Bim Afolami: After the reshuffle, back to the future – NHS queues, rising energy bills, and higher prices

Bim Afolami is MP for Hitchin & Harpenden.

As the Prime Minister said at Cabinet on Friday morning, it is “half time” in this Parliament. We have two more years to deliver on our election pledges before shaping up for the next election. Covid has basically taken up the vast majority of this Parliament so far, not only preventing us from focusing on our wider domestic agenda (though, very importantly, we have delivered Brexit), but also creating new problems, such as lan extra £350 billion in public debt and huge NHS waiting lists.

By two years from now, levelling -p needs to be noticed on the ground, people need more money in their pockets, and public services need to be consistently improving. Is this going to be straightforward to deliver? In a word, no.

The Government reshuffle was a significant start on moving forwards. Much has rightly been made of the importance of Michael Gove’s new beefed-up MHCLG – now LUHC: the department for Levelling Up, Housing and Communities – with responsibility for housing, local government, devolution and the Union.

Education has severe challenges, from the difficulties of our exam system to the need to rebalance public spending from our universities towards the further education sector. Both Michael Gove (LUHC Secretary) and Nadhim Zahawi (Education Secretary) are extremely capable, with very good new junior ministers in their departments – in particular Neil O’Brien in LUHC and Alex Burghart in Education. But the stakes are high. If these departments fail over the next two years, the Government will fail too. We don’t have long to start delivering.

However, the most important domestic department for the next two years is the Department of Health. The public has gradually grown to trust us with the NHS, ignoring the propaganda from the Labour Party and the doctors’ and nurses’ unions. The most significant aspect of the Health and Social Care Levy which passed the Commons last week was the implicit realisation that the political risk of potential NHS failure is even worse than the risk of being seen as a Conservative Party who broke a manifesto commitment not to raise taxes. (Even though a pandemic was not in the manifesto!)

The NHS’s problems are of acute public and political importance. Since the start of the pandemic, the number of people waiting for NHS treatment in England has grown by a fifth. Some 5.3 million people were waiting for treatment in May 2021, up from 4.4 million in February 2020. There has been a particularly sharp increase in the number of people waiting for longer than a year.

Yet the number of people on the waiting list is expected to rise much further. Sajid Javid has warned that it is ‘going to get a lot worse before it gets better’, and could grow to 13 million.

The challenge here is monumental, and the department is also pushing through the Health and Care bill, which it seeks to remove barriers to integrating services to improve health outcomes and reduce health inequalities.

On top of all of this, we are not fully out of the woods on Covid yet, and doctors warn of a difficult winter with significant flu and RSV cases. This is a Department that may hold the fate of the Government in its hands.

The economy is facing its own headwinds too. Yes, we are bouncing back after Covid – according to the International Monetary Fund’s latest World Economic Outlook report, the UK economy will expand seven per cent this year, a sharp increase from the 5.3 per cent predicted in the Fund’s previous report in April. This is fastest in the G7.

However, the ghost of inflation past stalks us. I wrote about this here (in June, and worries about rising prices and costs of living are growing. One key aspect of inflation is energy prices, especially in the winter. Household energy bills are to rise after prices on the UK’s wholesale electricity market soared to a record high last month. The average market price reached £107.50/MWh – up 14 per cent on July, and well above the previous record of £96/MWh recorded in the run-up to the 2008 global financial crisis.

Last month, the industry regulator Ofgem announced it would lift the maximum price cap on energy deals by more than 12 per cent, after a sharp rise in the market price for gas and electricity. This increase is driven by a rise of over 50 per cent in energy costs over the last six months, with gas prices hitting a record high as the world emerges from lockdown. Coupled with rapidly rising costs for many foodstuffs, cars, and consumer goods (largely due to a combination of global macroeconomic factors), it is likely that most voters will feel a real pinch this autumn.

The Just About Managings (remember them!) will have a much tougher time. This will be especially the case if the Bank of England seeks to spike the rise in inflation in the coming months with a rise in interest rates (though at the moment I think this is unlikely). Shortages of certain foods and other key goods, largely due to damaged supply chains after Covid and not enough HGV drivers, are growing in the short term. This not only likely to put up prices, but also become a very visible and real problem for ordinary people who just go about their daily lives without thinking much about politics: i.e. most voters. This will come at political cost, particularly if the press builds up public anxiety about Christmas shopping which leads to a degree of stockpiling.

The difficulties with rising prices and energy bills will coincide with the much awaited Net Zero strategy (expected in mid-October) followed by COP26 in November. The net zero strategy will have to answer the knottiest questions on the environmental agenda such as: how are we going to replace boilers in millions of homes or better insulate buildings? How are we going to manage the shift away from petrol and diesel cars?

Whilst I am confident that there are huge economic opportunities over the medium term, in the short term there will be certain costs. Though these costs are a necessary part of implementing this critically important task of getting to net zero, being seen to impose greater costs at a time of rising prices will be politically challenging.

The next year brings rising prices, higher energy bills, and NHS difficulties. This will not be an easy atmosphere for the Government, and the Party, to operate in.

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David Skelton: Why a lack of dogma is Johnson’s strength, not a weakness

David Skelton is the author of The New Snobbery.

