A spiteful attack on prudence

IT WAS not the kind of Autumn Statement we had come to expect under George Osborne – all fire and brimstone, all change, more complexity – but Philip Hammond’s debut was not without its nasty side.

While no doubt saving his more draconian announcements for next year’s Autumn Budget – goodbye higher rate tax relief on pension contributions? – his decision to hike up Insurance Premium Tax from 10 per cent to 12 per cent was both unexpected and spiteful.

It represents an attack on prudence, a financial discipline that you would think a Conservative Government would embrace wholeheartedly.

It is an assault on those who bypass the overstretched National Health Service in favour of going private (crazy logic). Premiums on private medical insurance are already rocketing as a result of rampant medical inflation without Hammond adding to the financial pain of policyholders. I would expect such an attack on access to private health from Labour’s vengeful Shadow Chancellor John McDonnell.

Finally, it is both meanspirited and crass. Mean because in the case of motorists and homeowners with mortgages, it is a tax that cannot be avoided. Crass because I bet you that as a result of the Chancellor’s tax hike, some homeowners and motorists will gamble on being uninsured. Or they will be tempted to buy inferior cover.

Of all the policy decisions that the Chancellor announced last Wednesday, the increase in Insurance Premium Tax is the one that will replenish the Government’s barren coffers the most. In the next tax year when it is introduced (June 2017), it will reap £680million, rising to £840million the following year.

Whichever way you dissect these numbers, they represent a big hit on the JAMs – those ‘just about managing’. They also represent a big hit on Middle England, the likes of you and me.