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.”
