House of Commons
Tuesday 7 September 2021
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Chancellor of the Exchequer was asked—
Loan Charge: Bankruptcy
I call the Minister.
Good morning to you, Mr Speaker. It is great to be in a Chamber that is 100% full strength after so many months. If I may make a personal note without undue deference, Mr Speaker, I will say that I thoroughly appreciated your remarks about standards within the Chamber.
To date, Her Majesty’s Revenue and Customs has not initiated insolvency proceedings against any taxpayer for a loan charge debt. No estimate can be provided for the number of people who have fallen into debt or who have been declared bankrupt and are subject to the loan charge because, where debts arise, HMRC is not always the only creditor. Some individuals are declared bankrupt as a result of a non-HMRC debt and some may choose to enter insolvency themselves based on their overall financial position.
We know that there are many, many thousands of nurses, social workers and other public sector workers who have been caught up in the loan charge. They took work via agencies that basically told them, “Sign here or you don’t get the work.” Checking to see whether they would be liable for the loan charge was not an option. Last week, the Yorkshire Post reported that a number of former services personnel had been affected and that one is feeling suicidal as a direct result. What does the Minister say to this veteran and the thousands of other public servants whose lives have been turned upside down by this retrospective taxation?
I thank the hon. Lady for her question. Taxation is often a difficult matter for the relatively small number of individuals who may be affected by particular pressures. Of course the Government recognise and understand that, but it is nevertheless the case—it is indeed a foundational principle of the tax system—that people should be responsible for their own tax returns. If I may, I would like to refer the hon. Lady to the very wise words of the former shadow Chancellor, the hon. Member for Oxford East (Anneliese Dodds), who said in 2018 that
“we would obviously welcome tightening in the area of disguised remuneration schemes…We are concerned that the measures in the Bill do not go far enough…There should be no excuse”—
these are her words—
“for people not to be aware of the situation”.––[Official Report, Finance (No. 2) Public Bill Committee, 9 January 2018; c. 30.]
I am afraid that she was right about that.
The Conservative Government’s approach to the loan charge means that ordinary people who are victims of mis-selling are suffering financial ruin and personal harm. Ministers will have heard some harrowing accounts of people pushed to the very brink and worse, some even tragically taking their own lives. This cannot be what the Government envisaged and a new approach is urgently needed. Will the Treasury now review the loan charge scheme and the approach of HMRC to prevent further devastating consequences?
As I have said, both the Government and Her Majesty’s Revenue and Customs take these cases extremely seriously, which is why HMRC has put in place extra care and support for people who may be affected by tax issues of this and other kinds. The fact remains that we have had a review. I might refer the hon. Gentleman to the words of his colleague, the hon. Member for Ilford North (Wes Streeting), who said of Sir Amyas Morse who did the review that it was
“a thorough piece of work…we thank him…He has done a great service to Parliament and to the wider public debate.––[Official Report, Finance Public Bill Committee, 4 June 2020; c. 33.]
He was right about that and the Labour party has been right not to have opposed this policy at any point during its passage through Parliament.
The problem that Members have on both sides of this House is that ordinary people were duped into something and it has effectively become a retrospective piece of legislation. I thought the way that the shadow Minister, the hon. Member for Ealing North (James Murray), approached this was very reasonable. HMRC is not taking the right approach. Perhaps the Government could look at that again.
I thank my hon. Friend for his question. I have mentioned the extra care and support that HMRC has put in place. I have mentioned the extremely careful approach that it has taken with people who may be facing the loan charge. As he will be aware, it has not initiated insolvency proceedings against any taxpayer for a loan charge debt and that in itself is emblematic of the care and attention that it is taking with this subject.
It is not enough for the Minister to say that people had to take responsibility for their own tax affairs when the information that they were given by HMRC was that there was nothing wrong with these schemes initially, when HMRC passed and signed off tax years for people, and when the head of HMRC has admitted that, in recent months, he had repeatedly tried—this was the outcome of a freedom of information request—to obtain legal analysis to understand the strength of a claim with “very little success”. There is not even a legal standing for this. How then can the Minister say that it is right to pursue people for things that they were led into, and, indeed, for payments that HMRC was regularising by allowing contractors to use as a means of paying their employees?
The right hon. Gentleman raises a whole bunch of questions. Let me address them. There were some contractors working through agencies for HMRC. Where it was discovered that they had used disguised remuneration, those relationships were ended and strong measures have been put in place to prevent recurrence. That is an unfortunate feature of the extended way in which these contract arrangements sometimes work. I do not think that there is any evidence that HMRC has signed off or positively approved the use of any disguised remuneration scheme. If the right hon. Gentleman has an example, he is welcome to send it to me. The right hon. Gentleman will be aware that the chief executive of HMRC has specifically written to the loan charge and taxpayer fairness all-party parliamentary group to make it perfectly clear that it has taken those remarks out of context and that what he was doing—as every chief executive of a public agency should do—was putting his own officials under some pressure to provide the justification needed, and rightly so.
Her Majesty’s Treasury analysis published alongside Budget ’21 has shown that policy interventions in response to covid-19 have, on average, supported the poorest working households most as a proportion of pre-pandemic income.
The Government’s plan to increase national insurance will clearly unfairly impact the living standards of young people and the low paid. That is in stark contrast to the Scottish Government’s free education, bus travel for under-25s and the Scottish child payment. Will the right hon. Gentleman confirm how many Ministers spoke against this move at Cabinet today and whether this included the Scottish Secretary?
I would have thought that, having sought additional powers, the hon. Gentleman would be more interested in reminding the House how his own Government are using the powers that they have. The key issue is that in many areas they are choosing not to use their tax powers—for example, to top up universal credit. He should focus on the alliance that his party has formed with the Greens, which is bad for business, bad for the economy, bad for the oil and gas industry, and counterproductive to growth.
In 2016, the Tories promised that fuel bills would be lower for everyone on leaving the EU. The reality is that fuel bills are increasing while they make the heartless cut to universal credit. In order to tackle fuel poverty, will the Minister use the net zero review to cut VAT on energy efficiency products, keep new nuclear off electricity bills, provide direct funding for heat decarbonisation and sort out the unfair grid charges on Scottish renewables?
Well, I think we should look at what my right hon. Friend the Chancellor has done. I touched a moment ago on how the covid measures have protected the poorest working households the most. Alongside that, the Budget measures on tax, welfare and spending decisions made since 2019 have, on average, benefited all households this year, with the poorest gaining the most as a percentage of net income. That is the approach that my right hon. Friend the Chancellor has taken and it is one that the Scottish Government should follow.
According to Save the Children, more than 3 million children living in low-income households across the United Kingdom are likely to be affected by the £20 universal credit cut, with half of claimants saying that they will face significant financial impacts as a result and one in seven worrying about affording food. The Joseph Rowntree Foundation says that the cut will push 500,000 people below the poverty line. Will the Minister explain how this squares with the Government’s so-called levelling-up agenda?
A key way to tackle poverty is to get people into work and then skill them up in their jobs. That is what we have set out through the plan for jobs, and that plan is working. Ultimately, if that is the priority of the Scottish Government, why are they not using the powers they have to prioritise it?
Does my right hon. Friend agree that it is difficult to justify raising national insurance to fund social care for the predominantly elderly, when the impact of that tax rise would fall mainly on young people and those who are earning little in the workforce? Does he also recognise that those two groups are the very groups that have been most impacted by the economic consequences of the pandemic?
As my right hon. Friend knows, the Prime Minister will make a statement on this matter shortly, but what he and I would agree on is that the best way is to grow the economy, drive productivity, get people into work and skill them up through work. That is what the plan for jobs is doing, alongside the £600 billion investment in infrastructure over the course of this Parliament as part of levelling up and our commitment to net zero. We need to grow the economy, skill up the workforce and get those who have been impacted by the pandemic back into work as quickly as possible.
I wonder if the Chief Secretary has had the opportunity to read a recent report by the Institute for Fiscal Studies that says:
“Material living standards held up surprisingly well through the pandemic…This is an astonishing outcome given the scale of economic disruption”.
My hon. Friend is absolutely right. The package of measures that my right hon. Friend the Chancellor took improved on the economic scoring that was forecast for the pandemic, including the figure for unemployment, which will now be 2 million lower at its peak than was estimated. That package of measures has helped to prevent many of the worst outcomes that were forecast by the Office for Budget Responsibility as we went into the pandemic.
One group whose living standards have been impacted during the pandemic has been low-income individuals who have used buy now, pay later credit products to buy online. I very much welcome the Government’s announcement in the spring of regulation of this sector. Will the Minister update me on the progress being made in regulating the sector given that it is become of increasing importance, as Citizens Advice reported just last week?
I understand that by the end of October there will be reassurance on that, and I am happy to take that up with my hon. Friend following this session.
When the Chancellor increased universal credit eighteen months ago, he said that he wanted
“to look back…and remember how we thought first of others and acted with decency.”
Does the Minister consider that taking £20 a week from millions of families across our country is really an act of decency?
I think that £400 billion of support in response to the covid pandemic across our public services and individual businesses shows the scale of measures that the Chancellor has put in place. On the specific issue of universal credit, we were always clear that the uplift was going to be temporary. As it was, my right hon. Friend the Chancellor extended it for a further six months. But ultimately what divides the two sides of the House is that we believe the best approach is to have a plan for jobs, to get people into work, and to upskill them in those jobs. The Opposition simply do not have a plan at all.
