With the budget less than three weeks away, Westminster is awash with speculation of what might be included. Having abandoned the widow's tax for now, and bound by their election pledge not to hike taxes on workers, specifically income tax, national insurance, or VAT, the chancellor is scrambling around to find ways to pay for her spending plans.Â
The thing about national insurance though is the two elements: employee and employer contributions. Weâre all very familiar with employee national insurance - I certainly grumble each time I see it on my payslip - but people often donât think about the employer contributions. For every employee on the books, a percentage of their salary is paid by the company to the treasury.
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So naturally, when the topic came up at Prime Ministerâs Questions this week, our ears pricked up. Leader of the opposition, Rishi Sunak, asked Keir Starmer whether he would rule out hiking employer contributions at the budget. When he failed to do so, alarm bells were ringing in the TPA office. In a flash, John OâConnell, our chief executive, made it absolutely clear what Starmer should do: âThe prime minister should stop searching for a cheap way out of his manifesto promise and rule out this rise for good.â
Why does this matter? Well, employerâs national insurance contributions are, quite simply, a tax on jobs. Every time a company hires someone, they have to factor in this cost. Everytime they want to give someone a pay rise, they have to factor in this cost. Higher employer contributions mean lower wages and fewer jobs. In the same way tobacco taxes are meant to put people off smoking, job taxes like this put businesses off hiring people.
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With all this talk about what will or wonât be announced by the chancellor, our head of campaigns, Elliot Keck, took to the BBC studios when he joined the Politics Live panel. In a wide ranging discussion that covered everything from water companies, to wealth taxes, and our national debt, Elliot was unrelenting in standing up for taxpayers and calling out those who claim all our problems can be solved by yet more government spending. Check out the full episode here.
Speaking of the national debt, a core part of our mission is to make sure politicians and taxpayers alike are informed about the issues, which is why weâve published our latest factbook, The Indebted Kingdom. A compact, easy to understand explainer of the national debt and the interest weâre paying, this factbook provides all the information you need to hold those who spend your money to account. Download your copy here.Â
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Getting our message out to as many people as possible is key to our success and turning the tide on the high-tax, high-spend orthodoxy that seems to grip the corridors of power. Thatâs why weâre incredibly excited to announce our new podcast, A nation of taxpayers.Â
Produced and hosted by Duncan Barkes, a veteran journalist, broadcaster, and political adviser, each week weâll be joined by different guests to discuss the latest issues affecting taxpayers, our latest research and campaigns, and lots more.
A nation of taxpayers will be available on all major podcast platforms and the first episode is out on Thursday. You wonât want to miss it.
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TaxPayers' Alliance in the news
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If they donât change course, Labour will deepen the national debt
The latest TPA briefing note was the focus of an op-ed from our media campaign manager, William Yarwood, this week. Our research explores just what has happened to the national debt and our debt interest payments over the years, and how different governments have added to, or reduced, the debt (hint, itâs normally the former).
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Writing for CapX, Will argues: âDecisions by successive prime ministers have left the public finances in a horrendous mess. The risks of this debt spiral are clear. With reduced fiscal flexibility, the UK could struggle to respond to future crises â whether another financial meltdown, a public health emergency, or demands for vital public service investment.â
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One rule for usâŚ
Almost without exception, council tax goes up for Brits every year. But it looks like those who like sending us a bill arenât always keen on paying it themselves. We were shocked to learn that a number of councillors in Scotland have failed to pay their own council tax bills.
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Speaking to the Scottish Daily Express, Elliot gave the offending councillors both barrels: âScots will be sickened by this shameful scandal. While councils run deficits and cut vital frontline services, a cabal of councillors are covertly avoiding council taxes and forcing locals to carry the burden.â Hear, hear!
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The answer to increasing public sector productivity is not âspend more moneyâ
For years, public sector productivity has been sluggish to put it mildly. Having grown just 0.2 per cent a year since 1997 (excluding the pandemic), boosting productivity is vital if public services are to improve. Naturally, many seem to think that simply spending more money is the way to fix this but, as TPA researcher, Shimeon Lee, argues in an op-ed for ConservativeHome, throwing more cash at this issue isnât the answer.
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Shimeon rightly argues: âunder so-called austerity, productivity increased. From 2010 to 2019, inputs grew by an average of 0.5 per cent. But during that same period, outputs increased by more than double that, an average of 1.2 per centâ and we must all do our part to âkeep productivity at the top of the agenda and ensure that we do not fall into the trap of thinking that spending more automatically translates into higher productivity when history proves it does not.â Have a read of Shimeonâs piece here.
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Five Takeaways from our Debt Clock Handbook
As mentioned earlier, our latest factbook, The Indebted Kingdom, can now be read or downloaded from our website. Just in case you donât have the time to read it, in this weekâs blog, Will brings us his five key takeaways.
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From how our debt compares to the Weimar republic to the shortcomings of modern monetary theory, this oneâs a must read. As Will says: âWith the budget coming up and conversations concerning the debt surfacing in political discussion, it's important to be armed with the facts.â
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As youâll probably have guessed by now, weâre not really big fans of the licence fee here at the TPA. This week, Joanna Marchong, our investigations guru, reveals how just some of your cash is being squandered at BBC HQ.
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Benjamin Elks
Grassroots Development Manager
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