Sir John Redwood (Wokingham) (Con): I support my hon. Friend the Member for Basildon and Billericay (Mr Baron), although I will not press the matter to a Division either; I understand that the Government have a sense of urgency.

I think we need three debates, not one. First, we need a debate about how an extra £10 billion or £12 billion would make a big difference to waiting lists in the NHS; I would like to know the plan for that. Secondly, we need a debate about how we transition the money from health to social care and about what the social care plan looks like. Thirdly, we need an economic policy debate about whether we actually need to raise £12 billion in tax and, if so, whether this is the right tax to raise it with.

I urge the Government, in their own interest, to unpackage all that, at least in their own remarks, and understand that we need to see the cases for their propositions. If I go to a shop, I do not present it with some money and go away being told that in a month’s time I will get a brochure about what I might have bought; I expect to get the goods. Call me old-fashioned, but I would like to see what the goods will be. Would I like waiting lists down? You bet. Would I like people in my constituency to have access to better public social care? You bet, but I want to know that I will get that, and I want to know why the Government think that they need a tax.

Does my hon. Friend share my surprise that the Treasury can be precise in saying that it needs £12 billion from a new tax when it overstated the budget deficit by £90 billion last year, which shows that it does not have a clue about how much money will come in anyway?

Mr Marcus Fysh (Yeovil) (Con): My right hon. Friend makes a good point.

Yes, it would have been great to have had more detailed context of where we can get to in this economic recovery so that we could know where we were in terms of revenue before we make such momentous changes that affect the aspirations and potential of so many people within the economy. We also need to look at whether this measure will increase costs and cost pressures within the system that we are trying to help.

Sir John Redwood: I urge the Government to think again about the health plans. On the Treasury figures, this year the health budget in the public sector overall is £230 billion—£64 billion higher than the 2019-20 budget pre-pandemic. I understand that there were lots of one-off and special costs in setting up and dealing with procedures for tackling the pandemic, and I, like everybody else, am very grateful for the work that went in from health staff and experts. But that cost will drop away, so what happens to that money when it is no longer pre-empted by the special costs of the pandemic, and can it not be applied?

I hope the Government will listen to the Chairman of the Health Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt), about the need for a manpower plan, because if we wish to clear the backlogs it is quite obvious that more nurses and doctors are going to have to carry out more treatments and procedures. Some of that will be possible through reallocation and improved working of the staff we already have, but a lot of it will require additional recruitment.

I am also very worried about the lack of a detailed social care plan, particularly for my own area of Wokingham. We have a large number of self-payers at the moment. How could I be sure that if we went for this levy scheme, which is still not properly detailed, sufficient money would come from it to a local authority like Wokingham, already under enormous pressure on its social care budget?

I am very suspicious of hypothecated levies. It is particularly dangerous to hypothecate a levy that is a tiny fraction of the budget one is trying to improve. That will give some people the misleading impression that the social care levy will pay for social care, whereas, on the numbers, the levy would be able to match under one fifth of the total public social care budget.

Pitted against the huge numbers for the NHS and wider public health budget, that is just over 4% of the total, so it is a very insignificant amount in relation to the huge sums we are already talking about for the health budgets. However, it is a big sum of money when it is broken down and becomes a tax burden on people on quite modest incomes and those struggling in self-employment or trying to get their little businesses going. The last thing they need, when we need rapid growth and a faster recovery, is a tax rise.

The economy does not need sandbagging with austerity economics; it needs promoting for faster growth. It is still below the levels of output before the pandemic hit. Up until this point, the Treasury has been magnificent in making an avalanche of money available to get us through a most difficult time. We have got away with it. It has been borrowed at very close to zero interest. In these unique circumstances, it was possible to take extraordinary monetary measures that one would not normally be able to rely on and would not want to, and I am very grateful that that was done.

I say to the Government: it is too soon to start braking the economy.

The growth rate almost disappeared in the last month. I am hoping it is going to look a bit better in the next month or two when we get more opening. But before the economy is completely opened up, and people have stabilised their businesses and repaired some of the balance sheet damage that the pandemic measures did, is not the right time to take money off them. We need more spending power, not less; more demand, not less.

If the Government back that, the revenues will come tumbling in to a much greater extent than if we put rates up. Do they not understand that they were £90 billion wrong last year because there was more recovery than expected? They are already £26 billion under this year because there was a fast recovery in the first few months. Do not kill the recovery and you will get the money.