Let us think about what £20 a week really means. Twenty pounds a week means being able to afford to buy a coat for your children this winter. It means not having to worry about turning on the heating when the weather turns cold. Can the Minister offer any advice to families who work hard and play by the rules about how they should manage with £100 less each and every month?
As the hon. Lady knows, alongside the universal credit uplift other measures of support were given. Those are not only my words; I quote the Resolution Foundation, which has said:
“Since the crisis hit, the support schemes introduced by the Government have prevented an unprecedented collapse in GDP from turning into a living standards disaster.”
That is the package of measures put forward by the Government. That is how we have protected people’s living standards. The key is to have a plan and to get that plan working; it is, and that is helping people back into work.
Can my right hon. Friend comment on the living standards of those thousands of public sector employees to whom the Government have given exit payments in excess of £100,000 a year and continue so to do?
My hon. Friend is right to highlight this issue, which he and I have discussed on many occasions. In July I chaired a roundtable on it across Government, and it is prioritised across Departments. We have a manifesto commitment that the Chancellor and I are committed to delivering on. As my hon. Friend knows, we have a £200 million cost to this that we need to tackle. But at the same time we also need to be true to the manifesto, which was not about tackling those on low incomes who had high pay-offs because of the way their pension benefits were structured and those proprietary claims. We need to differentiate between that and the real ill that he is concerned about, which is those on six-figure salaries who are receiving pay-offs. That is something we are prioritising.
I am not quite sure if that related to the original question, so we are going to have to watch out for that in future.
Scottish hospitality and generosity is world-renowned, but could the Minister explain to us why he thinks that Scottish taxpayers should pay for England’s social care crisis?
It is a slightly odd question, because through the broad shoulders of the United Kingdom, it is Scottish jobs that have been protected through the furlough, it is Scottish businesses that have been supported through the self-employment income support scheme and it is the block grant that has provided additional funding to the Scottish Government. The oddity is that they are choosing not to use those uplifts in the Scottish grant to prioritise the things that they come down to Westminster and say they care about.
Can I just suggest to the Minister that it might be easier if he speaks through the Chair?
It would be good if the Minister answered the question, as well. The Prime Minister’s hike in national insurance has been roundly panned, not least by his own Back Benchers and the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride). People in Scotland are already feeling the pain of a decade of Tory austerity cuts and the harms caused by Brexit, with the devastation of the £20 a week cut to universal credit still to come, none of which they voted for. Why should my constituents pay for the Prime Minister to break his manifesto pledge with a new poll tax on the poorest who can least afford it?
It may be helpful for me to remind the House of the uplift in funding that the Scottish Government have received as a result of the ability of the UK Government to act across the UK. Baseline funding of £28 billion last year with an additional £8.6 billion of funding—that is £36.6 billion in total—has increased to £40.9 billion this year, so the Scottish Government are getting additional funding. As a result of covid, they have received an additional £14.5 billion, but they are choosing not to prioritise that extra money or to use the additional powers they have on tax or welfare to target the issues they say they care about.
At the beginning of this pandemic, like most people I was really worried that unemployment would rise by millions, and I am delighted that it has peaked 2 million below what most people forecast. Unemployment, at 4.7%, is now at historic lows. Does my right hon. Friend agree that the best way to raise living standards is to get those without jobs into jobs and, for those who already have jobs, to give them the training and skills they need so that they can get higher-paid jobs? That is exactly what the Government are doing.
I very much agree with my hon. Friend. It is as a result of those measures that unemployment has now fallen for six months in a row and that the OBR is forecasting a peak of 5% to 6%, compared with the previous forecast of 12%. As he rightly says, the peak will be 2 million fewer. It is not just about those who are being helped back into work, however; it is also about the programme of apprenticeships, traineeships, jobs support and the doubling of work coaches that will then help people in work to get into the better jobs that they deserve.
Net Zero Emissions and Green Investment
The Prime Minister’s 10-point plan demonstrates our commitment to net zero. It sets out £12 billion of new Government investment in green industries. This will create and support up to 250,000 highly skilled green jobs in the UK. In addition to this £12 billion, our plan will attract up to three times as much private investment by providing regulatory certainty and robust green finance frameworks.
The recent Climate Change Committee progress report showed that the Treasury had not fully met a single one of its recommendations in the past year. Does the Minister think this is good enough, and what steps should be taken to rectify that?
I am afraid I do not think that is what the report has said. What I will say is that we will be releasing many publications this autumn around net zero, not least the net zero review. This final report will be published in advance of COP26. The report will inform sectoral decarbonisation strategies and the net zero strategy, and work on those will continue to develop at pace across Whitehall.
The recent cuts to the international aid budget have undermined the UK’s leadership in advance of COP26, so what urgent steps will the Treasury take to develop a carbon neutral programme of international aid going forward?
I will ask my counterparts in the Foreign, Commonwealth and Development Office to answer the hon. Lady’s question directly—they are responsible for aid. What I will tell her is that there is a lot of stuff we are doing within our remit on international climate finance action, not least on the taskforce on nature-related financial disclosures.
Time and again, I speak with companies that want a freeport on Anglesey. I want a freeport on Anglesey, and local people want the jobs and local investment that will come with a freeport, but the Welsh Government say and do nothing. Will the Minister please urge the Welsh Government to work with me to deliver this game changer in my constituency of Ynys Môn?
I thank my hon. Friend for her letters and her continued campaigning for her constituency. We are working closely with the Welsh Government and remain committed to establishing at least one freeport in Wales as soon as possible. I encourage them to work closely with constituency MPs on that. As in England, specific locations will be chosen in a fair, open and transparent allocation process.
The Minister must recognise that climate inaction is not just a disaster for the planet but has a huge financial cost and economic consequences. We cannot dodge the critical decisions that we need to decarbonise the economy any more. How exactly will the Government hardwire our net zero targets into every decision in the upcoming spending review?
The Government have used the Green Book to mandate that policies must be developed and assessed against how well they deliver on our long-term policy aims, including net zero. We did that at spending review 2020, where guidance required Departments to include the greenhouse emissions of bids and their impact on meeting carbon budgets and net zero, and allocations to Departments were informed by that information. That is how we will continue to carry out consideration of climate impacts in fiscal policy.
I thank the Minister for her response. With more than £10 trillion of assets under management in the UK, there is scope for more green innovation investment via the venture capital sector. I therefore welcome the measures she explained and the regulatory changes being driven by the Treasury, but will she meet me to discuss a potential office for venture, similar to the new Office for Investment, which could provide a centre for expertise and growth in this area?
I thank my hon. Friend for that question. The Government recognise the important role of financial markets in supporting the UK’s transition to a net zero economy. The British Business Bank is a Government-owned economic development bank that makes finance markets for smaller businesses work more effectively, and its remit includes venture capital. I note her point about a meeting and believe that my hon. Friend the Economic Secretary is happy to meet her on this issue.
It is only 55 days until COP26 in Glasgow and households, consumers and businesses urgently need clarity and certainty about how the costs and benefits of our transition to net zero will be shared. Labour’s approach to tackling the climate crisis would have fairness at its heart, because we know that while some are planning to build personal heated swimming pools in their homes, millions of others are struggling with energy bills. The net zero review is supposed to consider fairness. At the last Treasury questions, the Chancellor told my hon. Friend the Member for Leeds West (Rachel Reeves) that the final report would
“of course be published imminently”—[Official Report, 22 June 2021; Vol. 697, c. 750.]
That was 11 weeks ago. Where is it?
As I said, the report will be published in advance of COP26, but we have published other things that the hon. Member does not seem to have heard of or read. We have set out ambitious plans about the net zero target and published the energy White Paper, the industrial decarbonisation strategy, the transport decarbonisation plan, which has not happened anywhere else in the world—we are the first country to do a transport decarbonisation plan—and a hydrogen strategy. We will publish the heat and building strategy in due course. The Government have been busy setting out plans on net zero, and we would appreciate it if Opposition parties took some time to read them.
The Government’s measures will have important consequences for taxpayers and energy bills. Will my hon. Friend therefore set out in detail the cost of net zero and the calculations behind that cost?
We will put affordability and fairness at the heart of our reforms to reach net zero. Our latest estimates put the costs of net zero at under 2% of GDP—broadly similar to when we legislated for it two years ago—with scope for costs of low-carbon technologies to fall faster than expected. Most of those represent increased investment in growth markets of the future. However, I take my hon. Friend’s point. All I would say is that he should wait until the net zero review is published.
The hon. Member for Wycombe (Mr Baker) and I may not have the same views on net zero, but we share a concern about how the Government will fund it. We will see, for example, a reduction in petrol vehicles, so what will happen to the tax on them? We have also seen yet another failure recently with the green homes grant. What is the fiscal plan for making sure that net zero achieves its targets while we maintain the Exchequer balances?
I thank the hon. Lady for that question. We recognise that this is an issue under intense speculation. We will publish a strategy that will set out many of the answers to the questions she is posing. What we have said is that we will put affordability and fairness at the heart of our reforms to reach net zero. The fact is that everyone in this House agreed with us when we set that target. For example, we have put in place plans to bring in electric vehicles by 2030. These will require changes not just in how we spend, but in our tax and regulatory system. The answers will come in due course.
