NI, the pension and the contributory principle

Beveridge nationalised the popular and successful contributory or insurance principle. Working men  in the 1940s paid weekly into “the club”, “the social”  or “the sick”, charities and societies that paid them assistance if they fell ill or lost their weekly wage. They believed in working to keep their families and thought it right to pay for insurance against worklessness.

Beveridge created a national insurance scheme which provided subsistence payments if someone could no longer get a weekly wage. It also added in the state pension when they retired. State pensions were included in the sickness and redundancy insurance scheme which depended on a single regular payment out of income.

Subsequent changes understandably saw us want more generous sickness, unemployment and pension payments .Gradually more of the non pension payments were made out of general taxation and no longer depended on contribution records. As the triple lock policy drove the real value of pensions up so pensions came to dominate the NI fund .

I do not wish to reproduce arguments over the fact that  the NI fund has always been pay  as you go, not funded. It receives a favourable audit certificate every year because  current payments in exceed payments out. The current working generation pays the pension of the older generation in the knowledge that their  children  will pay their pensions in due course. I will look at the impact of abolition  of employee NI tomorrow.If you wanted to convert to a funded scheme the current generation of workers would need to pay  twice.

120 Comments

  1. Mark B
    March 12, 2024

    Good morning.

    . . . insurance scheme which depended on a single regular payment out of income.

    And that is the point. It was an insurance against loss for those who had. Much like you would with your house and its property. You did not have to do it but, if you did and lost your income, you would get something back. People now see that they can get it without contributions. All you have to do is earn over a certain amount (£9,000 I think) but below £12,800 to qualify. But an insurance scheme is paid no matter what amount you get.

    Personally I think something that is both voluntary and is linked to the level of contributions and return is far better than just handing over a percentage to the State for it to do whatever it wants to do.

    1. Lifelogic
      March 12, 2024

      Indeed they are trying in effect to increase income tax to replace NI. In effect are putting NI on all the income range and unearned income too but calling it income tax (just cutting in earlier with fiscal drag).

      They also, on top off higher taxes keep increasing the age at which the state pension is paid this despite the fact that life expectancy has declined due to dangerous net harm Covid vaccines, Madazolin use, a defective delayed & overloaded NHS, late ambulances…

      1. Bloke
        March 13, 2024

        Work is good, so taxing income penalises the wrong way.
        Extravagance, errant behaviour and waste are bad; so they should be the targets for charges.
        Imagine the concept of the government having only one source of income, such as consumption of electricity and fuel.
        Those would be grossly expensive, but the knock-on costs would reach all users fairly according to usage.
        Government would have little left to do, apart from dumping the 10 million words in the current tax code and adding some sensible words on four clean sheets like the US constitution intended.

    2. Peter Wood
      March 12, 2024

      MB,
      So you want our society to return to the common-sense of personal responsibility; you might have to write a full explanation of what that means for the people currently infesting the Palace of Westminster and environs…

    3. James Freeman
      March 12, 2024

      If you have more than £16,000 in savings, you are no longer entitled to receive most benefits. The state pension is not enough to live on, so everybody should supplement it with private pensions. But the government will pay you pension credit anyway if you don’t.

      So, if you are on a low income, there is little incentive to do the right thing by saving into a pension scheme or building up your own savings. The whole system is a mess. The pensions element is a Ponzi scheme, so it is almost impossible for the government to reform.

      1. JoolsB
        March 12, 2024

        Spot on. Our joint state and private pensions are below the national average income but because we have savings we get no help with our £3,500 council tax. Meanwhile, couple up the lane are on pension credit, pay no council tax, get dental and eye treatment free, cost of living payments, etc., it turns out they are better off than us who have contributed all our working lives into our pensions and are eligible for nothing. This Consocialist Government just like Labour, punish those who provide for themselves and tax us to the hilt so they can look after those who don’t.

        1. Donna
          March 13, 2024

          +1

        2. a-tracy
          March 13, 2024

          This will be a problem moving forward as parents tell their children they’re much worse off by putting some aside for their retirement. You might as well blow the lot. I know people selling their homes and renting houses and spending the lot, cruises, their grandchildren’s treats, and trips to Disneyland, figuring when it runs out, the government will cover their housing benefit and pension credits will top up their pension.

        3. Gillian Brain
          March 21, 2024

          Wait until you need a Nursing Home. They will take your house, your children’s inheritance and anything else they can get their hands on to pay for your care. The person in the next room/bed as you who has hardly worked, paid NI or Taxes will have it all paid for and their family will still be paid benefits as well!

      2. Mickey Taking
        March 12, 2024

        Us pensioners, and by the way our middle-aged children, are looking around and thinking ‘why did we go without believing it was to protect us from a miserable old-age, when those feckless, johnny-come-latelies are getting more than we are ?’
        A bizarre situation prompting a breakdown of the economy, social structure, motivation to maintain morals etc….
        Governments need to reflect and come to terms with ‘reap what you sow’.
        Dystopia here we come, a take what you want/need society.

    4. Ian wragg
      March 12, 2024

      We now have a situation where a large cohort pay nothing into the system but extract large sums our.
      Some sections of society never work because it’s a cultural thing. Annually we import more and more people who will spend a lifetime on benefits.
      The sooner they are contribution based the better. That would deincentivise the boat people.

      1. margaret
        March 13, 2024

        The culture has it ,and I cannot specify, as this would incite years and years of legal battles, that one culture does something wrong or deliberately bad against another culture and whilst the naive brits , try honour fairness and justice, the other culture will back their own up what ever they have done. This follows that the ones who actually gain power are the liars. This happens again and again.

      2. hefner
        March 13, 2024

        Just to put a bit of meat on IW’s almost meaningless comments: what do ‘large cohort’ and ‘large sums’ mean without any quantitative information?

        http://www.gov.uk 13/02/2024 ‘DWP benefits statistics’
        Employment and support allowances: 1.6 m claimants (fell by 5.3% since 2023)
        Income support: 140,000 claimants (fell by 18.3%)
        Jobseeker’s allowance: 88,000 claimants (fell by 1.6%)
        Housing benefits: 2.3 m claimants (fell by 6.0%)
        In Dec’23, there were 6.3 m Universal Credit claimants.

        Overall a total of around 10 m getting ‘something’ from the State.

        Obviously people can claim more than one benefit, see ‘Benefit combination statistics’:
        Excluding State Pension Age (12.6 m in Feb’23) 9.3 m are of working age, 660,000 are under 16 receiving Disability Living Allowance).

        ons.gov.uk 12/03/2024 ‘Labour market overview’ and ‘Employment in the UK’
        Actual number of people in work 31.736 m as of Dec’2023 (statista.com 12/03/2024)

        Productivity growth in private sector: 0% in the last three months of 2023.
        International comparisons of UK productivity ons.gov.uk 11/01/2023 latest comparison with G7 countries for full year is for 2021.

        ftadviser.com 29/08/2023 ‘Half of people claiming new state pension receive full amount’.

        Draw your own conclusions.

