Posts Tagged ‘zero hours contracts’

Labour’s response to the Tories’ business letter has been an epic act of political self-harm

01/04/2015, 08:22:37 PM

by Atul Hatwal

When the history of the 2015 general election is written, the Tories’ business letter in the Telegraph will be seen as a pivotal moment. Pivotal because of what it presaged for the potency of a key Tory line of attack in the campaign and Labour’s inability to mount a convincing response.

For the Tories, the letter is not just a one-off story but part of a longer, sustained offensive that will build over the coming days and weeks. More business leaders will have been lined up to intervene to kick the story on, reheat it if it cools and bulldoze the central Tory message on Labour and the economy, into the public consciousness.

How do I know? Because I have a memory which stretches back to the 2010 campaign, something that Ed Miliband’s strategists evidently lack.

In 2010, the single most damaging intervention in the campaign was the letter from business leaders opposing Labour’s National Insurance tax rise. The manner in which more and more business signatories were rolled out by the Tories dominated days of coverage and shattered Labour’s fragile reputation for economic competence.

To paraphrase Tony Blair, the public might not cherish these business leaders as national treasures but they do believe that Britain’s CEOs know more about creating jobs and wealth than politicians.

In the end there were over 500 signatories of the 2010 letter running businesses that employed over 1m people, with all sectors and ethnicities represented.

Tuesday’s letter in the Telegraph is just the start.

Damaging as the Tory offensive is though, perhaps the worst aspect of the exchange between the parties has been Labour’s response.

On Twitter, Labour activists, candidates and Labour supporting journalists engaged in an epic, collective act of political self-harm as the story broke.

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NICs currently penalise 3.4m of the lowest paid workers. This must change.

27/01/2014, 12:51:14 PM

by Joe Anderson

The rise in zero-hour contracts since 2010 is well-documented. The ONS estimates that the percent of people in employment on zero hour contracts has increased from 0.57% in 2010 to 0.84% in 2012. Ed Miliband is therefore right to call for a ban on their exploitative use. What, however, has not been often discussed is how the National Insurance system inflicts extra hardship onto workers on zero-hour and many other flexible contracts.

Unlike income tax, class 1 National Insurance contributions (NICs) are calculated on a weekly—rather than annual—basis. Whilst this may seem like a subtle difference, it has profound effects for those whose earnings vary significantly on a week-by-week or month-by-month basis, such as those on zero-hour contracts.

The class 1 NIC primary threshold in 2013/14 is £149, meaning employees earning over £149 in a given week are liable to make NICs. Yet, a significant number of people earning less than £7,775 per year (the annualised equivalent of the weekly primary threshold) will still be compelled to pay NICs. The reason for this is because if they earn more than £149 in any week (or £646 in any month, if paid monthly), they will be required to pay NIC, regardless of their annual income.

To illustrate the perverse effects of this anomaly, consider our conjectural protagonists, Jack and Jill.

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