As chair of the all-party parliamentary group on hydrogen, may I take this opportunity to welcome the Government’s world-leading comprehensive hydrogen strategy, backed up by £105 million of public funding to unlock £4 billion of private investment by 2030? Does the Minister agree with me that this is how we will build back better and create more jobs in places such as Teesside?
I thank my hon. Friend for that question. I do agree with him: building back better and building back greener are at the heart of this Government’s strategy. I thank him for raising those points, which will benefit Teesside and the north-east in general.
At the weekend, a young activist called Fatima challenged the Chancellor, asking why the Treasury is blocking action on the climate crisis. He replied that the Treasury has committed £12 billion of new money to the 10-point plan, but even that is not true, as he knows, and the President of COP26 has said that actually only a paltry £4 billion is new money. When will the Treasury start committing serious money to the green transition, in the region of the £85 billion that the TUC has said is necessary to put into green investment so that we go into COP26 as climate leaders, not climate laggards?
I will tell the hon. Lady what the Treasury is doing. We are issuing £15 billion of green bonds over the next year, and launching a world-first green savings bond ahead of COP26 to help finance the Government’s green projects. We set up the UK Infrastructure Bank to invest in net zero, backed by £12 billion of capital, which will also help to unlock more than £40 billion of overall investment in infrastructure. We are committing £11.6 billion in international climate finance over the next five years to help developing countries tackle climate change. The Budget also announced three UK-wide competitions that are part of the £1 billion net zero innovation portfolio. We have the towns deal, which is helping people create new green spaces, build back greener, create sustainable transport routes and repurpose empty shops. The fact is that the Treasury is doing everything it can to support the transition to net zero.
Helping Young People into Work: Covid-19
It is absolutely right that we remain relentlessly focused on helping young people into work, and our plan for jobs does exactly that with a range of initiatives. I would just draw colleagues’ attention to the fantastic youth offer that our jobcentres are rolling out, providing 13 weeks of intensive tailored support for those young people who enter universal credit and creating 140 dedicated youth hubs across the country.
In Bury, Ramsbottom and Tottington, the Government’s plan for jobs is working, saving jobs and getting people back into employment. As chair of the all-party parliamentary group on youth employment, may I ask my right hon. Friend to update the House specifically on how schemes such as kickstart are helping young people with employment and training opportunities throughout the country?
I thank my hon. Friend for all the work he does as chair of the APPG on youth employment, and I thank him and his colleagues for their advice as we have developed these initiatives. He is right to highlight kickstart. This is a signature initiative of this Government, providing Government-funded, high-quality jobs for young people at risk of long-term unemployment. It has got off to a fantastic start, with 50,000 kickstarters already having started and thousands more to come.
That initial response is helpful, and of course I commend the Chancellor and his Treasury colleagues for their financial support to some businesses over the last 18 months, and I realise important announcements from the Treasury and the Prime Minister are imminent. However, in a city such as Lincoln with such a vibrant hospitality sector, the cumulative impact of successive lockdowns has hit my constituents hard, especially young people, and my right hon. Friend knows that they are disproportionately employed in those businesses that are forced to close. Does the Chancellor agree that we must do everything possible to keep the economy open so that instead of paying young people not to work, we focus on creating well-paid jobs for them?
My hon. Friend is absolutely right to highlight the importance of hospitality in employing young people, which is why, together with our VAT cut for that sector and indeed £16 billion of business rates reductions, we have helped support all those jobs. He should also know that employers do not pay employers national insurance on those young people under the age of 21, nor on most apprentices up to the age of 25, demonstrating our support to those employers to keep young people in work.
When I was a very young MP, a Conservative Prime Minister introduced a windfall profit tax on the banks. When will this Administration and this Chancellor of the Exchequer have the imagination and leadership to introduce a windfall profit tax on those who have done very well over the last few years, and put it into green apprenticeships, green training and green skills, and do it now?
Talking about young people and financial services, I was recently in Glasgow talking about young people starting exactly what the hon. Gentleman described: new apprenticeships in the financial services industry, growing in Glasgow, supported by this Government who have put more money behind apprenticeships than any previous Government.
I am hearing from colleges that fewer level 1 and level 2 students are going to college as they are going straight into work and that is to be commended, but we know that having a level 3 increases people’s earnings potential in the long term and therefore opportunities to obtain that level 3 must be available to those young people as they get older. How can they achieve that, however, when the Chancellor has cut the adult skills budget by half since 2010?
I point the hon. Lady to the Prime Minister’s speech on skills last year when he unveiled this Government’s lifetime skills guarantee, which delivers exactly what she is asking for. Those 10 million adults without a level 3 qualification, who she is absolutely right to highlight, will, for the first time, be able to get one, fully funded by this Government. That is a Conservative Government delivering for people, giving them the skills and opportunities they need.
The combination of the furlough scheme, the kickstart scheme and the youth offer the Chancellor has just discussed shows that his efforts are leading to the UK having one of the fastest economic recoveries in the world. Will he commit to working globally to ensure that the confidence and opportunities this brings are available globally as they increasingly are in the UK?
My right hon. Friend is absolutely right, and I want to thank him for two things. First, when he was a Minister he created traineeships, and he will be pleased to know that this Government are tripling the number of them to give young people the best possible start in life, finding new skills and opportunities. Most importantly, this year, because of his success in making sure this country had the fastest roll-out of a vaccine anywhere in the world, we are enjoying the fastest opening up and the fastest economic recovery, and I pay tribute to him for that.
The Government announced the kickstart scheme to much fanfare. However, at the moment they publish the kickstarter statistics breakdown by gender and perhaps by race, but why do they not do so by disability? Will the Chancellor rectify that?
I am always happy to look at what more we can do to improve the transparency of our statistics. However, with regard to kickstart in aggregate, I would just say that there have been 50,000 starts and, when compared with previous versions of similar schemes such as the future jobs fund under the last Labour Government, kickstart is delivering more young people into more jobs at a much faster pace and, importantly, many more of those jobs are in the private sector, not just the public sector.
New Infrastructure Investment
The Prime Minister is rightly ushering in an infrastructure revolution because infrastructure drives growth and productivity and creates jobs. We are doing that with over £100 billion of investment this year and, thanks to the efforts of the Financial Secretary to the Treasury, a world-leading UK Infrastructure Bank created and set up in Leeds.
Does my right hon. Friend agree that all parts of the country can benefit from investment in infrastructure, and that an excellent way of achieving that in my constituency, in support of the substantial housing development there, would be to approve funding for the Aylesbury link of East West Rail, which would also help to achieve our target of net zero?
My hon. Friend is absolutely right to focus on making sure that our investment reaches every part of the country, including his constituency. I am pleased to tell him that £760 million has been allocated by the Chief Secretary and the Transport Secretary to deliver East West Rail, and I understand that the Department for Transport is currently working with the East West Rail Company to figure out the best possible way to serve Aylesbury. I hope that my hon. Friend will engage with that process.
The Infrastructure Forum recently published a report that showed clearly that the super deduction is already having an impact, accelerating investment by businesses. Will my right hon. Friend join me in encouraging businesses across Grantham and Stamford to take up the relief, and does he agree that this is exactly the kind of investment that will boost jobs and level up our country?
From the Office for Budget Responsibility to the Bank of England, many people have described the super deduction as doing exactly what my hon. Friend has said, and that is why we know it is working. I recently visited BT, for example, which, because of the super deduction, is now increasing the speed of its roll-out to millions more houses and creating thousands of new jobs in the process. My hon. Friend is absolutely right, and I encourage his businesses to take up the super deduction, and, indeed, we see that; a Deloitte survey recently showed that business intentions to invest in this country are the highest they have been in years.
I am afraid that I must tell the Chancellor that his infrastructure revolution is not very noticeable in cities in the north of England, which grind to a halt at rush hour. They desperately need infrastructure investment, particularly in public transport. Can he tell the House when he last met our city region Mayors in the north of England, and what his plans are for fiscal reform that will help them invest in public transport infrastructure?
My entire team meet the regional Mayors all the time, and of course we will do so in the run-up to the spending review and the Budget. I agree with the hon. Lady that intra-city transportation is important. Unlocking the economic potential of our cities is important to driving our economic recovery. That is why last year, in my first Budget, we announced £4.2 billion for intra-city transport settlements for our largest several cities outside London so that they enjoy the same long-term funding as London and can invest in exactly the types of schemes that she describes.
That investment in infrastructure does not get to the south Wales railway service. DFT Ministers keep announcing increased services along the main line in south Wales, which includes Pencoed in my Ogmore constituency, but no increased investment in stations, level crossings or, indeed, the track. When will the Chancellor get a grip and start investing in much-needed railway infrastructure in south Wales?
I am not sure that I entirely recognise the aggregate picture that the hon. Gentleman presents. Rail investment over the course of this Parliament is at record levels, under CP5—control period 5—and then CP6, to give the technical terms. I am very happy to take away the specific schemes. He will understand that those are a matter for the Welsh Government, but I am happy to facilitate with the Department for Transport as required.
