A UK-wide tax hike to pay for social care in England will anger devocrats
The Government’s proposals to hike National Insurance in order to fund increased social care spending are already facing a backlash from several quarters.
It’s a breach of a manifesto commitment. It’s a tax on working-age people to protect the inheritances of asset-rich older people. And so on. But the Prime Minister might be sailing straight towards another constitutional row too.
Why? Because he is proposing to raise NI, a reserved tax paid across the United Kingdom, to fund social care spending in England.
On a technical level, this is perfectly defensible. The two things aren’t formally linked. The Government is simply raising a tax that is within its purview, and at the same time increasing spending on an area under its control. The devolved administrations will get their Barnett consequentials in the usual way.
But rhetorically, it is quite clear what the increase is for, and the potential upshot is voters in Scotland and Wales paying more tax for reasons not directly connected to their own public services.
This isn’t the first time the Treasury, one of the last truly powerful and truly British departments, has found itself in this position.
During the pandemic, there was and remains obvious tension between the devolved governments having control over lockdown, but the British Government retaining control over furlough and the other economic interventions that make lockdown possible.
Once again, that’s right and proper — the “whatever it takes” economic response to Covid-19 was a prime example of the power of the British State, and of course the British Government should oversee the disbursement of British cash. But the tension was there.
Likewise, do not be surprised if the SNP and Welsh Labour try to weaponise this ‘Tory tax hike’.
Eventually however, beyond the rhetoric, they will run into a problem. The usual devocrat response to any real or confected crisis is to try and leverage it into ‘more powers’.
But if you go too far down the road of devolved taxation it gets increasingly difficult to justify the pooling of resources around the UK. A world in which England starts mostly paying specifically English taxes is one in which the amount of ‘British’ money available to redistribute shrinks dramatically.
And if they like precious little else about Britain, both Nicola Sturgeon’s big-N Nationalists and Mark Drakeford’s small-n nationalists like fiscal transfers very much.
Perhaps it will be enough simply to shout about how many extra millions ‘for Scotland’ and ‘for Wales’ will result from the increase. Or maybe Sajid Javid can find some pan-UK social care policies to implement under the UK Internal Market Act, making it look less like an English affair.
Nonetheless, Boris Johnson should be wary of gifting his opponents in Edinburgh and Cardiff any opportunity to portray the country as being ordered to the benefit of wealthy English homeowners. If nothing else, it won’t help the electoral fortunes of his party in Scotland and Wales.