NI rate rise for 25 million brits planned.

[big fat yorkshire pudding]

BFYP
The point I'm making is that we will still need to pay large amounts for care costs every year, well after COVID is a far distant memory. Essentially COVID is a big one-time capital cost, whereas care is a big permanent, annual current cost. You can pay for capital costs through long term borrowing, not through tax income. You have to pay current costs through tax income. So conflating the two is calculated to deceive. But it does sound superficially plausible.

Of course it's a narrative I don't disagree.  It only builds up that way because of choice of the government doesn't it?  It's not as simple as A pays for B, C pays for D etc etc and doesn't need to be, big picture and all.  Of course it would be better if the capital expenditure promoted growth in the economy and thus increased the tax take naturally wouldn't it?

So where does this leave the so called pay rise for NHS staff?

The increase in NI will eat into the minimal increase given to NHS staff after Covid, alongside the fall in value due to cost of living increases.

Give miserly with one hand, take back with the other.
This will do nothing for staff morale and recruitment to the sector.

As a follow up, it looks like inflation is going towards 4% this year;
https://www.theguardian.com/business/2021/aug/05/bank-of-england-uk-inflation-interest-rates-prices

So the NHS pay rise of 3% is reduced by the NI increase to 1.75% before inflation.

Add in the 4% forecast for inflation, and the pay rise for NHS staff is actually a real terms pay CUT of 2.25%, for some of those on low pay to start with.

In what world is that reasonable or fair?

And therin lies the problem, pay the NHS more you need to fund it and the challenge that I mentioned months ago and was blooming obvious.  Don't increase the NHS funding then pay the staff more giving 0 benefit to the system.  Something has to give somewhere and it's the public who pays for it in the end in just about every example.

[big fat yorkshire pudding]

For example someone who owns and rents out a dozen houses and lives off that income will not pay a penny to the new care sector costs because they don't pay NI on their rental income. Their care costs will be subsidised by hospital cleaners and call centre workers who WILL pay the increased NI.

Equally apply that and where is the cost going?  Rents, so again they don't lose out do they but the persons renting do (who are probably said cleaners and call centre workers).

[albie]

BFYP,

It is not the public who pay for it though, it is certain sections of the community who pay disproportionately to their available resources.

A NI hike is a bigger slice of the disposable income of those on low pay.
The principle is wrong, the burden should fall to those who can most afford it, not those who struggle to make ends meet.

A wider discussion needs to be had about the tax system in the UK, it is badly in need of a review and a root and branch overhaul.

Rather than adding to a tax system which is regressive, and looks to the tax objectives of the 1970's, the system must reflect the weightings of the new economy.

Digital services, off shore tax avoidance, and the need to decarbonise are all priorities not properly supported within the current tax framework.

It is time that they were!

[sha66y]

Easy for you to say.  It's the young that get fleeced.  A graduate for example is massively more stung already and this is just yet another addition to that, not to mention house prices.

Of course things need to be paid for but they choose a tax that impacts the well off and elderly less proportionately (or not at all if a retiree).

BFYP
I've been calling for more support for younger people and more taxation on very comfortable, well off older people (of which I'm now one) since before your balls dropped.

Define “well off” please. Genuine question.

Well off = to be able to replace the most expensive thing you own with cash and still have enough left in the bank to get it fixed……..is how a colleague put it!

I don’t understand it either, but it seems simple!

I retired last October at the ripe old age of 58 ……….And love it!

[BillyStubbsTears]

BFYP
The point I'm making is that we will still need to pay large amounts for care costs every year, well after COVID is a far distant memory. Essentially COVID is a big one-time capital cost, whereas care is a big permanent, annual current cost. You can pay for capital costs through long term borrowing, not through tax income. You have to pay current costs through tax income. So conflating the two is calculated to deceive. But it does sound superficially plausible.

