The Government has announced that it intends to implement a new Health and Social Care Levy, on which MPs voted in the House of Commons on Wednesday 8th September. Below I have outlined my thoughts about this new levy, and my reasons for supporting the Government in the vote.
During the pandemic the country joined together to clap and cheer for our frontline NHS and social care workers. Even now you can find banners and posters still in place, celebrating and thanking the NHS for their service in an incredibly difficult period. However heartfelt and welcome these gestures are, they cannot pay the bills to keep the service running as we address the backlog created by Covid-19. So, the question must be asked, how do we fund the billions we all know we need for the NHS?
We could borrow the money, but this would be generationally unfair, passing the buck to future taxpayers when we all benefit today. Instead, the Prime Minister and Chancellor of the Exchequer have taken the tough but right decision to find the money through our taxes. Only three tax mechanisms could raise the kind of sums required: national insurance contributions (NICS), income tax, VAT. In the Conservative Party’s 2019 Manifesto each of these were static, but we have to be realistic about the fact that the pandemic has changed the world beyond recognition, with a particular impact on the country’s public finances. Our manifesto also promised sound public finances and it’s hard to see how we would be delivering this if we stuck these extra billions on the national credit card. So those suggesting wealth taxes, capital gains tax etc need to be honest about the huge shortfall this would leave.
Considering the three possible measures, VAT is de facto regressive and income tax is not applied to business so individuals would be looking at 2.5% on income tax instead of the levy rate of 1.25% shared with employers. By comparison, NICs is the credible, progressive option. For those who doubt this is progressive, the top 14% of earners will pay around half of the revenues. It will also apply to investment incomes and the earned incomes of those over 65.
The Health and Social Care Levy will raise £12bn per year to fund the urgent task of bearing down on the elective backlog, and finally means we can deliver the funding solution for social care that has eluded previous Governments of all colours. This policy is bold and decisive, yet fiscally fair. On the changes to social care, no proposal is perfect in every respect, but we have secured the future of our precious NHS and Social Care system, and those who think there are better options should spell out where they would find such a colossal sum of money.
Finally, as the son of a nurse and someone who frequently raises the issue of social care staff, we must remember these measures fund a 3% nurses pay award, and £500m to develop the social care workforce. Those on the frontline had our support in word during the pandemic, this levy will see us support them in deed.
Full information about the policy can be found here: https://www.gov.uk/government/publications/health-and-social-care-levy.
