of the extra costs of collecting the levy.

Amendment 7, page 2, line 23, after “cost” insert

“in current or future years”.

Amendment 1, page 2, line 28, leave out from first “as” to end of line 30 and insert

“determined by joint agreement between the Treasury and the devolved administrations of Wales, Scotland and Northern Ireland.”

This amendment would require agreement between the Treasury and the devolved administrations of Wales, Scotland and Northern Ireland as to the shares of the proceeds of the levy that are allocated between health and social care and between England, Wales, Scotland and Northern Ireland.

Amendment 4, page 2, line 29, leave out from “as” to end of line 30 and insert

“determined jointly by the Treasury and the devolved governments of Scotland, Wales and Northern Ireland.”

The amendment would require joint agreement between the Treasury and the governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four areas and between health care and social care.

Clauses 2 to 7 stand part.

New clause 1—Equality impact analysis—

“(1) The Chancellor of the Exchequer must review the equality impact of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the impact of the Act on—

(a) households at different levels of income,

(b) households at different levels of wealth,

(c) equality between different ages, and

(d) impact between the nations of the UK and regions of England.

(3) In this section ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause seeks an equality impact assessment of the Bill covering households at different levels of income and wealth; equality between different ages; and the impact between the nations of the UK and regions of England.

New clause 2—Review of economic impact of Act—

“(1) The Chancellor of the Exchequer must review the economic impact in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions of the Act on—

(a) business investment,

(b) employment,

(c) productivity,

(d) GDP growth, and

(e) poverty.

(3) In this section ‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland

and ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause seeks an economic assessment of the Bill on investment, employment, productivity, growth and poverty in the devolved nations and English regions.

New clause 3—Review of revenue effects of Act—

“(1) The Chancellor of the Exchequer must review the revenue effects of this Act and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.

(2) Any review under this section must include an assessment of—

(a) the impact of this Act on revenue derived from—

(i) employment, and

(ii) self-employment; and

(b) the impact of the revenues under this Act from employment and self-employment on the revenues derived from taxation on—

(i) dividends,

(ii) rental income, and

(iii) other forms of personal income.”

This new clause would require the Chancellor to report to the House on the impact of the Act on tax revenue derived from different sources of income.

New clause 4—Review of impact of Act on business—

“(1) The Chancellor of the Exchequer must review the impact of this Act on business and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.

(2) Any review under this section must provide a separate analysis of the impact of the Act on the operating costs and profits of—

(a) small and medium sized enterprises,

(b) large enterprises solely based in the UK, and

(c) large multinational enterprises.”

This new clause would require the Chancellor to report to the House on the impact of the Act on the operating costs and profits of different sizes of business enterprises.

New clause 5—Review of equality impact of Act—

“(1) The Chancellor of the Exchequer must review the equality impact of this Act and lay a report before the House of Commons within six months of the passing of this Act and every 12 months thereafter.

(2) A review under this section must provide a separate analysis of the equality impact of this Act on—

(a) income inequality,

(b) wealth inequality,

(c) geographical inequality,

(d) inequality between people with protected characteristics (within the meaning of the Equality Act 2010), and

(e) socio-economic status.”

This new clause would require the Chancellor to report to the House on the equality impact of the Act.

New clause 6—Report on levy expenditure shares—

“The Chancellor of the Exchequer must report to the House of Commons at the end of each financial year the share of the levy spent on—

(a) health care, and

(b) social care.”

This new clause would require the Chancellor to report annually to the House on the share of the levy spent on health care and on social care.

New clause 7—Report on levy revenue derived from those in the social care sector—

“The Chancellor of the Exchequer must lay a report before the House of Commons within six months of the passing of this Act, and every 12 months thereafter, containing an assessment of the levy revenue derived from those working in the social care sector.”

This new clause would require the Chancellor to report to the House on levy revenue derived from those working in the social care sector.

New clause 10—OTS Assessment of levy and National Insurance increase—

“(1) The Office for Tax Simplification shall publish by 30 September 2022 a report assessing the advantages and disadvantages of introducing the health and social care levy in comparison to the increase in National Insurance.

(2) The report shall include an assessment of the costs of HMRC in collecting the levy and for employers in complying with their obligations in relation to the levy.”

This new clause would require the OTS to publish by September 2022 its assessment of the merits of the levy in comparison with the increase in National Insurance, including costs of compliance with and collection of the levy.

Jesse Norman (Conservative, Hereford and South Herefordshire)

It is a great pleasure to be here today to explain the clauses in this Bill.

The Social Security Contributions and Benefits Act 1992 sets out the earnings and profits on which employees, employers and the self-employed are liable to pay national insurance contributions. Clause 1 of the Bill introduces a new tax, to be known as the health and social care levy, which will be charged on the same basis as national insurance contributions. The levy will be set at 1.25%, and will affect earnings from 6 April 2023 onwards. When individuals or employers are liable for a qualifying national insurance contribution, they will also be liable for the levy. The levy will be payable on the earnings and profits on which those contributions are payable. The qualifying national insurance contributions in question are primary class 1 NICs that employees pay on their earnings, secondary class 1 NICs that employers pay on the earnings of their employees, class 1A and class B NICs that employers pay on benefits in kind received by their employees, and class 4 NICs paid by the self-employed.

This new levy has been introduced to raise funds for health and social care, so it is only right that individuals of all ages who are able to pay should do so. Therefore, individuals over state pension age who would be liable for those contributions were they not exempt will be liable for this levy.

Edward Leigh (Conservative, Gainsborough)

If we are talking about an insurance system, can the Government explain why they have ruled out state-sponsored insurance? I can understand why they cannot rely entirely on private insurance—the risk is too great—but Dilnot originally came up with the idea that people could take out insurance when they retired which would be a charge on their house, and they would have to pay it back when they died on the basis of the value of their house. I am not asking the Government to accept these ideas now; I am simply asking whether they have an open mind and are prepared to look at them. This is a complicated matter, and we want to have a real insurance system.

Jesse Norman (Conservative, Hereford and South Herefordshire)

In the collective sense, this is a state insurance system, because it is making long-term provision for catastrophic outcomes in people’s health and social care, but the point that my right hon. Friend has made is an acute one. He will be aware that both the King’s Fund and the House of Lords Economic Affairs Committee have looked at private insurance models and concluded that they have severe limitations that would not make them appropriate. Indeed, no country in the world has a purely private insurance model. It has certainly been contemplated by Professor Dilnot, and it is compatible with the thrust of this legislation, that there should then arise a private insurance market, now that some of these catastrophic risks have been removed from the calculus that individuals have to make about their own social care. I hope that that addresses my right hon. Friend’s point.

As I was saying, individuals over state pension age who would be liable for those contributions were they not exempt will be liable for this levy. That means that pensioners in work will now contribute 1.25% of their “NIC-able” earnings, or profit, to health and social care in the same way as working-age employees and self-employed individuals.

Clause 3 discusses in more detail how NICs legislation applies to the levy. However, clause 1 also ensures that when an employer benefits from a zero rate of secondary class 1 NICs, such as employers of people under 21, of apprentices who are under 25, of veterans or of employees in freeports, those earnings that are subject to the zero rate will not be liable for the levy. That will ensure that businesses continue to invest in young people developing strong skill sets, and in those who have served this country.