Of course it's a narrative I don't disagree.  It only builds up that way because of choice of the government doesn't it?  It's not as simple as A pays for B, C pays for D etc etc and doesn't need to be, big picture and all.  Of course it would be better if the capital expenditure promoted growth in the economy and thus increased the tax take naturally wouldn't it?

So where does this leave the so called pay rise for NHS staff?

The increase in NI will eat into the minimal increase given to NHS staff after Covid, alongside the fall in value due to cost of living increases.

Give miserly with one hand, take back with the other.
This will do nothing for staff morale and recruitment to the sector.

As a follow up, it looks like inflation is going towards 4% this year;
https://www.theguardian.com/business/2021/aug/05/bank-of-england-uk-inflation-interest-rates-prices

So the NHS pay rise of 3% is reduced by the NI increase to 1.75% before inflation.

Add in the 4% forecast for inflation, and the pay rise for NHS staff is actually a real terms pay CUT of 2.25%, for some of those on low pay to start with.

In what world is that reasonable or fair?

And therin lies the problem, pay the NHS more you need to fund it and the challenge that I mentioned months ago and was blooming obvious.  Don't increase the NHS funding then pay the staff more giving 0 benefit to the system.  Something has to give somewhere and it's the public who pays for it in the end in just about every example.

BFYP

I entirely agree about using capital expenditure to push up growth. That is the core principle of how Keynesian stimulus works in a depressed economy. And as I've torn my hair out about numerous times, THE most stupid economic policy of modern times was the way in which Austerity was focussed on slashing Govt capital expenditure when the economy hadn't recovered from the Great Recession, thus knocking growth flat for three years and making the 2010s the worst decade of GDP and wage growth since the Napoleonic Wars.

The interesting thing from here is that if Johnson has one thing right, it is a belief in stimulus spending. But Sunak appears to be an old fashioned Austerian who still prioritises debt above boosting economic growth. Who wins that argument will define the rest of the decade for us.

[sha66y]

What is NI ?

[River Don]

So where does this leave the so called pay rise for NHS staff?

The increase in NI will eat into the minimal increase given to NHS staff after Covid, alongside the fall in value due to cost of living increases.

Give miserly with one hand, take back with the other.
This will do nothing for staff morale and recruitment to the sector.

As a follow up, it looks like inflation is going towards 4% this year;
https://www.theguardian.com/business/2021/aug/05/bank-of-england-uk-inflation-interest-rates-prices

So the NHS pay rise of 3% is reduced by the NI increase to 1.75% before inflation.

Add in the 4% forecast for inflation, and the pay rise for NHS staff is actually a real terms pay CUT of 2.25%, for some of those on low pay to start with.

In what world is that reasonable or fair?

From that Guardian article:

Inflation is forecast to hit 4% this year as Britain’s robust recovery from the pandemic accelerates at a blistering pace, the Bank of England has said.

I will be absolutely amazed if this forecast turns out to be right.

[big fat yorkshire pudding]

BFYP,

It is not the public who pay for it though, it is certain sections of the community who pay disproportionately to their available resources.

A NI hike is a bigger slice of the disposable income of those on low pay.
The principle is wrong, the burden should fall to those who can most afford it, not those who struggle to make ends meet.

A wider discussion needs to be had about the tax system in the UK, it is badly in need of a review and a root and branch overhaul.

Rather than adding to a tax system which is regressive, and looks to the tax objectives of the 1970's, the system must reflect the weightings of the new economy.

Digital services, off shore tax avoidance, and the need to decarbonise are all priorities not properly supported within the current tax framework.

It is time that they were!

I do actually fundamentally agree and I'm no tax expert (I am married to one though - yes dinner table conversations are great fun).

I'm sure there are many papers or articles proposing these types of things, but many will be far too radical to be implemented and it's 12 years since I last studied tax.  The biggest one I fully agree with is electronic sales taxes and increased costs for online retailers to level the playing field.  There's also question marks around multinationals that surely should be answered (Amazon etc).  The biggest standout income one for me is the lack of a sliding scale, the cliff edges for middle income earners are crazy.  Why take on a higher job if you lose a significant amount of it, there becomes a point it isn't worth it.

