Last week the UK Prime Minister, Boris Johnson, announced the introduction of the ‘Health and Social Care Levy’ – a new tax that amounts to a basic 1.25% increase on National Insurance contributions. This will initially manifest as a simple raise to National Insurance but from April 2023 the Levy will appear as a separate tax that, unlike National Insurance, will include those people still working beyond retirement age, in addition to a 1.25% tax increase on share dividends. The levy is expected to bring in £12 billion a year with those funds ring-fenced specifically for health and social care.
Having won a historic majority in 2019, and with Labour’s new leadership showing few signs of making significant inroads into the Conservative lead, it is interesting that the Prime Minister is willing to change so much. In one move Johnson has opened himself up to criticism from a wide range of important political stakeholders: Conservative loyalists have seen a fundamental 2019 manifesto pledge broken; high taxation may be seen by a dampener on post-pandemic recovery; poorer voters are seeing their wallets squeezed further as we enter was is being touted as a potential ‘Winter of Discontent’, and this is compounded by a sense of generational socio-economic injustice as the perception grows that baby boomers and generation X have had their cake and continue to eat it at the expense of the prospects of the young. Given the notable wealth disparity, there has been understandable anger, both in Parliament and online, that the Levy’s burden is to be shared at a flat rate, and thus disproportionately.
This is where Keir Starmer has taken aim. Addressing Parliament last week, the leader of the opposition derided the Levy as ‘a tax on young people, supermarket workers and nurses’, paid for by working people when ‘we need those with the broadest shoulders to pay more.’ Yet, unfortunately for the opposition, despite this injustice many indicate they’re willing to pay more; two in three say they’d accept tax rises to better fund the NHS (Ipsos MORI). Boosting Britain’s greatest national asset casts Johnson’s shadow directly over the centre ground that Starmer was looking to reclaim for Labour. As the Labour party moved away from the Corbyn era, the clearest pitch Starmer had so far offered was that of sensible centre-left reform to counter the personality politics, inconsistency, and lack of public spending that they wished to portray as typical of Johnson’s tenure. With a single policy the Prime Minister has, in the short term, removed the primary stick with which to beat his party and forced Labour into the extremely uncomfortable position of voting against the most significant NHS funding surge in a generation. Starmer will attempt to discredit the policy with a typical legalistic rigour, and to champion the voices of those he believes are treated unfairly by this tax. But ultimately, the best Starmer can offer at this point is progressive, wealth focused, tax reform within the Levy; an attractive and necessary reform but not an attention grabbing, popularity surging, counter-agenda. Labour would not dream of repealing this policy as a whole and so the political ground on which Labour can battle shrinks again.
No politician’s armour is completely impenetrable but many of Johnson’s failings simply seem to wash off his back. Despite widespread awareness that Johnson and the Vote Leave campaign misled the electorate, his own personal scandals, broken manifesto promises, and public disdain towards a heavily mismanaged pandemic response, the electorate still expresses more ‘favourable’ views of Johnson than Starmer according to Ipsos MORI data released last Friday. With the worst of the Brexit political fallout in the past, his personal popularity, and now a bold move to address health and social care it is difficult to see clear ground on which the Labour party can make strong gains in the two-and-a-half years before the next planned General Election.
The major vulnerability that remains is on delivery. The social care sector has been critical of the new plans, arguing they lack detail, ambition, and guarantees for genuine social care reform. This winter presents a significant challenge for Johnson as he attempts to mitigate simultaneous crises in HGV drivers, rising prices, and supply-chain shortages. Yet, in stealing the NHS centre ground, the Prime Minister may have secured re-election, cutting the ground from under Starmer. But fail to deliver and this may prove a fatal miscalculation for Johnson as the forces of discontent, presently placated, may round on him. This is why Johnson has taken a risk by deviating from the Conservative norm; it is a bold action and one that is likely to define the next election. Deliver and he will have destroyed significant ground for Labour to fight on, fail and it may prove a fatal miscalculation given the Prime Minister’s strong starting position.