    5. Everhopeful
      March 12, 2024

      Well said!
      And I do not believe that govts should have used NI contributions to further their policies.
      Since 1911 the system has been subject to many amendments making the stark warning on my relative’s 1948 papers ( basically if you don’t pay in you don’t get ) somewhat redundant.
      Also I’m pretty sure that the available benefits used to be far more transparent.
      Now one needs to be fully embedded in the system to understand the riches available on Treasure Island.
      Did I read that a/several million (?) sick folk are planning to “go on benefits”?
      The slow march towards 15 min reserves, no cash, a totally different health model ( in partnership with a drug Co.) carries on apace and now are these sick people the germ of Universal Basic Income?

    6. Pominoz
      March 12, 2024

      Mark B,

      But what about the now retired, who contributed via their National Insurance deductions, believing that such contributions would deliver, in their latter years, the pension which was ‘guaranteed’ to supplement meagre income in retirement, but who subsequently chose to live in the likes of Australia, Canada, New Zealand and a few other non-European or Non-US locations, but now find them deprived of all pension increments due to the indefensible frozen pension policy of a whole succession of Governments, both Labour and Conservative. Why are they treated so abysmally compared to retirees in, say, Spain and the remainder of the EU, The USA and even The Phillipnes. Many of these elderly people are living in relative poverty, despite their, sometimes, significant contributions via National Insurance, fully expecting the British (British – the name suggests (or used to suggest) you can absolutely rely on BRITAIN to deliver what is fair) Government to look after their citizens who contributed, during their working lives, to the benefit of the nation as a whole. Massive levels of funding are now provided, by the British Government, to countries around the world, but BRITISH citizens, who led a life expecting a fair deal, are now being ignored. This gross failure should be remedied without delay and the many years of shortfall in pensions rectified without delay. Failure to remedy is utterly indefensible and should reflect on whichever Government is in power but refuses to address the problem.

      1. KB
        March 12, 2024

        I don’t agree. The NI contributions were never invested, it is the current workforce paying your pension via their contributions. It’s not “your” money. If you live abroad, you are not supporting the UK economy with your pension. In fact, given how much pressure the NI fund will be under in the near future, I think there is an argument for reserving the state pension for UK residents only.
        Bear in mind also we have lots of immigrants paying NI, and will qualify for the UK pension. A lot of them will “go home” to retire, and that money is then lost to us. Some years back there was a TV programme about all the centenarians claiming UK pension in the mountains of Pakistan. It is too dangerous to go and check if they are still alive apparently, and they don’t make programmes like that anymore.

        1. Pominoz
          March 13, 2024

          KB,
          When I was in the ‘current workforce’ I was paying contributions, some via SERPS, which all, at the time, understood, were to enhance our personal pensions in retirement. The fact that Government decided that, in certain parts of the world, they would not deliver on what were perceived to be firm commitments as regards pension, is indefensible. Please put forward plausible arguments as to why, for example, UK pensioners living on the US side of Niagara Falls receives increasing state pensions, whilst those on the Canadian side have frozen pensions. Also, why, following Brexit, did the UK government decide that pensioners continuing to live in Spain, France, Germany, etc. warrant the full indexed pension, whilst continuing to ignore those in other parts of the world on frozen pensions.

          1. KB
            March 14, 2024

            I’m not defending the fact that there are different arrangements for different countries. That does appear daft.
            What I am questioning is the whole concept of sending money abroad to support jobs and the economy in our competitor countries. Pensions paid in this country support the economy and local jobs. There was never any savings fund from your NI contributions, your pension is paid out of current taxation. That means some of our current NI contributions go straight to other countries, and that will only increase in the future. We need to save money or the NI fund will deplete to zero in the 2030’s.

      2. a-tracy
        March 13, 2024

        The thing is, Pominoz, perhaps the State pension is only there really to pay for the council tax (money straight back to the government), water rates, energy bills in the UK, and food in the UK. 20% back off all other purchases made in the UK. Don’t people have a secondary pension from Australia or NZ or Canada?

        1. Pominoz
          March 14, 2024

          a-tracy,
          Certainly not in my case as, despite living here for 22 years, I am still regarded as a temporary resident – and Australian pensions are means tested.

    7. Ian wragg
      March 12, 2024

      So the government has had an epiphany moment and announces the building of new gas fired power stations. The fact you won’t be in power to implement this policy doesn’t matter because if by some miracle you did get back in it would be quietly shelved.
      Who in their right mind would build a plant with a potential 40 year life to be continually threatened with closure. Who is going to pay the vast subsidies to keep them standby or running on low load. Another too little too late announcement from a busted flush.

      1. Donna
        March 13, 2024

        Dead cat strategy. Anderson’s defection has seriously rattled them so they make a high profile announcement which makes no sense whatsoever, but will change the headlines and give the chattering class something else to focus on.

      2. a-tracy
        March 13, 2024

        They need to get this ratified by a majority of all the other MPs from all parties.

  2. DOM
    March 12, 2024

    Unfunded and by extension unsustainable changes to pensions and welfare payments brought in by successive political leaders driven more by electoral considerations rather than strict fiscal considerations.

    The state and all of its dependents exist to further its own interest at the expense of the private sector. That is unsustainable. The private sector produces all that we use and consume to make daily life comfortable. The state’s role is merely one of redistribution (taking their cut or margin) while demanding we thank it for such a parasitic task. Mug’s game!

  3. agricola
    March 12, 2024

    Whatever the details of the current NI, it succeeds in giving UK citizens possibly the worst national pension scheme in Europe, which in turn leads to a government pay out for just about everything imaginable that said citizen has become entitled to. It is the root of the dependent society and in many cases is grotesquely unfair.

    For instance why should the profligate be entitled to free end of life care, when those who have led a more responsible life, have virtually all that taken from them in order to die with dignity in comfort. It is a form of double taxation that any government should be ashamed of, but the majority of politicians have no shame.

    The excuse is that it would be expensive, but then so is paying unnecessary hand outs to 20,000,000 of the population minus those who really need it. Witness the temporary neighbour who has had four irresponsibly produced children taken away, lives on canabis, has never worked, lives on her giro cheques, and gets given a brand new mid range car when all necessary shops are only 100 yards away. You politicians, either to buy votes or out of sheer stupidity have created a society that can choose a lifestyle assuaging work, but living on the backs of the responsible and ambitious who make work a lifestyle choice. An ever reducing productive number in UK society carry an ever increasing number of profligate members of the same society and politicians are the fertilizer. Not content with such idiocy, the same politicians invite in 1,200,000 nett dependent migrants to replace the 500,000 per annum who are fed to the back teeth with it, and leave for more attractive destinations. What bigger number than 21st are you aiming for in terms of personal GDP. As this rot runs through everthing else that politicians touch, I find it surprising that they cannot sense the discontent.

    1. agricola
      March 12, 2024

      When I wrote this nothing had been moderrated. When I posted it only one comment had been published at around 06.30 this morning. It is now 17.31 so I can only assume the content is too accurate to be published.

  4. Iain gill
    March 12, 2024

    Lee Anderson is making the most sense now.