[sha66y]

So what is NI contribution?

[River Don]

https://www.theguardian.com/business/2021/sep/07/bank-of-england-saunders-inflation-interest-rate-rise

A more recent article, seems to be rowing back on the expectations of the extent of any future inflation already.

I really can't see a "blistering" recovery in the offing. Covid is likely to prove more sticky than that. And recent news is the Chinese recovery is already slowing, hampered by Covid and elevated energy prices proving a drag. That's going to set the tone for the global recovery.

I would bet they'll need more stimulus before they dare raise interest rates.

[sha66y]

Ok….clearly the question was worded wrong…

Why should a wealthy man/woman pay National Insurance Contributions?

[big fat yorkshire pudding]

Ok….clearly the question was worded wrong…

Why should a wealthy man/woman pay National Insurance Contributions?

It's just tax with a different name basically.

[sha66y]

Ok….clearly the question was worded wrong…

Why should a wealthy man/woman pay National Insurance Contributions?

It's just tax with a different name basically.

But tax for what?

[BillyStubbsTears]

There's no such thing as a tax "for" anything. Governments impose taxes on who and what they choose. They spend on who and what they choose. No specific tax is ever ringfenced to pay for anything specific. It all goes into a big pot to pay for all the expenditure

[TheFunk]

No government is brave enough to admit that our basic rate of tax is 33.8% so the term National Insurance will remain. NI is tax it's just that only people who earn their income pay it.

[sha66y]

There's no such thing as a tax "for" anything. Governments impose taxes on who and what they choose. They spend on who and what they choose. No specific tax is ever ringfenced to pay for anything specific. It all goes into a big pot to pay for all the expenditure

Ok …
So why is it called NATIONAL INSURANCE CONTRIBUTION.?

[BillyStubbsTears]

It is much worse than that Funk. It's a tax on lower end wages. Anyone earning more than £50k per year pays less NI on every pound they earn above that level.

So this is how it works.

Someone earning £500/week pays £37.92 NI. That is 7.6% of their wage.

Someone earning £5000/week pays  £174.62 NI - 3.5% of their wage.

Taxes that charge the rich a smaller percentage than the poor are called "regressive". NI is about as regressive as it gets. It protects the wealthy and hammers the less wealthy.

[BillyStubbsTears]

There's no such thing as a tax "for" anything. Governments impose taxes on who and what they choose. They spend on who and what they choose. No specific tax is ever ringfenced to pay for anything specific. It all goes into a big pot to pay for all the expenditure

Ok …
So why is it called NATIONAL INSURANCE CONTRIBUTION.?

Because it was brought in to help balance the books when the Welfare State was founded. But NI income is not designed to, and never does perfectly balance Welfare spending.

[Ldr]

There's no such thing as a tax "for" anything. Governments impose taxes on who and what they choose. They spend on who and what they choose. No specific tax is ever ringfenced to pay for anything specific. It all goes into a big pot to pay for all the expenditure

Ok …
So why is it called NATIONAL INSURANCE CONTRIBUTION.?

Because it was brought in to help balance the books when the Welfare State was founded. But NI income is not designed to, and never does perfectly balance Welfare spending.

I guess it worked when introduced when we had a population pyramid that actually resembled a pyramid

[sha66y]

So does NI go into the NHS pot or the Pensions pot?

Or no pot at all…

[Glyn_Wigley]

So the manifesto promise was broken because of Covid? Aye, social care wasn't in the shit before Covid.

[drfchound]

So the manifesto promise was broken because of Covid? Aye, social care wasn't in the shit before Covid.

Is anyone saying that Glyn.
It is fair to say that covid has caused lots of expenditure which wouldn’t normally have been required and perhaps some of that money would have gone to providing care.

[Glyn_Wigley]

So the manifesto promise was broken because of Covid? Aye, social care wasn't in the shit before Covid.

