If a government does not wish to break a manifesto promise it should punt fewer such ‘promises’ into its manifesto. The modern mania for throwing everything possible into a manifesto – the better to proof it against interference from the House of Lords – renders manifestoes nothing more than a job lot of largely spurious pledges. The vision thing is notable for its absence and the vision thing is more important – and more revealing – than a grocery list of promises.
Still, if you must break a promise it is no bad thing to start with a large and stupid one. The Conservative commitment not to raise any of the major taxes during this parliament was doubtless designed to impress voters, but if it did so it achieved its goal at the expense of betraying the party’s lack of seriousness. Circumstances change and there are times when some tax increases cannot prudently be avoided. Indeed, this government accepts as much: a good chunk of George Osborne’s corporation tax cuts are being reversed.
So the promise to leave personal taxation well alone was a foolish one inevitably taken hostage by events. Now there is the possibility – if the Prime Minister and the chancellor have the courage to do it – this promise will be broken. A hike in national insurance contributions to pay for the obviously needed increase in funding required by the social care sector will, naturally, attract frothing Tory backbenchers and spluttering leftists complaining national insurance is an insufficiently ‘progressive’ means of paying for social care.
All of which is good. Some things shouldn’t be as ‘progressive’ as other things and the principle problem with the proposals floated by the government is not that they go too far but that they do not go nearly far enough. For if ever there was a time to put health and social care funding on both a stable and transparent footing, this is it.
Understandably, the Treasury dislikes hypothecated taxes but, even at arms’ length, increasing NI to pay for social care is a form of hypothecation. Once the principle has been conceded it might as well be implemented properly. For that reason, it seems to me there are compelling reasons for thinking it is at last time to replace national insurance with a dedicated health and social care tax, levied on income above the current NI threshold of around £6,000.
This is, of course, a tax on the young for the benefit of the old. But then so is national insurance at present. Today’s pensions are paid from today’s revenues. There are no state pension pots accumulated over the decades. You pay other people’s pensions trusting that when the time comes other people will pay yours. Now it may be that this is a foolish way of organising such matters, but it is the way they are currently organised. Proposals to fund social care in broadly similar ways at least have the virtue of familiarity.
Scrapping NI and replacing it with a health and social care tax, paid for by employees and employers, might at long last allow for more sensible debates to be had on how the NHS is funded and organised. A deduction for health and social care on every payslip would at least be a reminder that there is no such thing as a free hospital.
As for progressivity, is it truly outrageous to suggest that the country’s key universal service – the envy of the world, we are so often told – be financed on as close to a universal basis as possible? If the NHS is the national religion, as great a share of the congregation as possible should be expected to contribute to its costs. (There would, for sure, be a case for significantly increasing the upper threshold above which national insurance is not levied and arguably a case, too, for tapering contributions from the lowest paid; these are details less immediately pressing than the principle.)
For a long time, Britons have demanded a world class health service on the cheap. Much of the time the NHS offers a tolerable service at an unusually low price. We prefer to pretend it is world-class because admitting the truth is considered both shameful and some kind of betrayal. No wonder reform is so difficult.
A braver, bolder, government than this one would use this moment to attempt something genuinely transformational. Which, I suppose, is one further reason for supposing that even this modest nod towards impending reality – the care sector is hideously under-funded – may prove too much for this parliament to bear.
But if not now, and when armed with an 80 seat majority, then when? The alternative is not greater fairness but the further degradation of an already over-stretched, over-stressed service. Everyone appreciated the problem; at some point that appreciation must shift to actually doing something about it.
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