The Tories have made it clear in no uncertain terms that the burden of taxation will increasingly be shifted onto the shoulders of the working class and those least able to pay. Tuesday’s taxation proposals, allegedly to deal with adult social care and the NHS, raise the overall tax burden to its highest level in 70 years, with the difference that since 1950 it has shifted far more onto the pay packets of the least well off.
Anyone who voted for the Conservative Party in 2019, on the understanding that austerity was ‘over’ and that there will be a ‘levelling up’, as between the richer and poorer parts of the UK, will have had their hopes rudely shattered by these latest tax increases. The headline feature, of an increase in National Insurance payments by 1.25%, is that the burden has shifted even more towards the lowest-paid because of the very sharp taper that benefits the highest paid.
It matters little that this increase in NI contributions, will become a ‘new’ tax, with a separate line on a pay slip. In fact, it is worse, because as a new free-standing tax, it will more than likely be subject to further uplift in the future.
Not young against old, but a class question
Many commentators have suggested that this new tax is aimed at younger workers, often on extremely low pay, and that it protects older and better-off people. There is no more than a grain of truth to that, because it is not so much a matter of young against old, as much as poor against rich. It is a class question, and the tax rises distinguish the big majority of society, those in work and less-well off pensioners, from the small minority – of all ages – who are very well off.
Even the removal of the so-called ‘triple-lock’ on state pensions is a measure that will be shrugged off by the rich, but bitterly regretted by the millions on state pensions who live in poverty. The difference between an 8% pension rise (as it would have been with the triple lock) and a likely 3% matters to those pensioners who are the least well off.
Having said that, these measures are a blatant attempt to shore up the Tories’ core base, which statistically leans towards the most well-off, older voters. It is hardly surprising that newspapers like the Daily Mail and Daily Express, whose readerships are overwhelmingly older and better off, have welcomed the new taxation. Had these proposals come from a Labour Government, the same newspapers would have issued howls of outrage at the increased tax-burden, never mind the broken Tory election promises.
Anyone with half a brain knows that the Conservative Party has always been opposed to the National Health Service, from its establishment in 1948 by the then Labour Government, right up to the present day. When Johnson claims that the Tories are the ‘Party of the NHS’ what he really means is that they are the party that is facilitating the privatisation and looting of the NHS.
Changes currently being made to the NHS are designed, not to improve the service for the benefit of local communities, but to enable speedier privatisations and outsourcing, so that sickness and injury can be sources of profit to the friends of the Tory Party.
Extra money will pad out the profits of those looting the NHS
The biggest part of the new taxation income, estimated at around £12bn a year, will go to the NHS in the first instance, but there should be no illusions about where it will end up. It will not mean more NHS staff or better services because the money will quickly pad out the profits of the likes of Virgin Health, AXA, Nuffield, Bupa, Alliance, Serco, Capita and the big pharmaceutical companies.
The beneficiaries will be people like Matt Hancock, former Health Minister, whose granting of a lucrative contract to his sister’s company means that he will benefit personally as a shareholder. As the Tory management of the pandemic has revealed in all its ugly detail, the NHS is a huge money-making machine for all the friends and relatives of the Tory party.
There will be few crocodile tears spilt over the small uplift in taxes on dividends because it is well known that the big shareholders have a variety of dodges to avoid tax, including trusts, off-shore accounts and beneficiary companies registered in tax havens.
A big proportion of the ‘new’ money will also go to chase old debts, like service payments for the PFI scams for hospitals built over the last thirty years. In many cases, the ongoing costs have ballooned so much that hospital trusts are struggling to keep up the never-ending payments.
Most care workers’ wages below £10 an hour
Not a penny of the new money will go towards paying NHS staff the decent wages they deserve. The big majority of workers in the care sector are on wages that are below £10 an hour and that also applies to many in the NHS. The huge number of vacancies in these sectors – more than 100,000 in each – will not be dented in the slightest by the new tax intake. On the contrary, the poorly paid, overworked and understaffed NHS and social care workforce will be taxed more, as will all ordinary workers.