In October 1958, Harold Macmillan gave his second conference speech as Prime Minister and party leader. Here was a man at the peak of his political powers, who would a year later lead his Party to a thumping election win.

Rather unusually for a man of his verve and swagger, Supermac spent part of his speech talking about the nature of his political philosophy.

He differentiated Toryism from liberalism and Socialism with a characteristically fine turn of phrase. Macmillan argued that his opponents were living:

“…either in the past or in a world of make-believe. The pure doctrine of laissez-faire and absolute free trade; the nationalisation of all the means of production, distribution and exchange – these were the cries of my boyhood. What a musty period flavour they have now. How utterly out of touch all this is with the problems and opportunities of today.”

I was reminded of the great man’s speech during the debate that followed the government’s necessary steps to support the NHS and social care last week. One Telegraph columnist even complained that it represented the “total victory of Socialism in Britain” and a “trashing” of “intellectual traditions.” The truth, of course, is much the opposite.

Conservatism – always adapting to meet the challenges of the day

The unifying thread that runs through the entire Tory tradition is a belief that the Party has a patriotic duty to tackle the big issues facing the country today, rather than become trapped by a tight partisan dogma. The Conservatives are the most successful political party of the democratic age because of their ability to adjust to changing circumstances and changing times, just as their opponents become trapped in ideological straightjackets.

When one of the major challenges was the degrading social conditions faced in factories, Disraeli’s Government pushed a radical agenda of social reform. When the state had grown too large, unions too powerful, and business too weak, Margaret Thatcher’s Government set out to restore the balance.

Conservatives have always believed that rigid dogma is the folly of our opponents and that we should do what is necessary to maintain balance and tackle the major issues we face today. We should not pretend that the solutions to the problems of the 1970s are somehow replicable as we face the very different problems of today.

Conservatism isn’t libertarianism

Conservatism has never been a libertarian concept. There’s a good reason why Hayek, the icon of the libertarians, wrote an essay entitled ‘Why I Am Not A Conservative’. In it, he argues that conservatism and liberalism have often been opposites, as conservatism is based on a “fear of change” and liberalism is based on “a preparedness to let change run its course even if we cannot predict where it will lead.”

Conservatism can never just be a simplistic championing of the unfettered free market. For Tories other things, such as family, community, nation, and belonging, matter just as much as the market. As Robert Tombs set out in his masterpiece, The English and Their History, the reality of conservatism “is more complex, and more intriguing” than modern liberals would argue. According to Tombs:

“Tory beliefs – state intervention to defend the vulnerable.. Spending on welfare, rejection of deflationary economics – chime more with modern sentiments than those of the progressive Whigs.”

As Conservatives, we understand that the state often has a role to play in solving the difficult problems we face, as long as this is done in a balanced way that doesn’t diminish the role or importance of civil society, the market or families. Rab Butler was emphatic when he argued that, “Conservatives have always been ready to use the power of the state. That has been our tradition since Bolingbroke.”

Lord Hugh Cecil, in his important work on Conservatism, even suggested that modern “Conservatism inherits the traditions of Toryism which are favourable to the activity and authority of the state.”

Tackling today’s challenges

The major challenges that we face as a country today are not going to be solved by a simplistic, dogmatic mantra of “small state, low tax.” Social care, for one, is a policy dilemma that successive governments have dragged their feet over, so last week’s announcement that the government will be prioritising a lasting social care solution has to be welcomed.

Similarly, ‘levelling up’ – reviving the “post-industrial” towns that gave us an 80-seat majority – is not going to happen with a dogmatic attachment to a small state. Ambitious infrastructure projects and an industrial policy committed to reviving manufacturing represent the pragmatic solutions to the problems of the day.

Boris Johnson has always instinctively understood the importance of a balanced conservatism. When he was Mayor of London, he was, for a time, one of the only leading Tories who advocated a Living Wage and used his office to extend and support the concept. The Prime Minister has always seen the value of flagship and important infrastructure projects and this is reflected in the ambition that lies behind the Levelling Up agenda.

To return to Macmillan’s pithy summary of the political divide, Conservatives should neither be living “in the past or in a world of make believe.” Conservatives have always done what is right to tackle the challenges of the day, which sometimes involves utilising the power of the state.

Despite the cries of dogmatists on both left and right, simplistic sloganeering is no substitute for making the hard choices that come with governing.

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David Orr: The pandemic has shown that now is the time to bring England’s homes up to scratch

David Orr CBE chaired the Good Home Inquiry, an independent inquiry to determine solutions to the poor quality of England’s housing.

We have known for a long time that the quality of England’s existing housing stock simply isn’t fit for purpose. Today, four million homes don’t meet basic standards of decency – and half of these (one in ten homes overall) contain a category one hazard, meaning they pose a serious risk to their inhabitants’ health or safety.

Successive governments have tried, through various interventions, to tackle the problem – but none has taken the action needed to address the scale of the challenge. Now, we face a unique set of circumstances which make this the time for action.

First, the pandemic has highlighted the profound impact that poor-quality housing can have on our physical and mental wellbeing. Our research with the King’s Fund last year found that those most at risk of Covid, including older people, those from Black, Asian and Minority Ethnic backgrounds, and people with pre-existing conditions, were also more likely to be living in non-decent homes.

