[TobyD]

The benchmark for credible policy these days is whether the plans pass muster in the House of Marcus Rashford.

Apparently so, unless its animal related in which case the court of Carrie Johnson takes precedence.

Further on the social care system funding system,  it seems that the main problem is that "a plan to fix social care " involves both funding it, and actually having a good system to deliver it.  At the moment the latter is very much not the case, nowhere near enough care workers,  or social workers and a totally ad hoc system of integration with the NHS. 

[danm]

The benchmark for credible policy these days is whether the plans pass muster in the House of Marcus Rashford.

Given the lack of a credible opposition party, I'll take criticism of policy by St. Marcus of Wythenshawe any day of the week over unfettered freedom for the Tory leadership to give the nation a proper shafting.

Just imagine Rashford and Thunberg together, it would be like Ghostbusters but vs capitalists - never cross the beams of environmentalism and inequality.

[IanP]

So they've done it, 1.25% increase on NI, at least both lower and higher threshold rates so higher earners will also pay on income abover £50,000.

Leaving aside arguments around reform of care system and more complex solutions to funding I still haven't seen anyone even attempt to justify raising funds by NI rather than income tax.   In an aging society where pensioner income is similar to the general working age population and providing funds significantlty biased to the older how can it be justifiable to raise money using a tax only payable by the working?

[spidermonkey09]

It isn't justifiable at all, but it's more justifiable to the Tory membership and aging, wealthy Tory voters. Its entirely the wrong decision for the country to do it this way, but if the aim is securing their voters short term, it makes perfect sense. If I was the Tories strategist and that was my brief, I think it's probably correct from that incredibly narrow perspective.

[petejh]

So they've done it, 1.25% increase on NI, at least both lower and higher threshold rates so higher earners will also pay on income abover £50,000.

Leaving aside arguments around reform of care system and more complex solutions to funding I still haven't seen anyone even attempt to justify raising funds by NI rather than income tax.   In an aging society where pensioner income is similar to the general working age population and providing funds significantlty biased to the older how can it be justifiable to raise money using a tax only payable by the working?

This isn't entirely correct. The 1.25% tax is also to be paid by working pensioners. That at least makes a lot of sense.. although haven't looked up the proportion of working pensioners earning over the threshold (of £9k).
Also a 1.25% increase in share dividend tax. A lot of pensioners receive share dividends, more than the young. Although many will be in tax shelters. Glad mine are in an ISA...(no I'm not a pensioner!)
So it's not true that pensioners will be unaffected, and it's also the case that the wealthy will pay by far the most of the extra cost - approx 50% of the total cost will be paid by the top 14% of earners according to the tories.. (fact check..).
But I share some concerns.. However I'd like to see Labour's or a.n.other opposition's ideas clearly spelt out in black and white.

[wasbeen]

Another group that will not to have to pay will be landlords - profits are liable for income tax but not National Insurance.

Generally, the very wealthy will also be exempt as few currently pay significant NI as a result of various tax avoidance schemes. Having said that they probably don't pay much income tax either.   

[galpinos]

This isn't entirely correct. The 1.25% tax is also to be paid by working pensioners. That at least makes a lot of sense.. although haven't looked up the proportion of working pensioners earning over the threshold (of £9k).

Is that the case? If you are working over the state retirement age you are currently exempt from NI contributions*. I guess paying 1.5% instead of nothing is something......

Unless I'm massively out of date, you used to be Category C?

[galpinos]

I'm ambivalent about the proposed NI increase. The figures say the proportion of pay taxed increases for the wealthier (a result of the lower tax threshold):

A 1% NI increase results in the following extra payments, as a proportion of the following salaries:
£20,000 extra £104 per year or 0.52% of salary
£40,000 extra £304 per year or 0.76% of salary
£60,000 extra £504 per year or 0.84% of salary

A 1.5% increase widens the gap in proportions.

But I suppose a more important metric is what proportion of spending money, following essential living costs, is the increase? A person on £20,000 per year will have much less spare money than somebody on £60,000. So the £104 increase will likely be higher proportionally.

Seems madness that pensioners who still work don't need to pay NI, this seems like it should be the first change. Then a banded increase in NI perhaps to target the most well-off. They'd pay an even higher proportion of their salary as per above.. but more in line with proportion of spare money.

Tories seem to be cynically protecting the short term grey vote.. probably wise from a short term stay in power point of view but it's the usual short-termism bullshit in politics.

This bit in bold is key (and having read I've realised my last post was unnecessary) as I understand why they are going after NI (politically)* but it would be a simple adjustment to make NI12% across all amounts, instead of it dropping of to 2% above £50K.

*Boris has also got Labour to brief against a tax rise for the NHS which is quite the coup for the Tory press officer.

