Social care levy
An article in the Big Issue considers the recent increase in national insurance to pay for social care in the UK. It argues that, on the face of it, the proposal to use national insurance to pay for social care makes sense. However, the author, James Ball, says the proposal is really a “messy swindle”.
Ball first sets out that all forms of social care are “in crisis”, including care for older adults, working age social care and children’s social care. He further says that the “great fiction” of national insurance is that it is separated to pay for pensions and social care, but it is not. He sets out four reasons why using national insurance to pay for social care is less effective than increasing income tax:
- The threshold for paying national insurance is less than that for income tax, meaning that those on the lowest incomes are affected.
- Conversely, there is an earnings threshold above which high earners do not pay extra national insurance contributions.
- National insurance works as a tax on jobs, as employers also have to pay more for each person they hire. This will affect the social care sector which is already in a recruitment crisis.
- It unfairly impacts younger workers as people over state pension age do not pay, though they will be the ones benefitting from the change.
The author argues that instead of fixing social care, the change to national insurance will instead “accomplish two goals for the Government”: making it seem like the UK has a social insurance system, and making it appear like the system is “fixed” by the tax increase.
Read the full article: James Ball, ‘The national insurance hike is a scam—and won’t fix social care’, Big Issue, 3 September 2021
Writing in support of introducing road pricing, Phillip Booth argues in an opinion piece for the Institute of Economic Affairs that without prices “you get queues”, and that a pricing system would provide “the funds for capital investment”.
Booth points to reports that support the introduction of road pricing: most recently from the Tony Blair Institute for Global Change, but also from the Smeed Commission that reported in 1964. He states that this shows a “unanimity on the subject” from a spectrum of opinions.
Explaining how the system would work, Booth says that road users would be charged depending on how far they travelled, where they travelled, at what time of day they travelled, and how congested the roads were at the time. He said that cars with high emissions could be charged more than electric vehicles. This would be an “ordered and voluntary” way to move to electric cars, rather than through government regulation. He argues that, when asked to pay, people would travel less, use public transport more or change the time of their journey. This would reduce road congestion “dramatically”.
He then sets out how the system would need to be protected from being turned into a “milch cow” (for a source of easy profit) by politicians. He argues that private roads that are built could set their own prices, or large parts of the road network could be privatised. Another way could be for the Government to pass legislation to set out how road charges should be determined with the Competition and Markets Authority monitoring for abuses.
He concludes by asserting that the introduction of road pricing would allow vehicle excise duty and other car taxes to be scaled back.
Read the full article: Philip Booth, ‘Road pricing: good economics—and not even bad politics’, Institute of Economic Affairs, 6 September 2021