During the lockdowns, when our homes became our refuge, we discovered that for millions of us they were not only unsafe but could even harm our prospects of survival. The link between our health and our home is undeniable. To narrow health inequalities, we need to look to the state of our homes.

At the same time, we are reaching a crunch point for driving down our carbon emissions – and it is becoming increasingly clear that our energy-inefficient homes are a major stumbling block in doing this. Without decarbonising our homes, we simply will not be able to fulfil our commitments to reaching net zero.

There is huge potential for job creation here. The Construction Industry Leadership Council have suggested thousands of skilled jobs could be created in retrofit and the opportunity of related home improvement work.

And finally, we must prepare for the reality of an ageing population. By 2041, one in four people in England will be aged 65 or over with the fastest increase in the 85+ group. We know that the vast majority of older people live in mainstream houses and flats – and would prefer to stay living independently in our homes and communities.

We need a transformation of our housing stock so that more people are able to stay safe and independent in their homes for longer, and to avoid placing additional strain on the NHS and social care system – poor housing currently costs the NHS an estimated £1.4 billion a year. With government grappling with the question of funding social care, we should not overlook this huge opportunity to make savings.

There is a great deal to be gained by tackling the crisis in poor-quality housing. Over the past year, the Good Home Inquiry has gathered evidence and examined the problem, looking at the causes of the crisis, what interventions have and haven’t worked, and what policies could make a real difference.

This isn’t an issue that national government can or should try and fix alone but it is an area where national leadership is needed. We recommend that government set out a cross-government housing strategy with a ministerial champion to implement it, and empowers Homes England with a clear mission to improve existing homes. And we need to see low-cost government-backed lending and grants to improve homes.

At a local level, Good Home Agencies should bring together in one place information and advice including on trusted traders, finance, home repairs, adaptations, and energy retrofit services.

The last 18 months have taught us that we can no longer stand back and do nothing. We have both an opportunity and an obligation to come up with a plan of action which gives the best possible chance for us all to live in homes that are safe, warm, affordable and energy efficient. By doing so, we can improve the quality of life for millions while reducing demands on our health service and helping to tackle the existential threat of global warming.

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James Frayne: Johnson’s headroom to raise taxes, in the wake of the new levy, has been dramatically reduced

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

A few weeks ago, opinion polls showed three to one support for a national insurance rise to pay for social care. It’s hard to say for sure where the numbers on this question are now, but the evidence is they’ve moved considerably against the Government (although not irretrievably).

Some suggest that the mess in the media flipped the polls against the Conservatives and put Labour ahead; I think there’s much more to it than this but it clearly didn’t help.

So what went wrong? What were the alternatives that the Government should have considered? And what are the medium-term implications for the Conservatives?

Admittedly, I haven’t tested my sense in detail yet, but it is that three reasons help explain the the shift against the national insurance announcement.

First, and most importantly, it became clear that revenue raised by this higher tax won’t be ringfenced for social care. After a day or two of briefing that higher taxes would pay for care, the Government clarified that revenue raised would also pay for the hole in the NHS finances created by Covid.

Ordinarily, adding the letters “NHS” to a political message adds several points to a political message (ask Vote Leave). Here, it simply made people think (rightly) that pretty much all revenue raised would go into the great bottomless pit of NHS finances. It’s not that people don’t love the NHS; nor that they want to change the way the NHS is funded. It’s just that they quickly realised the Government wasn’t making a social care announcement but a debt repayment announcement.

Second, people got out their calculators quicker than I can ever recall – with the extra they’d pay pushed around widely by the likes of the Taxpayers’ Alliance. Politicians have long liked using national insurance as a tax-raising device; not only does it have perfect branding for health and social care announcements, but even people on PAYE – who see the national insurance line on their payslip each week – inexplicably find it less offensive than income tax. This time, a combination of media and social media scrutiny showed people what they’d be paying, and its transparency felt like a council tax rise.

Third, the announcement was too detached from the policy conversation on social care. People care deeply about it, as the Conservatives discovered to their cost during the 2017 election; social care is regularly raised as an issue in focus groups without prompting.

But it’s a complex area, and the Government would have done well to have reheated the policy conversation on social care for several weeks before springing this announcement on the public. Ordinarily, for a policy announcement of this magnitude, you’d expect (some) cross-party support, endorsements by experts from the sector, a formal announcement with the Health Secretary flanked by care workers and all the rest. This time, there was nothing.

Two alternatives would have been better.

The Government could have announced that the country was going to have to cope with a few years of financial pain via higher taxes to pay off Covid debts – and not to have beamed in on social care at all.

I don’t understand why they didn’t do this. Polls have consistently showed the public supported the massive crisis payments to the NHS and furloughed workers. They’re well aware this led to massive debt and they’re also aware debt must be paid off – at least in part with higher taxes.

They would have completely accepted a straightforward explanation that taxes were going to rise – for everyone – to deal with this. Sunset clauses would have made this all go down better, but there’s something in the English psychology that revels in harsh, shared sacrifice. It was a huge, missed opportunity; it’s possible that the Government would even have secured a bounce from it (assuming they said they were going to tackle waste at the same time).

The alternative option would have simply been to have announced a smaller national insurance rise and explained it was going to be strictly ringfenced for social care. This would have given them the option to raise taxes again later. Wrapping social care, the NHS and Covid debt repayment looked shifty and ill-thought-through.