    1. glen cullen
      March 12, 2024

      +1

  5. Peter Gardner
    March 12, 2024

    Thank you for the history. The issue is that while the system treats everyone the same, people are not all the same. Even in their medical needs, socio-economic factors affect health and, if they are paying per use of health services, a patient’s choice of treatment. The advantage of including private provision seemlessly into the system is fourfold:
    1) It can be designed to reduce the overall burden on the state,
    2) Those who can afford better pensions and better healthcare may do so without being shut out of state provision, or causing social division
    3) Those who cannot afford to pay more than their state contribution will get better care than if that level of care were available to everyone.
    4) Private investment and insurance companies operating in the free market usually get better returns on the funds than government departments (so long as there is competition).
    These advantages don’t necessarily accrue but can if the system is designed properly and should be set as objectives. They are also interdependent, such that for example, setting too high a level of minimum care would raise the threshold at which people would voluntarily make additional contributions into their private health and retirement funds, and thus increase the proportion of people wholly dependent on the state.
    I have said many times Australia has a far better health system and the reasons. 45% of Australians have private hospital cover and 55% have health other than hospital cover. In the UK only 22% have private health cover and it was a steady 12% until 2019. Health outcomes are far superior than in the UK yet the spend per capita is only slightly more. Lord Hannan has written about this perhaps he has studied it in depth.
    On pensions, 39% of Australians of pension age in 2023 received the full state pension and a further 24% received a part pension. 37% were fully self funded (no state pension) and this is forecast to increase to 43%. In UK 71% of pensions had some private pension income but this does not affect their entitlement to the state pension (received by 97% of pensioners). Private pension fund contributions are mandatory for all in employment. The excellent Australian superannuation scheme is essential to keep the state small. Public expenditure as % of GDP is set to fall from 38% to 36% by 2028. Uk’s is currently 45.6% and you know the forecasts better than I do.

  6. Javelin
    March 12, 2024

    Been to Conservative Home for the first time in years, and it appears the writers live in an alternative universe.

    The Conservatives are 27 points behind in the polls and about to suffer the biggest defeat of any political party in the history and the writers are busy writing about the nuances of policy and people.

    Genuinely worthy of the overused analogy of arranging the deck chairs on the Titanic.

    1. iain gill
      March 12, 2024

      Conservative Home for me lost any credibility when they would wholesale remove comments on their site which were pro Brexit in the months leading up to the referendum. They were not only extreme remainers in editorial policy, they were actively hiding the massed responses from the pro Brexit readership.

  7. Sakara Gold
    March 12, 2024

    In a desperate attempt to curry favour with Big Oil, Sunak has announced that we will build yet more gas-fired power stations, condeming the UK to inevitable volatility in fossil fuel prices. Preposterously, he has threatened black-outs if we don’t

    Let’s be clear about Sunak. Ever since he was annointed PM he has kowtowed to the fossil fuel lobby’s deranged demands to slow the introduction of EV’s, insanely obstruct the upgrade of the national grid and rashly use the planning system to prevent more onshore wind and solar harvesting our abundant supplies of free energy etc etc.

    The government cannot deliver the lower bills and energy security we need because of its incompetence in bungling the offshore wind auctions – and failing on enforcing buy-to-let energy efficiency measures.

    Last year, gas accounted for 32% of Great Britain’s electricity generation, ahead of 29% from wind and 14% from nuclear. Clearly, we need more renewables sources of energy, not more gas

    Reply Mr Sunak does not get lobbied by oil and gas cos in the way you suggest.The oil and gas majors are on their own transition, building renewable businesses. There is no point in building more renewables without solving the problems of storage and grid capacity. The current system only works with gas ready to run on windless days and in the dark.

    1. IanT
      March 12, 2024

      The only problem with todays announcement about new gas-fired power stations is why it took so long to make it. It was quite obvious we needed to replace the existing power stations that were being closed down. Of course nothing will happen in this Governments remaining days in power, so maybe it’s really just about trying to embaress Labour going forward.

      As for “he has threatened black-outs if we don’t” – He doesn’t need to threathen anything SG, this is simply a statement of fact and has been a blindingly obvious outcome given current energy policies for a very long time. As an ardent wanna-be cave dweller this may not bother you but I live in the real world and can still remember the 3 Day Weeks and black outs of the 70’s. I’m sure Mr Starmer does too, so he will have no excuses.

      1. Sakara Gold
        March 13, 2024

        @IanT

        Your tiresome, pro fossil fuel anti-net zero rants are, as today, frequently inaccurate. For the record, neither myself nor the vast majority of people in the UK live in caves

        Mrs Gold and I own a nice three bedroom house, which is well insulated. I have a 3kWh solar panel system on my roof and I heat my home using a HETAS approved low-emissions log burner. The fuel comes from farms where they have grubbed 50% of their fruit trees post-brexit. I drive an EV – and grow my own vegetables

        This winter renewables have provided about 40% of our electricity demands, saving us from importing about 25 tankers of LNG. There have not been any blackouts and because of the interconnectors with the EU, there never will be

        Get real for once and start doing your bit to save our beautiful planet from fools like Sunak

        1. Sam
          March 13, 2024

          Burning wood creates pollution SG
          The smoke and ash gets into the air and makes people with asthma and other lung problems suffer.
          Far more pollution than a gas central heating system
          I’m surprised you own a log burner.
          An electric heater would be much better.

  8. Rod Evans
    March 12, 2024

    WE have had 14 years in office John, can you list the areas of life in Britain that are now better after this 14 years in office than they were after the 13 years of Labours destructive policies that have not been repealed.
    The Climate Change Act of 2008 and the Equalities Act being of 2010 just two examples of the most damaging legislation ever introduced to the country, are still on the statute book. Why?

    1. a-tracy
      March 13, 2024

      We do a rubbish job in the UK celebrating successes in developing, building projects, schooling, . Breakthroughs in genetics and genome based research, bionics, AI.

      “Right now, the UK is a global leader in cancer research” Cancer Research UK…England to rollout world-first seven-minute cancer treatment jab” Reuters https://www.reuters.com/world/uk/england-rollout-world-first-seven-minute-cancer-treatment-jab-2023-08-29/

      The top 100 construction projects within the UK. https://barbour-abi.com/top-100-construction-projects-uk/
      Crossrail cost £18.9bn.
      Hinckley Point £23bn.
      Tideway £4.2bn
      Heathrow Airport expansion £14bn

      As outlined in Chapter 16, since 2011 the government has set out its ‘Top 40 priority
      infrastructure investments’, to support delivery of its objectives in each sector.
      https://assets.publishing.service.gov.uk/media/5a7de87bed915d74e33eeccb/Top_40_Annex_FINAL.pdf

      “Pupils in England have risen up the international rankings for maths, placing England as one of the top performing countries in the western world.5 Dec 2023” FENews 16 UP 9 yes NINE places have you heard much about this? Instead we hear how the UK is down because of Scotland and Wales.

      May 2023 — England has gained a top five place in new international rankings for reading. The latest Progress in International Reading Literacy Study, . London Evening Standard. 4th in the International rankings.

      Teenagers now in full time schooling from 16-18 or apprenticeships, 17 from 2013, 18 to 2015. Whether this is a good idea or not is another matter, but it is being paid for at a considerable cost, I’d estimate £2bn per year.

      1. Mickey Taking
        March 13, 2024

        ‘the UK is a global leader in cancer research’ pity we are in the 3rd world for actually treating it!

        1. A-tracy
          March 15, 2024

          Are we MT? Where have you seen that ranking?

