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Tax burden to rise to the highest level since 1948

“MPs will be asked today to approve the biggest personal tax rise in two decades to pay for a £12 billion-a-year package for the NHS and social care reform. Britain’s public spending will rise to its highest peacetime level in what the chancellor described as a “permanent new role for the government”. The move breaks a Conservative manifesto commitment, but the prime minister sought to justify it by blaming Covid-19. “A global pandemic wasn’t in our manifesto either,” he said… The measures announced by Johnson will increase the tax burden to about 35.5 per cent of GDP by the end of the parliament — its highest level since 1948.” – The Times

  • Poll shows the nation is divided over the plan – Daily Mail
  • Blank cheque for an unreformed NHS is a perilous gamble – Madeline Grant, Daily Telegraph
  • There’s no good time to lift taxes but now is the worst possible moment – Jeremy Warner, Daily Telegraph
  • PM’s pulse is racing as rebels suffer in silence – Quentin Letts, The Times
  • £36 billion of un-Conservative tax rises – Leader, The Sun
  • Health and social care levy is needed to protect the NHS as it protected us – Michael Gove, The Sun
  • Levy will ensure our NHS can cope with this unprecedented challenge – Sajid Javid, Daily Telegraph
  • Covid’s the cover for this inevitable rise – Paul Johnson, The Times
  • Budget will be held on October 27th – BBC
  • Build Back Better: Our Plan for Health and Social Care – HM Government
  • A big deal with holes in it – Leader, The Guardian

>Today:

>Yesterday: MPsETC: “A global pandemic was in no-one’s manifesto, Mr Speaker.” The Prime Minister’s Commons statement. Full text.

Home Care sector say the money is not enough

“There was anger from the social care sector over the amount they had been promised as a result of the tax. UK Home Care Association chief executive, Dr Jane Townson, said it was ‘nowhere near enough’ and some measures could ‘create new risks’. Chairman of the Independent Care Group, Mike Padgham, said it was a ‘huge opportunity missed for radical, once-in-a-generation reform of the social care system’, adding it would not address the staffing crisis which was ‘sending the sector into meltdown on a daily basis as care providers struggle to cover shifts’.” – BBC

  • Social care cap does not cover care home food and accommodation costs – Daily Telegraph
  • NHS leaders insist even more money is needed – Daily Mail
  • New levy makes a muddled tax system even messier – The Times
  • Javid promises the money won’t be wasted – Daily Express
  • At last, my plan has been accepted – Andrew Dilnot, Daily Mail
  • The NHS delusion – Christopher Snowdon, Daily Mail

>Yesterday: WATCH: Johnson defends the taxpayer-subsidised £86,000 cap on care costs

Only three Cabinet Ministers spoke out against the plan…

“At the first full in-person Cabinet meeting for almost 18 months on Tuesday morning, Liz Truss, Jacob Rees-Mogg and Lord Frost led the charge in raising concerns about the proposals, according to sources… Other Cabinet ministers who had been tipped as potential opponents of the plan – including Kwasi Kwarteng, the Business Secretary, Priti Patel, the Home Secretary and Robert Buckland, the Justice Secretary – did not speak out against it.” – Daily Telegraph

  • Williamson, Patel and Raab “facing demotion” as prospect of snap reshuffle looms – The Times

…vote to be held today as backbench rebellion “melts away”

“Conservative MPs demanded guarantees of more funding for social care yesterday as the prospect of a significant Tory rebellion against a manifesto-breaking tax melted away…Jake Berry, chairman of the Northern Research Group of Tory MPs, was co-ordinating some of the rebels in red wall areas yesterday, though it was unclear whether he would vote against the reforms….A group of MPs from the 2019 intake including Greg Smith, who represents Buckingham, were said to be unhappy about the plans and likely to rebel.” – The Times

>Today: Damian Green on Comment: I worry that the spending switch from the NHS to social care may never happen.

Triple lock manifesto pledge broken as pensions will only go up by rate of inflation

“Boris Johnson broke a second Tory manifesto promise as he ditched the pensions triple lock. The state pension will rise by the rate of inflation, set to be around 3 per cent next year as he and Rishi Sunak suspend the lock for a year thanks to Covid. The triple lock means that pensions will rise by inflation, average wages, or 2.5 per cent – whichever is greater. But after the pandemic wages have shot up, by around eight per cent, which would have meant the Chancellor having to find billions of pounds extra to fund pensions. Instead the triple lock will be replaced with a double lock vow – for one year only. The new, full, flat-rate state pension rose to £179.60 a week in April. Work and Pensions boss Therese Coffey made the statement today in the House of Commons after the PM’s social care announcement.” – The Sun

City of London warns dividend tax will deter investment

“Boris Johnson’s £600m tax raid on dividends risks damaging the City of London, deterring investors and punishing entrepreneurs as Britain struggles out of the Covid crisis, economists and business leaders have warned. The tax on dividend income will rise from 7.5pc to 8.75pc next April as part of a blitz on savers, workers and businesses aimed at raising £36bn over the next three years to plug a post-pandemic backlog in the NHS and reform social care. It deals a further blow to the Square Mile as London fights against hostility from Brussels and seeks to keep pace with New York.” – Daily Telegraph

  • Dismayed business groups warn tax rises will harm recovery, The Guardian
  •  A ‘kick in the teeth’ for investors – Financial Times

Starmer calls for wealth tax to fund social care

“Sir Keir Starmer backed a wealth tax to pay for social care, as Labour was accused of having no plan to deal with the care crisis. The Labour leader confirmed his opposition to Boris Johnson’s plan to raise National Insurance contributions by 1.25 percentage points in order to fund reform of adult care and funnel more money into the health service. He derided it as a “tax rise on young people, supermarket workers and nurses”, arguing that it would ask tenants to pay more instead of rich landlords.” – Daily Telegraph