What are the implications for the Conservatives? It’s been said all this undermines the Party’s reputation as a low-tax party. I don’t think this is quite right; most of the public have rightly not viewed the Conservatives as a low-tax party for many, many years, but rather as a lower tax party than Labour.

There are worse things to be: in 2019, this contrast certainly made lower middle voters even more wary of Jeremy Corbyn. But it means that the sort of messages the Conservatives pump out at the annual party conference – around low tax, free enterprise, a small state etc – have zero traction with the public. (It’s weird to think that until a few years ago the party’s logo was a torch of freedom; the rainbow associated with the NHS would be more appropriate.)

If Corbyn were still Labour leader, it’s possible that the Conservatives would have retained this lower-tax advantage regardless of national insurance. Under Starmer, I think it’s reasonable to assume this advantage will no longer be there.

In turn, all there will be to choose between the Conservatives and Labour on the economy will be competence and stability – in the Conservatives’ case, because they’re in Government, this will be defined entirely by delivery. In other words, if the economy appears stable and grows, they’ll be fine; if not, they’ll be in a mess.

It also means that the party’s freedom on other issues is dramatically reduced. There’s no way now the Government can introduce any new tax rises; at that point, their polling numbers really would go off a cliff; everything now needs to be revenue neutral, with taxes raised balanced out by taxes cut. Most obviously, this somewhat complicates their Net Zero strategy; you would have expected fiscal policy increasingly to have rebalanced towards green taxes.

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Andrew Griffith: If public services aren’t radically reformed, the new healthcare levy may be in vain

Andrew Griffith is MP for Arundel, founder of the Campaign for Economic Growth, and the former Chief Operating Officer of Sky plc.

Like most Conservatives, I support today’s Health and Social Care Levy Bill with some reluctance. Personal contact with the care system as well as that of my constituents made clear to me that more funding is part – but only one part – of any long-term fix. In particular, my heart goes out to the millions of unpaid caregivers who stoically provide cover for (when not actually falling through) the cracks in the system as it stands today.

Nor should we get carried away. The UK remains one of the lowest tax countries in the G7, and the choice at the next election will still be between a Conservative Government which raises taxes as a last resort out of necessity, and opposition parties who never see a question to which the answer is not to spend more of other people’s money. Margaret Thatcher increased taxes when required, before going on to reduce taxes and instigate reforms that unleashed Britain’s growth for decades to come.

Conservatives’ real concern – and my own greatest fear – should be if the new Levy turns out to be in vain. So far, it has to be said, the omens are not good. Rather than a ‘long march’ towards a radically overhauled, streamlined modern state, we have the ‘slow shuffle’ of public sector employees back to their desks.

Publicly funded salaries and pension are a privilege, not a right, and a growing pile of my correspondents are making the link between their own personal experience of the state – the delayed driving licence, slow motion planning application or a growing waiting list for a continuing healthcare or childs educational assessment – and the relative responsiveness of the private and public sectors. It was a different era but, the last time the UK tried to reconcile growth and prosperity with a three-day working week in 1974, things did not end well.

As we put the crisis stage of the pandemic behind us, it is therefore critical that we do not lose sight of, or the zeal for, the radical reform of government that is required. Only by changing the machine itself can we change what it delivers for the people of Britain. The normal clock speed of government is far too slow; memorably likened to the dream where you try to run but your feet will not move.

During the pandemic a heroic effort by all concerned overcame this. The epic recent Afghanistan evacuation was another similar example. But you can’t run the British state by constant exception management. Delivering our popular and bold programme will require better instrumentation, clearer goals and new ways of working.

Without near real time data, Ministers are forced to drive not just in the rear-view mirror but using a backwards-pointing telescope. One example, the latest NHS workforce statistics are only available for April: whilst we may shortly be dealing with the impact of a difficult winter, the NHS will be telling us how many staff it had back in the midst of summer.

The excellent Commission for Smart Government recently published actionable proposals for reform. It also identified the risk that the scale of the task might encourage leaders to put the intricacies of systemic reform to one side. Tired Ministers heading towards mid-political cycle and with busy in-trays may not have the energy or the freshness for the challenge.

One lens on a future reshuffle could be to inject a little more grit into the oyster. The current Spending Review is an opportunity that should not be missed, but such exercises rarely end up in the true zero-based scrutiny of departments and their operating model that real reform requires.

This Government has everything going for it. Clear leadership, an ambitious programme and political fuel in the tank in the form of a large majority. But the yardstick of long-term political success is real action impacting the real lives of citizens across the UK. To achieve this, reform is a necessity not a luxury.

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Johnson, Sunak, tax and spending. The former strains to soar skywards. The latter keeps tugging him back to earth.

The 1981 Budget raised taxes during Margaret Thatcher’s first term in government.  Two years later, she won her second general election by a landslide.  Does that piece of history cast light on Boris Johnson’s future?  We believe that it does.

Like Rishi Sunak last week, Geoffrey Howe, Thatcher’s Chancellor, didn’t shy away from raising taxes on incomes.  (After all, what is the new Health and Social Care Levy, a form of national insurance which working pensioners will pay, if not a kind of income tax?)