I commend my right hon. Friend for his commitment to infrastructure, and I particularly welcome the UK Infrastructure Bank. Will he consider introducing an infrastructure bond so that long-term pension funds can invest in the future of this country too?
My hon. Friend is right. He has previously highlighted the importance of unlocking pension fund capital to invest in long-term assets such as infrastructure in the UK. He will know that the Prime Minister and I wrote to pension funds just recently discussing that, and my hon. Friend the Economic Secretary is actively working on creating a long-term asset fund, a new vehicle to unlock exactly the investment that my hon. Friend the Member for Wimbledon (Stephen Hammond) wants in exactly the type of infrastructure that this country needs.
End of Universal Credit Uplift
The Government have always been clear that the £20 increase to universal credit was a temporary measure, much like furlough and our other interventions to support this country through the acute phases of this crisis, but we are not done supporting those who need our help. This Government will always be on their side, and that is why we have created our plan for jobs. On the Government side of the House, we know that the best way to help people is to give them the skills and the opportunities they need to find high-quality work, and that is what the plan for jobs is delivering.
Ending the uplift will mean £286 million less for families in Wales, and risks plunging 275,000 families into poverty. Figures from the Bevan Foundation suggest that families in Ceredigion stand to lose £5.7 million in support. What assessment has the Chancellor made of the economic impact of ending the £20 a week uplift for communities in Wales?
The hon. Gentleman talks about those in poverty. The statistics most recently published show that 200,000 fewer people are living in absolute poverty in the United Kingdom than when this Government came into office. With regard to the economic impacts, I think all colleagues in the House can see the strength in our labour market: the need for businesses to find people and the fact that this Government are giving them the skills they need to get those jobs. That is the right strategy to help people and that is the economic strategy this Government are pursuing.
While the Chancellor was pondering the colour of the tiles for his new swimming pool and the site of his new tennis court for his country mansion this summer, back in the real world 20% of my constituency of Liverpool West Derby are facing a £20 a week cut to universal credit and sleepless nights about how they will survive. Can the Chancellor tell me what assessment the Government have made of the impact of the cut, and how many of the 12,530 people in Liverpool West Derby they estimate will be forced into poverty?
I do not accept that people will be forced into poverty, because we know, and all the evidence and history tells us, that the best way to take people out of poverty is to find them high quality work. We are creating jobs at a rapid rate, with eight months of continuous growth in employment supported by this Government: traineeships, sector-based work academies, apprenticeships, kickstart. You name it, we are delivering it to help those people in Liverpool to get the skills and the jobs they need to help support their families.
Forty per cent. of the people who claim universal credit are already in work. Does the Chancellor understand that they will be very hard hit by this cut, which is the biggest overnight benefit cut in our history?
Of course there are people already in work who are on universal credit, but our plan for jobs helps them too. We increased the national living wage this year by an inflation-busting amount—£350 a year to help those families. We talked earlier about the lifetime skills guarantee, about apprenticeships, about skills boot camps. Those are all ways the Government are supporting people; each one of those initiatives, by the way, is worth thousands of pounds of support. Those people will benefit from those increased skills and benefit from guaranteed new job interviews or higher wages at the end of it. That is the right strategy to help those people in work.
This week, the charity Action for Children highlighted that a street cleaner with two children in private rented accommodation is already on average £729 worse off as a result of Conservative cuts since 2010, but that will soar to over £1,700 as a result of the Chancellor’s planned cut to universal credit. So I ask the Chancellor: how exactly are families meant to manage?
Again, what we know is that children growing up in workless households are five times more likely to be in poverty than those whose parents work. That is why we are supporting their parents to get into work and why almost 800,000 fewer children are living in workless households than when this Government first came into office. That is the right way to support those families. Of course, there are other bits of our welfare system that we have maintained the generosity of, but when it comes to universal credit or employment, we on this side of the House we will support their parents into work and, crucially, with their childcare costs. Mr Speaker, we forget that 85% of childcare costs for people on universal credit are covered to support parents into work, which we know will make a difference to those children.
Over a year ago, the Government launched their plan for jobs, a comprehensive and ambitious plan to help people back into work to earn more and to gain the skills they need to succeed in the jobs of tomorrow. The latest data shows that our GDP and our economy is recovering quickly, unemployment is falling, jobs are being created, and, indeed, household incomes have been protected. All of that tells me that this Government’s plan for jobs is working.
Cutting universal credit by £20 a week will hit working families very hard. It will leave support for unemployed families at the lowest real terms level for over 30 years. It will undermine the recovery and scupper the prospects for levelling up. Does the Chancellor of the Exchequer understand why every single former Work and Pensions Secretary since 2010 has opposed his cut?
The right hon. Gentleman talks about economic recovery. We are forecast to grow faster this year than any other country in the G7. The recovery is under way. Jobs are being created, people are getting into work, wages are rising. That is the right strategy for us to pursue. Our plan is working and we will stick to it.
My right hon. Friend is right to highlight this issue, which I know is of particular importance to her and her constituency. I assure her that I have spoken to my team about it and, as part of the spending review, we will further those discussions with the Department for Education. I look forward to the Chief Secretary and she and I talking about this issue again.
The Prime Minister’s and the Chancellor’s plans to increase national insurance will hit workers and businesses hard at the worst possible time. The British Chambers of Commerce described it as a “drag anchor” on jobs growth. The Federation of Small Businesses stated:
“If this hike happens, fewer jobs will be created”.
The TUC said that it is wrong to hit young and low-paid workers while “leaving the wealthy untouched”. We agree. Will the Chancellor of the Exchequer therefore explain why he is choosing a tax on jobs rather than on other forms of income?
I am very pleased to see the Labour party finally focus on the importance of jobs in this House. We also agree that it is important to support companies to hire people, which is why there is no national insurance payable on those employing people under the age of 21, on most apprentices up to the age of 25 or on people who are going to be employed in new freeports. And, because of the steps that Conservative Governments have made to the employment allowance, 40% of all small businesses pay no employer’s national insurance at all.
You cannot have it both ways. Cutting national insurance either benefits jobs or it does not. The Chancellor told voters at the election:
“Our plans are to cut taxes for the lowest paid through cutting national insurance”.
That promise is now in flames. The Chancellor is not cutting national insurance; he is putting it up. It cannot be right that nurses and builders are set to pay hundreds of pounds more each year in national insurance, yet those getting their incomes from a large portfolio of shares, stocks and property will pay not a penny more. Labour cannot and will not support this Tory Government’s manifesto-breaking, economically damaging and unfair tax on jobs. So let me ask the Chancellor again: why will this Government not fund health and social care in a way that is fair for families and for businesses?
I will be brief, Mr Speaker. When the hon. Lady was appointed shadow Chancellor, she went out of her way to say that any policies that the Labour party put forward on her watch would be “fully costed and we will explain how they are paid for”. We have heard about uplifts to welfare. We have heard about more money for public sector pay. We have heard about opposing every difficult and responsible decision that this Government have made. We have not heard once how the Labour party will pay for anything and we know what happened last time around when it did that.
I do not know about the Chancellor, but I am sure my children would love to come and visit the zoo. I thank my hon. Friend for putting forward a bid for the levelling-up fund. As he will know, bids are currently subject to competitive assessment against objective criteria, but more generally, I think the whole House will welcome the fact that zoos are once again fully open to the public this summer. They provide a wide range of valuable benefits.
We support the UK oil and gas sector, especially as gas is a transition fuel to net zero. The sector supports 147,000 jobs directly in its supply chains. I take the point that the hon. Gentleman raises; if he would like to write to me with more detail, I think I will be able to give him more comprehensive answers.
I commend my right hon. Friend the Chancellor for all his determination to create new jobs and new investment and to upskill the workforce; I believe it is paying dividends, as we are seeing in the economy. Does he agree that further education colleges have a vital role in upskilling our workforce, both young and not so young, to get the best jobs for the future?
My right hon. Friend is absolutely right about the important role of FE colleges, which is why I was pleased in the last Budget to invest billions over this Parliament to improve the infrastructure and the quality of our FE estate. With the Prime Minister’s lifetime skills guarantee, FE colleges will be instrumental in delivering to all adults the extra qualification that they need to get better-paid jobs. My right hon. Friend is absolutely right to focus on that.
The hon. Gentleman raises a very valid point. It is right that we maximise the opportunities from domestic suppliers; my right hon. Friend the Business Secretary is focusing on that through the industrial strategy. It is also linked to targeting the seven innovation sectors funded through the significant uplift in our research and development budget.
We are working hard in Shropshire on a £500 million investment in modernising A&E services in our local hospital. There is a funding shortage; I have written to the Chancellor on the issue and would be very grateful for a response. There is nothing more important than modernising A&E services for the safety of our patients and constituents.
I know that that is a very important constituency issue, and my hon. Friend has championed it frequently. He will know that, through the long-term plan, there is a £33.9 billion uplift in core funding, in addition to the other funding through covid and other measures announced by my right hon. Friend the Chancellor. I am very happy to discuss the matter with my hon. Friend; I know that it is a key constituency issue, and he is right to focus on it.
I thank the hon. Lady for raising that important point. I would be very happy to make sure that it is considered as part of the spending review.