John Redwood (Conservative, Wokingham)

As I understand it, it is the Government’s wish that the social care levy should appear as a separately identified line item, with that phrasing, on a payslip. Could it also be clear on a payslip that it would represent only a small fraction of social care costs and a tiny fraction of health costs? Otherwise, it could be very misleading.

Jesse Norman (Conservative, Hereford and South Herefordshire)

That is a helpful suggestion. I do not think there will be any ambiguity in the language on the slip, but of course it might not be clear that it is not the totality of the funding that goes through Government. If I may, I will take what my right hon. Friend has said as a suggestion and refer it to colleagues.

Bill Cash (Conservative, Stone)

I would like to ask the Minister, as he has such responsibilities across the board, whether he has contemplated the question of public waste in the context of, for example, HS2? If we were to cut that back and to cut back waste generally throughout Government, would that not send an enormously powerful message to the British people that we are not only concentrating on this aspect of public expenditure but balancing it off by making real savings in other areas, given that the Treasury or its economic advisers have said that they have put phase 2a of the HS2 legislation on red watch because it is so impossible to achieve its objectives?

Jesse Norman (Conservative, Hereford and South Herefordshire)

My hon. Friend has successfully dragooned a topic that has nothing to do with national insurance contributions or the levy into the debate, but let me reassure him that the Treasury seeks to exercise a hawk-like vigilance over all public spending. I do not think it would be appropriate to think of the response to the pandemic of the past two years as characteristic of the Treasury’s overall largesse, and we look very closely at the spending on HS2, which is the specific responsibility of my right hon. Friend the Chief Secretary to the Treasury and one that I know he takes with great seriousness.

Andrew Murrison (Conservative, South West Wiltshire)

The fact that the social care levy will be introduced in 2023 and not 2022, and that in the interim we will have to rely on national insurance, suggests that creating it will involve quite a lot of work and expense. How much is it going to cost to introduce the levy, beyond national insurance? Based on that, we will need to make an assessment as to whether it is worth while putting the 1.25% levy on people who are past state retirement age. If it is costly, we should not do it and simply rely on national insurance contributions. Allied to that, how much does my right hon. Friend think the 1.25% levy is going to raise from people who are beyond state retirement age?

Jesse Norman (Conservative, Hereford and South Herefordshire)

That was a series of questions. The payslips that people are given will be generated by their own companies in the large part, and it is therefore important to think not only about the changes that HMRC will have to make but about the changes to be made by companies in order to reflect the amendment to payslips. In the case of HMRC, the Government have clarified in a letter to the Treasury Committee that, although it is very early days, HMRC provisionally estimates the operational costs of implementing the levy at between £50 million and £60 million, which is not nothing but it is not substantial in the context of the overall amount to be raised. I think the final part of my right hon. Friend’s question related to the amount that would be attributed to the over-65s. One would expect that to be relatively modest, because the number of qualifying people will not be enormous and because they generally have a high propensity to manage their work-life balance, meaning that there might be a dynamic effect from the levy. I am not aware that we have put that number into the public domain, but if we have it, I will see if we can publish it, probably at a future fiscal event—at the Budget or thereafter.

Andrew Murrison (Conservative, South West Wiltshire)

rose—

Nigel Evans (Conservative, Ribble Valley)

Order. Just before Dr Murrison makes a further intervention, can I ask the Minister please to face the microphone? Otherwise, Members will not be able to hear his responses; I have found it difficult to hear him.

Jesse Norman (Conservative, Hereford and South Herefordshire)

I do apologise, Mr Evans.

Andrew Murrison (Conservative, South West Wiltshire)

Just to clarify my thinking on this matter, is that £50 million to £60 million a one-off or a recurring feature?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I think it is the set-up cost, although it may be incurred over more than one year. As I say, it is a very preliminary number that we have tried to get for the purposes of responding to the Treasury Committee’s inquiry.

Nigel Mills (Conservative, Amber Valley)

My right hon. Friend talks about the advantages of having clarity on payslips about what people are paying for with the health and social care levy. Has he thought about combining the existing national insurance contributions that are allocated directly to the NHS and do not go into the National Insurance Fund? They are around £26 billion each year, which would effectively treble the amount of money in the levy. That would make it much clearer that people are paying all of it towards the health system, rather than having two different taxes doing exactly the same thing in slightly different ways.

Jesse Norman (Conservative, Hereford and South Herefordshire)

My hon. Friend rightly points out that an element of NICs is already hypothecated, which is sometimes forgotten by people who are concerned about the hypothecation in the levy. I will take his remarks as a suggestion and reflect on them further. I recognise his expertise in this area, so I am grateful for the intervention.

Serendipitously, I will now address my hon. Friend’s amendment. This amendment asks that HMRC should publish a forecast of the estimated costs of collecting the levy. The published tax information impact note sets out clearly that the operational costs of the levy are being quantified. I have given a preliminary indication, but we will publish the final estimates before the levy comes into effect in April 2022. This amendment is therefore not necessary and I would ask him to consider not pressing it to a vote.

Matthew Hancock (Conservative, West Suffolk)

Building on the point made by my right hon. Friend the Member for Wokingham (John Redwood), is not one of the advantages of having a separate health and social care levy that, as people’s representatives, we can explain more clearly that if we want to put more money into the system, it has to be paid for? Will that advantage not ultimately help connect people to where their money goes and, therefore, enrich the debate?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I think it will, which is why the Government have decided to make this rather important change. It may well be that this is not the end of the story, and in due course the desire for clarity about how money is spent, which is expressed elsewhere in the tax system, might manifest itself in other ways. I do not want to speculate on that, but my right hon. Friend has outlined the importance of accountability, clarity and perspicuity in how money is spent.

Christopher Chope (Conservative, Christchurch)

Would it not be even simpler and more transparent if we had a social care levy standing on its own? Is it not the case that the Government do not want to have a social care levy on its own because they know that, if there were transparency, it would be obvious that we were reneging on our manifesto commitment of two years ago?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I do not think that is true at all. The reason for putting it on the payslip is so that taxpayers can see that this new tax is clearly represented. If they need reassurance that the support for social care, in their own life and in the life of their family and community, will be long standing and enduring, they need only look at their payslip.

Christopher Chope (Conservative, Christchurch)

If it is about social care, why do we not have an exclusive levy relating to social care? Would that not be much clearer and more transparent?

Jesse Norman (Conservative, Hereford and South Herefordshire)

My hon. Friend invites us to think of social care as a completely separate thing, but of course there is a tremendous overlap between social care and some aspects of health. It is important to make sure that the system, which I think all hon. Members realise is too disjointed, is more joined up. This treatment therefore appears to be more appropriate to an area where we want to see more integration.

Clive Lewis (Labour, Norwich South)

Will the Minister give way?

Jesse Norman (Conservative, Hereford and South Herefordshire)

The hon. Gentleman has not featured in the debate so far, so I will make a bit more progress before happily taking his intervention.

Amendment 7, tabled by my hon. Friend the Member for Yeovil (Mr Fysh), seeks to ensure that proceeds from the levy can be used in any tax year. As the Committee will be aware, the levy is designed to mirror the approach of the national insurance system, which has always operated on a pay-as-you-go basis. Indeed, that has been the case since the NHS and the National Insurance Fund were established in 1948. This means that national insurance contributions collected in one year are used to pay for the NHS and contributory benefits paid out in the same year. The pay-as-you-go basis provides a clear precedent for how the levy should operate and that also ensures simplicity and consistency across the NICs system. So I hope that my hon. Friend will not press his amendment, for the reasons I have outlined.