But the differences between the two plans are at least as significant as the similarities.  Howe’s plan was executed in the context of a broader restructuring of the personal tax system.

His first Budget of 1979 had shifted its burden from income tax to VAT – cutting the top rate of the former from 80 per cent to 60 per cent, and its standard rate from 33 per cent to 30 per cent.

So the direction of travel was clear, despite the sharp detour.  By contrast, the approach of this Government to taxation is uncertain – partly because of the exigencies of “getting Brexit done”, partly because of the consequences of Covid.

Furthermore, the purpose of the 1981 tax rises was unambiguously communicated.  Borrowing was too high, and so were interest rates.  The purpose of the increases was to get it under control, thus allowing the economy to grow once again.

The plan worked.  Growth in 1981 was minus 0.7 per cent.  By the time of the 1983 election, the economy was growing rapidly again: the figure for the year was 4.2 per cent.

By contrast, the purpose of last week’s rise was muddled.  Will the new levy, which kicks in in 2023, really go to fund a new Social Care Plan?  Or will it be swallowed up by the NHS’s never-ending demands?  (And if it makes no real difference, what’s the point of it?)

And even if implemented, the Social Care plan will address one aspect only of the current political problem – people having to sell their houses to meet the costs of care.

It is hard to see how the scheme will increase supply or raise standards in the sector as a whole.  Or how it will substantially address the needs of the half of social care provision expended on people of working age.

And it’s not even as though the plan, welcome though it will be for many homeowners – in the event of it happening at all – will guarantee that the sale of family homes to help fund social care will come to an end.

Which is wide of the commitment made in the last Conservative Manifesto.  This promised to “consider a range of options but one condition we do make is that nobody needing care should be forced to sell their home to pay for it“.

Mind you, that wasn’t one of the manifesto’s headline pledges.  At its very start, under the heading “My Guarantee”, and a photo of Johnson, were the words: “we will not raise the rate of income tax, VAT or National Insurance.”

So that’s one, two – and a third manifesto promise broken last week.  “We will keep the triple lock,” it said.  But this will be suspended for the coming year.

So, then: we have a tax rise that isn’t part of a clear plan; that won’t necessarily fund social care at all; that, if it does, will only tackle one aspect of its challenges, and which is in breach of manifesto commitments.

There are times when the mood of the public swings away from spending increases: the run-up to the 2010 election was one of them.  And there is always a segment of the public in favour of tax cuts, especially for council tax, income tax and fuel duty, according to YouGov.

However, the lesson we draw from the 1981 Budget is that raising taxes can work if the Government has not yet lost credibility, if the increases are part of a credible plan, and if they are straightforwardly presented.

In our view, it won’t be fatal if such a plan breaks a manifesto commitment amidst a crisis.  We suspect that Johnson and Sunak might have been able to get away with announcing a temporary rise in national insurance last week to help pay for the NHS’s Covid backlog.

(Though the money will provide less value than it might.  As Lord Ashcroft wrote yesterday, “despite its vast funding, the NHS is hopelessly short of doctors and nurses and far too relaxed in its attitude to taxpayers’ time and money”.)

So why didn’t they do so?  The answer lies in a fundamental difference of view between the Prime Minister and the Chancellor about tax and spending – and of priority as last week’s decision approached.

For there is more to the Government’s uncertainty over the future of tax and spending than the hangovers from Brexit and Covid, even assuming that the latter is a spent force.

Johnson is a Keynesian, or at least a Boosterist.  Sunak is a monetarist – or, at any rate, a conventional Conservative Chancellor.  Furthermore, the Prime Minister seems to have been consumed by his commitment on social care and home sales.

Protecting what some conservatives see as middle class welfareism seems to be a priority for the Prime Minister.  And he had claimed when first entering Downing Street as Prime Minister that he had a “clear plan” to stop people selling their homes to help pay for care.

What seems to have happened is that Johnson met Sunak halfway.  The Chancellor yielded to the Prime Minister over social care – however partial the plan may be.  And, broadly speaking, the Prime Minister gave way to the Chancellor over funding.

The consequence, other than a package with the weaknesses that we have described, is the narrowing of the Conservative lead in Politico’s poll of polls to three points.  The one will be connected to the other.

As a rule, our position is closer to the Chancellor’s, and indeed to Thatcher’s: spending control comes first, tax cuts come second, as that 1981 Budget suggested.

But if a short, sharp spending increase to help meet the Covid NHS bill is required – and we stress “if” – ConservativeHome suspects it would have been best for the Government to say so, put the social care plan to one side, and borrow the money.

Public spending this year is planned to be some £1,093.2 billion.  The Health and Social Care spending plan comes in at £12 billion a year for the next three years.

Borrowing that sum would seem unlikely to bust the markets’ confidence in the Government’s economic management.  Sure, there is a limit to their tolerance of government wheezes (such as a new social care plan, however narrowly constructed) funded by borrowed money.

But one-off borrowing for the NHS, announced within the framework of the coming Budget, might not have frightened the horses.  As it is, Sunak’s cupboard looks bare for October 27th.

The Prime Minister and the Chancellor are making a great show of solidarity.  The latter told Conservative MPs last week that they owe the former their loyalty.