The Chancellor referred earlier to the record amounts being invested in the rail network. May I urge him to ensure that one of the projects that he supports is an east-west freight corridor linking the Humber ports to the west coast? That would greatly maximise the benefits of freeport status; it would also aid the levelling-up agenda.
I am in no doubt about the importance and the merits of my hon. Friend’s approach to freeports, not least after an early morning meeting that he and I had—last week, I think—on that very topic. As part of the integrated rail plan, we are looking at how we link that to levelling up across the UK. He is quite right to highlight the growth and productivity opportunity that freeports offer.
That is absolutely not right. When it comes to the super deduction, what the Labour party will never understand is that we want to support businesses to create jobs. That is what the super deduction does. I just gave the hon. Gentleman the example of BT creating thousands of new jobs because of the super deduction. When it comes to education, this Govt have invested £3 billion—£800 per pupil—in helping children to catch up with lost education, on top of a record increase in schools funding, which means that per-pupil funding in real terms at the end of this Parliament will be the highest it has been in over a decade.
Jobs are the most important way of helping communities to move forward. Those who have been out of work for 12 months or more can access the restart scheme, worth nearly £3 billion. Will my right hon. Friend ensure that part of his plan is helping everyone to have proper, decent work and decent training to enable them to get the right job?
My hon. Friend is absolutely right to highlight not only the importance of restart to the long-term unemployed, but how it sits alongside the kickstart scheme, the tripling of traineeships and the boot camps for skills. That is part of a plan for jobs that is working.
This Government are proud of the record investment that we have made in our armed forces—a record settlement for the next few years to support our forces and the work that they do around the world to ensure that we can play our responsible role.
We will end on this note, I think. We have had a good debate today, but one thing is clear: the difference between us and the Labour party. We believe in supporting people into work, we believe in supporting their skills, and, crucially, we believe in our plan for jobs, because it is working.
I thank the Chancellor for his willingness to make extremely difficult decisions to fix the crisis in waiting lists in the NHS and the problems in the social care system. The Health and Social Care Committee heard this morning that we need 4,000 more doctors to tackle the backlog. Does he agree that this is about reform as well as money, particularly in respect of the way we plan our workforce?
My right hon. Friend speaks on these matters with extreme authority and experience, and I thank him for all his engagement on them with me and others. He is right to want to make sure that we have a long-term plan for people in the NHS. He will know that we are committed to delivering 50,000 more nurses and 50 million more primary care appointments, but as part of that plan we must ensure that we get the number of GPs right as well, and I look forward to working with my right hon. Friend on that.
Given that the Prime Minister and the Chancellor have already decided to break their manifesto commitment on overseas aid and are now gearing up to break their solemn manifesto promises on the tax lock and the pensions triple lock, why should any voter believe ever again that a Tory manifesto promise is worth the paper it is written on?
What people know they get from this Conservative Government is a Government who are on their side, a Government who are delivering their priorities, whether their priority is 50,000 more nurses, 20,000 more police officers, record investment in every part of our country, or having a Government who are creating jobs and prosperity wherever people live. It says in that document that this is a people’s Government, and that is what we are delivering.
I know that this Government are listening to the levelling-up agenda, especially in the north of England, and on that note I should like to suggest that the best way of getting people back into work is putting forward new initiatives. Will the Chancellor meet me shortly to talk about Eden Project North?
I should be very happy to.
Health and Social Care
Mr Speaker, with permission I will make a statement on the Government’s plans for health and social care. Our national health service is the pride of our whole United Kingdom, and all the more so after it has been there for us during the worst pandemic in a century, treating almost half a million patients, administering more than 88 million vaccines and saving countless lives. The inevitable consequence of this necessary and extraordinary action is that covid has placed massive pressures on our NHS. As we stayed at home to protect the NHS, thousands of people did not come forward for the treatment they needed. Like those who suffered from covid, these are all people we know: your aunt who needs a new hip, your neighbour who has problems with their heart and needs a pacemaker, or your friend at work who thinks that they should get that lump or cough checked out. So we must now help the NHS to recover, to be able to provide this much needed care to our constituents and the people we love, and we must provide the funding to do so now.
We not only have to pay for the operations and treatments that people decided not to have during the pandemic; we need to pay good wages for the 50,000 nurses who will enable that treatment and who can help us to tackle waiting lists that could otherwise expand to 13 million over the next few years. We now need to go beyond the record funding we have already provided, and we need to go further than the 48 hospitals and 50 million more GP appointments that are already in our plan. So today we are beginning the biggest catch-up programme in NHS history, tackling the covid backlogs by increasing hospital capacity to 110% and enabling 9 million more appointments, scans and operations. As a result, while waiting lists will get worse before they get better, the NHS will aim to be treating around 30% more elective patients by 2024-25 than it was before covid.
We will also fix the long-term problems of health and social care that have been so cruelly exposed by covid. [Interruption.] The Labour party certainly failed to tackle them. But having spent £407 billion or more to support lives and livelihoods throughout the pandemic—from furlough to vaccines—it would be wrong for me to say that we can pay for this recovery without taking the difficult but responsible decisions about how we finance it. It would be irresponsible to meet the costs of this permanent additional investment in health and social care from higher borrowing and higher debt.
So from next April we will create a new UK-wide 1.25% health and social care levy on earned income, hypothecated in law to health and social care, with dividends rates increasing by the same amount. This will raise almost £36 billion over the next three years, with money from the levy going directly to health and social care across the whole of our United Kingdom. This will not pay for pay awards for middle management; it will go straight to the frontline at a time when we need to get more out of our health and social care system than ever before. It will enable radical innovation to improve the speed and quality of care, including better screening equipment to diagnose serious diseases such as cancer more quickly; designated surgical facilities so that non-urgent patients are no longer competing with A&E; faster GP access to specialists, so people do not have to wait months to see someone in hospital to find out whether something is wrong; and new digital technology so that doctors can monitor patients remotely in their homes.
We will do all this in a way that is right, reasonable and fair. Some will ask why we do not increase income tax or capital gains tax instead, but income tax is not paid by businesses, so the whole burden would fall on individuals, roughly doubling the amount that a basic rate taxpayer could expect to pay, and the total revenue from capital gains tax amounts to less than £9 billion this year. Instead, our new levy will share the cost between individuals and businesses, and everyone will contribute according to their means, including those above state pension age. So those who earn more will pay more, and because we are also increasing dividends tax rates, we will be asking better-off business owners and investors to make a fair contribution too. In fact, the highest-earning 14% will pay around half the revenues. No one earning less than £9,568 will pay a penny, and the majority of small businesses will be protected, with 40% of all businesses paying nothing at all.
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. In total, Scotland, Wales and Northern Ireland will benefit from an extra £2.2 billion a year and, as this is about 15% more than they will contribute through the levy, it will create a Union dividend worth £300 million.
However, we cannot just put more money in; we need reform and change. We need to build back better from covid. When the covid storm broke last year, 30,000 hospital beds in England were occupied by people who could have been better cared for elsewhere and who wanted to be better cared for elsewhere. That is 30,000 out of 100,000 hospital beds in our NHS, costing billions. Those beds cannot be used by people needing cancer care or hip operations, making it harder than ever to deal with the growing backlog in our NHS.
Too often, people were in hospital beds because they or their relatives were worried about the cost of care in a residential home, and that same fear kept many others at home without any care at all. This anxiety affects millions of people up and down the country: the fear that a condition such as dementia, one of nature’s bolts from the blue, could lead to the total liquidation of their assets, their lifetime savings and their home—the loss of everything, however great or small, they might otherwise pass on to their children—while sufferers from other diseases, who have to be in hospital for the majority of their treatment, have their care paid for in full by the NHS.
Governments have ducked this problem for decades. Parliament even voted to fix it, yet that 30,000 figure is an indictment of the failure to do so. There can be no more dither and delay. We know we cannot rely solely on private insurance because demand would be too low for insurers to offer an affordable price, and a universal system of free care for all would be needlessly expensive when those who can afford to contribute to their care should do so.
Instead, the state should target its help at protecting people against the catastrophic fear of losing everything to pay for the cost of their care, and that is what this Government will do. We are setting a limit on what people can be asked to pay, and we will be working with the financial services industry to innovate and to help people insure themselves against expenditure up to that limit.
Wherever you live, whatever your age, your income or your condition, from October 2023 no one starting care will pay more than £86,000 over their lifetime, and no one with assets of less than £20,000 will have to make any contribution from their savings or housing wealth—up from £14,000 today. Meanwhile, anyone with assets between £20,000 and £100,000 will be eligible for some means-tested support. This new upper capital limit of £100,000 is more than four times the current limit, helping many more people with modest assets.
As we fix this long-term, long-standing problem in social care, we will also address the fears that many have about how their loved ones will be looked after by investing in the quality of care, in carers themselves, and by integrating health and care in England so that older people and disabled people are cared for better, with dignity and in the right setting. My right hon. Friend the Secretary of State for Health and Social Care will be bringing forward a White Paper on integration later this year.
You can’t fix the covid backlogs without giving the NHS the money it needs; you can’t fix the NHS without fixing social care; you can’t fix social care without removing the fear of losing everything to pay for social care; and you can’t fix health and social care without long-term reform. The plan that this Government are setting out today—the plan I am setting out today—will fix all of those problems together. Of course, no Conservative government ever want to raise taxes, and I will be honest with the House: I accept that this breaks a manifesto commitment, which is not something I do lightly, but a global pandemic was in no one’s manifesto. I think that the people of this country understand that in their bones and can see the enormous steps this Government and the Treasury have taken.
