National insurance - people have short memories

[MumofCandR]

I don't understand the outrage over the national insurance increase in the budget. Only 2 years ago (April 2022) Rishi Sunak increased employee NI to 13.25%, 5.25% higher than it is today - fact. Only in January this year it was 12%, today it sits at 8% - fact. This was a very clever move by the conservatives to pull the wool over everyone's eyes. On the one hand, best case scenario it would increase their vote share as they floundered in popularity (didn't work), worst case they would leave the next government with an impossible hole to fill and the NHS underfunded laying the foundations for privatisation, and setting the conditions for any subsequent government to fail - very, very devious. And people seem to have fallen for this machivelian move, memories are incredibly short. So much consternation over a 1.2% increase for employers? This doesn't even bring NI near to where it started out less than 12 months ago, if businesses are this sensitive to a minor % increase in NI then there's far more to worry about the sustainability and viability of these in the first place, surely - AIBU?

And she sold off the public/social housing stock!

I was excluding the debt owned by the Bank of England. It's the next line down. It shows that, even when measured as a percentage of GDP, we're failing to reduce the debt.

And, besides, waiting another five years to reduce PSND (if not PSNDex) is far from being a triumph. The country isn't in a crisis for the next five years that justifies more borrowing. This is the time when the borrowing should be shrunk.

Furthermore, the modified fiscal rule is no better than the previous government's fiscal rule. It's never to balance the books in the current year, but always in the third year, with the third year always pushed back another year. So they never actually have to balance the books, they only have to promise to do so in a few years time.

And, in order to balance the books in year three they've promised to do a whole bunch of things that don't look realistic. The plan says they will increase fuel duty. Well, I'll believe that when I see it. It also promises to impose austerity on departmental spending after large increases in the first couple of years. Again, that doesn't strike me as credible. Why plan for feast and then famine in the spending budgets?

They're not being honest or realistic.

@Xenia "I would much rather we had many many fewer public services. I have seen a doctor twice in 15 years - I call them my £100,000 NHS appointments for 7 minutes a time and would rather have no NHS or one where people pay at point of use and in return pay half my tax bill."

You presumably saw a doctor and had postnatal healthcare when you were a baby - as did any children you had. And a school nurse and dentist (if you're old enough). And BCG jabs. Are you 100% certain that you won't be diagnosed with cancer or dementia in the future? Or that you won't fall and break your hip, or be involved in a traffic accident, catch Covid or be hit by a bus any day soon? The average cost of Stage 1 and 2 breast cancer treatment in the USA is $82,000. For a hip replacement it's around $39,000. In-house hospital care in the USA costs around $3,000 a day, so 10 days in ITU with Covid is going to be costly. Your £100,000 is beginning to look like good value.

The whole point of the universal funding of healthcare is that it is there if and when you need it - and you never know when this will be. And the money doesn't just go to treating you - it pays for the training of doctors and other staff, for the facilities and equipment, and for the treatment of other people that you rely on.

I've never had to call the fire brigade, so can I please have all my money back ... hang on, what's that burning smell?

"the Government will be running a current budget surplus from 2027"

that's a very bold statement. Many people do not share the belief as there are way too many variables involved. I heard it described (by someone I'd consider very knowledgeable) as needing a "reverse lemony snicket situation", i.e. requiring a serious of very fortunate events to occur, to have a hope of coming to fruition.

They need income and need to increase income tax to improve public services.
If we want better services we need to pay higher income tax.
It will lead to better services and a better society.

If you think the budget should be in surplus now, then you should tell us how you would plan to close the £106 billion roughly that is the gap between receipts and total expenditure?

But there would have been an outcry if Labour had campaigned on this ticket and they would never have been elected because "that's what Labour always do, they always put up taxes".

Realistically us all paying more is what we need to do but the majority of people are very reluctant to do so.

This idea of pushing it back on to employers may well backfire but it was them trying to do things a different way.

If we all pay more the better services we will get and thus a better quality of life we will all have.
An increase in income tax could fund this.
We have one life and it will be better lived with better robust well.funded state system.

So I do believe an increase in income tax across the board is needed to fund it.

It’s true—there's often resistance to paying more taxes, even when we all acknowledge the need for improvements in essential services like the NHS and social care. Many people want better services but are hesitant to personally contribute more, hoping someone else will bear the cost.
If we genuinely want a high standard of living supported by robust, well-funded public services, we may need to embrace a broader increase in income tax. This shift could create a more sustainable system that benefits everyone in the long term. Expecting top-tier services without contributing our share is like wanting a champagne lifestyle on a lemonade budget.
Making this change could lead to better services and an improved quality of life for all.

Well said, and thanks for the reminder!

I don't think it is possible, or desirable, to move the budget into cash surplus in one year. It's better to avoid sudden and large changes in fiscal policy, but I would like to end up at the point during non-crisis years, so it is a fair challenge.

Reduced increase in Health spending £10bn
Reduced increase in other departmental spending £10bn
Increase state pension by 2%, rather than 4.1% £3bn (I can't find the precise figure for this, so this is a bit of a guess based on other figures, and is only for year 1)
Increase income tax basic rate by 2% £16bn
Increase the NICs upper rate by 2% £4bn
Increase VAT by 2% (to 22%) £20bn
Increase fuel duty as planned (end temporary 5p cut and increase by 2p) £7bn
Abolish Council Tax and Stamp Duty Land Tax and replace with a Proportionate Property Tax at a rate of 0.75% of house value £36bn

This adds up to £106bn, though I'd expect to implement the changes over 3 years. I'd then use the additional money raised by sticking to 2% state pension increases for the three years (not sure how much this would be, as I can't find the OBR forecasts for average wages, but probably around an extra £3bn), and additional planned increases to fuel duty (£2bn in each year), to increase investment funding.

My ex FIL is in a care home at a cost of over £3k a week and the overarching company have £53m in the bank. I think care homes will be fine. They choose to put profit over paying decent wages anyway.

I'm genuinely interested to read this.

Are you able to give me a rough idea of your background? (Nothing outing obvs)

Dad and Grandad degree-educated. So I had what would be regarded as a middle-class professional family background. London comprehensive education. STEM degree. Civil service employee in a technical role for > decade, followed by working in a couple of different SMEs for the next almost a decade. Bought a house before the banking crash, had to sell it after a divorce. One child now graduated and in her first full-time job. Married again and hopefully about to buy a house again, but left Britain for Ireland after the pandemic.

The contrast between Ireland and Britain is interesting. Ireland was dirt poor not too long ago, but they put effort into building infrastructure with European funding and attracted foreign investment, and so their fiscal position is much stronger. The politicians (and the voters who vote for them) still prefer to cut taxes rather than invest in public services, which I disagree with, but they have the money to make that choice. Britain doesn't.