“The tax raid signals that this government doesn’t understand wealth creation, enterprise or business,” wrote Iain Martin, former editor of this paper, in the Times. “The Prime Minister cheerfully hikes tax, again, creating a drag on growth and dispiriting entrepreneurs and the young taxpayers we need to create companies and innovate.”
The Daily Telegraph’s Allister Heath decried Prime Minister Boris Johnson’s policymaking as “juvenile”, raging that increasing National Insurance was “not merely an unforgivable manifesto broken promise: it symbolises the party’s repudiation of the conservative and classical liberal world view… This government is no longer Thatcherite, or even conservative: it is Blue Labour.”
The party faced a “generational crisis” and would “have to rediscover what it stands for”, said ex-minister Steve Baker, and stop imposing higher taxes every time there was a squeeze on public finances.
With 39 Tory backbenchers abstaining in Wednesday’s vote, and the otherwise loyal Penrith MP Neil Hudson among five voting against, it was not just a warning shot across the government’s bows but a volley.
Even though the flat 1.25 per cent hike on earnings to generate £12 billion to pay for health and social care has been widely seen as disproportionately hitting young workers to benefit the elderly, it’s inconceivable that such a massive government policy gamble was not gamed and tested beforehand, and it’s proved hard for both Labour and SNP to mount a credible attack because of their own high tax instincts and the ring-fencing for services where deep problems are self-evident.
SNP Westminster leader Ian Blackford plumbed new depths of bitterness by claiming it was “the Prime Minister's poll tax on Scottish workers to pay for English social care”, despite it handing a £1.1bn boost to the Scottish government’s budget while the Scottish government gives the middle classes free prescriptions and free dentistry.
But £12bn is nowhere near the £102bn recommendation in a commission of inquiry by the London School of Economics and the Lancet medical journal published in May, which called for the total UK budget to rise from £185bn to £288bn in ten years through higher income tax, National Insurance and VAT.
As health unions have claimed, that suggests the £12bn won’t make any meaningful difference to the social care crisis because it is likely to be swallowed up by tackling NHS backlogs.
And even if Mr Johnson had gone the whole hog, throwing an extra £100bn at an unreformed service with a severe staff shortage which will take years to fix would not deliver the health and social care revolution the public would have a right to expect in exchange for such a crippling imposition.
Recent World Health Organisation comparisons show up the differences in per capita health spending, with the UK’s £3,205 per capita expenditure lagging behind France’s £3,484, Germany’s £4,031, Ireland’s £4,077, and Norway’s £6,120.
Both France and Germany have extensive public social insurance schemes, but the quasi-religious status of the NHS all but rules out this approach in the UK, so the political options come down to who gets taxed and how.
Other critics of the government wanted an old-fashioned, anti-aspiration “tax the rich” approach and suggested it would have been fairer to target wealth locked up in property owned by those in need of care which really would have cut traditional Conservative supporters to the quick.
If, along with the realpolitik, it’s accepted that more cash is needed for health and social care, Mr Johnson’s prioritisation of asset protection over taxation might be the least worst option for Conservative voters, but with such widespread unease in the ranks, there is no question that the Conservative brand of ‘low-tax, small government, personal aspiration and responsibility’ is at greater risk than at any time since the days of Ted Heath. Not irrevocably wrecked, but is it the existential crisis for Conservatism some of the more excitable commentators are claiming?
It certainly will be, if having done it this once and already jacked up the tax burden to its highest for decades, Mr Johnson carries on and takes chapters out of the Gordon Brown playbook to sell tax raids as benefits. There is every chance that voters will accept the argument that it’s impossible to meet every manifesto pledge made before the pandemic, especially those relating to health expenditure, but if so it’s the last time Mr Johnson will get away with it.
I’ve written here before that the key to Conservative success has been a flexible approach to circumstances and Mr Johnson appears to be trying to move the centre ground of UK politics in a manner not dissimilar to Tony Blair, but from the opposite direction.
The Conservative Party can remain the party of low taxation and the clear centre-right option, but Mr Johnson is relying on public perception of what represents a low-tax economy, and where the middle sits, shifting too.
He’s only got this one shot at it, because he is challenging core party philosophy and testing party loyalty as never before. Europe might have been divisive, but the principle of low tax is a unifier and more Conservatives than ever are wondering if Mr Johnson really thinks like they do, or if he is only the calculating, principle-free opportunist his critics say he is, and one who owes his position to the collapse of loyalty to his predecessor which he led.
A new poll for the Times showed Conservative support slipping to a five-year low, not unheard of in mid-term, but if it’s not quite a crisis for Conservatism it will soon become one for Mr Johnson if this tax raid doesn’t produce quick results. The Manchester conference next month won’t be the triumphant procession it was two years ago.