Home » NI The Wrong Tool to Fix Social Care
Comment Jonathan Edwards Politics

NI The Wrong Tool to Fix Social Care

Jonathan Edwards:

THE CONSERVATIVE party’s key signature policies for the last Westminster election included a pledge that there would be no tax increases in three critical fiscal areas; income tax, VAT and National Insurance.

In his first speech as Prime Minister, Boris Johnson made a further promise; to “fix the crisis in social care once and for all, and with a clear plan we have prepared to give every older person the dignity and security they deserve.”

This week, the British Government’s announcement on social care has proven both to be false promises; they have increased taxes whilst failing to produce a clear plan.

Add this to their broken promises on International Aid and the triple lock. It raises some fundamental questions about the credibility of future Tory election pledges and the integrity of the electoral process.

The Tories are trying to claim that they have been forced to take their current course of action because of the pandemic, despite the Chancellor in March – a year into the pandemic – promising that national insurance would not go up.

And, of course, the truth is that the social care crisis is nothing new.

After all, a similar policy announcement by Theresa May during the 2017 Westminster snap election derailed the Tory campaign.

Those individuals who voted for the Conservatives in 2019 because of their tax promises should be incandescent with rage.

Leaving aside the political skulduggery behind the broken election promise, serious questions surround the policy itself.

The Federation of Small Businesses has warned that this tax on workers and businesses will “stifle recruitment, investment and efforts to upskill”.

When the economy is recovering from the deepest recession since records began, this is a tax on jobs and a tax on economic recovery.

It is also clearly unfair in inter-generational terms as the burden will fall almost exclusively on working-age people.

Sustainability is another concern in the context of an ageing population.

Official statistics indicate that, in 20 years, there will be an extra 9 million pensioners in the UK, resulting in a far smaller proportion of the population being of working age.

I’ll leave readers to work out the obvious mathematical consequences.

Compared to other taxes, NI is also regressive, meaning that the poorest proportionally will contribute more.

Of course, the Tories won’t mind all this because their priority was finding a funding solution that protected asset-rich pensioners in the South-East of England.

A further reservation for those who live in Wales is that the British State will use a UK-wide tax to fund a social care policy designed for England.

Whilst increased expenditure on health and care in England will lead to Barnett consequentials for Wales, we can safely assume that the Welsh Government were not consulted on these proposals.

Notwithstanding the constitutional implications, the result is that the Welsh Government had no opportunity to ensure that the tax proposals would resolve the crisis in social care we face in Wales.

Given that Wales has the highest proportion of older people in the British State, the Welsh Government should have been central to the discussions from the start to ensure that they can deliver a social care policy that meets the needs of our population demographics.

Instead, Westminster ignores Wales and targets workers at a time when businesses are still recovering from the pandemic, and the removal of the £20 uplift to Universal Credit will mean £286 million less for families in Wales.

I will oppose the legislation in Parliament on Tuesday and continue to make a case for a more progressive tax system, including greater use of wealth taxes.

Westminster politics often feels superficial and shallow, and this major policy announcement ticks all the wrong boxes.