The Pennies (an Extra 1.25% of Them) Have Finally Dropped | Luke Black
The Conservatives are returning to conference in Manchester reassuring its members the value of low taxes. The first Tory government to raise taxes for decades, they might have their work cut out. But after the last two years, what else do they expect?
Raising urgent funds for a languishing (we’re told) National Health Service and to seriously address – probably for the first time ever in our history – the injustice of social care and the changes to taxation last month came as an unwelcome reminder to many that things cost money.
And this is costing £36billion, to be exact. Over three years, the rise in National Insurance will be used primarily to address the backlog of non-emergency and non-COVID related appointments, before rolling into a Health and Social Care levy, which will cap social care costs at £86,000 and provide means-tested support to anyone with less than £100,000. A controversial move, hailed by social care and dementia campaigners, will see someone on £40k a year paying an extra £381 in national insurance contributions. This is an increase of 1.25%.
To be fair, it is probably easy to forget the ‘paying for it’ aspect of politics in recent times. Public opinion has certainly skewed in favour of more public spending in recent years, with both Conservative and Labour parties shifting significantly leftward in their post-recession manifestos, but also in the way the electorate appears to engage in politics. The expectation of the government to respond to the issues of the day – and act – is more pronounced than ever before. Even before the size of the state grew – hopefully temporarily – in the wake of COVID, there was an increasing appetite for more spending and more government across the spectrum, be this in the form of Corbyn’s nationalisation plans or Johnson’s extra nurses and police officers. Cameron’s Big Society, spending cuts and personal responsibility are no longer in vogue.
Moreover, the economic horrors of COVID and lockdown policy have been hidden, or at least delayed. Rishi Sunak has done a fantastic job at cushioning the blow of lockdown policy, through probably the most generous furlough scheme in the world (which prevented a mass hike in unemployment) and similar unemployment-deterring schemes such as the Kickstarter scheme, which incentivised employers to keep people on payroll. This was done at huge internal party-political expense, as the Conservative Party put pragmatism ahead of all forms of tory ideology, nationalising huge swathes of the private sector, closing entire industries and – most un-Conservative of it all – forcing people to stay at home.
Those holding the Government to account aren’t innocent either – be this in the form of the Labour Party, the media or the mask-obsessed Liberal Democrats. Until the Labour Party conference, the country barely saw one actual policy from the Labour party and most of the journalistic narrative (with a few exceptions for Andrew Neil and Tom Harwood at GB News) have been from an angle of more, more and more.
The clamour for more lockdown, more restrictions and more government control gave into complete economic ignorance of the decisions that were being made. Our pundits – perhaps too busy stressing the prodigal fear of death and destruction – seldom challenged our Government on how all of this was going to be paid for. Those who did online were labelled insensitive, deniers or just evil Tories.
After over 100,000 deaths, I am not in the business off ‘I Told you so’s’ but the price tag of lockdown was always known. Very little consideration was given to the impact on the UK’s mental health, vulnerable people like domestic abuse victims or just how much money all of this was going to cost – or who was going to pay for it. And delighted as I am to see more fiscal intrigue on the behalf of our big-name journalists – like Robert Peston and Beth Rigby – this is a new trend in COVID journalism. Where was this line of inquiry when the Government had Sir Keir’s “circuit breaker” or the race-to-the-vaccine-finish-line lockdown earlier this year?
Only with hindsight do our media seem to be interested in the economic impact of big COVID government.
COVID has been like an expensive all-family meal where babies sit on highchairs watching Peppa Pig on an iPad and an obscure Great Aunt has drunk the bar dry. It’s been painful for most in attendance and never felt like it was going to end, but you drank abundantly to get you through it. Except now, busboy has cleared the table, served the table a generous selection of coffees and teas, and is circling the chairs with a card reader. The bread and circuses of clapping for our carers, paying millions on furlough to essentially do nothing and the daily state announcements of deaths registered within 28 days of acquiring COVID-19 are but done – and all that is left is to pay the bill.
In this analogy you can of course throw it on your credit card, but you’ll need to pay it off later anyway – and you’ll need to pay interest too. So how do you pay it? And who on the table should pay the most?
These are the questions that no one seems eager to answer but at least people are now asking them. Roll into that the long-avoided topic of social care, and you have an iceberg of titanic proportions ahead.
But at least the penny has finally dropped. Everything that the government does costs money. Often they don’t spend it effectively – that is what governments do. And the more we demand from it, the more money it needs. At some point, we’re going to have to pick someone to pay for it and you probably won’t want it to be you.