I am sure that the hon. Gentleman has made that point before. I looked at the Nuffield Foundation report on Wales a couple of years back. I do not think that Wales has had a good deal out of the Barnett formula over the years, and although the Government have addressed some of that over the past year, they have not done enough. The Nuffield Foundation said that Wales has not only an ageing population, but higher levels of morbidity, so the funding does not match the need. A whole debate needs to take place about moving forward. When I was shadow Chancellor, I talked about a review of the Barnett formula. That frightened a number of people, but it is needed. In fact, I think there is a need for a Barnett formula for the north of England as well. [Hon. Members: “ Hear, hear!”] I thought that might raise a response.
There is a long-term funding crisis that we have to address. I look forward to next month’s Budget for some resolution of this matter. Where can the money come from? I know that a lot of people say we should never make unfunded commitments. To be honest, I was the first shadow Chancellor who produced a Budget and a manifesto that was fully funded and costed, in the “Grey Book”, so I want to look at some ideas and just throw them out there.
On Tuesday, we heard that, as a result of the higher level of tax receipts received than the Office for Budget Responsibility predicted, the Chancellor now has £30 billion of headroom that he did not have previously. Some of that £30 billion needs to be invested in the NHS, and particularly social care. I would also like to see some of that money invested in relieving poverty, which is one of the major causes of ill health in this society.
We need to do something on capital gains tax. If we taxed capital gains at the same rate as earned income and charged national insurance on it, we would get £25 billion extra. Let me throw in a few others. If we lifted the higher national insurance rate, so that instead of 3.25% above £50,000, it was paid at what everyone else below that level pays—13%—that could raise us £15 billion. I cannot for the life of me see why dividends
are not taxed at the same level as earned income. If we did that, we could raise £8 billion. Those on the Labour Front Bench have put forward the idea of scrapping non-dom status. Again, I claim copyright on that one. That would raise between £1 billion and £3 billion.
The Government have implemented a windfall tax on the excess profits of energy companies, and they should extend that, as those on the Labour Front Bench have advocated. Some Members may have read the recent reports on bank profits and the return of extremely excessive bank bonuses. There is an argument for a windfall tax on bank profits during this extremely difficult period. This is a time when we should all bear the burden of the challenges that we face. Taxing the bankers’ bonuses needs to come back on the agenda, and I deeply regret that the Government removed the cap on bankers’ bonuses, which we supported.
With regard to the City, I have been an advocate of the financial transaction tax for a number of years. All it does is close some of the loopholes in terms of stamp duty. If we look at the work on this recently by Advani and others, we see the potential. With limited changes, we could raise £8 billion to £10 billion.
It is time to start looking at how we tax wealth in this country more effectively. If we look at the proposals that have been produced by various think-tanks over the last year or so, a 1% tax on people who have assets over £10 million could raise an additional £10 billion. This is not revolutionary stuff. It is straightforward and pragmatic, making sure that we have a fair taxation system.
Those on the Labour Front Bench have argued strongly that we have to go for growth, as have the Government. I fully agree, but that needs a rapid programme of investment in the public sector, with matching private sector investment. If we can increase growth by just 1%, we usually match Governments receipts at the same time by 1%, which would mean about £7.7 billion, and for 2% it would mean £15.4 billion. In addition to the short-term taxation measures, redressing the imbalances in our taxation system at the moment, that would enable us to achieve the growth that will give us a stable form of income to meet the needs of our NHS and social care system.
We cannot continue with an NHS and a social care service that is paid for on the backs of people we are exploiting in long hours, undermining their morale by not paying them properly, and at the same time making them face challenges that are both heartrending and certainly not what many of them signed up for. The NHS workers I have met just want to provide a decent service in a caring environment that is fully funded, where their profession is respected by being properly paid. I hope that we can achieve that sooner, rather than later.
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