Clive Lewis (Labour, Norwich South)

On the point made by the hon. Member for Christchurch (Sir Christopher Chope), one reason the Government have used the term “health and social care” is that they have established a principle that people pay at the point of delivery. As we see health and social care begin to integrate, the fear for many Labour Members is that this is a Trojan horse for introducing those payments for healthcare—for the NHS. One of my fears when the Prime Minister spoke of this delivering “profoundly Conservative” outcomes was just that danger.

Jesse Norman (Conservative, Hereford and South Herefordshire)

It is helpful to have a diagnosis of why Labour Members might be opposed to or worried by this, but the fear is entirely without foundation. There is no suggestion that the Government wish to create a system that is anything other than free at the point of delivery, and that is the basis on which the Government have always proceeded and proceed now. We are trying to put a longer-term arrangement in place for social care that allows us to bring the same kind of clarity to it that people have enjoyed for many years with the NHS.

Nadia Whittome (Labour, Nottingham East)

If the Government believe in a social care system that is free at the point of use, why are they not delivering a social care system like that, one like the NHS, which is universal and available to everyone?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I do not know whether the hon. Lady heard, but I was talking about the NHS and that has been a founding principle of the NHS, one the Conservative party have always adhered to, and rightly so. What we are doing with the levy is funding an expansion and a development of an existing set of arrangements, and, as I have discussed in relation to the question from my right hon. Friend the Member for Gainsborough (Sir Edward Leigh), the potential to expand that through the use of other mechanisms of support, now that these catastrophic risks have been removed, or will be removed, from people’s lives.

Let me turn to the amendments tabled by the Scottish National party and Plaid Cymru which look to require a joint agreement between the Treasury and the Governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four parts of the UK, and between healthcare and social care. As for how the levy revenue will be split between the four parts of the UK, this legislation mirrors existing legislation on how NHS allocation is divided between England, Scotland, Wales and Northern Ireland. It is right and appropriate that we should follow that established precedent. The Government will work closely with the devolved Administrations on the implementation of the levy, including on the process for allocating revenues across the UK and on the split between health and social care from April 2023 onwards. It is also worth bearing in mind that the devolved Administrations’ overall funding will continue to be determined by the Barnett formula, so that this process will just determine the element provided by the levy. I hope that the Members concerned will not press their amendments, for the reasons I have outlined.

Alison Thewliss (Scottish National Party, Glasgow Central)

I do not know whether the Minister has read the note from the Hansard Society on this, but it is concerned by some of the implications for the devolution settlement. It says:

“There is also no requirement in the Bill for the Treasury or the Health Secretary to consult the devolved administrations about any aspect of the process.”

Is that not a cause for concern?

Jesse Norman (Conservative, Hereford and South Herefordshire)

The Treasury already consults the devolved Administrations very closely on many aspects of tax policy and there is no reason to think, and the Bill does not suggest, that there should be any other reason for handling this. On the contrary, following an existing hypothecation gives direct support to devolved Administrations that they will be able to receive the Union dividend, which is generated and delivered by this policy.

Clause 2 creates a legally binding obligation to use the funds raised by this levy for the purposes of health and social care, and sets out that HMRC will direct funds to the Secretary of State to be used for the cost of health and social care in England, Wales, Scotland and Northern Ireland. The funds from the levy will be shared between healthcare and social care, and will be shared between each nation in a proportion determined by the Treasury. The Treasury has used the long-standing Barnett formula to fund devolved Administrations and will continue to do so for the proceeds of this measure. Clause 2 goes further and ensures that any interest or penalties that can be attributed to the levy will also be used to fund health and social care. However, any expenses incurred by HMRC in collecting the levy will be deducted from the proceeds, which ensures that HMRC has the ability to collect and police this levy properly. I therefore ask Members to allow clause 2 to stand part of the Bill.

Andrew Murrison (Conservative, South West Wiltshire)

On clause 2, in 2014 we passed the Care Act and accepted the Dilnot proposals; slightly less than two years later, we canned the central part of the Dilnot proposals, in that it was decided that local government should in fact have the social care uplift, which had been anticipated in 2014. What certainty do we have that the measures we are passing today will not be dealt with in a similar way if, in two or three years’ time, we find that the pressures on local government are so acute, which they may well be, that we have to can some of the measures we discussed earlier?

Jesse Norman (Conservative, Hereford and South Herefordshire)

I thank my right hon. Friend for his question. I think the point is perfectly clear: this levy is intended to be and will be a long-term, permanent funding arrangement to support health and social care. The plan includes a component that is designed to support local government in the delivery of care services without distorting markets that are already in existence. There is no reason to think, and we do not anticipate, that there will be specific issues that cannot be addressed at the time. The commitment to provide a longer-term funding settlement that can be reviewed and considered by individuals when they pay their national insurance contributions, and to do so in a way that gives them comfort that that same settlement will be in place, in a way similar to the state pension system, so that they can plan against it, is manifest. The Government have made that clear.

Clause 3 specifies that any provisions that apply to a qualifying national insurance contribution are to apply to equivalent payments in respect of the health and social care levy. It also sets out the limitations of such provisions applying to the levy.

Clause 4 provides for regulations for the purposes of the health and social care levy to be made under the Bill and specifies the parliamentary procedure that will apply to those regulations.

Clause 5 sets out the transitional arrangements for the measure and specifies that they will apply only for the 2022-23 tax year. Its effect will be to increase temporarily the rates of classes 1, 1A, 1B and 4 NICs by 1.25% for one year. There will be a corresponding temporary increase in the amount of contributions allocated to the NHS by the same amount.

Clause 6 defines various terms used in the Bill. Clause 7 specifies the short title of the Act as the Health and Social Care Levy Act 2021 and states that the levy is payable by or in relation to employees of the Crown. I commend all those clauses to the House.

Let me turn to new clauses 1 and 2, tabled by the SNP, and clauses 3 to 5, tabled by Labour. These new clauses ask the Government to review and report on the impact of the revenue effects of the levy, its impact on business and its impact on equality. I wish to explain why they are unnecessary.

The Government have already provided a number of assessments of the levy’s impact, including a distributional analysis of the impact of the combined tax and spending announcements that shows that lower-income households will be large net beneficiaries from the package, with the poorest households gaining most as a proportion of income. It also shows that the 20% of highest-income households will contribute more than 40 times the contribution of the 20% of lowest-income households.

There is a further assessment in a technical annex in the Government’s plan for health and social care. It sets out the impact on the Exchequer, individuals and businesses and shows that 70% of the money raised from businesses will come from the largest 1% of businesses, while 40% of all businesses will pay nothing extra.

The tax information impact note is a third form of assessment. It sets out the equality impact of the levy specifically rather than of the overall package of measures.

Alex Sobel (Labour/Co-operative, Leeds North West)

As well as on businesses, the levy will have a large effect on the bills of public services. For instance, West Yorkshire Police is looking at having to pay an extra £3 million of national insurance, and for Leeds City Council the amount for directly employed services is also in the region of £3 million. Somewhat ironically, many of the social care services that the council uses are outsourced, so the NICs will push up the cost of those services. What assessment has the Minister made of the effect of the levy on local government and the police?

Jesse Norman (Conservative, Hereford and South Herefordshire)

The plan is clear that, to the extent that national insurance contributions are incurred by public bodies, they will be met. The funding is set up on that basis. In respect of local government, extra pressures other than those already contemplated are matters for discussion in the spending review. That is the normal fiscal procedure and the one the Government are following.