Is anyone saying that Glyn.
It is fair to say that covid has caused lots of expenditure which wouldn’t normally have been required and perhaps some of that money would have gone to providing care.

Boris said Covid was the reason he's breaking his promise not to raise NI to fund social care, in his speech in the Commons. And social care was a problem way before covid happened.

[drfchound]

So the manifesto promise was broken because of Covid? Aye, social care wasn't in the shit before Covid.

Is anyone saying that Glyn.
It is fair to say that covid has caused lots of expenditure which wouldn’t normally have been required and perhaps some of that money would have gone to providing care.

Boris said Covid was the reason he's breaking his promise not to raise NI to fund social care, in his speech in the Commons. And social care was a problem way before covid happened.

I’m not sure what you mean by that.

Edit.

I have retread your post and I think you are backing up my earlier post.
Yes, social care has been a problem for many years, agreed.
But money used to get us through covid surely could have been earmarked to help alleviate the social care problems.

[big fat yorkshire pudding]

So does NI go into the NHS pot or the Pensions pot?

Or no pot at all…

It all goes in to one big pot and then gets split up in to many other pots, it's not s one for one relationship.  Worth noting national insurance is also a tax on business not just people so it's more than just a direct income tax.  Nothing mentioned if this applies to class 1a (paid by employers on bik but not employees).

[sha66y]

Well at least we got 25 million people paying the increase to get the books balanced then…..for a minute I thought it was a bad thing there!

[BillyStubbsTears]

You want to know why this is being paid for through NI increases?

1) Over 65s overwhelmingly don't pay NI.
2) Over 65s overwhelmingly vote Tory.

I wonder what over 65s think of this policy?

https://mobile.twitter.com/YouGov/status/1435268292168531972

Yep that's right. They support it 68:23.

They used to call this "pork barrel politics" in the USA. Corrupt politicians buying the support they needed to win votes by pouring money into their voters' pockets, paid for by everyone else.

[Glyn_Wigley]

So the manifesto promise was broken because of Covid? Aye, social care wasn't in the shit before Covid.

Is anyone saying that Glyn.
It is fair to say that covid has caused lots of expenditure which wouldn’t normally have been required and perhaps some of that money would have gone to providing care.

Boris said Covid was the reason he's breaking his promise not to raise NI to fund social care, in his speech in the Commons. And social care was a problem way before covid happened.

I’m not sure what you mean by that.

Edit.

I have retread your post and I think you are backing up my earlier post.
Yes, social care has been a problem for many years, agreed.
But money used to get us through covid surely could have been earmarked to help alleviate the social care problems.

The money to get us through covid has been borrowed and is part of the national debt. They were never going to borrow to fund social care.

[BillyStubbsTears]

You CANNOT borrow to fund current costs like social care or defence or education or health.

If you could, every country would borrow to have a top grade army and schools and hospitals.

You have to pay for current expenses through taxes. Exactly as Labour said at the last Election. And the Tories repudiated.

But politicians eh? All the same.

[SydneyRover]

''The lost decade: the hidden story of how austerity broke Britain''

It's not so hidden now of course and should be seared into everyone's brain.

''What happened in the UK between 2010 and 2020 will scar us for the rest of our lives. David Cameron’s Conservatives, only just victorious in the 2010 election, sold austerity as a necessary response to the 2008 financial crash. The exact social consequences of these cuts were spelled out last week in Michael Marmot’s report for the Institute of Health Equity: for the first time in a century, life expectancy has stopped growing and for women in poor areas actually fallen.

Meanwhile, the UK got older, with no plan for the decade’s 25% rise in those aged over 65. Social care was a can kicked down the road; as a result, 1.5 million frail old people get no care at all: at the end of the decade, the Johnson government’s response was to deny visas to care staff from abroad, as they earn too little to reach a new £25,600 threshold''

https://www.theguardian.com/society/2020/mar/03/lost-decade-hidden-story-how-austerity-broke-britain