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.
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?
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.
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.
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.
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?
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—
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.
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?
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—
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?
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.