[IanP]

So they've done it, 1.25% increase on NI, at least both lower and higher threshold rates so higher earners will also pay on income abover £50,000.

Leaving aside arguments around reform of care system and more complex solutions to funding I still haven't seen anyone even attempt to justify raising funds by NI rather than income tax.   In an aging society where pensioner income is similar to the general working age population and providing funds significantlty biased to the older how can it be justifiable to raise money using a tax only payable by the working?

This isn't entirely correct. The 1.25% tax is also to be paid by working pensioners. That at least makes a lot of sense.. although haven't looked up the proportion of working pensioners earning over the threshold (of £9k).
Also a 1.25% increase in share dividend tax. A lot of pensioners receive share dividends, more than the young. Although many will be in tax shelters. Glad mine are in an ISA...(no I'm not a pensioner!)
So it's not true that pensioners will be unaffected, and it's also the case that the wealthy will pay by far the most of the extra cost - approx 50% of the total cost will be paid by the top 14% of earners according to the tories.. (fact check..).
But I share some concerns.. However I'd like to see Labour's or a.n.other opposition's ideas clearly spelt out in black and white.

I was aware of that but its a small amount that working pensioners will pay (£100 million out of £12 billion I believe has been quoted) so barely worth mentioning.  And of course higher earners will pay more of any increase since they earn more.   

As I said, nobody has even attempted to provide a justification for why NI is better than Income Tax (other than the comments here about Torys wanting to protect their grey vote).

[wasbeen]

As I said, nobody has even attempted to provide a justification for why NI is better than Income Tax (other than the comments here about Torys wanting to protect their grey vote).

... as previously mentioned, the motivation for targeting NI is that they get a 2% increase (employee+employer) for the political cost of a 1% increase.

... except, and this and is where the real political genius lies,  the increase is now 1.25%. It is so close to the previously mooted 1% that no one has quibbled it, yet the total increase is now 2.5%.

If they tried increasing income tax by 2.5% it would have raised a few eyebrows.

[IanP]

As I said, nobody has even attempted to provide a justification for why NI is better than Income Tax (other than the comments here about Torys wanting to protect their grey vote).

... as previously mentioned, the motivation for targeting NI is that they get a 2% increase (employee+employer) for the political cost of a 1% increase.

... except, and this and is where the real political genius lies,  the increase is now 1.25%. It is so close to the previously mooted 1% that no one has quibbled it, yet the total increase is now 2.5%.

If they tried increasing income tax by 2.5% it would have raised a few eyebrows.

Not wanting to argue, but thats motivation not justification  .  Worth noting that employee and employer NI rates are not aligned, there's nothing stoping them raising income tax by 1.25% and employer NI by 1.25% if they want to spread the rise (and assume they wouldn't need as big an increase in income tax since it has a significantly bigger payment base).

[wasbeen]

As I said, nobody has even attempted to provide a justification for why NI is better than Income Tax (other than the comments here about Torys wanting to protect their grey vote).

... as previously mentioned, the motivation for targeting NI is that they get a 2% increase (employee+employer) for the political cost of a 1% increase.

... except, and this and is where the real political genius lies,  the increase is now 1.25%. It is so close to the previously mooted 1% that no one has quibbled it, yet the total increase is now 2.5%.

If they tried increasing income tax by 2.5% it would have raised a few eyebrows.

Not wanting to argue, but thats motivation not justification  .  Worth noting that employee and employer NI rates are not aligned, there's nothing stoping them raising income tax by 1.25% and employer NI by 1.25% if they want to spread the rise (and assume they wouldn't need as big an increase in income tax since it has a significantly bigger payment base).

The justification could be that if the people think that taxes have only increased by 1% then they carry on spending accordingly, the economy thrives and they get a pay rise which covers the increase.

If however, people think tax has gone up by 2.5%, their wallets snap shut like clam shells, the economy tanks and there will be job losses and pay freezes.

quite Machiavellian

[spidermonkey09]

I gather that the average 25 year old will pay an extra 12,600 over their working lives, whilst a retired pensioner, unless they have lots of share, will pay nothing. 

[TobyD]

Notwithstanding the arguments on intergenerational unfairness, although I do think it's unfair, this money isn't actually for care at all yet, doesn't it all go to the NHS initially?

Wait 6 months after it's brought in before there are newspaper investigations into how it's all been paid to managers and hasn't reduced waiting lists. Without any workforce strategy or reorganization I think that it's fairly likely it's going to be wasted.

[TobyD]

Additional to the above,  I was slightly wrong, over the next 3 years 5.4bn of the 36bn raised by the tax goes to social care,  the rest to the NHS. 