We can’t believe that Johnson will move Sunak in any reshuffle this week – or in the near future.  But you can bet that the two men are thinking as follows.

The Chancellor will be worrying about Prime Ministerial schemes that would require further tax rises.  The Prime Minister will be resenting the Chancellor tugging at his wings, as he sees it, every time he wants to soar into the skies.  These tensions bode badly.

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Let’s look at how to reduce the need to put people in care homes. Not just who should pick up the bill.

Those who wish social care provision in this country to be logical, face rather a daunting problem. Jacob Rees-Mogg, interviewed for this site last week, said:

“It is odd that if you’ve got Alzheimer’s it’s not paid for, but if you’ve got cancer it is paid for”.

Indeed so. If the principle of the NHS is that healthcare should be universal and free at the point of use, then why not also social care?

On the other hand, if means-testing is accepted for welfare payments, why not for social care? John Redwood argued in a Centre for Policy Studies paper a few years ago:

“Families who would like to inherit the old family home or their elderly relative’s property argue that it is unfair for the state to pay for the residential or care home costs of those who saved nothing during their lives and did not buy a home, whilst expecting the richer pensioners who did make provision to pay their own bills. Their argument is a specific case of a more general argument against means-testing – it “rewards” the unsuccessful, the profligate, the lazy, the unlucky and the disadvantaged at the expense of the hard working and the prudent.

“It is, surely, morally right to expect the taxpayer to fund decent food, care and accommodation for the disadvantaged and the disabled who may have not been able to get a better paid job, or afford the home or put money away in savings. This may also entail the state paying for some of those who could have provided for themselves but chose not to. The latter is the price of being able to do the former: for everyone who has blown money on round the world cruises or fast cars who ends up penniless, there are many more deserving cases of people who were never able to earn good money in their working years.”

The full basic State Pension is currently £137.60 per week. I’m due to start being paid that benefit after my 67th birthday on January 11th 2033.  If I keep toiling away for ConservativeHome I may well be too rich to be eligible for anything on top of that modest provision from the taxpayer by then. But what if I become idle and extravagant with “world cruises or fast cars”? And then, scheduled rather cunningly, I become completely skint by 2033? I could fill my boots with Pensions Credit (currently an extra £177.10 a week). Plus my rent could be paid by Housing Benefit (which still exists for pensioners making new claims rather then being absorbed under Universal Credit.) Also Council Tax Support. Should we push up the basic state pension to, say £300, and scrap the Pensions Credit and Housing Benefit perverse incentives for the wastrels? There seems to be no clamour for any such reform.

The Government proposals strike me as misguided as they incentivise pensioners who are paying for good quality care which they have control over to switch to a deficient service paid for by their local authority. (They might be pressurised by their greedy offspring to make this switch.) Even if this increase in public spending was justified, it is complete nonsense to see that it is “impossible” to find savings in the trillion pounds of overall state spending. Even if it was impossible to fund such economies, we are so heavily burdened with tax already that any hike in rates may well be counterproductive in terms of revenues. Still, I accept that the issue of who should pick up the cost for social care is, as Sherlock Holmes put it, “a three-pipe problem”. Lord Lilley’s case for a genuine insurance scheme struck me as compelling.

What seems to be missing from the debate is how to reduce the number of us (half a million at present) who need residential social care – that fate which typically manages to combine being miserably dreary with staggeringly expensive. Of course, with an ageing population there is a sense of “running to stand still” with such endeavours. All the more reason to make every possible effort to avoid institutional care wherever possible.

Here are some relatively straightforward starting points.

First. End Stamp Duty on “downsizing”.

For some, there is great sentimental value in staying where they are. For others, the upheaval of moving is discouraging. But cost is also a factor. Charging Stamp Duty for those who downsize makes no sense. From October, the threshold will revert to £125,000 – the rate ranges from two per cent to 12 per cent of the purchase price. Given our astonishingly high property prices, that means that even those wanting to buy something more modest then they currently have would face a hefty bill. So inertia is encouraged with no transactions and no tax revenue. It also restricts the supply of family homes. Coping with a large home might well be challenging for an octogenarian. Repairs accumulate. Heating is expensive. Moving to a smaller home, perhaps nearer to relatives would have advantages. Less likely to fall. Less loneliness. Better family care. The need for a care home could, at least, be delayed. But the Chancellor of the Exchequer stands in the way.

Second. Lift planning obstacles to retirement homes.

For some simply moving to a smaller home might not be enough. While remaining property owners they might also want an arrangement where they have some assistance – and buy a flat or bungalow or cottage that is a “retirement property”. These are collections of properties where there is some assistance with security and maintenance. There are some developers (such as McCarthy Stone) seeking to meet this demand for those over 55 or 60 who are basically still able to cope with independent living with some back up. But there is a shortage – the Australians and Amercians have far more. Planning applications for such properties are treated like other private housing as it is unsubsidised. Then it is subjected to the financial penalties of Section 106 demands and the Community Infrastructure Levy. The social benefits of these developments should be recognised and such burdens lifted.

A Demos report concluded that:

“Specialist housing for older people delays and often prevents the need for residential care. Since for each year a person postpones moving into residential care the state would save on average £28,080 the cost savings can be substantial. Both the University of Reading and IPC calculated net cost savings to the NHS of hundreds of millions of pounds in building more retirement housing.”