After all the extraordinary actions that have been taken to protect lives and livelihoods over the last 18 months, this is the right, reasonable and fair approach, enabling our amazing NHS to come back strongly from the crisis; tackling the covid backlogs; funding our nurses; making sure that people get the care and treatment they need, in the right place, at the right time; and ending a chronic and unfair anxiety for millions of people and their families up and down this country. I commend this statement to the House.
I thank the Prime Minister for advance sight of his statement—I think I had almost as much notice as the Cabinet. May I also thank everybody who works in the NHS and social care? During the darkest days of the pandemic they kept our health service from collapsing, they looked after the elderly when others could not and they rolled out the vaccine, which has finally provided the light at the end of the tunnel. Despite their efforts, we are facing the toughest winter in the history of our health service. Not only do we have the threat of another covid surge, but waiting lists for diagnosis and treatment have reached record levels, we risk cancer survival rates going backwards for the first time ever, and social care remains neglected and strained. It is a crisis, but how did we get here?
The pandemic has undoubtedly placed the NHS under huge strain, but that is only part of the story. A decade of Conservative neglect weakened the NHS. Waiting lists had spiralled—up 2 million before the pandemic. Targets were missed, on cancer, on accident and emergency, and on mental health, before the pandemic. The same is true on social care, with £8 billion cut, despite growing demand, before the pandemic. Carers were on poverty wages, without secure contracts, before the pandemic. There were 100,000 vacancies before the pandemic. And the Prime Minister has just referenced the 30,000 hospital beds occupied by those who should go into the community—this is before the pandemic—and he called that an “indictment of failure”. Who had been in government for 10 years at that stage? Just remind me. Prime Minister, an “indictment of failure” is an accurate description of the situation in our health service and social care before the pandemic, so the pretence that he is “only here” because of the pandemic is not going to wash. He is putting a sticking plaster over gaping wounds that his party inflicted. He made that commitment on social care before the pandemic, and he said he would pay for it without raising taxes before the pandemic.
Yes, the NHS urgently needs more investment, but the backlog will not be cleared unless the Government hit the 18-week target set out in the NHS constitution—the Prime Minister did not mention that. It was set and it was met by the last Labour Government. Let me ask a direct question: if there is to be improvement, Prime Minister, can you commit today to hitting the target and clearing the backlog by the end of this Parliament—yes or no? I know he likes to avoid these questions, but if he cannot answer that basic question, it is clear he has not got a plan.
Let me turn to social care. Under these proposals, people will still face substantial costs. I heard what the Prime Minister said, so I have another direct question for him: can the Prime Minister guarantee that under his plan no one will have to sell their home to fund their own care—yes or no? [Hon. Members: “He just told you.”] Well, let us hear him make the commitment, at the Dispatch Box, that under his plan no one will have to sell their own home to fund their own care, and then we will come back to it.
Social care is about so much more than this. The blunt and uncomfortable truth is that under the Prime Minister’s plans the quality of care received will not improve—there is no plan for that. People will still go without the care that they need—there is no plan for that. Unpaid family carers will still be pushed to breaking point—there is no plan for that. Working-age adults with disabilities will have no more control over their lives—there is no plan for that. Pay and conditions will not improve for care workers—there is no plan for that. Let me spell it out: a poorly paid care worker will pay more tax for the care that they are providing without a penny more in their pay packet and without a secure contract.
The Prime Minister shakes his head; my sister is a poorly paid care worker, Prime Minister, so I know this at first hand.
This is a tax rise that breaks a promise that the Prime Minister made at the last election, a promise that all Conservative Members made—every single one of them. It is a tax rise on young people, supermarket workers and nurses; a tax rise that means that a landlord renting out dozens of properties will not pay a penny more, but the tenants working in full-time jobs will; and a tax rise that places another burden on businesses just as they are trying to get back on their feet. Read my lips: the Tories can never again claim to be the party of low tax.
The alternative is obvious: a timetable and plan to clear waiting lists, just as we did under the last Labour Government, and a comprehensive reform plan for social care that deals with the inadequacies that I just pointed out and drives up the quality of provision—not just tinkering with the funding model. We do need to ask those with the broadest shoulders to pay more, and that includes asking much more of wealthier people, including in respect of income from stocks, shares, dividends and property. [Interruption.] Chancellor, I was listening. The Chancellor knows the numbers just as well as I do—he will have done the sums and we have done them. Tinkering and fiddling with dividends will not do it. The Government are placing the primary burden on working people and businesses struggling to get by.
As I have said to the Prime Minister, if the Government come forward with a plan to genuinely fix the crisis in social care and they have a fair funding model, yes, we will work together. Thousands of families who are struggling with the current system and only want the best for their loved ones deserve nothing less.
Now we know why over decades the Labour Government totally refused to deal with this problem, and now we know why both Blair and Brown failed to do it: the right hon. and learned Gentleman has absolutely no plan. I was waiting, and I am amazed that he sat down. What is his answer to the backlogs in the NHS? What is his answer to the problems in social care? The Opposition have absolutely no plan. They have no idea how they would raise the money.
Let me answer some of the right hon. and learned Gentleman’s questions. We will of course be investing in social care. I thank his sister for what she is doing in social care, but we have lifted people’s wages across the country with record increases in the living wage; we are investing in 700,000 training places for people in social care; and we are making sure that we invest £500 million—that is in the plan I announced today—in the social care workforce.
What this plan will also do is enable us to get our wonderful NHS back on its feet and enable it to deal with the backlogs. The right hon. and learned Gentleman totally failed to explain how a Labour Government would do that. One year of capital gains tax would not even begin to deal with this problem. He has not got a solution and it is deeply irresponsible of him to come to this place without having any kind of alternative.
Let us be in no doubt: if we did what we have heard from the Labour party over the past few weeks, we would still be in lockdown, because the right hon. and learned Gentleman opposed coming out of stage 4; we would have absolutely nothing by way of dealing with the NHS backlogs; and after decades of inertia from the Labour party we would have absolutely no way of dealing with the anxiety of millions of families across this country who face the prospect of catastrophic social care costs.
This Government are dealing with those things—we are dealing with all of them. We are getting on with it. We are taking the decisive action. We are doing it all together. This is the Government who get on and deal with the people’s priorities; this is the Government who tackle social care; and, indeed, this is the party of the NHS.
Raising taxes is an incredibly difficult thing for any Conservative Government to do, so I thank the Prime Minister for biting the bullet on this intractable issue that I and many former Health Secretaries have wrestled with.
Does the Prime Minister agree that the demographic challenge—which I know he is personally trying to address with a bit of population growth in Downing Street—means that whether someone pays insurance in America, social insurance in Germany or taxes in the UK, everyone is going to pay more for their health and care? Any Government have a responsibility to make sure that resources are allocated where the electorate’s priorities are, and in this country that is health and social care.
I thank my right hon. Friend not only for his support but for all the campaigning and hard work that he did when he was Secretary of State—the first Secretary of State for both health and social care because he sees that the two things go together, unlike the Labour party. What he said is entirely correct.
I thank the Prime Minister for an advance copy of his statement. Let me quote from it:
“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.”
Let me tell the Prime Minister that health is devolved to the Scottish Government. The Prime Minister can get his mitts off our health system, because the people in Scotland trust the Scottish Parliament and the Scottish Government to run health and they certainly do not trust the Prime Minister—[Interruption.]
Order. Quite rightly, we heard the Prime Minister and the Leader of the Opposition; I expect everybody to listen to the leader of the SNP.
Thank you, Mr Speaker. When we have an attack on devolution, we have the baying mob of the Tories trying to shout down the voices from Scotland.
Government briefings in advance of the statement on social care told us that this was supposedly a key part of securing the Prime Minister’s legacy in office. Well, the Prime Minister is certainly creating a legacy, but it is definitely not the one in his vivid imagination. The real legacy of this Government is now well defined: a Tory Government who blatantly break manifesto promises and blatantly break international law.
It is telling that as we hopefully emerge from the covid crisis, the first act of this Prime Minister is to impose this regressive tax. The scandal of the tax hike is that it will fall hardest on the young and the lowest paid—the two groups that have suffered the worst economic consequences of the pandemic. Pre-covid and post covid, the pattern is the same, and this Government have learned nothing. Westminster keeps adding to the growing burden that young people face while stripping them of the benefits that previous generations enjoyed.
The unfairness of this tax hike will be especially felt in Scotland. The Scottish Government are responsible for social care and already funds provision—including SNP policies such as free personal and nursing care—from existing budgets and tax receipts. We have done it. As the Prime Minister well knows, by raising this levy across the UK, the Tories are taxing Scottish workers twice and forcing them to pay the bill for social care in England as well as at home in Scotland. This is the Prime Minister’s poll tax on Scottish workers to pay for English social care. Scottish people remember that it is this Prime Minister who said that
“a pound spent in Croydon was of far more value to the country than a pound spent in Strathclyde.”