  9. Roy Grainger
    March 12, 2024

    The argument that the pension is pay-as-you-go and not funded is irrelevant. I’ve paid National Insurance contributions in order to get a pension – the fact the government have chosen to use that money to spend on other things rather than save and invest it to provide my pension is not my fault and irrelevant to me. So any move to make the pension means-tested for example would be effectively a breach of contract.

    The fact Hunt wants to eliminate NI is interesting and suspicious – it was the only piece of information around the budget that he didn’t leak to the press beforehand. It is also one of those things with long-term consequences like scrapping A Levels that the Conservative head boys seem to think they can do on a whim without bothering to put it in an election manifesto or have it properly debated either in parliament or within their own party.

  10. Donna
    March 12, 2024

    There should be no changes made to the NI system/State Pension without abolition of the guaranteed and overly generous Public Sector pension arrangements …. including the Gold Plated Pensions of MPs and the oh-so-special Director of Public Prosecutions.

    Public Sector employees, including MPs and the oh-so-special Director of Public Prosecutions, should have to risk their retired futures on the same contributory pension systems as private sector employees. The current Public Sector pension boondoggle is already unaffordable and is only going to get worse.

  11. Donna
    March 12, 2024

    Off topic.

    So Sunak is now admitting that 14 years of Blue-Green Socialism and capitulation to the Eco Lobby (including blowing up our remaining coal-fired power stations) means the UK is at serious risk of blackouts.

    So now we’re going to pay a fortune to install unreliable, intermittent windmills AND – in order to provide energy security – we’re also going to have to pay for new gas-fired power stations. ie we’re paying twice. Once for global virtue-signalling, and a second time to keep the lights on.

    The Minister who announced this lunatic policy on GB News this morning proudly explained that the gas power stations, built at considerable expense, would be a back-up system and probably wouldn’t be used very much. But were necessary because the windmills couldn’t be relied on.

    Unfortunately, neither of the presenters had the nous to ask him WHY, if gas is a reliable system and windmills clearly aren’t, we didn’t just do away with the unreliable windmills and use a reliable gas system.

    And the climate will change anyway, because it always has and always will.

    1. A-tracy
      March 15, 2024

      Blue – Green – Yellow (remember yellows were in the collective for five years). Even if red were in the mix the Eco Lobby has won them all over.

  12. Berkshire Alan
    March 12, 2024

    Yes I can well remember my Father paying into a Social Fund for sickness benefit, as few workers were paid anything if off sick back in the 1950’s.

    When I started work 1960’s you needed I think 45 years of full NI contributions to gain a full pension entitlement (for men)
    There was always some confusion with regards to woman, some made Full payment, some Part payment if married, credits were gained if Childminding your own children, and married woman also qualified for a Pension based on the husbands contributions.
    Then we had further modifications over the years with different entitlements, and now we seem to need to have fewer years contributions to qualify, an increased retirement age, with a longer living age expectancy, and other benefits if you do not qualify for a pension in the first place.
    Thus the link between payment and entitlement has been completely lost not just on State Pensions but on all Benefits, so we end up with a complicated mess, that few really understand, where many get something for nothing, and others get little (the basic State pension being impossible to live on) having paid in all their lives and where work, saving for your own future, and paying taxes is not rewarded/encouraged.
    What a daft policy we have at present !

  13. Walt
    March 12, 2024

    Sir John, you omit to note the Castle Scheme, introduced in the 1970s by Barbara Castle and formally named The State Earnings Related Pension Scheme, SERPS. That was a funded scheme, not a pay-as-you-go scheme and not a hypothecated tax: there was a formula that promised payments out according to payments in. Subsequent governments reduced the promised payments out and after a couple of decades abandoned the scheme.

    1. Berkshire Alan
      March 12, 2024

      Walt
      Also remember Graduated Pension contributions, yet another twist that has not purchased any more benefits, because the whole system was changed again, and the new Standard State Pension is greater than the old one after paying the top ups to supposedly get more !
      Successive Governments of all colours over the years have slowly destroyed the very basics and DNA of the Country, self sufficiency and pride in work has been steadily eroded by taxation, regulations and a Benefits system which penalises those who actually try to help themselves.
      We now have growing millions of people, who simply do not even want to bother to look for work, as it does not pay.
      The last Budget had absolutely nothing in it for people earning less than £25,000.
      Why get off Benefits which tax free, and go to work, pay tax, and be worse off !

    2. Mickey Taking
      March 12, 2024

      indeed and I paid in – very much doubt I will get anything like back what I paid (plus interest of course).

      1. a-tracy
        March 13, 2024

        But you were never just paying for yourself MT, you are paying for top ups for part-time working wives, for people who can’t work, for people who don’t earn high wages and don’t pay enough in to cover their family, that is what we have a social state for and Labour are promising to do more! For less for those at the bottom.

        1. Mickey Taking
          March 13, 2024

          I never imagined SERPS was going to replace the concept of the annual Budget dealing with the lower paid via Personal allowance, income tax rate, and a myriad of other taxes designed to load the wasteful purse of the PM & Cabinet!

  14. Narrow Shoulders
    March 12, 2024

    Much like a student tax was introduced through loans which effectively taxed students twice why not introduce an immigrant’s NI scheme as their forebears have not paid in. An extra 5% from £0 would make up for the infrastructure they are using and benefits claimed.

    The proceeds from this can start a ring fenced sovereign fund which can pay pensions in years to come.

    The Work place pension scheme will pay the same as the state pension when the first members have contributed their whole working lives so I suspect the state pension is earmarked for abolition anyway.

    1. a-tracy
      March 13, 2024

      It won’t if it stays at 8%, it will provide nothing like a £250,000 pot for those earning less than £30k pa on paye.

  15. Nigl
    March 12, 2024

    And in other news. Well done Lee Anderson. May be politically futile but at least one Tory MP with guts prepared to stand up against the anti conservative Blairite One Nation group that has captured the parliamentary party facilitated by a weak Sunak and ministers more interested in their own careers like the vacuous Mordaunt, believing nothing and saying nothing, waiting for a leadership contest when she will ‘swing’.to whichever faction she thinks will give her most votes.

  16. beresford
    March 12, 2024

    If we had a funded scheme there would be a pool of money that could be seized by unscrupulous politicians.

  17. Everhopeful
    March 12, 2024

    Whilst reading how WEF is concerned about a “pension gap” in their report “We’ll live to 100 – How can we afford it?” I stumbled across the fact that the Chancellor wanted to make tax cuts in the budget but was advised against it by the IMF and someone at the WEF.
    Our public services needed the money apparently!

    “ Puppets seem like vampires sometimes’
    They live and you’re depleted” Henry Selick

    1. Mickey Taking
      March 12, 2024

      We’ll live to 100? Not a high proportion of our peers/friends etc. Although not quite 80 – I am wearing out my black tie….

    2. Donna
      March 13, 2024

      Well the Dutch have already gone down the “assisted dying” (ie euthanasia) route. Macron is doing the same and Starmer has just announced that he will do the same in the UK if he becomes PM.

      If you’re elderly and don’t want to risk being euthanised, best not vote for a WEF puppet, which rules out Sunak as well as Starmer.