I turn now to address the Opposition’s new clauses 6 and 7 on reporting the levy expenditure shares and the revenue derived from those in the social care sector. First, on the share of levy spent on health and social care, the Government already routinely publish data on departmental spending throughout the year, including at main and supplementary estimates, through public expenditure, statistical analyses and in departmental annual reports and accounts as well as data on the revenue raised from individual taxes.

At present, this reporting shows, for example, exactly how much revenue NHS England receives from national insurance contributions. In future, this will show the contribution that this levy makes to the budgets of the Department of Health and Social Care and the Ministry of Housing, Communities and Local Government. There is no need for additional reporting in that context as all the relevant information will readily be publicly available. The Government have already published the amounts that will go to the NHS and to adult social care over the next three years as a result of this levy and will confirm final allocations at the spending review.

Finally, on the levy revenue derived from those in the social care sector, existing data sources do not include or reliably collect data on employment by sector. It is not known which sector an individual works in, only their income types and amounts. I hope that, given these considerations, Opposition Members will not press their new clauses for the reasons that I have outlined.

Let me turn to new clause 10 tabled by my hon. Friend the Member for Amber Valley (Nigel Mills). This would require the Office for Tax Simplification to publish an assessment of the merits of the levy. As outlined in the Finance Act 2016, the statutory role of the OTS is to advise on the simplification of the tax system. To assess fully the advantages and disadvantages of introducing the health and social care levy would require the OTS to consider and comment on choices with far broader policy considerations, including on health and social care, which sit well beyond its remit and expertise.

The OTS functions as an adviser to the Chancellor rather to Parliament and it is for the Chancellor to commission work for the OTS or for the OTS to advise the Chancellor on its own initiative as it sees appropriate. It is not the role of Parliament to commission work from the OTS, though I have no doubt that the Treasury will have taken on board this new clause, and I thank my hon. Friend for tabling it.

The published tax information and impact notes set out clearly that the operational costs for the levy are being quantified and the Government will publish these estimates before the measure comes into effect in April 2022.

Nigel Mills (Conservative, Amber Valley)

Does my right hon. Friend have any rough estimate of the cost to business of having to comply with the rules of paying, in effect, a third payroll tax? Does he have any idea of the costs of changing the software to include that levy and of redesigning payslips? All those costs will have to be borne. Does he have any estimate for us before we decide whether we want a new tax or just to increase national insurance as we are doing for the first year?

Jesse Norman (Conservative, Hereford and South Herefordshire)

It is true that, just in relation to the levy, business will bear some cost and the existing tax information and impact notes outline that there will be costs to be borne, as one would expect with any tax, let alone a broad-based tax of this kind. The package goes well beyond this, and businesses will be large beneficiaries in many ways from aspects of the package because they will benefit from having a healthier and more secure workforce than they would otherwise have. How one measures that I am not entirely clear, but I take the point that my hon. Friend makes and will, of course, refer it to colleagues. Having said that, I hope that he will not press his new clause for the reasons that I have outlined.

Nigel Evans (Conservative, Ribble Valley)

I would just like an indication of who will want to make independent speeches by bobbing—thank you.

James Murray (Labour/Co-operative, Ealing North)

As we turn to the Bill’s Committee stage, I will address the new clauses tabled in my name and the name of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).

We know that social care desperately needs more funding and the Government claim that their Bill today will help to raise some of that money, but the truth is that there is nothing in this Bill that will guarantee a penny going towards social care. I will return to that point when I address new clause 6, but first I want to look at the core measure that this Bill introduces—the unfair tax rise on working people and their jobs. Our new clause 3 would require the Government to report to the House of Commons on the impact that the Bill will have on tax revenue derived from different sources of income. On the one hand, there is income from employment and self-employment, which the Government have chosen to tax hard. On the other hand, as new clause 3 mentions, there is income from dividends, rental properties and other sources of wealth, which the Government have left untouched. We know that the Government have chosen not to raise taxes for those with large portfolios of stocks and shares, and for landlords renting out multiple properties, but the Bill even lacks any mention of taxes on dividends, despite the Prime Minister saying that they would be taxed more. Perhaps when the Financial Secretary to the Treasury responds, he could explain why the Government have chosen to delay implementing a tax rise in dividends until the next Finance Bill or beyond. Will he give us his word that the increase in tax on dividends will definitely go ahead?

As I said earlier, the Government have pulled out all the stops to push through legislation that raises taxes on jobs at breakneck speed, but they show no urgency whatever in raising the tax on dividends by an equivalent amount. Let us be clear, though: even if they do go ahead with their dividends tax increase, they have already admitted that it will raise just a small percentage of the amount that they are seeking; 95% of the revenue that they expect to generate still comes off the back of working people and their jobs.

The Government have said many times that they believe that there is no alternative to the national insurance rise and the levy introduced in the Bill. Yet in the days that followed the Government’s announcement, the London School of Economics, Warwick University, the Institute for Public Policy Research, the Social Market Foundation and many others have all come forward with other ways of raising the money. Our new clause 8 would have required the Government to report, before the levy comes in, on how the revenue could be raised by increasing taxes on income derived from wealth such as rental income and income from trading financial assets, instead of from employment. Although new clause 8 has not been selected today, I hope that Government Back Benchers will have had the chance to see it on the amendment paper. Ahead of the levy’s planned introduction in 2023, there is ample time for the Government to produce such a report.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

I am someone who has believed in getting cross-party consensus on the future of social care funding, and who has been calling for a health and social care levy since 2016. Does the hon. Member recognise that there has actually been cross-party consensus on this issue, and that the shadow Care Minister, the hon. Member for Leicester West (Liz Kendall), called for a health and care levy in 2018? How does he reconcile that with his comments just now?

James Murray (Labour/Co-operative, Ealing North)

Let us be really clear about what the shadow Care Minister, my hon. Friend the Member for Leicester West (Liz Kendall), proposed, because it was entirely different from what is being discussed now. She proposed that the tax should be raised from unearned income, and that it should be progressive and fair between generations, which fundamentally differentiates it from what we are discussing today. If the Government had truly sought to build cross-party consensus, does the hon. Gentleman not think that they would have done better to take some time over the Bill, rather than rushing it through within a week of the proposals first being announced, with limited ability for scrutiny and without any discussion of cross-party consensus about how to proceed?

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

Will the hon. Member give way?

James Murray (Labour/Co-operative, Ealing North)

I am going to make some progress now; I have given way to the hon. Gentleman already.

As I said, although new clause 8 has not been selected today, I hope that Government Back Benchers have seen it on the amendment paper and will perhaps raise the matter with their colleagues on the Front Bench.

I hope, however, that there will be a vote this evening on new clause 5, and I urge Government Members to join us in voting for this crucial review of how the Bill will make inequality worse. We know how widespread and deep rooted inequality has become in our country. The latest bulletin from the Office for National Statistics on household income inequality in the UK for the financial year ending 2020 confirms what we all know: the income gap between the richest in society and the rest of the population has widened over the last decade. A tax rise that singles out income from employment can only make this inequality worse, and new clause 5 seeks to expose this.

Not only does inequality manifest between people who may live in the same area, it also creates divides between different nations of a country and the regions within them. In areas where average wages are lower and fewer people get income from other assets, the impact of the national insurance rise and the levy will be more acutely felt. Recent analysis in the New Statesman suggested that within the regions of England, it is people in the north-west and the west midlands who will take the greatest hit to their disposable income as a result of the Bill.

