Press Room

16 Sep 2021

Miles Dean discusses Sajid Javid’s insistence that the UK remains a ‘low tax country’ despite health levy in the Express

Miles Dean, Head of International Tax, discusses Sajid Javid’s insistence that the UK remains a ‘low tax country’ despite the new health and social care levy, in the Express.

Miles’ article was published in the Express, 16 September 2021, and can be found here.

Last week, Sajid Javid told the BBC that “We are still a low-tax country after this change, and we will always remain a low-tax country.” The Health Secretary was responding to the new 1.25 percentage rise in national insurance contributions. To be branded as a “health and social care levy” on payslips, this will deliver £36bn over the next three years, initially for the NHS and then the social care system.

History shows that it is absurd for any government to argue that they can fix the NHS by simply throwing more money at it. Almost as absurd is Javid’s claim that the UK remains a low tax country: try telling that to young graduates who will be hit with a 50 percent tax rate on any additional money they receive after deductions for income tax, national insurance and student loan repayments. Overall, 2021 has seen the biggest cumulative tax rises in the UK since the 1970s.

In truth, the NHS has repeatedly shown itself to be a bottomless pit. The more money it receives, the greater its demands become. Every Health Secretary and every Chancellor over the past 40 years – Conservative and Labour – knows that is the truth.

The answer to fixing the NHS is not to throw more money at it. What it needs, and has needed for 40+ years, is major structural reform. Its patient outcomes are generally unimpressive when compared with similar systems in France and Germany, for example. Ultimately, it is these outcomes – the state of the nation’s health – that really matter.

Although the need for root and branch reform is understood by many Tories, the Tory government wilfully chooses to ignore this alternative. A significant risk therefore exists that the £36bn in extra revenues will become swallowed by yet another tier of management leading inexorably to further tax rises in the future.

How anyone could argue that the NHS model still works in 2021, when it was designed for post-war Britain, beggars belief. Pre-Covid, more than £156bn was spent on health across the UK in 2019/20 – roughly 12 times the figure that was spent in 1948/9, the year the NHS was founded. And that’s after adjusting for inflation. Today, 30p out of every £1 spent on public services goes on health.

If only we had a government with an 80 seat majority that had guts and conviction to do the right thing – we might then see real change. As it is, to Johnson and his government’s shame, it’s more of the same.

Miles Dean

Miles is Head of International Tax at Andersen Tax in the United Kingdom. He advises privately held multinational companies, entrepreneurs and high net worth individuals on a wide range of cross border tax issues.

Email: Miles Dean