  18. Lynn Atkinson
    March 12, 2024

    The workers who paid into into “the club”, “the social” or “the sick” also saved for their old age – i.e. they had a personal pension pot. They could see this growing and they had control.

    It’s impossible now to save money because it has been Government policy to steer clear of ‘honest’ money for decades, and the interest earned on saved money has long since been comprehensively outstripped by taxes and inflation. So much so that in our own interest we have been FORCED to become a nation of borrowers rather than savers, and this adds substantially to the lack of ‘mental health’ – see the suicide rate.

    To add insult to injury, the State causes pension funds to place the massive amounts of money into the City by subsidising pension funds by 4% – a personal pension controlled by an individual such as I does not benefit in that way. The owners of that wealth unknowingly fund much which is detrimental to their own well-being. Pension funds regularly return 4% (i.e. their subsidy – they make nothing!) if they don’t lose the pension fund altogether – see British Steel and others, whereas I regularly achieve 8% return from the money I control. I am a housewife!

    Your man who pays into a pension pot, including relations of mine who are accountants and bankers, think that their payments are all the effort required to secure a well funded retirement. They feel ‘entitled’ to it.

    They have a shock in store – one of many.

    Time for the state to butt out of pensions, health, education, energy, transport, farming, charities, housing and the ‘creation of British people 🇬🇧’ – only God creates those.

    Let’s see if they can manage to enact legal and just laws, maybe 4 a year. Fund the Justice system and a DEFENCE (NOT AN ATTACK) force. Disband the Army, we need ships, planes and nukes. That’s it!

  19. Bloke
    March 12, 2024

    People tend to be happy to pay into a scheme that involves moderate cost and is efficiently run. This government is both wasteful and convoluted in incompetence, so neither is possible for even simple happiness.

  20. Bloke
    March 12, 2024

    If our population were allocated a standard annual health budget enabling them to spend it on private health care, people would use it efficiently in their own best interests.
    By keeping themselves healthy, most would have a surplus which could be added to their pension at age 60. Others with surplus could allocate it to family members or health charities.
    The state could then focus on people with lifelong conditions to support them properly.

  21. Sir Joe Soap
    March 12, 2024

    Well we have pre-existing infrastructure here, built up by generations past partly in return for the benefit of a pay as you go pension. So you could use up front payments made by incomers in exchange for these infrastructure benefits to backfill such a pension hole.

  22. J+M
    March 12, 2024

    National Insurance is and always has been in the hands of the Treasury just another income tax. The honest thing to do is to abolish it and to raise income tax to meet the shortfall. That still leaves open the question of employers’ contributions, which are often described as a tax on jobs. Perhaps there should be a modest increase in Corporation Tax given that profitability will rise. I am a great believer in the Laffer Curve. There is ample evidence from all around the world that low tax rates increase economic activity and the amount of money collected through taxation. Given that the purpose of the tax system is to raise money to fund government expenditure, surely the focus should be on designing the system so that it maximizes the amount collected rather than using it to score political points or punish whoever is out of favour for the time being.

    1. a-tracy
      March 13, 2024

      Corporation tax has already risen from 19% to 25% a 31.6% increase.

  23. William Long
    March 12, 2024

    I should be interested to know whether NHI contributions are really used to fund pensions and benefits, and are the sole source of such benefits, or whether in practice they have become merged with general taxation. Certainly the latter was the impression Mr Sunak seemed to give when he talked about the ending of NHI, with the reference to double taxation.

    1. KB
      March 12, 2024

      If you Google National Insurance Fund you will find the accounts for it. It is used for a defined list of “contribution-based” benefits and the state pension.
      Also, since the 1990’s, some of it has been used for NHS funding.
      But that is it, it is a hypothecated tax.

  24. Paula
    March 12, 2024

    With a falling population and their replacements unlikely to pay NI ?

  25. acorn
    March 12, 2024

    “Yet, while many young people are undeniably feeling the brunt of our economic stagnation, some will still get to enjoy the riches amassed in earlier decades. Why? Because unlike economic growth, wealth can be passed down through generations, and that’s happening on a vast scale [circa £100 billion a year]. It’s something we at Demos [Dan Goss] are calling the UK’s new age of inheritance.”

    Unfortunately, not everyone will be getting on the lifeboat offered by the new age of inheritance. Far from it. IFS modelling of people in England born in the 1980s suggests that, while the top 25% of inheritors will receive over £284,000 throughout their lives, the bottom 25% will receive less than £30,000. The bottom 10% will inherit less than £850. It means we will see a growing divide between the inheritance ‘will-haves’ and ‘won’t haves”.

    “Inheritances are the £100 billion elephant in the room in talk of British decline” (google it).

    1. Sam
      March 12, 2024

      So acorn the answer is to enrich those less well off people.
      The political system that does this is not socialism.

    2. a-tracy
      March 13, 2024

      Why should we Google it? If people have saved rather than squandered so their children can get a leg up, so what? I say this as someone unlikely to inherit anything much from both sets of parents. Are you one of those of a view that every £1 someone inherits should be taxed at 20% like the Scottish would like to do?

      Brown gave children Child Trust Funds 2002 to 2011, he spent billions of £s on it, what are those investments worth per child now? We were told over 6 million kids benefited, no one saved any money for our generation. The first schemes matured in 2020 how much did each child get? Our generation didn’t get Child tax credits, Working Tax credits, universal credits.

      1. hefner
        March 14, 2024

        Newborns who got £250 in a CTF in 2002, if untouched ie no addition, got a bit more than £1000 in 2020 when they turned 18. An average of a bit more than 8% growth over 18 years.
        1.08^18=3.996

        1. A-tracy
          March 15, 2024

          They got more than £250 hefner, the first set got three lots of £250 towards the end it dropped to £500 + £50. The poorest families got £500 each time! Some of those pots unclaimed are worth more than you say.

  26. Ian B
    March 12, 2024

    That’s the start of the problem it is intended to be a contribution system to protect our futures. From that you get the premise of invested funds growing moving forward. However, in the UK successive Governments have run it as a Ponzi scheme to save their bacon come election time, no other intention materialized. That’s the big political flaw, the dishonesty of the powers that be the politicos
    The great vaguely similar example of one that works would be the Norwegian wealth fund now the World’s largest.
    If the intention is to remove NI, then all those contributions forcibly taken on a false premise should be returned.

    1. Ian B
      March 12, 2024

      If the intention is to remove NI, then all those contributions forcibly taken on a false premise should be returned.
      Pay all the contributions back as the contract is being broken by this Conservative Government, then request that every individual takes care of themselves, create their own pension pot and also pay for their own health insurance. Welfare benefits as now should not be used to make up the shortfall when those neglected to contribute actual get the same as those that do. Unemployment payments should not be after an initial period be paying the same as full employment.
      The UK tax and welfare systems are a mess there are layers over layers to create political virtue signals yet remain un-costed and undefined.

  27. Mike Wilson
    March 12, 2024

    As the triple lock policy drove the real value of pensions up

    The triple lock raises pensions by the highest of 2.5%, wage rises or inflation – whichever is the highest. In how many years since the triple lock started has 2.5% been above inflation and/or wage rises – because that is the only situation where the state pension might rise SLIGHTLY in REAL terms. And if it has risen SLIGHTLY in real terms, that rise is negated by the relentless 5% increase every year in council tax. So, no, Mr. Redwood, in real terms the pension has not gone up and does not cost the government more.

