Jeremy's Blog 17th September 2021: Social Care, Planning and Tax

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 16th September 2021

The fascinating politics of the last few days reveal serious conundrums as the government navigates between its existing voters wanting protection and the needs of its potential voters.

While little may have been done to reform or even fund social care, the threat of crippling care costs to existing homeowners and their heirs appears reduced. It is now reported that their concerns see teeth drawn from the Planning Bill.

Introducing last year’s White Paper, the Prime Minister said that “our outdated and ineffective planning system” meant we had “nowhere near enough homes in the right places”. He offered:

“Radical reform unlike anything we have seen since the Second World War … That actively encourages sustainable, beautiful, safe and useful development”.

In new language, the Secretary of State told Monday’s Financial Times:

“We will bring forward a set of proposals which are sensible, pragmatic improvements to the current planning system.”

New settlements seem one resolution of these pressures – if by compulsory purchase with what payment to the landowner? Will unbuilt planning permissions be taxed?

The spending and tax insights are striking.

With the NHS taking the new money first, we could appear to have a health service with an economy attached. Increasing NHS spending and austerity elsewhere will mean the NHS taking 44 per cent of day-to-day public spending by 2024/25, up from 27 per cent at the start of the century. NHS spending rises by towards 4 per cent annually with public demand, an ageing population and new expensive treatments – pressures that will only grow.

National insurance was preferred to Income Tax. While not insurance for many years, it is still national, applying in Scotland as elsewhere. A large and successful stealth tax, it has increased for employees from 5.75 per cent in 1977 to 13.25 per cent from 2022; the more politically sensitive basic rate of Income Tax was cut from 34 per cent to 20 per cent. As a tax on employers, it will now add another 1.25 per cent to the cost of having an employee – a total of 15.05 per cent on top of headline pay rates.

With increased debt, the demands of climate change, greater global uncertainty and taxes already to take their highest share of the economy since 1950, the conundrums seem only resolved by really achieving renewed economic growth. When the comfort of existing interests speaks louder than the needs of the future, do we have the appetite for what that will need?