[galpinos]

Additional to the above,  I was slightly wrong, over the next 3 years 5.4bn of the 36bn raised by the tax goes to social care,  the rest to the NHS.

It's the polar opposite of a Labour policy! Labour are keen for uncosted policy, the Tories appear to sort the financing but not policy as to what to do with the extra money.

I agree that it will all be "lost in the system" and make no significant change.

[TobyD]

Additional to the above,  I was slightly wrong, over the next 3 years 5.4bn of the 36bn raised by the tax goes to social care,  the rest to the NHS.

It's the polar opposite of a Labour policy! Labour are keen for uncosted policy, the Tories appear to sort the financing but not policy as to what to do with the extra money.

I agree that it will all be "lost in the system" and make no significant change.

You only have to look at the piss poor back of a fag packet plan where a huge wad of the money goes on 'day to day costs'. Seriously?
That's going on away days and conferences for senior management.

[Oldmanmatt]

To be clear, palliative care for cancer patients (amongst others) is largely handled by charitable hospices, not the NHS. You might receive, for instance,  palliative treatment, chemo etc, on the NHS, however your “care” will be down to family or a hospice/hospice nurse. District Nurse visits are about checking meds, not helping you shower.

I think most people are unaware of such things until they have to face it themselves (I know how much crap I had to listen to from people who couldn’t understand why I had to stop work and how shocked I was at how much the “respite” at the charities expense, was needed).

Charities do provide suport for palliative care at home as well, but general care was still provided by the care providers already in place.  We did find out that once he was in that stage of end of life care he was no longer required to pay for that care - however by the time we got round to following that up it wasn't really relevant.

This is not the fault of the NHS, but we are ignoring the Elephant in the room and I actually don’t see any way of addressing it without increasing National Insurance. The reality is that it’s not just old age provision that needs addressing, though, so probably the measures don’t go far enough. Obviously, how the burden is shared, is something that requires careful consideration and I doubt the current crop of clowns are capable of doing that.

This is where I disagree (and agree with Toby and the Spectator), National Insurance is definitely the wrong way to raise money.  In fact NI is just used so that the Tories can argue that they are no raising income tax - if you want to raise money via direct taxation on earning it should definitely be from income tax which is paid by everyone including plenty of well off pensioners.  Though as above I think we should be looking a raising such money from wealth in other ways - in particular the growth of property wealth which is basically untaxed for majority of of people in the UK.

Possibly I’m misreading what you have written, but you appear to imply that NHS care (and I mean care, rather than treatment) was available? Which seems to negate the point where you implied that (for instance) Cancer patients would receive NHS “care” but Alzheimers wouldn’t be. It certainly isn’t, in fact.

Also, your antagonistic implications around “Landlords”, is rather disingenuous  isn’t it?
Landlords who make greater than x are simply classed as self employed and taxed etc in exactly the same way as any other self employed person (I’d guess that the initial investment and prior tax contributions of buying a property are somewhat higher than most small businesses, too).

https://www.gov.uk/renting-out-a-property/paying-tax

Further, the lack of contribution/liability to the NI increase only applies to Cat2 NI payers, so very small incomes, anyone who crosses the threshold into Cat4 is still liable for the increase. That will sweep up any “professional” landlords. As an aside, most of those within the small income threshold will have alternative income streams that will boost then over the Cat2 threshold anyway. You get taxed on your entire individual income, not bit by bit.

https://www.gov.uk/self-employed-national-insurance-rates

And, this NI increase is a stopgap, for one year, not a permanent change, from 2023 there will be a separate levy and NI (should) revert. The levy is applicable under all the same conditions, except, it will also apply to earners over state pension age.
So, it’s a stopgap to cover an urgent need, for one year, to be replaced by what seems like a reasonable, new, levy, asap.

I’m struggling to find it all as offensive as I’m being told I should.

[TobyD]

I’m struggling to find it all as offensive as I’m being told I should.

I'm struggling with not becoming increasingly despondent about what sort of country this is becoming to be honest. I find it quite hard not to agree with Hillary Mantel. (Widely reported) From the attitude towards asylum seekers to the ignorance of the current slow demise of the farming and fishing industry, totally unethical foreign policy and general populist bullshit, I am really sad that anyone has any enthusiasm for this government, which is certainly not Conservative and has become a vehicle for Boris Johnson's fabricated personality.

Phew, I needed to get that off my chest.

[Oldmanmatt]

I’m struggling to find it all as offensive as I’m being told I should.

I'm struggling with not becoming increasingly despondent about what sort of country this is becoming to be honest. I find it quite hard not to agree with Hillary Mantel. (Widely reported) From the attitude towards asylum seekers to the ignorance of the current slow demise of the farming and fishing industry, totally unethical foreign policy and general populist bullshit, I am really sad that anyone has any enthusiasm for this government, which is certainly not Conservative and has become a vehicle for Boris Johnson's fabricated personality.

