BRASS TAX
The Guardian Weekly|September 17, 2021
Boris Johnson’s £12bn tax hike to pay for social care has outflanked Labour and confounded his own Conservative party. But with public spending at its highest level in peacetime, will it solve a dilemma that has defeated his predecessors – and even if it does, will the Tories ever forgive him?
Toby Helm and Phillip Inman

BORIS JOHNSON appeared, on the surface at least, super-confident as parliament returned last week to tackle the vast backlog of challenges that Covid-19 has left piled high in ministerial in-trays across Whitehall.

On a visit to a care home in east London, the prime minister cheerfully clasped a mug saying Love Social Care before heading to the House of Commons to make a statement on how he proposed to fund the health and care systems out of the crises in which both are mired. But his characteristic ebullience hid a new determination in government, a new calculation.

The aim was to showcase a prime minister determined to govern, lead and finally tackle head-on the issue that his predecessors David Cameron and Theresa May, and Labour prime ministers before them, had ducked or messed up over previous decades. Politically that was one intended message, the other being that Keir Starmer and Labour still had no plan at all.

“This is Boris saying: I can make myself unpopular to get things done, even if that means breaking promises. The intention is to contrast strength and bravery versus weakness and dithering,” said a former Tory minister.

In advance, and after much prebriefing, the idea of a manifestobusting 1.25 percentage point rise in national insurance (NI) for every worker, to pay for a £12bn ($16.6bn) a-year health and care levy – one that would take public spending to its highest level in peacetime and mean a huge expansion of the size of the state – met with much dismay among the many Conservatives committed to low taxes and smaller government.

How, they worried, would this go down in areas where voters deserted Labour for the Tories, partly because they did not like Jeremy Corbyn’s high tax-and-spend agenda? How to defend the red wall now? Dozens of Tory backbenchers threatened rebellion, and there was talk of splits in the cabinet. The Tory press seemed unsure whether to hail what it saw as a giant gamble with the nation’s finances, and the abandonment of Conservative principles, or to cry betrayal.

It was a week when it seemed that politics could be changing profoundly as the consequences of living with Covid-19 for good, and reshaping care services while tackling NHS backlogs all at the same time, have to be faced.

But it was also a week in which moods on both sides of the Commons swung wildly amid the new uncertainties, causing anxieties and a sense of dislocation among MPs. When details of the NI rise were announced in full, Johnson’s best line was that he had ample reason to break promises in the national interest and that the public would accept that.

Moods on both sides of the Commons swung wildly amid the new uncertainties

And when the package seemed, to some extent, to address worries about generational unfairness by making clear that pensioners still in work would also pay, there was a degree of temporary relief among some on the Conservative side. Last Wednesday, the government comfortably won a symbolic vote to approve the measures, though a good number of red-wall Tories and others withheld support or voted against.

So had Johnson, despite a degree of internal division, pulled it off, showing a new side to his leadership? That was the worry that initially permeated a Labour party lagging behind in the polls despite Covid, Afghanistan and Home Office chaos over immigration as boat loads of migrants head to the UK from France.

Johnson’s announcement, which front-loads most of the £12bn a year raised to clearing the NHS backlog and leaves questions of by how much and when social care will benefit unanswered, was a case in point. When the thinktanks had crunched the numbers and MPs looked at the detail, a sizeable number were seriously unimpressed. The Tory MP for Stevenage, Stephen McPartland, was one of many who complained that if the aim had been to end the threat of people having to sell their homes to pay for their care, it had failed. “The new health and social care levy provides no new money to fund social care for three years. No money for living costs, only personal care costs. Selling your home is just deferred. It is a tax on jobs,” he said.

A former Tory minister added that he was worried that the NHS backlog would take years to clear, and that it was hard to see how funding could ever be switched to social care as this would mean cutting NHS budgets at that point, something he called “ politically suicidal”.

As the scrutiny intensified, Johnson and his ministers were forced into admitting that they were unable to rule out more tax rises in future, given the state of the Covid-ravaged public finances. The care plan his government published explicitly raised the prospect that council tax, which has already risen by 16% above inflation since 2015-16, would have to go up again soon if local councils are to pay for soaring care bills in their areas without cutting other services massively.

Kate Ogden, a research economist at the Institute for Fiscal Studies, said that worries about more council tax rises were fully justified. “The government’s announcement of an extra £5.4bn for social care over the next three years should help councils across England reverse some of the significant cuts made to adult social care during the early-to-mid 2010s … However, this plan is far from offering a sustainable funding solution for the local government sector as a whole. ”

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