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Posts Tagged ‘National Insurance’

Jack Lesgrin’s week: Government U-turns on Triple Lock and National Insurance, but still the young lose out

12/09/2021, 11:13:00 PM

by Jack Lesgrin

Double U-turn on Triple Lock and NI, but not on preferencing old over young

Last week saw two U-turns by the government. First, they temporarily suspended the Triple Lock for pensioners because of an unusual and statistically anomalous rapid rise in earnings caused by the pandemic.

The second U-turn saw Johnson finally putting meat on the bones of his famous pledge, delivered in his first ever speech as PM in Downing Street in July 2019, to “fix the crisis in social care…with a clear plan we have prepared”. Tuesday’s mini-budget announced a National Insurance-funded Health and Social Care Levy. Note the sentence that preceded this: “My job is to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care.”

The government made the levy apply to some share income and on state pensioners’ income if they continued to work, in an attempt to mitigate criticism that using the National Insurance mechanism makes younger people, by definition of working age, subsidise benefits enjoyed by the elderly.

Yet this was only a fig-leaf, covering the sensitive nether regions of our system of taxation: namely that we have for too long preferred to tax income from work over other forms of income derived from other forms of wealth. Labour’s Shadow Chancellor, the excellent Rachel Reeves, eloquently put it thus: “Which types of income will be paying no additional tax after today? They include those who get their income from financial assets, stocks and shares, sales of property, pension income, annuity income, interest income, property rental income and inheritance income… Some 95% of the revenue the government plan to raise from this tax bombshell comes from employment. What a contrast.”

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The politics of mutualising the NHS and reviving National Insurance offers Labour a big opportunity

25/09/2014, 06:20:52 PM

In the second of an occasional series of posts, from Uncut contributors, that look at the policies and political positioning needed to win the next election, Jonathan Todd reflects on Frank Field’s case for restructuring how the NHS is funded.

by Jonathan Todd

In March 1992, 22 per cent of voters thought the Conservatives had the best policies on the NHS. 52 per cent thought Labour did. This didn’t stop the Tories winning the general election two months later. This experience should caution us against seeing the lead that Labour currently enjoys on the NHS as sufficient to secure Labour general election victory. Labour’s trust and popularity on this issue is not a passport to election victory. But it is a political asset that might be deployed to create such a passport.

Some perceptions of Labour strength and weakness that are relevant are:

More voters say of Labour “even if I don’t always agree with it, at least its heart is in the right place” than say this of any other party. 30 per cent of voters say this of Labour, in contrast to 23 per cent of the Tories and 15 per cent of the Liberal Democrats.
57 per cent believe government cuts are necessary. But only 10 per cent of voters believe Labour leaders are prepared to take tough and unpopular decisions, while 45 per cent of voters think that Conservative leaders are.

The support Labour enjoys on the NHS is emblematic of the sense that Labour’s heart is in the right place. No one believes that Labour enjoys seeing nurses being made redundant, whereas there is a lingering suspicion, perhaps unfairly, that Conservatives do. Nonetheless, there is also a widespread recognition that government involves taking tough decisions, as well as a sense that the Conservatives are more prepared to take such decisions than Labour. While there are relatively few doubts about Labour’s heart, there may be more about Labour’s judgment and resolve around difficult decisions.

As popular as the NHS is, there is also a recognition that tough choices need to be made on healthcare. Nearly three-quarters (73 per cent) consider the NHS to be one of the UK’s greatest achievements. Yet more than four in ten believe the NHS will not survive in its current form to the end of the current decade.

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The Labour case for an NHS mutual

25/09/2014, 11:42:22 AM

In the first of an occasional series of Uncut posts that look at the policies and political positioning needed to win the next election, today we are looking at the NHS. Here, Frank Field sets out the policy case for a radical restructuring of how the NHS is funded.

by Frank Field

A programme of fundamental NHS reform – on financing and ownership – could, paradoxically, convince the electorate of Labour’s financial competence and play a crucial role in rebuilding Labour’s fast collapsing core vote.

Labour has to combine two financially opposing objectives. About two thirds of the structural budget deficit remains to be eliminated. So, while cutting at twice the scale of the so-called ‘tough’ Coalition, Labour will face the mother of all NHS crises. The Coalition’s pledge of maintaining the real value of the £95 billion NHS budget is now hardly a mirage. Real cuts in the NHS budget have been in progress over most of this Parliament and there is an impressive array of witnesses reporting to this effect.

Differential NHS inflation, a growing aged population that makes disproportionate health and social care demands, and an abundance of advances in ever more expensive medical technology, will take an even greater toll on NHS budgets during the next Parliament. NHS England estimates a deficit to end all deficits of £30 billion in 2020-21 – very nearly a third of current NHS expenditure.

The electorate senses the NHS is facing mounting difficulties. They are willing to input additional monies into their NHS. But, despite the supportive showing the polls for significant increases in NHS contributions, neither Labour nor the Coalition is currently prepared to address the issue. They present getting through the election without seeking a mandate on NHS finance as what the clever boys do.

But, as events all too often show, the clever boys – and they are still largely boys in every sense of the word – have lost the plot. Either the NHS is refinanced or, during the next Parliament, it will cease to exist as we have known it.

We can conclude that, as the collapse of the NHS as we have known it will send the electorate into a god almighty spin, there will be a major injection of new funds into the NHS during the next Parliament. But, if the current cross-party evasion continues, the next government will have no mandate to raise new revenue. Ever greater cynicism will be the result of what will inevitably be a broken promise. But will the current Tory position hold?

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Want a fairer tax system? Merge national insurance with income tax

09/01/2014, 08:30:44 AM

by Callum Anderson

One of Ed Miliband’s biggest successes of 2013 was shifting the political argument towards the cost of living crisis. Whilst this will not be sufficient to win the economic debate against the coalition government, it is still likely to be a significant battleground in the run-up to the next general election, as wages continue to stagnate and the cost of living rises, despite signs that unemployment is falling and that economic growth is (finally) beginning to be restored.

Indeed, by May 2015, Ed Miliband could be well set to ask the voters: “Are you better off than you were five years ago?”

Naturally, an aim of a government (and certainly that of a Labour government) should be to increase the money that low and middle income earners have in their pockets. They are more likely to spend more, which will subsequently lead to positive benefits for the economy. Much progress has already been made in increasing wages through the minimum wage (although, of course, a living wage must soon be implemented), as well as increasing the tax-free personal allowances (for which credit deserves to go to the coalition government). One way of improving the living standards of low and middle income households is through the tax system. Tax cuts aimed at the poor are good because they encourage work, reduce the welfare bill, and helps poorer people to be better off.

And the clearest (not to mention the simplest) way of achieving this? Merging National Insurance contributions (NICs) with income tax. I believe that not only would we be able to help millions of the country’s lowest earners, we would also be able to create a fairer tax system that ensured that everyone pays their fair share, as well as making tax avoidance more difficult.

Currently, employees pay income tax on earnings over £9,440 per annum (increasing to £10,000 in April), yet begin to pay NICs when they earn more just £7,748 per annum. Clearly, this is significantly lower than the personal allowance for income tax, despite both being deducted from the same pay packet: NICs are essentially income tax 2.0.

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