    Reply Wage rises are usually above inflation.

    1. Mickey Taking
      March 12, 2024

      reply to reply ….Did you keep a straight face, and beg forgiveness for your sins in claiming that?

    2. Mike Wilson
      March 12, 2024

      Reply to reply: So, over the last 14 years, how many times, when calculating the triple lock increase, has the state pension increase been above inflation and by how much? And, as I said, if it is a bit above inflation, the increase is wiped out by the relentless 5% annual increases in council tax. I maintain, that in real terms, the state pension increase minus the council tax increase means the pension has not gone up in real terms – AND – it hasn’t cost the government more as a percentage of the tax take (unless the number of new pensioners outnumbers the ones dying). And this is being mitigated by the massive increase in women’s retirement age and the increase for men too.

      1. a-tracy
        March 13, 2024

        Here are the state pension increases, Mike. https://adviser.royallondon.com/technical-central/rates-and-factors/state-pension/basic-state-pension-rates/

        2010 a single person £97.65 or £5077.80 pa
        2010 Married couple £156.15 or £8119.80 pa

        UK Inflation rates
        https://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate/
        2010 3.298%, 2011 4.464%, 2012 2.828%, 2013 2.565%, 2014 1.461%, 2015 0.040% and so on.

  28. Ian Jacobs
    March 12, 2024

    Dear John,

    In your comments tomorrow could you mention other ” unfunded liabilities ” that HMG is responsible for ?

    The State Pension may represent the largest of these- but there are other pension schemes that are covered by
    top-up payments made out of general taxation.

    You mention that the State Pension liability is currently more than covered by contributions paid in.

    That surprises me .

    However there are superannuation schemes which are not in that fortunate position ( at least , as far as I am aware they are not )

    There are many other examples of these ” unfunded liabilities ” and they do not appear in the balance sheets of HMG’s finances ( or the individually affected Departments ).

    Thanks

  29. graham1946
    March 12, 2024

    Why was the pension entitlement period cut? I had to pay in for 44 years to get my pension and yet it was cut to, I think 35 years. I also get less pension than someone who has paid in for the shorter amount of time. What the hell is going on? They say I had so called SERPS to lift the pension, but I paid in for that. Then there are the WASPI women cheated out of years of pension. If the NI is in credit each year why was this necessary? Politicians cannot be trusted with anything it seems.

  30. Ian B
    March 12, 2024

    As @Mark B

    . . . insurance scheme which depended on a single regular payment out of income.

    It is the failure of our political class to move it on, to it being a functioning system rather than a ‘Ponzi’ scheme to get them personally re-elected.

    It is becoming a continuing theme and output from those we elect to protect us. Sell us one story, do the opposite and when they are caught out instead of re-aligning things to work scrap them altogether – give up, find something else to hang a virtue signal on.

    It would appear we need to revamp our democracy, have a complete new Parliament based on the people selecting and electing their own representatives that go forward to serve their communities and the country

  31. David Pelling
    March 12, 2024

    This is a good summary of NI but it is clear that actually what happens to the contributions is that they become part of “general taxation” and the monies are distributed as part of the compete Tax pot. When it was first envisioned the payment for pension sickness and unemployment went towards just that. Now it does not. This is made clear by the chancellor reducing NI contribution by now 4% it clearly shows that it is a convenient way of showing a tax reduction but the reduction of 4% for NI income is a bit of an oxymoron when the NI and of course the NHS needs every penny that is available. In France, as I understand it, they also have a Health insurance system but the monies paid by the wage earners goes to an insurance business designed to provide the needs. It is not part of the overall tax system. Therefore everyone’s national insurance contribution goes to national insurance!!! Neber mind the tax cut. I am sure that many people would be willing to pay more national insurance if they were sure it when to health, pension and unemployment support. And not to the “General Tax Pot”!!

  32. Linda Brown
    March 12, 2024

    I was brought up to believe we all paid our way by working and then the next generation would do the same. I have been proved wrong by the number of 18-24 year olds not in work and don’t intend to be but want all the benefits that other hard workers have put in. Someone should educate these shysters or put them in a dungeon on bread and water and see if it makes a difference to their warped thinking. You have to pay in to get out whatever scheme we have. As to Sunak, I would not listen to anything he says as he has put us in this mess as far as I am concerned with his two for one meals and letting people stay at home on 80% salaries but do no work during COVID. With his type of finance you see how we have ended up and we have worse to come with the Labourites and the ones they intend to take advice from.

  33. Ralph Corderoy
    March 12, 2024

    ‘If you wanted to convert to a funded scheme the current generation of workers would need to pay twice.’

    Every new year of workers could shift the split of their tax a little more to the funded scheme. The unfunded scheme would receive less income over time but also be paying out less as those benefitting from it die off.

    1. a-tracy
      March 13, 2024

      Isn’t that what the workplace pension is for? They are talking of putting the rates up. Currently 5% employee , 3% employer = 8% in total over £6240 (its not been raised since 2020)

  34. Sakara Gold
    March 12, 2024

    In wonderful news for the fossil fuel industry, the government has today failed to back the inovative Xlinks Morocco project – prefering to build more gas fired power stations

    As a result, the company has now announced that it is in discussions with the German governmernt to pipe the electicity there, rather than the UK

    Is there no depths that Sunak will stoop to kowtow to Big Oil/Gas? The sooner the party ditches this idiot, the better

    1. Martin in Bristol
      March 12, 2024

      Nonsense SG
      The two things are not connected.
      Some gas fired power is needed to back up intermittent renewables.
      Otherwise we will have power cuts.
      The Morocco project is being funded mainly by private investors.

      1. Mickey Taking
        March 12, 2024

        with the expectation that they will be able to rip off the Government on pricing?
        Else why do it!

      2. hefner
        March 12, 2024

        Well I agree I cannot see a direct link between the building of new gas powered stations and the delay on Xlinks.
        But cough cough MiB: 29/09/2023 ft.com ‘UK streamlines planning for £20 bn plan to bring power from Morocco’.
        ‘Xlinks is seeking a 25-year contract guaranteeing a price equivalent to £77-£87/MWh in today’s prices’ ‘Under the CFD scheme if the wholesale price falls below the price agreed between the developer and the government, the government pays the developer the difference, funded by a levy on consumer bills’.
        Is that your definition of ‘mainly’?

        Furthermore the Xlinks project originally financed only by Abu Dhabi National Energy Company and the British Octopus Energy Group has now got the French TotalEnergies Group onboard (I guess to help TEG to improve its green image).
        29/11/2023 renewablesnow.com ‘TotalEnergies joins huge Morocco-UK renewables export project’.

        1. Martin in Bristol
          March 13, 2024

          But cough cough, the CFD scheme underpins all renewable power sources.
          Yes hefner the Morocco scheme is mainly invested in by private investors.
          Would you invest in building a huge scheme like this if you had no idea at what price you would be able to charge in X years time?

          1. Mickey Taking
            March 13, 2024

            Good rationale for ‘don’t build it’!

          2. hefner
            March 13, 2024

            But that does not really look like ‘free market’ to me? Or is that how ‘free market’ has always been working, with subventions and guarantees from the state (ie, the consumers)?
            Please let me know.