Can the Prime Minister explain to the people of Strathclyde and across Scotland why he is now going after the pounds in their pockets to solve a social care problem in Westminster, which has failed to fix problems in Croydon and right across England? If their pound is really of less value, as the Prime Minister claims, why are we paying the price? Is he willing to stand up and explain to the families in Scotland why we are being hit by another Tory poll tax?
The NHS is a UK institution and we are all proud of it, and we are proud of what NHS Scotland does as well. The right hon. Gentleman is completely wrong in what he says about those who pay this tax. The burden falls most heavily on those who have the broadest shoulders, as it should, and it is the richest 14% who pay at least half the taxation. As I have just explained to the House, there is a massive Union dividend of £300 million across the whole of the United Kingdom, and the whole of the UK will find that there is more money for health and social care, which is, I think, what the people of Scotland will understand.
There will be millions of people right across the country who are so relieved today that, at last, the matter of health and social care will be resolved, with fairness to everyone. Can the Prime Minister reassure the many people who are concerned about prevention? We need early intervention, providing support for families with the very youngest children in our society, so that they too can have healthy and fulfilled lives throughout the United Kingdom.
I thank my right hon. Friend for everything that she does on this issue of early years. She and I have campaigned on this together. I have listened to her attentively over many years and I know that my right hon. Friend the Chancellor is determined to ensure that we get the proper funding for early years because the investment that we make in those first three years repays society and families massively.
Let us set aside for a moment the Prime Minister’s unbridled record on reneging on his promises, because, today, he has chosen what I consider to be the least progressive option to fix both our health and social care system. It is unfair between generations, unfair between individuals and unfair between those who derive their income from assets or from work. He is ignoring a raft of better alternatives: raising income tax; and making dividend tax equivalent to income tax or capital gains tax. Why?
The simple reason that I gave earlier is that none of those measures raise anything like the funding that we need. I have explained that very clearly, and I think that colleagues understand it and I think the country understands it. People are very suspicious. They know that this country has been through an enormous fiscal impact from the pandemic. They know that the Government have put their arms round people and spent £407 billion. They would be very suspicious of a Government who pretend that they can get the NHS back on its feet without some kind of serious, responsible, fair, fiscal effort and that is what we are doing.
I pay tribute to my right hon. Friend for gripping this issue. We are not in Government to be afraid of doing anything for fear of offending anyone. I will study the plans that the PM has promised to set out and I thank him for them. On behalf of my constituents and their families trapped right now in the spiral of rising care costs and fast disappearing resources, may I urge him and the Health Secretary, as we develop the new system that he has promised, to consider those for whom this is an issue in the present and not just many years into the future.
I absolutely agree with what my hon. Friend has said. The tragedy of decades of failure to tackle this matter is that people are now facing these costs. What we are doing is investing—as we have done throughout the pandemic—about £6 billion, I think, in dealing with the immediate costs of social care to try to help people through this very difficult time. What this package offers is a way of developing a long-term solution, enabling, we hope, the private sector to come in and give people a long-term plan to fix the costs of their own social care, knowing that the Government will remove the risk of those catastrophic costs. That is the advantage of what we are doing today.
Putting aside the unfairness of the national insurance tax rise that the Prime Minister is proposing, is it not the case that the expenditure cap will be his poll tax? In his Uxbridge constituency, the average price of a house is £500,000; in parts of mine it is £130,000. That would leave people in his constituency with an inheritance of more than £410,000 per family, and in mine £44,000 per family. That is unjust and unfair. It is not about levelling up, is it, Prime Minister? It is about doubling down on everything that is wrong, and yet again the poorest will pay the most.
This is a massively progressive measure that increases the floor on people’s liabilities four times. It protects people up and down the country from catastrophic costs, which anybody can face. Everybody across the country will benefit not only in the investment in social care and in care workers, but in making sure that we deal now and deal properly with the NHS backlogs and their effect on our NHS, which is what this country wants to see.
Let me just say to Members that we will be running this statement for around an hour, so, please, let us try to rush on and get through.
During the summer recess, I spent a week looking after my father who has advanced Alzheimer’s as my mother had a respite holiday. I pay tribute to all those who look after their loved ones in similar circumstances and all those who work in the care service. I certainly welcome the Prime Minister’s statement today. May I seek assurances that, through the health and social care levy, money raised will go to fund local authorities that do so much brilliant work in this area as well as the NHS?
My hon. Friend asks the question that everybody wants to be certain of. Absolutely, this is a legally hypothecated levy, but we will ensure that the funds that are fixed for social care go to social care so that we deal with the problem of the catastrophic costs. This will not be dispensed by the NHS, but by the Treasury in the normal course of Government spending.
I am a carer and I have been a carer for most of my life. Like millions of others caring for their elderly, ill or disabled family members, I have desperately wanted a plan to fix the country’s social care crisis after the Conservatives failed to implement the Lib-Dem plan legislated for in 2014, but this is not that plan. Where is the plan for the care staff to fill the 120,000 vacancies so that there are people to provide the care? Where is the plan for working-age adult care—care for physically and learning-disabled adults, which is the fastest growing care challenge? Where is the plan for the crisis facing millions of unpaid family carers whom the Prime Minister always forgets, and what is his message to the low-paid, the young and the small business owners hit by covid who now face his unfair tax? This Prime Minister has not a clue about fairness and he just does not care.
After a long career of listening to Liberal Democrat opportunism, I do not think that I have heard anything quite so absurd. The right hon. Gentleman calls for more funding and then attacks the Government for providing the wherewithal to do exactly what he wants. We will be spending half a billion pounds supporting carers, and there will be 700,000 more training places. The plan supports adult care. It supports everybody who needs care up and down the country; it is not just care for the elderly.
The reform of social care has been ducked for decades because successive Governments have put it in the too difficult box. I congratulate the Prime Minister on delivering on our commitments and his commitment. May I ask him to ensure that, as well as the money, we integrate properly the NHS with social care so that people can get the dignity that they deserve?
I thank my right hon. Friend, because he played a major part in the gestation of these policies and knows them intimately. He is completely right and has been massively encouraging to the Government over the last few weeks.
We will be bringing forward a White Paper on the integration. Of course this is going to be difficult, but it has to be done. We must have a system whereby people can work across both the health sector and the care sector in an integrated way. We have to have single budget holders and we have to ensure that, for instance, we have single electronic records in both health and social care. These are things that need to be fixed. We need to make sure that people are cared for appropriately and in the right setting, and that is why we are bringing forward the White Paper.
The Prime Minister will know that a number of young people are carers for their elderly relatives and family members. I was a carer for my late mother, who suffered from complex needs, including sickle cell anaemia and renal failure. Without those carers, our local government would have to pick up more issues. What assessment has the Prime Minister made of the high vacancy rates in the care sector, and will he be honest and say that this social care plan announcement has no impact on addressing those rates?
No, this plan does address the problems in the care sector. In addition to the £6 billion that we have put into supporting local government with social care during the pandemic, we are putting another £0.5 billion into supporting the care workforce. I have mentioned the 700,000 training places that we are investing in. We are also trying to ensure that people who become carers—they are wonderful people; I thank the hon. Member for what she has done—get the progression and career structure that they need, and understand how valued and respected they are.
The public will welcome the certainty in my right hon. Friend’s announcement today, particularly with regard to the cap and the floor, but does he agree that it is time that we had a real and informed debate about the nature of old age, now that we are all living longer? The longer that we can live independently, the better it is for everyone’s wellbeing, and we can all make lifestyle choices to encourage that. Does he agree that we need a fair debate about new models of care and housing models to encourage exactly that discussion?
My hon. Friend is completely right. One of the things that we are bringing in today is the housing and innovation fund, to ensure that we care for people in the right settings. She is completely right that there is no point in having residential care when a domiciliary option would be better, more effective and perhaps less expensive. That is exactly the right approach. The patterns of care and way we do things will change and improve—very rapidly, I believe.
Prime Minister, most people recognise that if we want more services, we have to pay more. But if we are going to pay, it should at least be fair. Despite your claim that this is a progressive tax, it is not. It is a flat-rate tax, the benefit of which will go mostly to better-off people. Those who are less well off will therefore be subsidising those who are better off. At a time when we are trying to create more jobs, young people and employers are going to feel the impact. Could I ask you—
Order. Can I just say that the right hon. Gentleman has been here a long time and knows that I am not responsible—I certainly do not want to be responsible for this—so could he not use “you”? I call the Prime Minister to respond.
Will the Prime Minister—
Sammy, sit down; come on, son.
The right hon. Gentleman is a formidable campaigner for his constituents, but I believe that these measures do serve them. This plan is progressive; the burden falls most heavily on those who can most afford to pay. It will, above all, help to deal with the current waiting lists in Northern Ireland, which are excessive and need to come down.
The NHS has been outstanding during the pandemic. However, as the Prime Minister has said, there is now a large waiting list of people needing treatment. As a hospital doctor, I am delighted to hear about the increased investment in the national health service that we are getting today, but as well as money we will need medical and nursing staff hours to reduce the waiting list. What are the Government doing to increase the numbers of those medical and nursing staff?
We are massively recruiting NHS staff. I think I am right in saying that, as I stand here today, there are 11,600 more nurses in the NHS than there were this time last year, and we will go on to deliver on our manifesto commitment to recruit 50,000 more nurses.