So far as social housing is concerned the priority should be new sheltered housing. It should be well managed and architecturally beautiful. Where council-owned sheltered housing blocks are badly run then charitable trusts, if able to offer a better service, should take over the management. It makes no sense for an elderly person to be alone in a four-bedroom council home just because there is no alternative of attractive sheltered housing available.

Third. Require better value for money from Public Health budgets

Local authorities have Public Health budgets of £3.7 billion. Plenty has been written about wasteful spending during the pandemic. But I had already highlighted on this site that this was nothing new.

But the money could be spent effectively. Providing a vaccination against shingles is an example. Sometimes victims from this unpleasant illness have to go into hospital. More frequntly they remain at home but are unable to look after themselves and thus need social care.

Fourth. Boost local innovation

We often think of Council Adult Social Care as just being for the elderly – but a significant part of the service is also for adults with learning difficulties. Many councils have made substantial progress in improving the lives of disabled residents by taking part in the Shared Lives scheme. This offers an alternative for those currently in supported living or institutional care. It is of them being placed in a family environment in someone’s home. It can also provide respite for parents with grown up sons or daughters who they are caring for. But progress is uneven. Some councils are failing to take the opportunity to provide a better service for the disabled at a lower cost for the Council Taxpayer.

Then we have technological improvements. We can look to what other countries are achieving. Also innovation that has succeeded in parts of our own country that other areas have yet to embrace. The private sector has a role to play. Bath and North East Somerset Council and the NHS have used Virgin Care to provide integrated community care – which has delivered good results.

This is localism in practice and is already working to some extent. But the Government should nudge it along. At present, the Adult Social Care precept on the Council Tax just bails out failure. It could be replaced by an Innovation Fund.

Fifth. Bring back the Big Society

One heartening aspect of the pandemic was the enthusiasm for helping out elderly and vulnerable neighbours. Faith groups and voluntary organisations will always be better suited at applying compassion than inflexible public sector bureaucracies. The state should not seek to usurp this role but it should look at how it can help it to flourish – in commissioning services rather than trying to doing everything directly. Also in simply getting out of the way – in lifting regulatory budrens.


We are twice as likely as the Italians to end up in care homes. Four times as likely as the Poles. Eight times as likely as the Ukranians. We are constantly told it is “inevitable” that evermore of us can expect that fate. But why should we accept outcomes that are so much worse than other countries? Why should the only argument be about who pays for this grim destiny?

“Do not go gentle into that good night.
Rage, rage against the dying of the light.”

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David Gauke: Johnson’s health and social care plan. A betrayal of Conservative principles? No – because, at one level, there aren’t any.

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire in the 2019 general election.

The Government’s plan for increases in National Insurance (NI) contributions to fund higher health spending and increased health spending has provoked a furious response from some on the right.

It “sounded the death knell to Conservatism” and drove “a coach and horses not only through the Tory Party manifesto, but Toryism itself”  according to Camilla Tominey in the Daily Telegraph.  In the same paper, Allister Heath fumed “shame on Boris Johnson, and shame on the Conservative Party…they have disgraced themselves, lied to their voters, repudiated their principles and treated millions of their supporters with utter contempt” and that “an entire intellectual tradition now lies trashed”.

In the Times, Iain Martin declared that “at this rate, the Conservative Party might as well rename itself the Labour Party”  and in the Spectator, Fraser Nelson questioned whether the “Boris Johnson” definition of conservatism as “a protection racket, where the tools of the state are used to extract money from minimum-wage workers and pass it on to the better-off?”

Meanwhile, Dominic Cummings has argued that “if you think you’re ‘conservative’, and you give those speeches about ‘enterprise’ and ‘responsibility’, why would you support making many more dependent on state money and bureaucracy?”

It’s all jolly strong stuff. And there are elements of the criticisms with which I have sympathy. I share the scepticism about prioritising a tax-funded social care cap, in that those who will gain most are those who have the most (thanks to rising house prices) and that is the wrong priority for public money.

There is a need for risk-pooling, but I think Peter Lilley’s proposal on this site is worth close examination (I suggested something similar when in Government). I also dislike NI as the choice of tax because of the narrowness of its base – and the distortions that this causes – and the dishonesty of employers NICs (no, Prime Minister, it is not a tax on business: it is a tax on jobs and employees’ wages).

In fairness to the Government, raising taxes is difficult, NI is less unpopular than income tax (largely because much of the public misunderstand it) and, being cynical, it is not surprising that Ministers exploit that misunderstanding.

Having said all that, is it a fair criticism to state that Johnson’s Health and Social Care plan undermines everything for which the Conservative Party stands? For a number of reasons (some of which reflect better on the Party than others), I think not.

First, the Conservative Party has an honourable record of fiscal responsibility. When the public finances are in trouble, Conservative governments have been willing to raise taxes in order to put the public finances on a sound footing – not least Margaret Thatcher’s, when Geoffrey Howe raised taxes in 1979 and 1981. The advocates of Reaganomics always find this disappointing, but responsible Conservatives do not believe that lower taxes will pay for themselves (as they did not for Reagan).

