MPs and commentators have been arguing this morning over whether a rise in employer NICs would constitute a violation of Labour’s manifesto pledge, which stated:
“The Conservatives have raised the tax burden to a 70-year high. We will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
The IFS considers that a hike would be a “straightforward breach” of the commitment. Tax expert and Labour activist Dan Neidle has pointed out that all employer NIC costs are transferred to employees. Labour’s defence operation has launched on the Tories’ asking for clarification from Labour on whether employer NICs would rise – an election press release issued post-manifesto. The implication being that the manifesto did not rule it out…
Labour MP and “rising star” Dan Tomlinson clarified on Politics Live just now that a hike would constitute a new tax on “working people” because someone who owns and runs a business is obviously a “working person.” The point decimates Labour’s defence as its pledge on “working people” was cast-iron. Was Starmer’s tool factory-owning Dad not a working person?
Labour has just released a new “bombshell” dossier arguing that, by making noises about scrapping National Insurance, the Tories are wiping out revenue “earmarked for the state pension and NHS.” At PMQs Starmer suggested Sunak would either cut the state pension or NHS spending. A basic misunderstanding of how NI works.
National Insurance “contributions” are a myth. The tax is not hypothecated at all. You are not contributing to a fund to get benefits in return. State pensions, benefits, and the NHS are all paid for by general taxation. Labour’s leader is peddling untruths. It’s no wonder Starmer wants NI kept high – Labour’s favourite think tanks want the limited tax extended to all other sources of income rather than just employment. A tax grab that would scour even more cash from the public…
Read the full sham “dossier” below:
Hunt is on the morning round and the focus is on yesterday’s claim it is his “long term ambition” to end the “unfairness” of National Insurance and income double taxation. Welcome idea, but that’s a big promise…
On Times Radio this morning Hunt started rowing back: “That’s a huge job. It raises an enormous amount of money. And I don’t think it’s realistic to say that’s going to happen any time soon.” When asked by Kay Burley on Sky whether he wanted the tax abolished he said “we want to end that unfairness over time… but yes I think that it is wrong that we tax work twice while we tax other forms of income only once” before suggesting abolition is “not the only way that you can end that unfairness, you can merge income tax and national insurance.” Unusually messy for Hunt…
Labour is obviously jumping on this. On Rachel Reeves’ counter-round she is claiming an NI abolition is an unfunded tax cut of £46 billion, bigger “than what even Liz Truss and Kwasi Kwarteng floated when they did their mini-budget a year and a half ago.” Kwasi and Liz will be having a chuckle this morning…
Hunt has announced he will cut National Insurance for employees from 12% to 10% from 6th January. He will also abolish Class 2 NI and cut Class 4 to boost self-employed income. It’s not a full return to tax-cutting Tories however, as a cut in income tax seems to be delayed till the Spring Budget. More to follow…
Commenting more candidly on reports that he voiced opposition to the National Insurance rise in Cabinet last week, Jacob Rees-Mogg has told the Moggcast that while upholding collective responsibility, “it must be right that ministers can, in cabinet, discuss the important issues of the day”:
“And that the whole point of Cabinet is that it disagrees, and then comes to a conclusion that everyone is bound by. If we just turned up like a lot of nodding dolls or whatever they are and agreed with whatever was put in front of us what would be the point of it? It becomes a completely formulaic symbolic opperation”
Asked if he’d resign over opposition to the National Insurance rise, Jacob flatly said “I’m fully supportive of the Prime Minister”. Hmm…
Nine rebel Tory MPs have signed an amendment to the Health and Social Care Levy, which if passed would exempt people from having to pay the social care levy if they took out their own care insurance.
Interestingly a number of the signed-up rebels merely abstained on the second vote last week.
Fysh told the Independent that the amendment will give ministers the option of using some or all of the money raised by the levy to encourage the publish to invest in insurance:
“The amendment would allow us to start having the conversation about what the best system is for the future… it would mean that if future ministers want to create incentives for investment into some kind of modern insurance scheme, officials wouldn’t be able to tell them that the law bars them from doing that.”
Seems like a good idea. While we wait to see how the vote pans out, Guido took to mocking up what Boris would have worn if he’d joined AOC on the red carpet last night…