  35. Ralph Corderoy
    March 12, 2024

    ‘Beveridge nationalised the popular and successful contributory or insurance principle.’

    Wasn’t it Lloyd George and Churchill who nobbled the successful friendly societies just before World War Ⅰ? The societies were popular and helped the sense of community be that by location, church, trade, etc. But two parties disliked them.

    – A doctor had standing in society but a lot of his income might be from a friendly society run by a lower class. If he didn’t satisfy them in cost and quality, he’d be ‘sacked’ as they moved to another doctor. This inversion of power was displeasing.

    – Insurance companies existed, e.g. for life insurance, but faced stiff competition from the lower costs of the friendly societies and that punters would rather pay their ‘tribe’ than a large company.

    The two groups colluded and lobbied the Government. Lloyd George and Churchill collected extra tax to pay for state provision. People stopped funding the friendly societies; they couldn’t afford to pay twice or so no reason to. Steve Baker MP has a good quote from a 1911 edition of the Oddfellows magazine:

    ‘Working men are awakening to the fact that this is a subtle attempt to take from the class to which they belong the administration of the great voluntary organisations which they have built up for themselves, and to hand over the future control to the paid servants of the governing class … This is not liberty; this is not development of self-government, but a new form of autocracy and tyranny not less but the more dangerous because it is benevolent in its intentions. (Oddfellows Magazine, September 1911, p. 544)’ — https://www.stevebaker.info/2013/09/put-patients-in-charge-of-the-nhs/

  36. a-tracy
    March 12, 2024

    Sick pay cover payment was effectively handed over to most employers from 1994. The 80% reimbursement rate of SSP was abolished, and the employer paid other than the smallest employer, and that reimbursement was scrapped for them in 2014.

    The SSP rate from 2024 is a minimum of £116.75 per week for 28 weeks (£6071 pa pro-rata). Rayner says Labour will increase this and remove the waiting period of three days. In addition to this SSP, the employer has to pay for absence holiday since the WTD was ratified. The minimum over the SSP period is 15 days holiday pay at the employee’s regular pay rate.

    So someone on the average wage (£35k) is sick for 28 weeks -£2019.23 + £3269 = £5288 (this sick provision needs accounting for in your charges); perhaps one of the reasons tradesmen don’t like taking on assistants and trainees and some large employers use agencies and sub-contractors instead, which Labour also want to put a stop to or make all companies responsible to pay it for all their regular workers whether low earners or sub-contractors.

  37. Ralph Corderoy
    March 12, 2024

    ‘Subsequent changes understandably saw us want more generous sickness, unemployment and pension payments.’

    No, subsequent politicians made unaffordable promises to expand the Welfare State in exchange for votes.

    A system should be hard to cheat by design. This removes the incentive to cheat from the many of us who would do so if it is easy and we are unlikely to get caught. It is not morals but cowardice which keeps us in line. Once some cheat, others start cheating because it has social approval. It grows to be the norm; there is no shame to it. Then try to stop the large-scale cheating and they will unite to stop you.

  38. RichardP
    March 12, 2024

    National Insurance has been paid in the expectation that there would be a return from it in the form of a state pension. If that was not the case why are people offered the ‘opportunity’ of voluntary contributions to cover gaps in their NI record?
    The fact that the original scheme has been corrupted by politicians and turned into a glorified Ponzi scheme is not our fault. It needs sorting out and the solution is not to short change the contributors in their pensions.

  39. Lifelogic
    March 12, 2024

    Is is often not sensible to force or bribe people to save. Many might be far better off to clear their expensive other debts. They might be paying 5%-40%+ on personal debts or mortgages but Gov. effectively force people to pay NI for a state pension or other pension contributions when these may give returns far less than this and are then taxed at 20-45% when drawn down as well.

  40. Lifelogic
    March 12, 2024

    The UK competition regulator is preparing to launch a formal investigation into the veterinary market after identifying “multiple concerns”

    Can they look into banking racket of 40% personal overdraft for all, rip off insurance increases, fair competition between state and private provision in healthcare, schools, housing and the rip off rigged energy market too please?

  41. Bert+Young
    March 12, 2024

    Back in the late 30’s and 40’s my family always subscribed to a medical scheme in Burton – on – Trent with our local Medical practice ; it was a matter of a few shillings a week for a family of 4 . This voluntary basis made sense and the practice of 4 doctors was highly regarded and successful . Today access to our local practice in South Oxfordshire is difficult ; the waiting time for an appointment is often a matter of weeks ; population density is the cause and there seems to be no end to this problem . Sunak/Hunt have got their priorities wrong in many ways and the pit grows larger every day .

  42. a-tracy
    March 12, 2024

    John, retired people I know don’t like their pension being called a ‘benefit’. Many feel they have funded their State pension with their employer also contributing, especially if they were an average or higher-wage ‘paye’worker. To get a pension of £11502 pa, the pension pot would need to be around £250,000 per person.

    What savings were made per annum by the government by moving men’s and women’s pension age to 66 and still receiving their national insurance premium from continuing to work those extra 6 years in the case of a woman?

    What % of those paying NI in for 44 die before they collect their pension and what % within three years of the old pension age of 65?

    We feel conned. We’ve a right to feel conned. Most people in their 50s started working at the age of 16. By 66, they will have been contributing to what they thought was their own State pension for 50 years. People in company pensions got a national insurance reduction. I think it was 1.5% for the employee. Why did they get that if they get the same State pension amount?

    Reply Life expectancy increased and real pensions increased so it was necessary to raise retirement age. Women on average live longer than men so the old pension differentials fell foul of equality laws.

    1. margaret
      March 13, 2024

      And what about individual rights where a woman has worked all their lives and in comparison a man has never worked!

    2. Donna
      March 13, 2024

      Reply to reply
      But throughout most of their lives, the WASPI women did not have “equality.” Prior to the late ’70s/early ’80s, they didn’t have equality of education and that affected their lifetime earning opportunities. Their job/career opportunities, and therefore their lifetime earnings, were far lower; they were paid less than men; they often didn’t have the option of joining a company pension scheme (I did, my sister – 2 yrs older, didn’t). For many years they were treated as second class citizens – ie they couldn’t get a mortgage without a man guaranteeing it.

      Equality in the State Pension should not have been applied to the generation that did not benefit from equality of education, employment and opportunity.

    3. graham1946
      March 13, 2024

      Equality laws – another fine mess. You could not make this stuff up. No forethought, no vision.

  43. KB
    March 12, 2024

    The contributory principle is important and needs strengthening not weakening. Many people say NI is just like income tax so why not just merge them to simplify things. But if you do that, there is a danger that the link between contribution and benefit gets lost.
    If NI is abolished, it means your state pension is paid out of taxation. So it is then on the same basis as means-tested unemployment benefits etc. How long would it be then, before the state pension becomes means-tested ?
    I think this is the real reason they want to get rid of NI.

    1. Donna
      March 13, 2024

      +1 I expect the plan is to combine NI and IT; as a precursor to means-testing (which will provide for the immigrants who will not have been here long enough to earn a State Pension) and gradually phasing it out.

