STEPHEN GLOVER: A Boris Johnson vs Rishi Sunak showdown is inevitable09/05/2021
STEPHEN GLOVER: A Boris Johnson vs Rishi Sunak showdown is inevitable – but social care won’t be the trigger
What are the Conservatives for? It’s a question that is asked every generation and the answer is often different.
Under Margaret Thatcher they stood for a smaller state, privatisation and lower taxation. But previous Tory administrations had lived perfectly happily with a larger state, nationalised industries and high taxation.
And Boris Johnson? This week, which may be an especially challenging one for him, he is expected to announce a tax hike to fund the NHS and social care.
Is Boris Johnson, in fact, a kind of closet socialist, albeit of the champagne variety, who is as prodigal and extravagant with the public finances as he has been throughout his adult life with his private finances?
All that can be said about the row over social care is that Boris Johnson hasn’t yet shown he has a solution
According to the Taxpayers’ Alliance, this will increase the overall tax burden to a level last seen 70 years ago when Labour was in power and Clement Attlee was prime minister.
So much for Singapore-on-Thames — the vision of a post-Brexit Britain with lower taxes, reduced public expenditure and a buoyant economy. The astronomical cost of the pandemic has seemingly put an end to that dream.
But was Boris ever really attracted to it? Or is he at heart a Big State man who loves splashing the cash and is acutely aware of the high expectations entertained by his ex-Labour Red Wall voters, on whose continuing electoral support he relies?
Is he, in fact, a kind of closet socialist, albeit of the champagne variety, who is as prodigal and extravagant with the public finances as he has been throughout his adult life with his private finances?
If the answer to these questions is ‘Yes’, in the short term there will be a growing number of quarrels with his Downing Street neighbour, Chancellor Rishi Sunak, with whom he is reportedly at loggerheads. In the longer term, only disaster can await.
Let us examine the charges that Tories of every political shade are making robustly and sometimes with vitriol. Despite his 80-seat majority, Boris is far from master of his own party.
In the immediate aftermath of the debacle of Afghanistan, with Covid errors piled up behind him and daunting pandemic challenges still lying ahead, a surprisingly large amount of ill-will has built up against the Prime Minister on his own backbenches.
One criticism is that it is virtually criminal to break the 2019 Tory manifesto promise not to raise personal taxes. Another is that the mooted increase in National Insurance Contributions (NICs) bears down hardest on the young. Former PM John Major and ex-Chancellor Philip Hammond have said as much.
They are right, of course. Why should poorly paid young people, many of them already saddled with student loans, stump up extra NICs so that old people needing ruinously expensive social care don’t have to sell their own houses?
The injustice is all the greater given that people in work over the pension retirement age don’t have to pay National Insurance at all, so won’t be asked to cough up anything, even though some of them may soon be needing care homes.
It is monstrously unfair — shades of Margaret Thatcher’s abortive poll tax? — and more than a little depressing that Boris Johnson should have come up with such a barmy plan in the first place.
The one thing we know about the NHS is that it has an inexhaustible appetite for endless resources. It has a waiting list which, according to Health Secretary Sajid Javid, may rise to 13 million
And yet. If the Prime Minister’s December 2019 pledge to ‘fix social care’ is going to be honoured — and almost everyone agrees it should be — then the money for it has to be found somewhere.
Ideally, there should be a social insurance plan so that people from a young age can set aside money to provide for their possible dependence on care homes in old age. But such a scheme would inevitably take years to fructify.
Money needs to be found now. Increasing capital gains tax? Maybe, though it would take us even farther from Singapore-on-Thames. Labour’s idea of a wealth tax? That would stultify the economy and drive entrepreneurs away.
The truth is, it will be painful for Boris and Rishi to raise £10 billion however they do it. Slapping higher national insurance on hard-pressed young people who may never own a house is obviously not the right approach. But finding a better way won’t be easy.
Moreover, it is perfectly possible that much, if not most, of the £10 billion annual levy will never actually be spent on social care. The idea seems to be that the NHS will pocket it for two or three years as it clears the Covid-generated backlog of cases before diverting it to social care.
Is that really likely? The one thing we know about the NHS is that it has an inexhaustible appetite for endless resources. It has a waiting list which, according to Health Secretary Sajid Javid, may rise to 13 million. I suspect it will simply suck in the new money and come back for more.
This is Mr Sunak’s concern — that Boris and Mr Javid will return in a year or two, asking for more funds for social care, plus a dollop of several billions to keep the NHS afloat.
Boris and Rishi could hardly be more unalike. The PM’s understanding of economics is hazy, though he loves spending money. The hair-shirt Chancellor is never happier than when poring over figures — and he does understand economics.
Can two such fundamentally different men get on for long? Prime Ministers and Chancellors frequently fall out and the consequences are never good for the country.
Chancellor Rishi Sunak, with whom Boris Johnson is reportedly at loggerheads. In the longer term, only disaster can await
Margaret Thatcher parted company with her second Chancellor, Nigel Lawson, over his belief that the pound should shadow the Deutsch Mark. She was weakened by his departure. The smouldering jealousies between Tony Blair and his Chancellor, Gordon Brown, undermined New Labour.
I don’t know how long Boris and Rishi will succeed in patching up their differences. Doubtless they will reach a settlement regarding the National Insurance levy.
And it seems both men are agreed that the ‘triple lock’ committing ministers to increase the state pension by the highest of earnings, inflation or 2.5 per cent will soon be ditched, even though that also breaks a manifesto promise.
Their justification is that wage growth has been so spectacular after lowered salaries during the pandemic that there could be a pension increase of almost 9 per cent this year, which the Government can’t afford. Raising pensions in line with more modest ‘underlying’ pay rises should save the Treasury £4 billion a year.
Nonetheless, the two men are not philosophically in step. Last month Mr Johnson was reported to have threatened to demote Mr Sunak after the Chancellor dispatched a letter to him calling for the easing of Covid travel restrictions.
When the reshuffle of the notably uninspiring Cabinet finally comes — some have speculated that it could be as soon as this week — Rishi Sunak is, of course, safe. In a remarkably short period of time, he has become too big a beast for Boris to bring down.
My guess is that an ultimate showdown between them is inevitable, but it won’t come for a while. Who emerges as the victor will depend on how many more mistakes Boris makes, as well as Rishi’s standing in the party. And that will hinge on how successful a Chancellor he turns out to be.
All that can be said about the row over social care is that Boris Johnson hasn’t yet shown he has a solution — and Rishi Sunak hasn’t yet proved that he can restrain the Prime Minister’s alarming propensity to tax and spend.
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