Data from the Office for National Statistics’ wealth and assets survey shows that the south-east is home to well over 3 million adults living in families with net wealth per adult of more than £250,000. That is roughly six times the number in the north-east. A tax increase that ignores income from renting out properties and selling financial assets, and that seeks to fund a plan that ignores differences in house prices and care costs between different regions, is destined to make inequality worse.

Andrew Murrison (Conservative, South West Wiltshire)

We are getting more granularity in the proposals that Opposition Front Benchers have in their heads for funding the uplift, which I think we all agree is necessary for health and social care, but can I probe the hon. Gentleman to describe the nature of the landlords or property-based businesses he has in his crosshairs for the levy of the moneys that he has in mind? Does he mean, for example, the mom and pop organisation that has bought a small residential property because it has no public sector pension, for example, and is relying on that for income in old age, or does he have in mind a business like any other business that has large numbers of commercial properties? How much does he think he is going to raise from the alternative that he has suggested?

James Murray (Labour/Co-operative, Ealing North)

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.

Marcus Fysh (Conservative, Yeovil)

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.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

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?

Marcus Fysh (Conservative, Yeovil)

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.

Andrew Murrison (Conservative, South West Wiltshire)

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.

Marcus Fysh (Conservative, Yeovil)

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 (Scottish National Party, Aberdeen South)

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.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

I declare an interest as a practising NHS doctor. Will the hon. Member reflect on the fact that the single biggest transformation delivered to health and care in the last 20 or 30 years was when Tony Blair increased national insurance to give a huge injection of funding to improve care for patients throughout the United Kingdom, including Scotland? In reflecting on that, can he see the benefits that will come from this levy for patients in his constituency and all our constituencies in the years to come, because it will make a difference? Will he reflect on the difference that it will make to real people’s lives—improving cancer care, reducing waiting times—and does he see that there is a benefit in that?

Stephen Flynn (Scottish National Party, Aberdeen South)

I thank the hon. Gentleman for his intervention and for the tone in which it was made, and I shall reflect on two points in relation to what he said. He said that perhaps the biggest change to health and social care was the action of Tony Blair, but I happily disagree with that. In fact, it was in 2016 in Scotland, when we did something that I heard Members discussing earlier at length: we integrated health and social care in Scotland. That was on top of the fact that we provide free personal care for our elderly and so on, and that is in contrast to the situation in England, which has led to the crisis we see before us.

On the hon. Gentleman’s point about finance, which is the crux of this argument, do the ends justify the means? That is the purpose of this discussion. I believe in the ends. I believe our NHS and social care services deserve more money, but I do not believe that this is the right way to do it. That obviously leads to the next question, which is about how we should fund this. I heard Conservative Members—rightly—shouting at the Labour Benches, “What is your plan?”, but what is the cost of Trident? What is the cost of nuclear weapons? Over their lifespan I believe it is between £164 billion and £200 billion. Conservative Members will not say that those weapons should be scrapped, but I will. They should absolutely be scrapped, and we can use that money to fund our vital NHS services. The answer is staring them in the face, but they choose not to look at it because this is about priorities, and their politics and priorities differ massively from mine, and ultimately from those of the people of Scotland.

Finally, amendment 4 goes to the nub of where much of our frustration lies with the Bill, because if we shake it about a bit, this is ultimately another UK Government power grab. They are seeking to tell the Scottish Parliament how it should spend money in devolved areas. Whether they agree or disagree with the national insurance hike, all members of the Committee, certainly Unionist Members, should be concerned about the consequences of the UK Government seeking to impose themselves once again on devolution. I say that not as someone who seeks to defend the Union—by all means continue to do it—but because all the UK Government are doing is driving home the message in the minds of the people of Scotland that they do not respect the devolution settlement and they do not respect the Scottish Parliament.

Nigel Mills (Conservative, Amber Valley)

I come at this debate from a slightly different angle. When we first heard rumours of a tax rise to fund health and social care I felt that, given that we had just spent £400 billion to get us through a pandemic, and that we wanted to get health care services to 110% of previous capacity to clear the backlog, we could accept that a tax rise had to be found to do that. I thought there was no other way, given that the economy and tax revenues are still smaller than they were, and that that was the responsible and prudent thing to do. I may not have chosen national insurance, but I accept that it is probably one of three taxes that the Government could have chosen.

My interest is in why, in the long term, we have chosen not to raise national insurance but to have a new tax. I remember that when I was first elected we were keen on simplifying the tax regime. We even had a review into whether we could merge income tax and national insurance, so that we could have one tax fewer, and make it cheaper and simpler to collect. For some reason that I will try to work out, we have now moved on to adding a kind of son or daughter of national insurance to the tax code. I think the only slight difference is that the new tax will apply to the earned income of people over retirement age, where national insurance does not. I do not know how much that will collect—the Minister would not give us an estimate—but I think it is a pretty tiny amount, and I am not sure there is huge advantage in that.

Being a bit of a cynical sort of person I thought that perhaps because our manifesto promise ruled out tax rises we could have a levy, and that people would fall for that, but I am glad we did not take that line. Indeed, the Government were clear that we are breaching our manifesto promise, for justifiable reasons in the circumstances.

Perhaps we are trying to create some clarity, thinking that if people can see a hypothecated tax, they can see how much they are paying for health and social care and they will understand and value what is happening, except of course we are raising by this levy £12 billion a year or so—a tiny fraction of what we spend on the NHS, let alone social care—and people will see a social care levy on their council tax bill. In fact, this money is not even the biggest part of national insurance that will go to the NHS; as I said earlier, £26 billion a year—roughly 2% of the national insurance contributions in each class—already goes directly to the NHS and does not go down the usual route of national insurance funding. I am not sure that we are going to get the benefit of clarity for people about what they are paying.

We should remember that we now create a personal tax statement for everyone every year, from which they can see what proportion of the tax they have paid has gone to which public service. If we want them to see how much of what they are paying goes to the NHS and to social care, that is already there for them in a much clearer way than having a strangely hypothecated tax, for a tiny fraction of the bill.

I am not at all clear what the justification is for creating a whole new tax. I was keen to know how much that was going to cost. The Minister has neutralised my amendment 8 by setting out in a letter to the Treasury Committee that he thinks HMRC will spend about £60 million to create the systems to collect this tax.

Jesse Norman (Conservative, Hereford and South Herefordshire)

I am afraid that I must correct myself. It is actually £40 million to £50 million, rather than £50 million to £60 million. I was relying on an imperfect memory.

Nigel Mills (Conservative, Amber Valley)

Perhaps the Minister was building in some optimism bias, as the Treasury normally does to other people’s forecasts, and going for £50 million to £60 million to make sure. I do not know whether that is the cost of building the systems to enable the returns to be made, or to enable the systems to collect or chase the money, or whether there is going to be some ongoing annual cost; I assume that there will be some ongoing annual cost in trying to chase compliance too. However, we do not have an estimate for how much we are going to be imposing on business to pay this tax.

I imagine that this will be a separate tax that is not collected in the same way—the same box—as national insurance. I assume that there will have to be different parts of the payroll returning different calculations, which will require every software provider to change all their software coding to cope with it and to add in the new amount that is being paid by people over retirement age who do not normally pay national insurance. All that will cost time and money and need testing and compliance, and then we will have to check whether employers are following it and chase them for the money.

