Labour exploits pensioners’ fears in attack on Tory plan to scrap NI
LABOUR was accused of scaremongering about the future of the state pension last night, as it launched a ‘cynical’ campaign against Rishi Sunak’s plan to abolish National Insurance.
Sir Keir Starmer and Shadow Chancellor Rachel Reeves kicked off an advertising blitz aimed at undermining the Prime Minister’s ambition to wipe out the ‘double tax’ on incomes.
Jeremy Hunt has slashed National Insurance by a third in the past six months, delivering a tax cut worth £900 a year to the average worker.
At the Budget in March, Jeremy Hunt signalled a ‘long-term ambition’ to abolish the tax altogether. Labour initially supported the cuts but has changed tack after private polling revealed some older voters are concerned about how the plan will be funded.
Its new campaign will seek to exploit a common misconception that National Insurance receipts set the budget for pensions and the health service, which are in fact funded in large part from general taxation.
In a message on social media yesterday, Ms Reeves said: ‘Cuts to the NHS? Cuts to state pensions? Tax rises?
The Prime Minister needs to tell us which one it will be to fund his £46 billion unfunded promise. The British public deserve to know.’
Experts have dismissed the claim that cuts to National Insurance will have an impact on pensions or the NHS. Factchecking organisation Full Fact said NI contributions ‘don’t determine how much is spent on health and welfare’ – and urged Labour to acknowledge the truth.
‘It’s not the case that reducing National Insurance would necessarily mean the Government would either have to cut pensions or the NHS or raise other taxes or borrowing,’ the group said.
Treasury Chief Secretary Laura Trott last night pointed out that the Government has cut NI by a third while increasing spending on the NHS and raising the state pension by £900 this month.
‘This is total nonsense from Labour,’ she said. ‘We will keep cutting the double tax on work until it is gone in an economically responsible way while increasing pensions and protecting the NHS.’
But private polling for Labour suggests many older voters believe there is still a direct link between the level of NI and the funding available for health and pensions.
In an internal memo leaked to the Observer yesterday, Labour’s strategy chief Deborah Mattinson said the confusion ‘gives Labour its biggest opportunity with pensioners for some time’.
‘This is total nonsense’
THE idea that the welfare state is funded by National Insurance contributions is pure fiction. Like any other tax, they go straight into the Treasury, to be spent as the PM and ministers see fit.
So, Labour’s claim that abolishing NI would mean the state pension, NHS and other public services having to be slashed is arrant scaremongering.
It plays particularly into the fears of older voters, who would not benefit from the abolition, as NI contributions end at state retirement age. If they’re told their pensions and health service will suffer to pay for it, they are bound to feel anxious.
It’s no coincidence that this demographic is disproportionately Tory. In 2019, more than 60 per cent of over- 65s voted Conservative. This is a cynical ploy to gull them into switching sides.
The Chancellor has already cut NICs by a third without hiking other taxes or cutting the NHS and vows to abolish them fully only when the financial climate allows.
Cutting this levy favours working people and stimulates productivity, hopefully leading to growth and more money for public services. Meanwhile, Rishi Sunak has pledged to keep the pension triple-lock, while Sir Keir has not.
Furthermore, Shadow Chancellor Rachel Reeves promises a shake-up of private pension rules, which in Labour hands usually means bad news. Remember Gordon Brown’s £5.6 billion tax raid in 1997? Sir Keir may say pensions are safe in his party’s hands. Experience tells us otherwise.