70,000 people to lose their ESA from today.

[carernotasaint]

www.guardian.co.uk/society/2012/apr/29/sickness-benefit-cuts

We all pay national insurance (increased to 12%) to cover our sickness benefit. OUr employers pay 13% NI - so the government has been raking in 25% of British earnings in NI to ensure we have an insurance policy for income for long term sickness e.g. cancer - and now the government refuses to pay up

No different to the PPI scandal -

Total receipts from NICs were £96.5 billion in 2010/11

The total expected payout for ESA in 2010/11 - £1.6 billion (NI based) - £1.2billion income based) - total £2.8 billion

I think with £96.5 billion NI collected by the government £2.8 billion is a tiny proportion of the budget

Why should £96.5 billion be collected by the government for an insurance policy to guarantee an income when injury and unexpected illness strikes for the government to revise the policy to stop paying the policy benefits

NI goes into the Treasury as general tax revenue. It isn't earmarked for particular things like sickness benefit or pensions - to think that would be naive. If the total revenue from tax is down, spending options have to change. All kinds of special interests could be justified for saving by the description 'tiny proportion'. It's a question of choices and priorities.

In that case it's a bout time they scrapped NI. As a self employed person I pay NI, why should I pay it? if it isn't for the purposes for which it was initially intended.

It's all part of the argument for having a simpler, flatter tax system which, in turn, cuts down the loopholes that provide opportunities to tax dodge.

I agree with Beingamumisfun and mini. Can you imagine the uproar if house insurance or car insurance refused to pay out?

NI is not the same thing as house or car insurance. It's just 'tax'... no more, no less.

The scandal is that NI was once earmarked for certain things and now isn't, but the powers that be kept that one rather quiet so as to enable general tax increases without too many people realising none of the money was earmarked for anything in particular. It's monstrous to carry on calling it National Insurance when it's Employment Tax.

unfortunately its been abused by too many people for too long and so is now too expensive. not saying the people in the article have done this, but they are obviously suffering as a result. plus of course the last gov just spent spent spent - so we are now broke.

"The National Insurance Fund is nominally hypothecated, and National Insurance payments cannot be used directly to fund general government spending. However, surplus in the fund is invested in government securities, and so is effectively lent to the government at low rates of interest. National Insurance contributions are paid into the various classes of National Insurance after deduction of monies specifically allocated to the National Health Service (NHS). However a small percentage is transferred from the fund to the NHS from certain of the smaller sub-classes. Thus the NHS is partially funded from NI contributions but not from the NI Fund"

If the figures BeingAMuMIsFun has quoted are correct and NI contributions can not be spent on anything other than welfare, why are we in this situation?

I don't choose to pay income tax or NI to fund MPs expenses or subsidise their drinking in the house of commons or pay for their salaries when half of them are clearly missing a significant part of their brain, the part that handles emotion, empathy and common decency.

The reason we're in this situation is that welfare payments doubled, in real terms, between 1997 and 2010.

Flatpack, out of interest do you know which welfare payment doubled?

flatpack in the case of Jobseekers Allowance it was REDUCED back in the late 1990s for people under 25. Thats one example so like mini asked can you tell us which welfare payment(s) doubled please.

The size of the welfare state has totally swamped National Insurance contributions. As this ONS report states

www.ons.gov.uk/ons/rel/pensions/pensions-in-the-national-accounts/uk-national-accounts-supplementary-table-on-pensions--2010-/index.html

the total size of government pension obligations is now £5 trillion (compare to national debt at a measly £1 trillion).

NIC at £96.5 billion is less than 2% of the pension liability so even if it was all spent of pensions it would not be enough to cover the index linking.

Pensions more than doubled between 1997 & 2010. Other benefits practically doubled too.

Ditto with health.

Pensions 1997 = £49.4 billion
Pensions 2010 = £116 billion

Health 1997 = £50 billion
Health 2010 = £118 billion

Benefits 1997 = £55.7 billion
Benefits 2010 = £106 billion

Source 1997
Source 2010

Even if you account for inflation, we've spent a lot more. If you include everything Labour have took our government spending from £312 billion per year to £660 billion per year.

At the same time total tax receipts in 1997 were £316.2 billion and in 2010 were £550 billion. source - Guardian

What this means is that Labour inherited a balanced budget and in the time they were in power managed to double our spending without a corresponding increase in taxation. In fact by 2010 we were £110 billion a year out.

Now you may argue that the Tories would have done exactly the same and the truth is that we'll never know. But the fact is that Labour were in charge during that time. They inherited a balanced budget, they were responsible for government spending and they ripped open the nations chequebook and left us with a large deficit.

".... National Insurance payments cannot be used directly to fund general government spending. However, surplus in the fund is invested in government securities,....."

Well let's look at the figures. As per the HMRC's own reports, in 2010-2011 NIC brought in £96.5 billion ( Source

In the same year we spent £116 billion on pensions alone.....not counting hospitals & other benefit payments.

So wether or not NIC's can be used to fund other govt spending is rather academic. So is what the govt can spend the surplus on. Because put quite simply there is no surplus. There is actually a huge hole!

If you want NIC's to cover the full amount of pensions, benefits & health then we'd be looking to triple contributions, just to stay still. Let alone pay for future liabilities.

Anyone fancy paying that? No? Me either.

I lost my income-based ESA when I moved in with DP last year, even though I was a single parent and the dc aren't his. He was expected to take full responsibility of me and the children (don't get maintenance from ex) and our income was assessed as a household. That's always been the case when it comes to income-based ESA or income support and DP accepted that was part of being in a relationship with me. I've always found it a bit odd that those on contributions ESA could just keep getting it regardless of their partner's income, my sil continued to get it even though her husband was on over £100k, but I suppose it will be stopped now.

Oh dear. Labour spent all the money and now we are all fucked.