I suspect that there will be quite a large up-front cost for all that work to be done, and then a reasonable annual cost to ensure compliance, so there is a first-order question whether we are raising more by quite rightly taxing people over retirement age on their earned income—this 1.25%—than we are having spent on obtaining that. From the Minister’s remarks, I am not convinced that the answer will be positive, so in actual fact, we are creating a whole new tax to raise less money than it costs to collect it, for no real advantage other than a presentational one.

John Redwood (Conservative, Wokingham)

My hon. Friend is such an expert on this. Has he probed or got anywhere with finding out how much consequential tax loss there might be from the national insurance rise, or the care tax rise, itself? Presumably, there are some losses that will have to be offset, so gross will not necessarily be net.

Nigel Mills (Conservative, Amber Valley)

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 (Labour, Nottingham East)

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.

John Redwood (Conservative, Wokingham)

I have worries about hypothecation. I thought the Treasury used to be against it and it is a difficult doctrine to make work well, because it is not always the case that a particular tax just happens to raise the right amount of revenue for a particular purpose, or if it does in one particular year, that may not be true in a future year because the revenue may grow too slowly for the purpose, or the purpose may become less popular and the revenue may exceed what is needed. I have always favoured the Treasury orthodoxy—I am not always someone to support Treasury orthodoxy—that it is better that we have a very big general pot into which we collect the taxes, and then we have general distribution based on tightly argued issues between Government Ministers and Departments on what their spending priorities are and the minimum amounts that they need to spend to get good results in their leading areas.

However, now that Ministers are treading the boards of hypothecation for the first time in this interesting way, I advise them that it is a very good rule, if they wish to sell the idea of hypothecation, that the tax revenue that they collect should pay for the thing that they are attaching to the hypothecated revenue. My big worry about this hypothecation is that the sum of money for social care—when we eventually get to that point after three years—collected by the so-called social care tax will be only about one fifth of the actual costs of social care to the public sector. Of course, there are additional costs to private individuals as well and I would not want my constituents to be misled. I have already had emails from constituents saying, “As the Government seem to be pressing ahead with this social care levy, I assume that I will no longer be asked to make any contribution through my council tax to social care”. Being an honest man, I have written back and said, “No, you can’t assume that at all. Social care is going to need a lot of money and I don’t think the idea is that the council tax levy part of it, or the need for that, will suddenly disappear.” So I think one does need to look again at hypothecation. If, for example, we wish to have hypothecated taxes to pay for the current costs of health, as identified by the Treasury for the current financial year, we would need to say that all income tax, all capital gains tax, all inheritance tax and all stamp duty—in other words, all income and wealth taxation—were already going to pay the large sums required for health in this year’s public budgets. Maybe we could start by renaming income tax and all the wealth taxes as a health tax, which would give people some idea of the scale of expenditure that we are talking about. There might then be a more interesting and useful debate to be had.

I am also a bit concerned about gross and net, a point that I asked my expert hon. Friend the Member for Amber Valley (Nigel Mills) about a few minutes ago. Clearly, if we put up a tax such as national insurance—or the son or daughter of national insurance, the care tax—companies will make less profit, so there will be less profit to tax after we have taken off the other costs. Individuals will also have less money to spend because of the deduction from their pay packet, so they will pay less in VAT and other taxes on things that they would otherwise spend their money on. There must be some tax loss as an offset, so the net will not be as large as the gross. One of the dangers of overcomplicating the tax system is that we get too many gross-to-net net-offs and it starts to get expensive. I am glad that my hon. Friend also raised questions about whether the set-up cost is worth while and what the running costs will be, because there will be HMRC running costs and, clearly, private business running costs as a result of introducing a new tax.

The best way to get the deficit down, which the Treasury rightly worries about, is to grow the economy faster. We have seen already that, with a very sharp rate of recovery in the early months once lockdown started to be relaxed, there was a very good impact on revenues: they outperformed the predictions of the Office for Budget Responsibility and the Treasury. I think that that is the best way to proceed. I am still surprised by the Treasury’s precision in thinking that £12 billion is the magic extra number that will first solve health and then go on to resolve social care; it is a very small percentage of the much larger totals that we already spend, and it is a tiny percentage of the total revenues that we hope to collect if we promote a really good recovery.

I am also concerned about the impact on those people, on whom much of our debate has focused, who find that they need care home assistance in their later months or years of life—the impact on their family finances as well as on their lifestyle. At the moment, there are broadly three categories of people: those whose financial and care needs are taken care of entirely by the state because they do not have the benefit of capital, a home of their own and all the rest of it; those who are quite well off enough that they can make their own provision and pay all their own bills; and those in the middle, who may need a mixture of the two kinds of funding, or who may start off by self-funding and then turn to the state for assistance when the money runs out.

As I understand it, the purpose of the policy is to increase the middle category, allowing more people to have a mixture of state money and self-funding, and reducing the number in the entirely self-funding category. If that is the purpose of the policy, it is very important to be honest about how much protection it will actually give and how easy it is for people to work out what their personal liability will be, what the legitimate calls on their capital or income will be, and what the state will do that it is not currently doing. I do not think that I have that clarity yet. We need a much more detailed paper with working examples, so that we can see what the impact will be on individuals in our constituencies who may face that problem.

Andrew Murrison (Conservative, South West Wiltshire)

I am listening carefully to my right hon. Friend. Does he share my concern that there may be an element of gaming by the social care sector, in so far as hotel costs are clearly exempted? Our constituents who may be listening might not be fully aware of that. There is a real possibility and risk that the sector will seek to enhance and embellish those costs so that they become a bigger and bigger proportion of the total take. Does that not need to be made explicit? Does my right hon. Friend think that in the White Paper process that we are about to embark on, there would be merit in limiting that cost in some way to ensure that the potential market exploitation of the Bill’s proposals is avoided?

John Redwood (Conservative, Wokingham)

I was with my right hon. Friend until his last recommendation. He had pre-empted what I was going to say next: that we need greater clarity about the three different kinds of costs that an elderly person can face.

All of us in this House agree that we believe in a health service that is free at the point of need, so that any elderly person, like anyone else, has complete entitlement to completely free healthcare if they need GP or hospital treatment. That is not in dispute. However, as my right hon. Friend has just reminded the Committee, it looks as though these proposals also say that if an elderly person is living in a care home, the board and lodging, or the hotel costs or whatever we like to call it, are not part of that kind of treatment, so if the person has money, they will have to pay for those.

I find it difficult to say that we need to pre-empt the possibility of care homes wishing to charge a bit more for that hotel accommodation, because there could be good reasons for their needing to do so, and the law is a very clumsy instrument when it comes to intervening in thousands of decisions that individuals and businesses have to make about what is a fair price. I do not think that there should be absolute price control, because it might be a period when wage costs or food costs had gone up, which the care home needed to pass on—or the care home might be improving the quality of what it was offering, in which case it would be mutually beneficial, or at any rate perfectly reasonable, for it to pass on that cost.

Andrew Murrison (Conservative, South West Wiltshire)

My right hon. Friend is being very generous in giving way. May I just clarify my intent? It would be reasonable to have an indicative cost. After all, in the case of most of our constituents who are living in a residential set-up—we are talking, basically, about a bedsit—what is usually involved, in my experience, is fairly basic food and some heating. The cost of that is not enormous, and it is the sort of thing that we would be expected to fund in any event were we living in our own homes; probably rather more so. Would it not be reasonable to have an indicative amount that it is felt reasonable for homes to be charging people—particularly, I have to say, if they are being funded through local government?

