Death of National Insurance could mean the death of state benefits

Thu, 23/07/2015 - 13:45 -- nick

The Telegraph usually has a pretty direct line to the Conservative party.

So when it floats potential new government policies they are likely to be on their way to becoming law, subject to whether they are roundly ridiculed or not.

The paper's recent story on George Osborne's proposed merging of National Insurance with general income tax is being presented as an attempt to reduce bureaucracy and simplify payments, and sounds reasonable on the surface.

Apparently "senior Conservatives believe that the distinction [between income tax and NI] has become increasingly academic as general taxation also funds the NHS."

But NI also funds a range of other support, a fact glossed over in the article which only briefly alludes to "wider social security programmes", although these include vital payments like sickness and disability benefits, pensions and jobseeker's allowance.

Maybe this linking of NI and income tax just means these benefits will be paid out of this bigger pot and really is based on bureaucratic need?

Another story bobbed up last week which, when linked with the Telegraph's, points in a different direction, one that could see welfare becoming the preserve of the rich.

The Prime Minister, David Cameron, and work and pensions secretary Iain Duncan Smith, are considering making British citizens pay into a savings account which would fund their income if they lost their jobs or became sick or disabled.

As reported in The Guardian, Cameron's official spokeswoman said:

“I think the PM shares the work and pensions secretary’s view that we should be doing more to encourage people to take personal responsibility for how they manage their affairs.”

Join the dots and this looks like another ideological attack on the state, and particularly the welfare state, by a government that appears hell-bent on shrinking the public sector to a point where it only provides soldiers, police and contract management.

So elitist is this Tory party that it appears not to have considered what happens to those people - the majority of unemployed people who are stuck in a low pay/no pay cycle - who never earn enough to save for a rainy day, and are more likely to be fighting debt than putting money aside.

Their situations have just been made worse of course by the tax credit cuts in the recent budget which are not offset by a rise in the minimum wage.

The two stories were released in consecutive weeks, but you may not see any relationship between them.

If Tory coalition and Tory government for the last five years have taught us anything, it is that nothing is out of bounds when social security cuts are being considered.

After years of bashing unemployed claimants while lauding workers, the first few months of stand-alone Conservatism have already seen huge cuts to the support employees receive, as if this previous moralising meant nothing and was simply a convenient fig-leaf for a dismissal of the poor and an over-zealous emphasis on individualism at any cost.

Few cuts are off-limits to this unfettered Tory government, and every bizarre idea that crosses the news pages has a better-than-evens chance of becoming policy, as long as it results in a smaller public spending bill at the end of it.

Those who still have a sentimental attachment to children shouldn't worry: Smith is in the process of redefining child poverty so you won't have to hear about the suffering his policies create as their experiences grow more miserable but they fit within a happier category.

If NI and income tax are joined, expect to see the welfare state look radically different within a very short time.