Having been a care worker, I know that it is a hard and skilled job that deserves decent pay and recognition, not a Tory tax hike. Does the Prime Minister really believe that his tax hike, which will fall on the shoulders of care workers, is any way to reward the heroes who have got us over the last 18 months?
Yes, because the burdens fall overwhelmingly on those who can best afford to pay, and the benefit for care workers is not only the increase in the living wage, but the colossal investment that we are making in care. That is something that will benefit not just care workers, but their charges: their patients, and the families who desperately need care up and down the country.
A decade on from Dilnot and with the demographic challenges becoming more intense, my right hon. Friend is to be commended as the first occupant of Downing Street to grapple with this immense challenge. Some of the most distressing cases that we encounter as constituency MPs are families who are caught in that tension between those who are in hospital ready for discharge and the local authorities. We see distressed and anxious families—confused, bewildered and vulnerable people. The greatest reform that we can make to the system is to put those who need the care at the very centre of our reforms.
I thank my right hon. Friend deeply; in that intervention, he has summed up the heart of the issue that I was trying to explain in my statement. It is the anxiety of millions of families up and down the country who face this uncertainty—about the finance, but also the proper setting for their relatives—that we are addressing today.
The backbone of the social care system is an army of underpaid and hard-working home carers and carers. How does the Prime Minister begin to justify to them a tax rise that not only breaks a promise, but hits them hard in their pockets?
Because we are investing massively in the sector. We are putting half a billion pounds into supporting care workers and investing in 700,000 training places. We are lifting the living wage by record amounts. Above all, we are valuing care workers and showing the respect to them and their careers that I do not believe has been properly shown before, by any Government.
I welcome that paying for this proposal is going to fall predominantly on the well off and those with the broadest shoulders. My right hon. Friend has pointed out that those who are earning less than £9,500 a year will not have to pay for the proposal, but what other mitigating factors can he put in place to help those on lower incomes to pay for it? Once the financial conditions allow, will he look at continuing to raise the living wage and at cutting taxes for lower earners?
My right hon. Friend is right consistently to campaign in the way in which he does for low earners. We are increasing the threshold for which people can be liable for paying anything at all from £14,000 to £20,000, which is a benefit that has not really come out properly in the conversation. People need to understand that we are lifting the minimum assets for which people can be liable from £14,000 to £20,000; that helps people on low incomes. As my right hon. Friend knows, we are also increasing the living wage. I am pleased to see that one of the effects of the current rebound in the economy, which I know he will be studying, is that wages are now starting to rise again—in exactly the way that some of us who campaigned for Brexit wanted to see.
When I was first elected to this place in 1997, one of the first people who came to see me in my surgery was the wife of a man who had been waiting two years for open heart surgery, and we are back there again with the waiting lists. There was no righteous indignation from the Tories when the list reached 2 million before the pandemic hit. Will the Prime Minister commit today to hitting the 18-week target for waiting lists, and to clearing the backlog by the end of this Parliament?
I think what the Labour party needs to do is come up with any type of plan at all. Every day in this country, plan beats no plan. We are putting record investment into the NHS. We have a plan to clear the backlogs—to reduce the backlogs as fast as we possibly can with this levy. What would Labour Members do? Answer comes there none: they have no plan.
For years, people have come to my surgery with horror stories about the difficulties of accessing care and the frankly squalid conditions that their loved ones have to be in in residential care. Can the Prime Minister reassure me that, as well as protecting the things people have worked hard for all their lives, we will also protect people from having to put their loved ones into conditions that not one person in this House would ever want for their loved ones?
Yes, because in addition to the caps and the floors that we are introducing to protect people from catastrophic costs, we are also introducing a fair cost of care.
Paul Johnson of the Institute for Fiscal Studies said that there were really no good arguments for using national insurance to raise these moneys, and having been briefed on the Government’s plans, care leaders are extremely disappointed, furious and depressed at the Government’s meagre plans on social care. But the question is: why is it necessary at all? This will raise about £12 billion a year, but the Prime Minister’s Brexit bonus of £350 million a week would aggregate to £18 billion a year. So where is this money, or did it never exist?
I think the whole country understands that we have been through a pandemic that obliged the Treasury to spend £407 billion on protecting people, jobs and livelihoods by furlough and other measures across Scotland. That was the right thing to do. I think people also understand that it is the reasonable and responsible thing to do now to put the NHS back on its feet with the funding it needs, and to sort out social care at the same time. That is what we are doing.
Is not the starting point in this discussion that greater demand for social care is bound to require greater money to pay for it, and anyone who does not like these proposals needs to explain what the alternative is, which is unlikely to be clear, simple and popular? Is it not the case that, in order to create an insurance market to give people even greater reassurance about their future care costs, we need to put a cap on and that is why the cap is most welcome? Will the Prime Minister do all he can to make sure that that insurance market is stimulated? Finally, will he confirm that that cap applies to those who have care needs regardless of their age?
Yes, I can certainly confirm that my right hon. and learned Friend is right on the last point—that the cap applies regardless of age. He is completely right in what he says about the logical necessity for the cap if we are to have any hope of the private sector coming in with the financial instruments that will help people to protect themselves against the cost up to the limit. That is the virtue of what we are setting out today. And what do we hear from the Labour party? Deafening silence.
People living with dementia and their families have been particularly affected by the social care crisis. They represent 40% of care home residents and they pay a dementia premium of 15%. On average, they spend £30,000 a year on their care. Dementia is an outcome of different diseases, which are increasing; we are going to see more and more people living with dementia. Therefore, can I ask the Prime Minister whether he will also fulfil his commitment in the general election manifesto for a dementia research moonshot? We know that we can, in the same way that we have developed a vaccination programme, develop cures and treatments for dementia.
The hon. Member is right to focus on the issue in the way that she does. It is a very cruel lottery that one in seven face these catastrophic costs as a result of dementia, while those who have other conditions are funded in full by the NHS. I can certainly confirm that the moonshot programme that was begun by my right hon. Friend the former Secretary of State for Health—one of his many moonshots—continues.
Can the Prime Minister confirm that this funding injection will go directly into frontline NHS services, not middle management, and that patients will be able to see the tangible benefits from it?
Yes. Not only will it go to frontline services and to beating waiting lists, but we will make sure that this money—this massive, unprecedented investment—is accompanied by the reform, change and productivity gain that the NHS needs to see.
My former colleagues where I used to work as a care worker sacrificed so much during the pandemic and now, under the Prime Minister’s plans, their pockets will be raided with a tax that will hit hardest those who are older, young and less well-off. Does he agree that it is now time for a national care service and a wealth tax to fund it?
The funding that we need on the scale that we need simply could not be raised in the way that the hon. Member describes or in the way that the Leader of the Opposition has vaguely indicated today; I do not think I heard a clear description of what he actually intends to do. But of course we want to make sure that people in the caring profession get the support and the investment that they need. That is why we are putting money into their training and into supporting carers, but also lifting their wages with the biggest ever increase in the national living wage. We will continue to support that.
I declare an interest as chair of the all-party parliamentary group on local government, in thanking my right hon. Friend for making the tough choices that he has today, rather than kicking the can down the road, as the Labour party did for 13 years when it had the opportunity to do something. As welcome as this injection of cash is, can I ask for an assurance that it is going to be met with the same rigorous reform that is necessary to make the system viable for years to come?
Yes. I thank my hon. Friend for everything he does for local government. Of course we will make sure that we bring forward the White Paper, which will show how we intend to join up healthcare and local government in a way that they have not been since the foundation of the NHS more than 70 years ago.
The Prime Minister is behaving like Father Christmas; he does not know what he has not delivered in government for the last 11 years. In this House last night, we had cross-party consensus on covering the costs of medicinal cannabis. So while Father Christmas is at the Dispatch Box, can he deliver on a Government promise to immediately set up a fund to pay for prescriptions for medical cannabis for children with intractable epilepsy?
I thank the hon. Lady. The prescriptions that she asks for are actually already provided for on the basis of clinical advice.
There has been much debate about how the money is being raised, but of more concern is how the money is going to be spent. My fear is that, once you start spending on perfectly proper things like the NHS backlog, there will never come a point where there is enough money in the new fund to transfer to social care, which needs it now. You cannot spend the same pound twice. So can my right hon. Friend guarantee that the social care sector will itself see a significant uplift in its support in the immediate future?
My right hon. Friend has done great work on this subject and I am indebted to him for some of the advice that he has given to me personally about how to proceed in this. He is right in what he says. The issue is making sure that the funding goes where it is needed and that it is specifically ring-fenced. The investments in social care will be protected by the Government and by the Treasury.
There are better ways of doing this than to take money from the less well off in work and the young to give to better off pensioners. Can I commend to the Prime Minister and my own Front Benchers the work of the Health and Social Care and Housing, Communities and Local Government Committees in their joint report of 2018, agreed unanimously by all Members of all parties in this House, which would deliver a system that is sustainable and equitable, address poor quality and low pay, and allow the proper integration of health and social care—none of which, from what I have heard today, his proposals would deliver?
Time and again, Labour Members have stood up and said that there is a better way to do this, without offering a single idea. A plan beats no plan.
Can my right hon. Friend confirm that the sums passed to Wales under his propo