Yesterday I voted against the  government’s Bill to introduce a Care Levy.

Words are the currency of politics. If you debase them you devalue your coinage.

I gave my word in the 2019 election to my voters that I would not support a rise in Income Tax, National Insurance or VAT.

The Care Tax begins life as an increase in National Insurance.

I will post my speeches during the stages of the Bill which raised a range of issues about economic policy, NHS management and social care reform.

 

Readers of this blog might be interested to see my speech today on the Health and Social Care Levy Bill:

Part A

Part B

I have received answers to my questions on bus services. They reveal that only 2% of the bus fleet is electric on the latest government figures, despite all the active public sector talk of the electric revolution. They also reveal that bus usage remains low, even before the pandemic struck. The latest figures the government has supplied do not chart the fall in use that must have occurred over lockdown.

The fact that overall bus usage outside London was under  11 people per bus prior to covid   tells us that bus services have to be heavily subsidised. London is stated to be under 19 people per bus.  The figures presented divide passenger miles by bus miles.  Buses can carry between 50 and over a hundred passengers depending on whether it is a single or double decker, and what the rules are on standing.  The system entails subsidising the least popular services the most, as clearly the more passengers per bus the more fare revenue and the less need for subsidy. Bus companies are reluctant to cut out little used services, as of course they can argue that they need to offer a relatively frequent timetable to persuade people to use a bus. An outbound traveller who needs to get a return bus may wish to return at unpopular times of the day, so they need to run more near empty buses to keep or attract the overall  custom.

Buses like trains have a relative advantage at  busy times. They are best geared to providing commuter services into and out of job rich areas of towns and cities, and to offer shopping access at busy shopping times. They become very costly providing off peak services for people who may need to get to an evening event or to return at little used times of day or night. In London it should be easier to fill more of the seats on the buses given the density of people along key routs and the difficulty of taking private cars on cramped and inadequate roads.

What should the government and Councils think about how many bus services to subsidise? How should the industry go about constructing more popular timetables in a post pandemic age? It is a pity the government was  not able to supply more up to date figures than the year to March 2020. I presume the pattern has changed a lot since then.

Readers of this blog might be interested to see my recent interview on GB News about HS2:

‘Nobody thinks HS2 will cost less that £150 billion. Wouldn’t it be a great idea to scrap HS2 and allow the Conservatives to maintain their tradition of low taxes’

Nigel Farage asks Sir John Redwood MP if scrapping HS2 would be better than raising tax for health and social care pic.twitter.com/3mPOYmyxiL

— GB News (@GBNEWS) September 12, 2021

Many MPs raised issues with Ministers about how they will ensure that the extra money voted by Parliament in principle this week to bring down waiting lists will  be spent to achieve this end.  I myself asked the Minister proposing the NIC rise followed by a  new levy what reduction in waiting lists could be secured for the sum in question. Like the Health Ministers themselves he would give no commitment to specific reductions.

The quest for this extra money seems to have come from the new Secretary of State for Health following briefings from the senior management of his department and the NHS. They conjured forecasts of large increases in waiting lists from current levels unless a major  new funding package was put in place. I understand the difficulty of making these forecasts, but surely barring a major outbreak of a new virus variant that defeats the vaccinations the  waiting lists should be falling as the NHS returns to a more normal working pattern, with the number of serious covid cases well down on the peak before mass vaccination.

Government forecasters seem to specialise in gloom, and have put out some very pessimistic estimates of the spread of the virus which did not come true. This issue of waiting lists should be easier to predict as much of it is in their control.

It is also important to understand why managers and officials think there could be a further surge in waiting list cases if we rely on the £230bn agreed health spend, and then to probe how an extra 4% would make all the difference. If there was more visibility of exactly what the new money would be spent on there could also be a better debate about budget priorities within the existing large agreed totals. We could for example examine the big budget for test and trace and see how that could be reduced as we move to a world where  most people are vaccinated and where compliance with it is now low. We could examine the profusion of managers and policy people, of structures and offices that hang heavily above the work of the surgeries and hospitals.

This new team of Health Ministers needs to go through a thorough review of costs and priorities to ensure more money goes to the good medical teams doing the work, and more is spent on acquiring in house additional capacity. The current dependence on locums and temporary medical staff is very expensive.

