National Insurance Contributions Increase — House of Commons, 2022-03-08
Topic: Social Welfare
Clive James Charles Betts (Labour, Centre-left): The idea of trying to raise a specific allocated funding source for social care came from a report in 2018 jointly done by then Housing, Communities and Local Government Committee—it has changed his name so many times, I have to think what it was called at the time—and the Health and Social Care Committee. We raised the idea of a national insurance increase but we were very specific about the caveats. We said that no one under 40 should pay it, because young people have been disproportionately hit by the impact of the banking crisis, the austerity measures and then covid. That is exactly the same way the Japanese raise their funding for social care. We said that the threshold at which people start paying national insurance should be higher, which this proposal does not do, and that the ceiling should be raised, which I think the Government now accept should be done. We also said that people on a high private pension should pay, but there is no proposal from the Government for that. The Government are saying that when the levy comes in formally next year, people of pensionable age who are working will pay, but for this next year, 2022-23, those of pensionable age will not pay anything at all for the national insurance rise, which seems particularly strange as the money that will be spent will disproportionately help older people. We also said that people who are getting unearned income should pay. The self-employed pay national insurance based on their profits but not on a whole range of self-employed income, which would be a very different tax—a very different premium indeed. The changes to the cap will disproportionately benefit people in the most expensive homes, who will pay less of their asset when they die than people with lower value homes. We said that, rather than deal with this convoluted arrangement with the cap, everyone above a certain threshold of home value should pay a percentage of that asset towards the social care premium on their death. That again would be a much fairer way to raise money What we have here is a regressive form of taxation. I accept that people at the lower end—the people at the very bottom—on a £10,000 income will not pay, but beyond that, the hit to family incomes is going to be much greater for a family earning £30,000 than for a family earning £130,000. And at the end of the day, this does not deliver more money for social care. It should not be called a social care premium. It delivers the money through the disproportionate raising of the cap, which I have explained. It does not give any extra money for councils to fund the gap in social care funding, which has grown wider over the last 10 years. As social care funding has gone up and council budgets have shrunk, the amount for other services has shrunk with cuts of up to 50%—the National Audit Office has done an excellent report on this—whether it be planning services, environmental services, bus services, libraries or road repairs. We are looking for a funding stream that will stop that happening. There is no more money for local authorities to provide social care to the 1.5 million people that Age UK believes would have been entitled to social care 15 years ago and do not get it now At the same time, we will see a disproportionate rise in national insurance premiums hitting some of the poorest families hardest. What else will the Government do to fund local councils? They will make sure that councils have to put up council tax by around 3%. Council tax is a disproportionately unfair tax for poorer families. Look at the relationship between the value of homes and the amount of council tax people pay. The Resolution Foundation did a very interesting analysis five years ago showing that the level of council tax paid by those at the top end was 3.3 times higher than those at the bottom end, but the value of homes was, on average, 6.8 times higher at the top end, and that gap has grown larger as the value of houses has grown over the years and there has not been a council tax revaluation since 1991 We have a double whammy. On top of the increases in food and fuel prices, which are disproportionately hitting poorer families, we have a disproportionate national insurance rise and disproportionate council tax increases, too. The Government should stand back and consider how we fund social care properly and fairly on a long-term basis, while at the same time addressing the problems of unfairness in council tax through revaluation and reconsidering the bands so that people in lower-value homes do not pay a disproportionate amount of council tax compared with people in higher-value properties. That would be fair. Let us see some fairness from the Government in addressing our future funding needs. They should not continue with the national insurance rise and the council tax increase this year, as they disproportionately hit the poorest families hardest.