John Redwood (Conservative, Wokingham)

I do not think that that is possible at all. Property costs vary to an incredible degree across the country. Levels of staff provision are different in different homes, the quality and level of service are different, and the needs of individual residents are different. Some are in relatively good health, and do not need to find the back-up or assistance that others require. What I want to see—and I think that we need to debate this more than we have so far—is better quality for everyone who needs end-of-life care or time in a nursing home. My right hon. Friend has suggested that some are quite basic, and I think we need to worry about that and work at it.

For me, the big care problem is whether it is adequate. I am not quite as worried about the family finances as I am about the experience of the elderly person and whether it is good enough, and, where the state is the sole funder or a substantial funder of the care, whether we are doing a good enough job in allowing a reasonable quality of care in terms of staffing numbers, training of staff and staff wages. When elderly relatives in my family have been in care, we have always wanted to make sure that the staff were well remunerated, rewarded and motivated, and had proper training, support and back-up from the care home, because I wanted them to be well looked after.

There is a much happier environment if the people working in the home are proud of it and have, for instance, a decent career structure. I therefore think that we need to be very careful about a cost-down or standard-cost approach. We need to understand the variety of life, but we also need to make sure that those who rely entirely on state support, or who may be becoming more reliant on it under the Government’s likely policy, will none the less look forward to a reasonable standard of care, and that the people who work with them and for them are treated well by employers who respect them and offer them a career structure, proper training, decent support and all those other good things.

In conclusion, I hope the Government will look again at some of these points to ensure that there is no muddle over the true costs of these services and the contribution that the tax will make, if they insist on it, because it will be quite a small contribution as a proportion of the whole. Will they also look at a big care issue that does not get enough attention in the Bill, which is the quality of the care? That leads immediately into the quality of the experience for the employees, their career structure and their ability to create good atmospheres in care homes that are of a high standard. Can we also have a bit more thought and more information on what this will mean for individuals going into care homes and their supporting families? I am afraid that I still do not have a clear explanation to offer my constituents as to what their experience would be under these proposals.

Richard Burgon (Labour, Leeds East)

I am speaking in support of new clause 3, which would require the Chancellor to look at different taxes to raise income. There are many other ways to raise this money and, in particular, I believe that we need to look at ways to tax wealth rather than taxing working people. Wealth in this country is concentrated among the top 1%, so instead of imposing a tax bombshell of £12 billion a year on working people, the Government could focus on the wealthy. They choose not to; instead, we have a tax system rigged in favour of those who already have wealth. They pay lower taxes than the millions who have to go out to work to make a living. The truth is that the Government’s proposal makes that situation even worse, and that is not right. The Government could reform capital gains tax, so that instead of lower taxes for wealthy people, that money could be used to fund social care, but they choose not to do so. They could raise many more billions of pounds by a direct wealth tax on the richest 1% with assets of more than £5 million, but they choose not to do so.

I am backing new clause 3, because there is always an alternative. That the Government refuse to back such alternatives speaks volumes. Aneurin Bevan once said that socialism was the language of priorities, but conservatism is the language of priorities too: the priority of safeguarding the wealth of the super-rich and sticking the boot into working people. This is the same old Tory party, attacking working people and defending the wealthy. We have heard a lot in this debate about so-called tough choices, but when politicians speak the language of tough choices, it usually means that they are taking the path they think is easiest. The truth is that the Government are taking the easy choice: not levelling up but kicking down and taking a hands-off approach to the wealth of the super-rich. There are alternatives, and that is why I am backing new clause 3.

Richard Holden (Conservative, North West Durham)

I thank the hon. Gentleman for giving way, and I would also like to welcome the hon. Member for Nottingham East (Nadia Whittome) back. It is great to see her back on the Opposition Benches. There is a similarity between what the hon. Gentleman is saying and what those on the Government Front Bench are saying; at least they are both putting forward proposals. He is putting forward a wealth tax and the hon. Member for Aberdeen South (Stephen Flynn) proposed the scrapping of Trident, but the Government are at least being honest in saying that people are going to have to pay more through national insurance: £907 a year for a Member of Parliament and £80 a year for somebody on the national minimum wage. Has the hon. Member for Leeds East (Richard Burgon) managed to convince those on his Front Bench to be as honest as he and the Government are in coming forward with an actual proposal for what they would do?

Richard Burgon (Labour, Leeds East)

I had actually finished my remarks, but I would be happy to take this up with the hon. Gentleman on another occasion if he so wishes.

Eleanor Laing (Conservative, Epping Forest)

I have to say I was not quite sure about that. I thought that the hon. Member for Leeds East (Richard Burgon) had finished, but the hon. Member for North West Durham (Mr Holden) nevertheless managed to make his intervention. He may indeed have wanted more, but the hon. Member for Leeds East read the mood of the House very well.

Christopher Chope (Conservative, Christchurch)

It is a pleasure to follow the hon. Member for Leeds East (Richard Burgon). He talked about alternatives, and perhaps I can throw out a possible alternative that he might think reasonable. Why should the very rich have unrestricted access to a free NHS?

Whenever that is raised by Conservative Members, Opposition Members object to the idea and say that it would undermine the principles of the NHS. I do not expect him to answer that question, but I throw it out there because it is another alternative that could be considered.

Richard Burgon (Labour, Leeds East)

It is useful that Members on both sides of the Committee are coming clean with all sorts of ideas. I would assert the principle of universalism—universalism of the welfare state and universalism of the NHS.

Christopher Chope (Conservative, Christchurch)

I thought that might be the hon. Gentleman’s response. Today we are talking about social care as well as healthcare, and the principle of universalism does not apply to social care because it is and will continue to be the subject of means-testing.

The Government talk the talk of integrating health and social care, and I had an exchange with my right hon. Friend the Minister on this subject. He justifies having a health and social care levy on the basis that they are interdependent. If they are interdependent and we are moving towards an integrated scheme, why do we not apply the same principles to both NHS healthcare and social care? We could have means-testing for healthcare, in the same way as we have for social care, or we could not have any means-testing for social care, in the same way as we do not have any means-testing for healthcare. If we are going to merge the two schemes, we need to resolve those anomalies. I am afraid that everything that has come out of this short debate shows that the Bill is a muddled fudge that perpetuates the distinction between health and social care but does not meet the challenge I put to the Minister: why not have a distinct social care levy?

Is it reasonable that we should have co-payment in the NHS? If so, it would generate an enormous amount of additional income. We essentially have co-payment on prescription charges, ophthalmology services, dentistry and, increasingly, audiology services. The idea that we should have co-payment more widely, so that people who can afford it contribute, say, half the cost of an orthopaedic operation, seems to be anathema to the Government. I do not understand why, if they want to get more money into the system.

Our system differs from most overseas systems. We are not spending more on healthcare in this country, but we are spending more on publicly funded healthcare and not enough on privately funded healthcare. I would like to see a Government strategy to encourage more investment by ordinary individuals in the healthcare system. I have a private Member’s Bill on co-payment coming up in the new year, but perhaps before that we might be able to get some movement from the Government on these principles. We have co-payment in the social care sector. If it is all right in the social care sector, why is it not all right in the healthcare sector? We are excluding hotel costs—the board and lodging costs—from the £86,000 social care threshold, but we do not charge any hotel costs to rich people who are in hospital. Why not? There does not seem to be any logic in that.