The NHS also needs to clarify what future use of the private sector it intends to make. Mr Blair started the idea that the NHS would buy capacity in areas like cataract removal from specialist units in the private sector that could achieve good results at affordable prices, leaving NHS main hospitals for more complex tasks. During lockdown the NHS paid to block book a lot of the private capacity to keep some non COVID activities going. How did that work out? Are reports of underuse true?

I am asking the Health Secretary to share more of the detail of how extra money could be used to reduce waiting lists. I am also asking why some senior NHS managers think there is going to be a further bulge in waiting times, given the much lower level of covid cases in hospital  now, the progress of vaccinations, and the extra cash allocated to health budgets.

He needs to know how many senior managers and Chief Executives there are now across the public health sector. How is their remuneration aligned with the public interest in high quality care and low waiting lists? Is there a continuing danger of overlap and blurred responsibilities within  what is a complex structure?

As the state embarks on recruiting  a large number of new Chief Executives for the Integrated Care Boards and for the Integrated Care Partnerships, what reductions if any will there be in the old management architecture this replaces? What arrangements are there to transfer appropriate staff to these new bodies to cut the costs of recruitment and to avoid redundancy costs and disruption to staff?

How will these new Care bodies arrange their purchasing of medical and care services from the NHS Trusts and other health providers? Are the current procurement organisations  now withdrawing from contracts with private hospitals, or will they be needing and using more private sector capacity to help reduce waiting lists?

Presumably much of the answer to workload, stress on staff and high waiting lists lies in  recruiting additional nurses and doctors to undertake the necessary procedures and treatments. What is the latest view on how many people can pass successfully through training?  What action is being taken to encourage the return of already qualified people? How can new technology assist in raising quality and productivity?

The use of temporary and contract staff is expensive and too common. the NHS needs to have more permanent staff members.

The Treasury needs to concentrate on the recovery. Its wish to raise taxes and cut spending is damaging confidence and helping slow down what was a strong recovery.

There is now an urgent need to rescue the recovery. This needs a complete change of attitude and approach, and a new forecasting model to stop the crazily pessimistic forecasts of the OBR.
The Treasury should

1.Set out a new framework for policy based on the current 2% inflation target and debt interest as a percentage of revenue target, dropping the EU state debt targets. The government should add a growth target.

2. Cancel the National Insurance tax hike. We need more jobs not a further tax on jobs.

3. Cut Stamp duty on homes again to add stimulus to a slowing homes market.

4. Stop the further attack on self employment through IR 35

5. Buy more UK goods and services into the public sector instead of so many imports by tweaking procurement rules

6. Commission substantial extra  electricity  capacity to cut out imports and allow extra  power for the electric  revolution

7. Speed haulage drivers tests and training

8. Use farming subsidies and rules to promote more food growing – too much is being directed to wilding

 

9 Do more to make it easy for people to work for themselves, to set up and expand small businesses.

10 State sector to make contract opportunities available to smaller companies.

 

The danger of associating one tax with one item of spending is people might believe that item of tax paid for that item of spending. This will not  be true with the NHS or with social care and the new levy by a very large margin.

According to the Treasury Budget document issued in March they plan to spend £230 billion on health this year, and another £40 bn on social care. The new proposed levy is a bit over 4% of those totals. People ask me if the Council Tax precept for social care will go when the Care Levy comes in. Of course it will not as the Care Levy  is only 23% of current social care spending plus the extra from the levy. This assumes they will remove all the Care Levy money from the NHS as currently proposed. The Levy otherwise will pay a smaller percentage of the care budget if some is still needed for waiting lists.

If we wished to have hypothecated taxes to cover the cost of health then it would take all of Income Tax  (£198 bn), all of Capital Gains Tax ,all  Inheritance Tax, all  Stamp Duty and all the Property transaction tax to reach the £230bn figure.  Maybe we should rename all these taxes as the Health taxes to show people how income and wealth is currently taxed extensively to pay for healthcare.

If we wanted a tax to hypothecate for social care why not choose the Council Tax which this year is forecast to be that same £40bn figure as the costs of social care.

The debate about waiting lists and about social care needs to start with the current budget figures. The health  budget has risen from £166bn for 2019-20  (Treasury forecast in Budget 2018) to £230bn (Budget forecast 2021). It is true the pandemic imposed additional costs and needs on the system, but as these decline we still have much larger  budgets than before the pandemic struck. I will look in a future blog at the management issues posed with such large sums of money. I will also return to the issues around social care which I have discussed before.