Parliament is debating today the Government's National Insurance Bill, which will set the earnings limits for paying national insurance contributions. Sounds like a dry bureaucratic issue but actually this is a key decision on whether the Government is serious about tackling poverty and inequality in today's Britain.
The National Insurance system which came out of the Beveridge report was a central plank of the Attlee Labour government's welfare state. It established the system whereby national insurance contributions are paid from our individual earnings into the National Insurance fund to pay for retirement pensions, unemployment and sickness and other benefits. It offered us all a basic level of security whatever life threw at us.
In the 1970s to protect the rich an upper limit was placed on the contributions paid by high earners. This was the uppper earnings limit. As a result those on average earnings today pay about 8.6% of their earnings in NI contributions but those earning £100,000 pay only 3.9%.
I wanted to use today's debate in Parliament on the Government's National Insurance Bill to highlight the unfairness of the earnings limit and to gain support for reform of this system. So I tabled a series of amendments to the Bill abolishing the upper earnings limit so that the high earners would pay the same share as everybody else. This would not only be fairer but it would also raise £8.8 billion for the national insurance fund.
This money could be used to increase child benefit by £14 a week, lifting 400,000 children out of poverty. It could be used to make all personal care for the elderly free or increase the basic sate pension or restore the link between pensions and earnings that Labour has been promising for over a decade.
Regrettably the amendments have been rejected for debate so the Government has lost a critical opportunity to address very practically the inequality which disfigures our society.
Last month the Institute for Fiscal Studies reported that in Britain "inequality is at its highest level since the late 1940s." The IFS actually found that "those at the bottom of income distribution and especially the poorest 15% of households saw their income go up at below average rates and in some cases even fall."
Abolishing the NI upper earnings limit which protects the wealthiest in our society could have been a small but significant step in reddressing this inequality. However in Parliament today we will not even get the chance of discussing this proposal. Welcome to Gordon Brown's Britain 2008.
10 Comments:
John should record a "Clip of the Day" aka the Long Way Down website....
they quite often mention political blogging on programmes such as teh BBC's Westminster Hour, Newsnight etc but usually ignore this one - maybe soem film clips would make them finally realise there IS a blog with the alternative view we all crave - now's our chance with the way the tide's turning in the US I think with teh Kennedy's speaking out against teh Clinton's and endorsing Obama; they're supposed to be delivering him the "dispossed" vote now.. we'll see what Super Tuesday brings...
hope the Artic weather holds off as we have a loal "Super Thursay" - well three way by-election anyway!
John, is the LRC going to vociferously and effectively oppose the welfare reforms announced by Purnell and that buffoon Freud. Thay are barking, cruel and divisive, based on misinformation and yes lies. They are pushing reforms that would normally take a royal commission years to devise. They are deeply ideological and neo-liberal changes,
If the left in the party and members doesn't oppose this wholesale marketisation of welfare with all it entails,, then whats the point of a left?
fo course the left will oppose though we don't get enough mediua attention and unfortunately the Govt's legislative programme is full of stuuf we need to oppose but this is a priority.
At one time in my life I had such bad migraines that I had to take a lot of time off work and I was going to have to consider going on incapacity benefit if I got any worse as apparently you can claim for migraines whihc shows how bad htey can be. However as with any illness you have to get a medical report which explins what you are like on your worst days not your best if you want to be able to claim but if you are like I was genuinely trying to get better or don't know you way around the Benefits systemn you can end up being assessed as not as bad as you really are because they are trying to penalise the majority rather than going after the few real abusers of the systemn as with many areas of public life now.
I hate the way they are once again attacking the sick, in particular the people suffering from depression saying that they should be able to work.
I suffer from depression and anxiety myself (its under control now and I am seeking employment) and it is a difficult illness to treat and takes a long time before it gets under control. I can see that if these attacks increase on these people it could make their recovery take longer and also put them into poverty.
Instead of punishing the vulnerable and needy in society, the government should be focussing on the rich people who continue to find loopholes to avoid paying their fair share of taxes, those are the last people who should be complaining about the tax system, becauseunlike most, they CAN afford it.
Another point to consider is the way non-work earnings are taxed. Income from dividends, interest on savings, capital gains and rents are subject to income tax but not national insurance.
This means that there is a large gap between the tax paid by those who work for a living and those who make their living off capital.
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