National insurance

The war on workers

It is been a familiar story in recent years: a Budget that sounded reasonably good when delivered, but that unravels in subsequent days. Rishi Sunak’s spring statement was no exception. When he delivered it a fortnight ago, he said he was going to compensate low-earners by raising the primary threshold for National Insurance, bringing it into line with income tax and relieving people who earn less than £12,500 from having to pay NI at all. But as the 1.25 percentage point rise in National Insurance kicks in today, it turns out that the rise in the threshold for NI will not take effect for another three months, on 6 July.

The Chancellor’s difficult choices

The Office for Budget Responsibility was designed to protect the Chancellor from accusations that he is cooking the books. If the forecasts are prepared by an independent body, there can’t be the suggestion – as there often was before the OBR’s creation in 2010 – that they have been politically influenced. But what the OBR cannot do is eliminate uncertainty. In recent years, the likely trajectory of the financial future changed quite a lot from one month to the next: from interest rates and inflation to the Covid pandemic and Russia’s invasion of Ukraine. The OBR itself admits that it had to conduct its work without knowing the full economic

Exclusive: Leaked NHS report shows waiting list hitting 9.2 million

Before the pandemic hit, NHS England waiting lists were at a record high of 4.4 million. Three lockdowns later, they’ve risen to six million: an unacceptable figure for a Tory government that has spent years trying to rebrand itself as the ‘party of the NHS’. Boris Johnson’s decision to break his manifesto pledge and raise taxes was directly linked to the idea that the money would first be funnelled into the health service to fix the backlog. So can he now deliver for patients? When Health Secretary Sajid Javid announced his ‘elective recovery plan’ in the House of Commons on Tuesday, he said that the waiting list would start shrinking

What Boris must do now to survive

When Omicron struck, Britain was already the most boosted country in Europe. Our programme was so advanced that 80 per cent of pensioners were already triple-jabbed. This helped force the new variant into reverse in the first days of January, with hospitalisations half of the previous peak. A country whose economic recovery had already surpassed almost all expectations can now continue to grow — in contrast to many European countries still dragged down by restrictions and heavy-handed mandates. In such circumstances, the Prime Minister might reasonably expect to be fêted. Instead Boris Johnson is fighting for his political life, unsure of when his mutinous Tory MPs might come for him.

Can Boris Johnson now afford to scrap the National Insurance rise?

After promising not to raise National Insurance in the 2019 manifesto, the Tories are preparing to do just that in April with their new ‘health and social care levy.’ The levy is set to add £200 to the average worker’s tax bill. Why have the Tories broken this manifesto promise? Because there was a pandemic, the government says. There was no choice. Tory MPs are getting antsy. Backbenchers, including former cabinet ministers David Davis and Robert Jenrick, are calling for the National Insurance rise to be postponed or scrapped, as relatively high inflation and the cost-of-living crisis is creating enough of a burden on taxpayers already, even before the new

The cost of living – not Covid – could bring Boris down

Two and a half years into his premiership, Boris Johnson has enjoyed no more than a month of that time unencumbered either by Brexit negotiations or the public health emergency. Once Britain is through the worst of the Omicron wave, it would be understandable if the Prime Minister wanted to pursue some kind of political vision. The danger is that, as normality returns, his premiership will be further imperilled by the cost of living. An economic crisis is expected to hit households in April. In that month, National Insurance contributions (NICs) will go up by 1.25 per cent, a direct violation of Johnson’s manifesto pledge to protect voters from tax

Letters: Why net zero is impossible

Carbon deceit Sir: At this week’s climate change conference, countries will be urged to follow the UK’s ‘lead’ in setting the goal of net-zero carbon emissions by 2050 (‘Cop out’, 30 October). This goal is impossible for any advanced economy based on mass consumption. The majority of British manufacturing has shifted abroad, where labour is cheap and items are mostly produced with electricity supplied by coal and other fossil fuels. For a real figure for Britain’s emissions, the consumption of goods produced overseas must be included. As our consumption has increased enormously over the past 30 years, this carbon addition will be substantial. It is a dangerous nonsense for rich