I am glad it looks like the Minister will have a long time to answer these points and the other important points raised by my hon. and right hon. Friends. If we are going to have a complete review and fundamental change of outlook on health and social care, we need to meet those challenges. What is the answer as to why we do not charge hotel costs for millionaires in hospital? That would introduce more income into the service and bring it into line with what happens with social care.

Those questions remain to be answered, but there are a whole lot more besides. I was looking at the Official Report of an exchange in the other place yesterday evening. The Parliamentary Under-Secretary of State for Health and Social Care, Lord Bethell, said that

“we recognise that family carers play a vital role. When we announced an additional £4.5 billion over three years for social care, it included a commitment to take steps to ensure unpaid carers have the support, advice and respite they need.”

We know that there are about 1.6 million unpaid carers, and that was leading them to believe that there was some sort of dividend around the corner for them. However, Lord Lilley picked up on that point and asked the Minister to

“confirm that…there would be only £1.5 billion a year going to social care from the large increase in national insurance”.

Obviously, that is correct. He then asked the Minister to

“confirm that nearly half of that will be absorbed by the need to pay for the extension of free social care to those with valuable homes…That means that nothing will be left to help domestic carers.”

That was a perfectly straightforward question, and as it was not answered in the other place last night, I hope that the Financial Secretary can answer it tonight. The answer that that Health Minister gave—perhaps the Treasury has a better view on this—was that

“the maths that my noble friend has done is a little bit premature.”

I did not think that maths could ever be premature. He continued:

“The White Paper will come out later this year; it will spell out the precise financial arrangements, and I am looking forward to that.” —[Official Report, House of Lords, 13 September 2021; Vol. 814, c. 1130.]

The Minister was implying that he did not really have a clue as to what was going to be in it when it came out. That is an example of the muddled thinking, the failure of the Government to answer precise questions and the very dangerous policy of raising expectations among our constituents that somehow they are all going to be able to relax and spend all their hard-earned savings and use their houses for themselves without having to contribute much towards the long-term costs of social care.

May I throw out a suggestion arising from that exchange in the other place last night? If we have 1.6 million people providing free care for their loved ones, why are we choosing to impose upon them an extra levy, an extra tax? Surely it would be reasonable—clause 4 enables this to be done by subsidiary legislation—to exclude those who are looking after their loved ones, doing the right thing and saving the state a lot of money. We could say, “In return for doing that, you will be exempt from the 1.5% levy.”

John Redwood (Conservative, Wokingham)

indicated assent.

Christopher Chope (Conservative, Christchurch)

I am delighted to see that my right hon. Friend thinks that is a good idea. I hope we will get some nodding soon from those on the Front Bench, but I have looked there in vain so far.

Anybody who speaks in a debate such as this is open to the challenge as to how they would pay for this. That challenge was put across the Dispatch Box today by Conservative Members to Opposition Members, and answer came there none. I have an anecdote to share with the House. Probably around a fortnight ago I was talking to a former very senior aide at No. 10. He said that one great thing that has come out of the covid-19 emergency is the sure knowledge that we can manage with 25% fewer civil servants in government without any detriment to the quality of government. That came from a senior adviser at No. 10. How many fewer civil servants does my right hon. Friend the Minister think we can have without any detriment to the public service?

John Redwood (Conservative, Wokingham)

My hon. Friend is making an interesting speech. Does he think that as a lot of civil servants now find they can work pretty well from home, we do not need all these expensive offices and perhaps ought to be surrendering leases?

Christopher Chope (Conservative, Christchurch)

That is another excellent idea. I am grateful to my right hon. Friend for the suggestion, but I fear that the Government are so focused on spending money that they have lost any incentive to try to control expenditure, which I thought was the Treasury’s job. It takes me back to Geoffrey Howe’s first Budget. The Conservatives had become a national Government on the back of very high socialist spending and a popular rebellion against socialist waste and high taxation. In his first Budget, Geoffrey Howe emphasised: “Finance must determine expenditure”. That message has now been lost by the Government, who are saying that expenditure must determine finance. Our Government—I say “our Government” advisedly—have reverted to the old socialist tax and spend philosophy in which expenditure determines finance. I hope that my right hon. Friend on the Front Bench will explain why he thinks that to change our philosophy fundamentally is consistent with Conservative values.

My final point is about the Barnett formula. The Bill recites a restatement of the fact that the Barnett formula is there and says, “Isn’t it fair?” My constituents are incensed at the unfairness of the Barnett formula, which results in their paying higher taxes so that the people of Scotland can receive higher public services, with much more spent on those services in Scotland than is spent in England, financed by our constituents in England. Why, when we should be looking at issues that relate to expenditure, are we just saying that the Barnett formula is going to apply? Will my right hon. Friend the Minister say what will happen when the Barnett formula is reviewed or abolished, as surely it must be because it has outlived its usefulness? The House of Lords did a comprehensive demolition job on the Barnett formula, which was brought in years ago as a stopgap—a plastering over of some cracks—and has now almost reached the status of some religious doctrine.

My right hon. Friend the Minister will not be able to persuade me to do other than vote against this Bill’s Third Reading, because introducing it is a chronic mistake by the Government, and it is even worse that we should be imposing taxes without explaining how we are to spend them. But let me leave that on one side. I hope that my right hon. Friend, wearing his Treasury hat, will be able to explain exactly what the Government are doing to help to constrain and reduce waste in public expenditure, whether it be by getting rid of leases on surplus buildings; by sacking staff who are not productive; by introducing the long-promised cap on exit payments; by stopping the obscene salaries that are paid in much of the public service; or by addressing the problem of all these bureaucrats in the health service who seem to squeeze out productive activity, for whom we are having to pay dearly and are going to have to pay the highest taxes in our lifetimes. Those are the challenges that the Government must face up to if they are to be able to recover not just my support, but the support of so many Conservative activists up and down the country.

Jesse Norman (Conservative, Hereford and South Herefordshire)

I thank colleagues for their contributions to the debate. It has been very wide ranging—especially the last speech—occasionally touching on the subject of the Bill and the clauses and amendments in it.

Let me start with the hon. Member for Ealing North (James Murray) who speaks for the Opposition. He asked why the dividend tax has not been brought in. The answer to that question is that it does not fall under a national insurance contributions Bill. Dividends are subject to a separate dividend tax regime. That is a tax that is already in existence and it will be handled, as the Government have already made clear, in the course of the forthcoming Finance Bill.

The hon. Gentleman asked questions about levelling up and multinationals’ tax avoidance. I think he is aware that the Government’s approach to levelling up is extremely manifest, most recently in the work that we have done with the UK Infrastructure Bank, which is specifically dedicated to net zero and levelling up and which has just recruited a world-class new chief executive. On the case of multinationals, he has obviously forgotten that the Government have been in the vanguard of the G20 and the G7 in arranging and leading on a new settlement on Pillar One and Pillar Two multinationals’ tax avoidance.

The hon. Gentleman repeated his untrue claim from the earlier debate that these measures contain no new funding for social care. In fact, as the Chief Secretary to the Treasury said a few minutes before he first said that, the measures contain £5.4 billion to support social care, which is in the plan. In case he missed it, it is in paragraph 36 of the plan. It is no wonder that those on the Labour Front Bench do not think that we have a plan if they cannot be bothered to read the plan that we have actually published.

The rest of the debate is in Hansard.