In reality, even putting aside any new commitments on social care spending, the prospects for the public finances are not great. Not only do we face some immediate challenges (Covid catch up, net zero and levelling up), but demography and rising health expectations will mean a tax-funded healthcare system will require higher taxes.

Some on the Right will argue for further cuts in spending or an alternative health model, but the political feasibility of such an approach is highly dubious. If we are going to spend more (and we are), taxes will need to rise to pay for it.

Second, the idea that a Conservative government prioritising homeowners is a complete break from the past does not bear scrutiny. Look at the arguments that Thatcher made in resisting the removal of mortgage interest tax relief (although the Treasury rightly prevailed in the end), or the general dislike of inheritance tax from the wider Conservative world. The reaction to Theresa May’s social care policy in 2017 suggests that the instinct to ‘defend our people’ (and their inheritances) amongst Conservatives is a formidable one.

Third, complaints about the Conservative Party not being the party of business are (how can I put this?) a little rich from some quarters. Imposing higher taxes, whether on employment or profits, is not great for business – but making it substantially harder to trade with our largest trading partner is a bigger problem.

It is all very well complaining about the anti-business instincts of this Conservative government, but hard to do if you have been a cheerleader for anti-business policies or, for that matter, Boris “f*** business” Johnson. If your expectation is that the Conservative Party would automatically be on the pro-business side of the argument, you have not been paying much attention in recent years.

The reason why the Conservative Party moved in the direction of an anti-business Brexit is that was where the votes were. And this brings me to the fourth and most important observation about the Conservative Party.

It has one purpose: to be in power. At one level, it is not possible for it to repudiate its principles because it does not have any. This can give it a tremendous advantage in a democracy because the public, as a whole, does not have political principles either – opinions and political alignments shift over time.

The Conservatives have been protectionists and free traders, the party of Empire and the party that facilitated the retreat from Empire, Keynesians and monetarists, the party of price controls and wages policies and the party of market economics, the party of Europe and the party of Brexit. It never stays on the wrong side of public opinion for long.

What is happening to our politics at the moment is that party support is realigning along cultural lines and, as a consequence, much more along generational lines. This has worked to the advantage of the Conservatives, so it is no surprise that it pursues policies that prioritises health spending over lower taxes for people of working age.

Polling suggests that the new, Red Wall voters who switched to the Conservatives at the last election are notably more left-wing on economic issues than traditional Conservative voters who are, in turn, to the left of Conservative MPs. The decision was made to pursue those voters and, if the Conservative Party wants to keep them, it cannot risk the NHS collapsing under financial pressure – which means higher spending and, ultimately, higher taxes.

Johnson’s critics are right to think that this will not be the end of it. Last week’s package was supposed to be an answer to how we fund social care. The reality is that it was a package to boost spending on the NHS. As Damian Green has argued on ConHome, it is hard to see how resources will be taken out of the NHS and switched to social care in three years’ time – and that, at that point, some expensive social care commitments will come into effect.

here will another funding gap and, on the basis of last week’s revealed preference, a further increase in the Health and Social Care Levy. Those who see the purpose of the Conservative Party as delivering low taxes are right to be glum.

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WATCH: The Shadow Health Secretary promises Labour would reform “broken” social care system.

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It’s far too early to start trying to read the future from yesterday’s polling

It’s just one poll, and all that. Nonetheless, the news that the Conservatives have fallen to their lowest recorded result since the 2019 election – and thus, behind Labour – will be doing nothing for the mood of the Tory Party in the aftermath of the Prime Minister’s manifesto-busting tax hike.

But fun as it is to read the future in the entrails of chickens, it is far to soon to tell what precisely lies behind this shift – or even whether its a sustained fall, as opposed to a blip. Indeed, another poll out yesterday finds a four-point Tory lead.

After all, the Politico poll of polls finds that the gap between the Government and the Opposition has been gradually closing for some time. It may simply be that as the sense of crisis around Covid-19 recedes, we’re returning to something more like politics as normal, when we’d expect Labour to be doing better at this point in the cycle.

Even assuming that there has been an acute fall in support, it might not owe directly to this week’s events. Perhaps the shambolic exit from Afghanistan, and the spectacle of the Defence and Foreign Secretaries taking lumps out of each other in public, has affected voters’ perceptions of the Government. Perhaps it stems from George Eustice’s bloody-handed resolution of the Geronimo circus.

More plausibly, several days of stories about the Government’s failure to get a grip on Channel crossings, and the Home Office’s apparent helplessness in the face of French intransigence, won’t have helped.

And despite all the hue and cry from the conservative papers about the National Insurance hike, we shouldn’t rule out the fall actually owing to Rishi Sunak’s entirely correct decision to break the pensions triple lock rather than hand older voters an unmerited eight per cent increase arising from the collapse of wages during the pandemic.

Even if people are angry about the tax rise, the question remains: why are they angry? Is it simply an aversion to high taxes? The fact that it breaks a manifesto commitment? The fact it purports to be ‘solving’ social care but will in fact mostly be swallowed up by the Charybdis that is the NHS budget?

From this close, it is simply impossible to say. And as Twitter wags enjoy pointing out, commentators who get too caught up in the moment risk looking foolish a year out. Can you remember which event in 2020 was billed by one as Boris Johnson’s ‘Black Wednesday moment’? No, nor I.

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