The Budget debate explodes a myth

Perhaps the most interesting thing about the debate on the increase in National Insurance Contributions for the self-employed is that it lays bare the lie that people are happier to pay more tax to fund the NHS.

In December, the Guardian reported Lib Dem leader Tim Farron highlighting research from October by ITV News that suggested that 70% of people would “happily pay an extra 1p in every pound if that money was guaranteed to go to the NHS”, while almost half of the 1,000 people surveyed said that they would even pay an extra 2p in the £.

Where are these people now?  A 2p in the £ increase suggested for a sub-section of people (a sub-section, don’t forget that currently pays less than those who are employed by firms to do the same jobs, and who will still pay less even after this increase) has led to all hell breaking loose. It seems the reality is that people want more money to go into the NHS, only so long as someone else is providing it.

The extent to which that is true could be heard clearly on last night’s Question Time, where repeatedly people commented on the fact that it should be ‘the rich’ who pay more. The trouble with that is that ‘the rich’ is nearly always defined by people as ‘those who are richer than me’.

You disagree? Then tell me this: what price do you consider is a fair one for people to pay for better services and better healthcare, assuming for a moment that it is true that both are created simply by finding more money to fund them?

I’m not an accountant, but bearing in mind the personal allowance of £11,000, it seems to me that the 2% rise in National Insurance contributions for someone earning £15,000 a year will mean an additional bill of around £80 a year, or £1.30 a week. The same thing for someone earning £40,000 a year means a bill of £580 a year, or £10 a week. And if you’re earning £100,000+, your bill will go up by £1,800 a year, or just shy of £35 a week.

Can we all accept that if you are earning £100K a year, you can afford to lose £35 a week? I suspect that we can (although admittedly I know people who would debate it – the same people who don’t look at their restaurant bill twice and wouldn’t notice if they’d been charged for the wrong bottle of wine).

I wouldn’t argue with the £40,000 earners who say that they are a long way from being wealthy even if they are approaching the top band of income tax, but it seems unlikely that they would think twice about spending £10 a week on something that they really wanted. It is, after all, the price of a (bought-in-a-shop) cup of coffee a day, and a lot less than they will be spending regularly on things they would regard as less important than their health. Having to fork out £10 a week more than currently will be annoying, but hardly unmanageable.

For the £15,000 earner life is tough: they are not earning a lot, by any yardstick, and the difference here of £1.30 a week may well make a difference when finances are tight.  But there are lots of people in this bracket out there, and presumably they were included in the 1,000 people survey, where nearly half of those polled said they would be happy to pay.

The NIC debate of the last two days might be couched in terms of a broken manifesto commitment, but let’s be honest: what proportion of people knew it was before that became the narrative? How many people voted the Government in on the basis of it? The notion being touted is that the Treasury didn’t even realise, so what price the idea that the person on the street did?

The debate might also be sidetracked by arguments about how self-employed people have none of the safety net of working for a firm – although interestingly, that doesn’t exactly loom large in the ONS’s study of self-employment trends.

And equally, plenty will seek to debate whether it is ‘bad politics’, but again, that is a different argument (to which an obvious counter would be that the bad politics was making the commitment in the first place).

The reality is that the argument about the Budget explodes a myth, which is this: when people say, “I’d be prepared to pay more to fund the NHS and/or social care,” they don’t actually mean it – and we know that because when they get it, they object. They argue in favour of a hypothecated tax for social care, but this is as close to a hypothecated tax for social care as we can get: £2bn being raised from a change in NIC contributions on the same day as £2bn extra was announced for social care. And people really, really don’t like it.

So the narrative that politicians are slippery and change their minds is a nonsense when you consider the fact that the public is far, far worse. Asked by pollsters in October about a policy, people were overwhelmingly in favour.

But in March, when it has become clear that that same policy will actually affect them as individuals, on top of being paid by others, they’ve changed their minds.

(This article was published on Spectator Coffee House today)