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Opinion

Where is the new tax revenue going? Maybe Dominic Cummings knows

Dominic Cummings was the epitome of a by-all-means-necessary administration. The new National Insurance increase has fuelled a conversion.

Dominic Cummings is a gas. Remember Dom? The frequently angry-looking fellow in an ill-fitting shirt. Liked driving around the north east then sitting behind a trellis table in a garden talking about it. Became seen as the Machiavellian puppet master and enforcer for a PM who couldn’t be bothered. Or at least a PM who liked to make it look like he couldn’t be bothered.

Cummings was the epitome of a by-all-means-necessary administration. He could be relied on to be a shield or a policy changemaker. To many, he was the de facto leader.

Not sure where that Dom has gone because he’s been replaced, on Twitter at least, by a very different beast. This Dom comes on like a young blogging tyro gunning for a birth on Novara Media.

“Tell your friends,” rages Red Dom, “the Tories are making the young – who can’t get a house & working for average/below average income, already screwed by a decade of hapless Tory government – to work harder to subsidise older richer people. They promised to do the opposite.” Then comes the kicker: “#RegimeChange”.

Leaving aside the obvious – for some time, not so long ago, Cummings was in a very good place to effect change during that “hapless” decade – it is a curious statement. What is leading to this Damascene change is not clear. But it does suggest that there were major clashes at the heart of government then and presumably they remain now.

The fury that Cummings is sounding about, the new National Insurance tax increase to fund social care in England, has been well articulated elsewhere in recent days. It’s a regressive move and it unevenly punishes those at the bottom of the pile. It’s also a curious ideological shift for the Tories to be happy to be, in a Labour fashion, the party of higher taxes AND be seen as the party prepared to take an electoral hit in order to help the NHS.

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But that misses a point. And it’s one that angry Red Dom also misses. It’s not that extra revenue unquestionably is needed. It’s not even a question over why other kinds of tax weren’t employed, whether that be a windfall tax from big businesses that boomed in lockdowns, or other taxable income drawn in an upwardly tapering manner from higher earners.

The question is who, ultimately, benefits? A lot of the money, it has been made clear, will help the NHS catch up with the Covid backlog. That is positive. But there are still billions moving towards the care sector. The care sector needs fixed and people need help looking after loved ones. So where will the social care billions pour? Will they go directly to the people on minimum wage on the frontline caring for the elderly and most vulnerable around us? Will they make life better for those vulnerable people? Will the money largely boost profits of private companies and financial vehicles that run vast parts of our care sector?

It was calculated in 2019 that 84 per cent of all care home beds in the UK are run by private companies. A percentage of them will be small and independent and fighting to do the right thing. But the IPPR also warned in the same report that one fifth of the sector was run by a big five of private companies, three of which were private equity firms. Such firms, the IPPR warned, “often rely on high levels of borrowing, complicated corporate structures and cost-cutting measures such as tax avoidance and low staff pay”.

Simply raising tax is not going to ameliorate a hugely difficult and complex situation. And while we welcome positives, we should ask for details on how the money is spent, and if it benefits anybody at the heart of government. More widely, can the shift to privatisation be reversed?

This is an administration dogged with mutterings about lucrative contracts for pals during the height of lockdown. As the world emerges back to normality, and more tax revenue is needed to help rebuild, we must look beyond the top line and ask difficult questions. We’re going to do it on these pages.

Maybe Dom will give me a hand.

Paul McNamee is editor of The Big Issue

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