Plans to hike national insurance contributions (NICs) to fund £12bn for the NHS and social care have been passed by the Commons, with Boris Johnson spared a mass Tory rebellion.
After springing a vote on MPs with just 24 hours’ notice in a bid to stymie a backlash from his own backbenchers, the government won comfortably by 319 votes to 248.
The 1.25 percentage point NICs increase – dubbed the “health and social care levy” – was approved despite criticism the prime minister was breaking a key manifesto pledge not to raise taxes and warnings it would hit younger and less well-off people disproportionately hard.
Earlier in the day, at PMQs, Johnson defended it as a “broad-based and progressive measure” and said the government was “taking the tough decisions that the country wants to see”.
By international standards, taxes in the UK are relatively modest. The amount taken by the state will be around 35% of national income following the decision to bring in a new health and social care levy, which puts Britain in the bottom half of the league table and well behind the 40%-plus rates in France and the Scandinavian nations.
By the UK’s own standards, however, the tax take is historically high. On a sustained basis, it is necessary to go back to the immediate aftermath of the second world war to find a time when tax as a share of gross domestic product stood at 35% – and at that time the trend was sharply down.
Carl Emmerson, the deputy director of the Institute for Fiscal Studies, said there was no comparable data for the period before the second world war but the tax take was almost certainly lower. “It was much cheaper to run an empire than a welfare state,” he said.
The tax take fell after 1945 for two reasons. Peacetime required a smaller state and the economy grew by around 3% on average. A country’s tax “burden” depends not just on whether taxes are going up or down but how fast the economy is expanding and so by the end of the 1950s the tax-to-GDP ratio was down to 27% of GDP. Higher government spending in the 10 years that followed meant higher taxes, which briefly hit 35% of GDP at the end of the 1960s, and remained only just below that level when Margaret Thatcher came to power in 1979.
There was then another 15-year decline in tax as a share of national income taking it once again below 30% by 1994. Since then, the trend has been steadily upwards, with only a few temporary dips.
Under his plan, patients entering the social care system from October 2023 will not have to pay more than £86,000 over their lifetime – excluding food and accommodation. More means-tested support will also be provided for those with assets of between £20,000 and £100,000.
Johnson batted away criticism, saying it was the “first time that the state has actually come in to deal with the threat of these catastrophic costs”.
However, the Labour leader, Keir Starmer, said: “The truth is his plans don’t do what he claims. People will still face huge bills, many homeowners will have to sell their homes.”
Despite speculation of a mass revolt at the weekend over a draft version of the plan that even angered some cabinet ministers, few Tories spoke in the debate on Wednesday to publicly criticise the government.
Just five Tories rebelled - Christopher Chope, Philip Davies, Neil Hudson, Esther McVey and John Redwood. A much larger number, 37, did not vote. These included Jake Berry, the longest-serving MP known as the “father of the Commons” Sir Peter Bottomley and former cabinet minister David Davis.
Berry, who chairs the Northern Research Group of Tory MPs, voiced concerns over the prospect of a new tax in the debate.
“It is fundamentally un-Conservative and in the long term it will massively damage the prospects of our party because we will never outbid the Labour party in the arms race of an NHS tax and that’s why I don’t think this is the right way to do it,” he said.
And backbencher Anne Marie Morris MP raised frustrations there was a lack of detail in the government’s plan and it was simply a list of “aspirational promises”. She said: “The big problem with this plan is that there’s no guarantee that much of the money will actually find its way to social care at all, but instead be swallowed up by the NHS.” She added: “Help for social care is needed now; not in three or four years’ time.”
Conservative former minister Sir Edward Leigh said he would vote for the levy with “a heavy heart”, insisting there were more “innovative” solutions to encourage people to take better control of their healthcare.