As for the long-term policy on adult social care, there is no policy, because most of the new money will go to the NHS. In so far as the Tories are offering relief to the burden of payment for care, it is once again heavily biased towards the well-off and those in the leafier, richer parts of England. The new ‘lifetime’ limit of £86,000 on payments for care will make a big dent in the assets of elderly people in most parts of the north of England, but it will be easily cushioned in the south, and among the comfortably well off, where the value of their properties are in most cases five or ten times higher than this limit.
There are already huge disparities in care across the country and between different groups of those who need care. The Care Quality Commission has revealed that more than one in six care providers are not meeting acceptable standards and more than a million and a half elderly people do not have their care needs met at all. Many disabled working-age people, who are also supposed to be the beneficiaries of the social care budget, are not provided for at the level they need. Far from ‘fixing’ the social care issue, the Tories are kicking a can along the road.
Labour Opposition is not fit for purpose
If there was a Labour opposition fit for purpose, they could make mincemeat of the Tories over these new taxes. Andy Burnham, the most popular leading Labour politician among Party members, echoed the feeling of many workers when he condemned the bare-faced class character of the new taxes.
“How can it be right to ask ‘generation rent’, already saddled with student debt, to pay for the care of a generation more likely to have generous pensions and to own their own homes?” he said (Guardian, September 7)
“The fairest way of providing social care is on NHS terms through a national care service, and the fairest way of raising the funding to pay for it is by taxing wealth, not work. The government should be looking at reforming taxes and reliefs on assets, land, pensions, property and excessive earnings and profits before hitting younger, low-paid workers with the bill.”
Frances O’Grady, TUC General Secretary, also weighed in with similar comments, “It is plain wrong that the government’s social care plans will see a low-paid social care worker paying extra to fund the social care system while the private equity magnate who profits from asset-stripping care homes to sell on sees no change. It’s time to raise taxes on wealth to fund social care properly, and guarantee decent pay for all social care workers.” (Observer on-line)
What Frances O’Grady is alluding to here is the fact that the privatised social care system is increasingly dominated by private equity companies with a business model based on low pay, minimal services, maximum government payments and therefore maximum profits. It is high time the Labour Party offered a policy that put care at the centre of health and social care, rather than private profits.
Increase in national wealth not distributed
It is also not without significance that a new report by the TUC, points to an alternative means of raising taxation for social care. “Increasing capital gains tax so the rates are similar to income tax,” it points out, “could raise £17bn a year and pay for an increase in pay for all care workers to at least £10 an hour”.
The TUC report points to research by the Resolution Foundation showing that “over the past forty years, total wealth has increased from three times national income in 1980 to around seven times national income on the eve of the pandemic” but noting that the increased wealth has not been fairly distributed and that regressive taxation has exacerbated that.
“The typical family in the richest 10 per cent of households had £1.3 million more in wealth per adult than the typical family in the fifth decile of the wealth distribution – an increase of 50 per cent in the wealth gap between 2006-8 and 2016-18. The pandemic has only added to that inequality. The Resolution Foundation’s research shows the gap between the wealth of the average family and that in the top ten per cent growing by an extra £44,000 between February 2020 and May 2021.”
Threatened ending of £20 a week Universal Credit uplift
Now the Tories are adding more taxes to the least well off and threatening to take away the £20 a week uplift in Universal Credit payments, a measure that by itself will throw hundreds of thousands of families into despair.
Rather than offering to “sit down with the government” to discuss social care, as Shadow Health Minister Jonathan Ashworth declared on TV, therefore, Labour should be demanding the return of privatised social care facilities to local authorities where they used to belong. Labour should demand an end to the private looting and profiteering from the NHS and for all of its services and provisions to be in-house. Labour should demand an end to tax-dodging and a situation where the rich and super-rich pay a tiny proportion of their wealth, that is if they pay anything at all.
Every time a Labour leader expresses indignation and outrage at the blatant class character of this government – government by the rich, of the rich and for the rich – there is a groundswell of support for Labour. Unfortunately, the right-wing who dominate the Parliamentary Party are so preoccupied with looking ‘responsible’ and ‘not-Corbyn’, that they fail to express an ounce of the anger felt by ordinary workers.
That will need to change. With or without the present Labour leadership, a storm is coming. The Tories cannot go on year after year piling on more austerity and cutting the living standards of ordinary working-class people and at some point, there will have to come a reckoning.
