The move may have been framed in a very clever way politically, but in terms of economics it is a terrible idea, and most damning of all, it is highly unlikely to solve the crisis in health and social care.
In a shrewd political move, the Government has framed the new taxes as providing extra money for the NHS – thereby blunting attacks from the left – and saving middle class grannies from being forced to sell their homes to fund social care – thereby blunting attacks from the right.
But however you look at it, the new taxes are a tax on jobs, which is exactly the wrong thing to do as we emerge from the pandemic.
Companies will simply pass on rises in National Insurance in the form of higher prices for customers, lower wages for workers or simply by making people redundant, and the economic growth we so desperately need will be damaged.
Until this week, the Conservatives regularly told us that low taxes boosted economic growth, creating jobs and thereby widening the tax base, and providing more money for the essential public services that we all value.
The party comprehensively junked that tried and tested philosophy this week by pushing the tax burden and level of public spending to record peacetime levels.
Now they have reverted to the old failed policies of high taxes and even higher spending – and they are going to clobber the less well-off and the young to pay for it all.
And what will the extra £12bn a year be spent on – improved patient care or increased bureaucracy? Well, there is a big clue in some other news that broke this week – the NHS, after yet another reorganisation, is currently recruiting 42 executives of new integrated care boards to be paid up to £270,000 a year. That is more than the Prime Minister earns for running the entire country!
What the NHS really needs is lots more highly paid managers, said absolutely no one ever – but that is where the bulk of the money is likely to be spent.
And the social care sector, urgently in need of investment, will remain the poor relation.
After the massed legions of NHS diversity and inclusion managers on eye-watering salaries have put their snouts in the trough, how much of the extra cash will be available to minimum wage carers on the front line of looking after the elderly and vulnerable? Close to sod all is my confident prediction.
The social care sector, provided by local authorities rather than the NHS, has been underfunded for years, but successive governments have dodged reform, even after Sir Andrew Dilnot recommended radical changes 10 years ago.
This was a chance to put the whole sector on a sounder footing, but it has been squandered. Mike Padgham, chairman of the non-profit organisation that provides care services in North Yorkshire and York, said it was a “huge opportunity missed for radical, once-in-a-generation reform” adding the government plans would not address the staffing crisis that is “sending the sector into meltdown on a daily basis”.
In summary, the new taxes proposed by the Government will just make an already complex system even more complicated, will hit jobs and growth, will clobber the less well off and won’t do much to solve the problems in health and care.
But in political terms at least the Prime Minister is seen to be “doing something”, and that could count for a lot.
These proposals are a huge gamble for Boris Johnson, but perhaps he will pull it off. He is clever enough and lucky enough to get away with it for now, as he has done so many times in the past.
But I found myself nodding in agreement when watching the Labour leader, Sir Keir Starmer, tell the Prime Minister in the House of Commons: “Read my lips – the Tories can never again claim to be the party of low tax.”
And that, in the longer term, along with the broken promises, could be very damaging for the Conservatives.
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