Last autumn, before the Government’s foot-shooting spree began in earnest, it pushed ahead with the controversial decision to increase taxes on working-age people in order to protect the asset wealth of older people.
By pushing up National Insurance, the ‘Social Care Levy’ is supposed to avoid the need for elderly citizens to sell their homes in order to pay for end-of-life care.
At the time, there felt as if precious few Conservatives were speaking out against the policy. Just as with abandoning planning reform, it looked like another area in which the party was set to strangle its future coalition in order to pander to powerful vested interests amongst its current one.
Yet just a few months on, the NI hike is now under sustained internal attack. High-profile MPs such as David Davis and Robert Jenrick have warned that Tory support will ‘evaporate’ unless the move is abandoned. And more tellingly still, Rishi Sunak has started calling it “the Prime Minister’s tax”.
Is the appellation fair? A tax rise wasn’t the only way to fund social care, after all: the Chancellor enjoyed a £30bn/pa windfall at the most recent budget, which would more than cover the money raised by increasing NI. He chose to spend it elsewhere.
Sunak would probably counter that this is what being a proper fiscal conservative looks like. I summed up the ambition set out in his Budget speech thus: “the Government must only be borrowing to actually invest, with everyday spending covered by taxation”. If the Prime Minister and the Health Secretary want more spending, then his duty as Chancellor is to find a politically-saleable way of raising the money.
And what’s the alternative? Our own Gerry Lyons suggests the Government should be more relaxed about borrowing against growth; asking older voters to actually pay in is likely politically impossible; so too is the sort of wholesale overhaul of the healthcare system which Ministers apparently concede, in private, is increasingly necessary. If Sunak would rather meet the challenge without this tax, he’ll need to explain how he would pay for it – and MPs may not like his answer any more than Johnson’s.
Regardless, it is a testament to the unravelling of Boris Johnson’s authority that the consensus behind his grand bargain on social care is coming apart so quickly, and Sunak’s positioning suggests that it may not survive a leadership contest.
Whether or not any of the candidates can come up with a better and more sustainable alternative than just borrowing the cash and hoping for the best, on the other hand, remains to be seen.