Phew, I needed to get that off my chest.

Don’t get me wrong, I  pretty much agree with most of that, except I don’t think it’s a matter of what have become/are becoming. We’ve always been like this and none of the things you mentioned are new, if anything we’re slightly better these days than we were a couple of decades ago. Possibly things felt better ten years ago and have regressed somewhat since, but still better than it used to be.

[IanP]

Oldmanmatt, that's a bit of an epic reply and since I'm now away with just my phone difficult to give you a full response 

But quickly.  NHS care was only available at the point he was in 'end of life' and needed appropriate medication to keep him comfortable (ish) in the last few weeks.

Landlords? Never mentioned landlords , the vast majority of property wealth is held by owner occupiers, the growth of property value has produced a big growth in that wealth and since we have no captital gains and very little inheritance tax for most this growth is basically untaxed.

On NI, average pensioner incomes after house costs are now similar to those in work, my argument is just that we should use income tax rather than NI , paid by all who have income rather than just by those who are working. Why is NI a better choice than Income Tax to raise this money?

[TobyD]

I’m struggling to find it all as offensive as I’m being told I should.

I'm struggling with not becoming increasingly despondent about what sort of country this is becoming to be honest. I find it quite hard not to agree with Hillary Mantel. (Widely reported) From the attitude towards asylum seekers to the ignorance of the current slow demise of the farming and fishing industry, totally unethical foreign policy and general populist bullshit, I am really sad that anyone has any enthusiasm for this government, which is certainly not Conservative and has become a vehicle for Boris Johnson's fabricated personality.

Phew, I needed to get that off my chest.

Don’t get me wrong, I  pretty much agree with most of that, except I don’t think it’s a matter of what have become/are becoming. We’ve always been like this and none of the things you mentioned are new, if anything we’re slightly better these days than we were a couple of decades ago. Possibly things felt better ten years ago and have regressed somewhat since, but still better than it used to be.

Other than that ten years ago I could travel and work freely in Europe,  we weren't signing trade deals with countries with awful environmental standards (Australia)... I won't go on.

But on the tax increase; its rubbish,  here is what it doesn't cover: BBC News - Will the cap really fix the social care system?
https://www.bbc.co.uk/news/health-58442991
But the real kicker is that vast amounts of the money will disappear into the NHS, and then Johnson will just raise taxes again in 2023, you wait.

[Oldmanmatt]

Oldmanmatt, that's a bit of an epic reply and since I'm now away with just my phone difficult to give you a full response 

But quickly.  NHS care was only available at the point he was in 'end of life' and needed appropriate medication to keep him comfortable (ish) in the last few weeks.

Landlords? Never mentioned landlords , the vast majority of property wealth is held by owner occupiers, the growth of property value has produced a big growth in that wealth and since we have no captital gains and very little inheritance tax for most this growth is basically untaxed.

On NI, average pensioner incomes after house costs are now similar to those in work, my argument is just that we should use income tax rather than NI , paid by all who have income rather than just by those who are working. Why is NI a better choice than Income Tax to raise this money?

Yes, my bad on the Landlords bit, it was meant as a general thread reply rather than all aimed at you. Shoddy phrasing and lack of proof reading on my part.
On the NI point, the short term NI increase is most likely a simple hook around legal instruments, that likely protect those in employment above SRA from becoming liable to NI and the impossibility of instituting the new levy in sufficiently timely fashion. NI, is hypothetically ring fenced for such uses, whereas general taxation is not, so probably better, in practical terms. If the levy was a simple addition, the NI route would not have been used.

Toby’s points about much of it all going to waste anyway, not withstanding.

A massive overhaul of NHS systems and spending, would probably generate far more cash for “Care”, but probably fills the average minister with sickening dread at the scale of the task.

Incidentally, the levy will be harder to avoid than tax, and simply not worth the effort to avoid. It seems like a very good way to raise money without it being lost into the Byzantine tax labyrinth. 

[TobyD]

Toby’s points about much of it all going to waste anyway, not withstanding.

Here you go, see the front page of the Times and the Telegraph this morning
BBC News - Newspaper headlines: New tax sparks spending concern and migrant-row anger
https://www.bbc.co.uk/news/blogs-the-papers-58495934

[chris j]

Leaving aside arguments around reform of care system and more complex solutions to funding I still haven't seen anyone even attempt to justify raising funds by NI rather than income tax.

I believe it is at least partly because income tax is devolved to Scotland. So raising income tax would only impact the other nations but a portion of the funds raised would be allocated to Scotland to do with as they want. Cue headlines in the Daily Mail...