      I have already warned my sons (mid-30s) not to expect a State Pension and make their own provision – along with advising them to emigrate.

  44. KB
    March 12, 2024

    Even before the recent changes, the 2020 review of the NI fund forecasted it falling to zero in the early 2040’s.
    Social security should be revised so we see an itemised bill for our salary deductions (many countries do this). Sometime in the 1990’s they started raiding the NI fund for NHS funding. This should be stopped, social security should be social security.
    There seems to be only one country in the developed world where social security is subsumed into general taxation, New Zealand. Every other country has separate social security and tax.

  45. KB
    March 12, 2024

    I believe the reason they have cut NI is extremely cynical: to leave Labour with an embarrassing problem. Revenge for the “no money left” note in the drawer. Labour will have to either increase NI again, reduce the state pension, or both.
    It would’ve been far better to increase the personal allowance for income tax. That would benefit the low-paid proportionately the most. Maximum proportionate benefit from the NI reductions occurs at about £50k p.a. income, the 85th percentile of the income distribution.

    1. margaret
      March 13, 2024

      Yes dirty tactics generally are increasing and furthermore are becoming accepted as the norm.

  46. Ian B
    March 12, 2024

    This appears to highlight who the UK’s real enemies are!
    https://order-order.com/2024/03/12/internal-treasury-document-establishes-case-for-large-tax-cuts/
    Even the tax-grabbing fanatics at the Treasury have to face the truth. A Freedom on Information Request has revealed that internal Treasury briefings are making quite the case for a low-tax economy. A document from January this year, delivered to Jeremy Hunt, makes the statistical case. It’s a shame none of its lessons made their way into the budget…???

    While the Treasury claims that “there have been many important factors affecting advanced economy growth rates“, it is forced to admit in its analysis that “over the 2010-22 period, OECD economies with higher total tax (as a share of GDP) have on average seen lower cumulative GDP growth.” A phenomenon that has been observed for hundreds of years…

    – ‘In a nutshell low tax equals high growth’ – the opposite of the Sunak/Hunt Socialist(& Labour party) doctrine

    The briefing established what people have been saying for years – that top performers have lower tax burdens: “The US and Canada saw the fastest GDP growth over in the G7 between 2010 and 2022, with the 1st and 3rd lowest tax burdens in the G7.”

    Tax share of GDP vs growth period 2010 – 2022
    New Zealand growth 45% – tax 32%
    Australia growth 38% – tax 27%
    US growth 31% – tax 25%
    Canada growth 29% – tax 33%
    UK growth 24% – tax 33%

    Germany 23% growth – tax 38%
    France 16% growth – tax 45%

    1. Ian B
      March 12, 2024

      More HM Treasury figures
      tax take vs growth 1997 – 2022
      US growth 81% tax 26%
      UK growth 63% tax 32%
      tax take 23% higher than the US growth 22% lower

      It would have been nice for the period 1997-2010 was shown separate, to highlight the ‘do..do’ this administration has created

  47. acorn
    March 12, 2024

    Interesting that Hunt’s British Shares ISA (£5k tax-free savings), fell at the first fence. The required tax relief would more than use up the tax headroom required for the NI cuts, according to Treasury officials. It appears neither the Treasury or the OBR, were aware that this Rabbit has been sneaked into hunts Hat!

  48. Mickey Taking
    March 12, 2024

    Off Topic – energy!
    Has our PM had a rather late epiphany?
    The UK needs to build new, gas-fired power stations to ensure the country’s energy security, Prime Minister Rishi Sunak said on Tuesday. The new stations would replace existing plants, many of which are aging and will soon be retired. But the government says the plans do not include measures for climate change-limiting carbon capture. That could threaten a legally binding commitment to cut carbon emissions to net zero by 2050, critics say.
    Mr Sunak, writing in the Daily Telegraph, said new gas power stations were needed to have a reliable and affordable back-up for days when renewables like wind and solar did not deliver. “It is the insurance policy Britain needs to protect our energy security, while we deliver our net zero transition,” the prime minister wrote.
    The government did not give any details about when or where the new power stations would be built.
    The decision, which Energy Security Secretary Claire Coutinho outlined in a speech at Chatham House in London, is part of a wide-reaching review of how the UK’s energy market works.

    1. Berkshire Alan
      March 12, 2024

      Was he completely unaware until today, that we would be short of energy in the future.

      If so that is a huge worry, if not, why did he not do something about it before now, and why did he still blow up existing power stations.

      1. Lifelogic
        March 13, 2024

        +1

  49. Berkshire Alan
    March 12, 2024

    Reply- Reply
    John remember any rises are taxed at either 20% or 40% so you need to get that percentage above and on top of the inflation rate to stand still.
    I do not know of any State Pensioner who has had a disposable increase above inflation (after tax has been taken) certainly I have not !.
    Indeed the rifle lock formula was abandoned last year as I recall.

    1. Berkshire Alan
      March 12, 2024

      “Rifle lock”— triple lock

      1. Mickey Taking
        March 13, 2024

        sometimes it would be a great idea for rifles to have a triple lock undone before they could be fired..,(grin)

      2. A-tracy
        March 15, 2024

        The triple lock was maintained in 2023 10.1% and 2024 8.5%

  50. Will in Hampshire
    March 12, 2024

    I’d like to ask our host to offer some commentary on the defection of the former Vice Chairman of the Conservative Party to a different party. In my experience one has to show real loyalty to an organization over a protracted period to be invited to occupy a position like Vice Chairman. What happened here?

  51. Lindsay+McDougall
    March 12, 2024

    Why has personal NI been cut twice? Could it be a poison pill, designed to ensure that we never move to an insurance based health system. I think that we should be told and I think that you, Sir John, should ask the PM or the Secretary of State for Health on our behalf.

  52. margaret
    March 13, 2024

    I took philosophy degree and a masters in community health where I looked at the medical ethics involved in community health. As I apply it to daily work, revelations of many other kinds arise and quite frankly I am disgusted by the degradation of GB’s justice and fairness ethics/ politics at an individual human level.

  53. Mickey Taking
    March 13, 2024

    Off Topic.
    Bringing manufacturing back home.
    Chris Ball and Ian Whateley sit around a large office table and talk about how much they are benefiting from UK firms reshoring. Reshoring is when a company decides to stop getting its manufacturing done overseas, such as in China, and instead returns the work to its home country.
    Mr Ball and Mr Whateley are the bosses of Shropshire-based Advanced Chemical Etching (Ace), which makes precision metal components for customers in the aerospace, automotive, electronics and telecoms sectors.
    They say that Ace’s order book is greatly improving as its clients increasingly bring manufacturing work back to the UK. “We recently had a £800,000 boost in orders, with probably in the region of about £250,000 to £350,000 of that from reshoring,” says Mr Ball. “And there’s a lot of stuff that is just at the quotation stage too.”
    We have all heard of offshoring, which started as a major economic movement in the 1990’s, when companies started to relocate their manufacturing abroad. They more often went to China, where incentives from the Chinese government were generous, and the workers were cheap. The result was a Chinese manufacturing boom, and a long supply chain from Europe and the US to China and beyond.
    But now the West is fighting back, with an increasing trend towards reshoring. More than half of UK manufacturers are now reshoring, according to one study at the start of this year.

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