The NHS and social care will receive “not a single penny less” as a result of the Government repealing a multibillion-pound tax hike, according to a Treasury minister.
Chris Philp offered the guarantee as the House of Commons took steps to scrap the national insurance rise introduced by former prime minister Boris Johnson’s government.
Mr Philp said Chancellor Kwasi Kwarteng will provide further details on October 31 about how they will fully fund its programme.
As a result of this measure, cancelling or repealing the Health and Social Care Levy Act 2021, not a single penny less will go to social care, to the NHS— Treasury minister Chris Philp
The levy was expected to raise around £13 billion a year to fund social care and deal with the NHS backlog which has built up due to the Covid pandemic.
But Mr Kwarteng last month confirmed he was cancelling the 1.25 percentage point increase, with the reversal kicking in from November 6.
Conservative former health minister Steve Brine noted part of the levy was to fund the NHS catch-up programme, asking: “Is that affected by me voting for this repeal today?”
Mr Philp replied: “I can categorically assure him that it is not affected. The £8 billion that was allocated over the spending review period to catch up the elective backlog is completely unchanged by this measure.
“The funding for social care, I think it was £5.4 million over three years, is unaffected as well and the rest of the money because that’s not all of it, it will continue to be available to the DHSC (Department of Health and Social Care) to spend on the NHS and social care in precisely the same way as was intended previously.
“As a result of this measure, cancelling or repealing the Health and Social Care Levy Act 2021, not a single penny less will go to social care, to the NHS or in particular the elective programme he referred to.”
He added: “We did this so people can keep more of their own money and so we can help with the cost-of-living challenges at this time as a matter of urgency on 6th November and not delay it any longer. It’s also important I think and the Chancellor thinks to boost incentives to work.”
Conservative former minster James Cartlidge put the revenue lost as a result of scrapping the levy at £17 billion.
The MP for South Suffolk noted businesses are worried about the “lack of stability”, adding: “I think he needs to explain this basic question: £17 billion of revenue for this levy to fund social care and the NHS – if that levy is going, surely that implies borrowing fills the gap or some other change fiscally? Is it the case that that will be confirmed on (October 31)?”
Mr Philp replied: “Yes, it is. The honourable gentleman is asking entirely reasonable questions, but of course you need to look at this in the round, across the entirety of public expenditure.
“And that is what the Chancellor will set out in detail October 31 to this House, accompanied by the OBR (Office for Budget Responsibility) scoring.”
We welcome the Government finally admitting they were wrong to raise national insurance on working people and businesses in the middle of a cost-of-living crisis— Shadow Treasury minister James Murray
Mr Philp also told MPs: “We’re going to set this out on the 31st. There’s a number of measures the Chancellor has in mind to make sure that over the medium-term this is fully funded and critically to do this and the other things in the growth plan … to make sure that over the medium-term we get debt as a proportion of GDP falling.”
For Labour, shadow Treasury minister James Murray welcomed the Conservative rethink on the levy.
Labour was against the levy when it was imposed, and Mr Murray told the Commons: “We welcome the Government finally admitting they were wrong to raise national insurance on working people and businesses in the middle of a cost-of-living crisis.
“But their wider economic approach is one characterised by ballooning borrowing, and a discredited trickle-down approach to economic growth.
“Our message to the Prime Minister and the Chancellor is to keep on U-turning. They need to U-turn on their whole disastrous approach to the economy which the Chancellor set out just over two weeks ago.”
The Bill cleared the Commons on Tuesday evening after receiving an unopposed third reading and will undergo further scrutiny in the Lords at a later date.