Sunak faces the free-marketeers

Rishi Sunak didn’t give too much away tonight when he spoke in the ‘ThinkTent’ at Conservative Party Conference. The Chancellor is known for being cautious with his words, and has been increasingly tight-lipped in the weeks leading up to his October Budget. But his presence at the fringe event was telling in itself. Sunak was only billed for one public fringe event this year, co-hosted by the Institute of Economic Affairs and Taxpayers’ Alliance. Their ‘ThinkTent’ boasts some of the most free-market, libertarian events you’ll find at conference: both organisations are strong advocates for a low-tax, smaller state. So, not necessarily an obvious place to find the Chancellor who has overseen record peacetime

How the Tories can redeem themselves in the eyes of the self-employed

Private members’ bills don’t normally make for exciting reading. They give MPs and peers a chance to let off steam if they have a bee in their bonnet, and more importantly to lay down fairly cheap political markers. Most sink without trace, since the government through its control of the Commons legislative timetable has an effective veto. But some are worth a second look. One such is Lord Hendy’s Status of Workers Bill, which got its second reading in the Lords last Friday. Currently, businesses love the idea of designating as much of their payroll as possible as self-employed independent contractors rather than employees. And not surprisingly: it saves them

Why didn’t Tory MPs oppose Boris’s tax hike?

Boris Johnson has just announced his plans to increase National Insurance by 1.25 per cent for both workers and employers to fund extra spending on the NHS and social care. Johnson framed the measure as necessary to deal with the backlog that had built up during Covid. He claimed that without action hospital waiting lists would reach 13 million. He said that he didn’t break his manifesto promise lightly but that a ‘global pandemic was in no one’s manifesto’.  Of course, the problem with this argument is that the tax promise, as well as the commitment that no one would have to sell their house to pay for social care,

How will Boris Johnson sell his social care tax rise?

Boris Johnson is on the brink of raising taxes to fund a health and care spending package two decades after Tony Blair embarked on his own NHS tax rises. There are striking differences in their approaches though, when it comes to preparing the ground for this rare event in British politics.  It is not yet apparent what Boris Johnson’s primary objective for social care is Blair’s 2002 tax rise came at the end of a long, high-profile process that sought to put the long-term future of the health service at the centre of a national discussion. By contrast there has been little to no debate ahead of Boris Johnson’s health

Boris could pay a big price for his flawed social care shake-up

Boris Johnson pledged to ‘fix the crisis in social care’ over two years ago. Next week, the Prime Minister is set to announce his plan to do just that. In doing so, he is also expected to opt for a major break from his manifesto pledge not to raise key taxes. So what is Boris’s solution, and will it work? The Prime Minister remains wedded to the 2011 Dilnot reforms to answer today’s problems. This includes bringing in a cap on the cost one would be required to pay for their social care. At least a 1p tax hike on National Insurance is also expected, to raise around £6bn. This pot of

Matthew Lynn

Three big problems with the government’s planned tax hike

We are in the middle of a once-in-a-generation shift: working from home. There are skill shortages across the economy, supply bottlenecks, and empty supermarket shelves. A couple of million people are still set to come off furlough, back into jobs that may no longer exist. The labour market is in utter chaos. But, hey, here’s a good idea. Let’s whack a tax on jobs. Really? The government’s widely leaked plan to increase National Insurance, a tax on jobs, could not come at a worse possible time.  The government’s widely leaked plan to increase National Insurance, a tax on jobs, could not come at a worse possible time We can all debate whether

A tax rise for care won’t solve the problem

The tax burden in the UK is nearing a 70-year high — but that’s not stopping ministers from mulling over plans to hike taxes further. According to reports this morning, Boris Johnson and Rishi Sunak are close to agreeing an increase to national insurance to help address the NHS backlog (five million patients in England, and counting). They also want to fill the long-standing black hole in the social care budget: something Johnson promised he’d address nearly two years ago to the day when he first entered Downing Street. The rumours have immediately led to criticism of the government’s willingness to break its manifesto pledge, not to raise income tax,