  • The vapid Labour Party is missing an open goal – Ian Birrell, The Times

Lynn: Tax cuts would be more effective

“While care homes are exempt from VAT, they are not zero-rated, which means they can’t reclaim the tax on everything they buy. So, in effect, the Government is raising hundreds of millions from the sector, at the same time as it is trying to work out ways to pay for it. Even by the increasingly surreal standards of the British tax system, it is beyond bonkers. If we zero-rated the care sector, costs would fall.” – Matthew Lynn, Daily Telegraph

Finkelstein: The Government lacks a theme. But the voters don’t mind

“Johnson’s government lacks a theme. It is not clear what it stands for, or for who. Occasionally it makes a desultory effort to explain itself, with the prime minister making a big speech on levelling up that leaves his audience none the wiser…I think it is possible that Johnson’s success is not despite him having only a vague idea what he wants to do. It is because he only has a vague idea what he wants to do. His opponents say he is good at photocalls and not much else, without reflecting that voters might like that.” – Daniel Finkelstein, The Times

  • Health levy shows Boris Johnson’s big-state trajectory for Tories – Robert Shrimsley, Financial Times
  • Will Big State Conservatism achieve results? – Leader, Daily Telegraph
  • Tax rise trashes Tory values – Camilla Tominey, Daily Telegraph

French hit back at Patel over Channel migrant crossings funding

“France has accused Priti Patel of a breach of trust over threats to withdraw UK Channel migrant cash over its failures, and attacked her “dangerous” and “illegal’’ plans to halt crossings at sea. In a strongly worded statement, the French interior ministry hit back at threats by the Home Secretary to withhold the UK’s £54 million over France’s failure to stop more Channel migrant crossings, warning it could lead to a “serious” breach in relations…The row follows Ms Patel’s declaration to MPs that she is prepared to pull the £54 million promised to France in July if it fails to stop three in four crossings by the end of this month.” – Daily Telegraph

>Yesterday: ToryDiary: Threatening the £54 million border enforcement deal with France is a desperate move

Zahawi says civil servants should set an example and return to the office

“Ministers have urged well-heeled mandarins to lead by example and get back to the office. Vaccines Minister Nadhim Zahawi admitted just one in four of his staff are at their desks on a rota system. But he vowed to personally get more of them back. Mr Zahawi said: “We continue to make sure we get people back as quickly as possible, as safely as possible. It’s the right thing.” With the number of staff in Whitehall still pitifully low, top brass — such as TV Yes Minister’s Sir Humphrey — were told to take the lead.” – The Sun

Booster jabs “may not be needed”

“Booster jabs may not be needed for everyone in the UK and rushing into a nationwide rollout of third doses risks piling extra pressure on the NHS, the heads of AstraZeneca have warned. It comes as new data is expected which could see officials give the go-ahead to booster doses, and as a decision is expected as soon as Wednesday from the UK’s Chief Medical Officers on whether to offer jabs to all 12 to 15 year olds.” – Daily Telegraph

  • While Britain frets, Danes are preparing for the last restrictions to be removed – Daily Telegraph

Rents outside London rising at fastest rate since 2008

“Rents outside London are soaring at their fastest rate in more than a decade, according to a property website. Zoopla said private rental prices across the UK increased by 5% in the 12 months to the end of July – adding £456 a year to the average tenant’s bill. The 5% jump is the biggest recorded since Zoopla’s index started in 2008. The firm said it was down to increased demand for city living amid limited supply.” – BBC

Number of Welsh MPs could be cut by eight

“Wales could lose eight of its 40 MPs under major proposals to change the country’s Westminster constituencies. Arfon, which covers part of Gwynedd, could go and the number of north-east Wales MPs could drop from six to four. Welsh Secretary Simon Hart could face a battle for his seat as Carmarthen West and South Pembrokeshire is redrawn. The Boundary Commission for Wales’ initial plan would see 32 MPs in future, with finalised changes to take effect at the next general election.” – BBC

>Yesterday: Andrew RT Davies on Comment: Voters deserve a full, separate inquiry into the Welsh Government’s handling of Covid-19

Sturgeon “starts work” on new push for independence

“Nicola Sturgeon has told civil servants to start making a new case for independence, which offers people “an informed choice on Scotland’s future” in the Scottish government’s first legislative programme since last month’s cooperation deal with the Scottish Greens. Bills to set up a national care service and reform the Gender Recognition Act, as well as proposals for private sector rent controls by the end of this year, all featured in Sturgeon’s plan for the year to come in Holyrood.” – The Guardian

Taliban Government is formed

“The US has said it is concerned after the Taliban unveiled Afghanistan’s new all-male government with figures linked to attacks on American forces. The interim cabinet is led by Mullah Mohammad Hassan Akhund, who is on a UN blacklist. Another figure, Sirajuddin Haqqani, is wanted by the FBI. The Islamist group seized control of Afghanistan in a sweeping offensive more than three weeks ago. Women-led demonstrations have been held against the Islamists since then.” – BBC

>Today: Columnist Robert Halfon: America has abandoned the Afghans. But we must stick with the Kurds.

News in brief

  • The politics will pay off, but the economics of this new tax stinks – Julian Jessop, CapX
  • Johnson dodges a tax hike Tory rebellion, for now – Katy Balls, The Spectator
  • If social care needs more, maybe some less urgent or desirable expenditures should be discontinued – John Redwood
  • The move to restrict abortion reflects public opinion on both sides of the pond – James Mildred, The Critic
  • Johnson has followed in Labour’s footsteps in his handling of the NHS and social care crisis – John Rentoul, Independent