I wonder if I can explain something to you. In their general election manifesto, the Conservative Party said this: “We will not raise VAT, National Insurance contributions or Income Tax.” That’s clear enough, then. No increases to NI or tax. So how come from April, National Insurance is increasing by around 15%, and, at the same time, the Conservatives are claiming that they have not broken their promise? How so?
The reason is simple and, I would contend, utterly cynical: the decision to increase NI from April 2016 was taken long before the general election, as part of the government’s reformed state pension scheme. So, you could argue, the Tory promise – made on four separate occasions in the manifesto – has been kept.
I would suggest this is going to come as a big surprise to a lot of people when they look at their pay packets at the end of April. Roughly speaking, if you earn £15,000 a year, you will be paying an additional £10.70 a month. If you earn £25,000 a year, you will be paying an additional £24.70 a month. And if you are really lucky, earning £45,000 a year, George Osborne will be trousering an extra £39.91 from your monthly hard earned cash.
This is all before next week’s budget which promises still deeper cuts in public spending. Because of the secretive way in which our politics operates, we have no way of knowing what, precisely, will be in that budget. Osborne has a habit of leaking choice announcements before budgets and then later announcing that actually things won’t be as bad as the press suggested they would be. This is because we are all meant to say, “Good old George!” when his cuts to our standards of living are not as deep as we had been led to believe.
The budget statement in the House of Commons is little more than theatre, an opportunity for the chancellor to paint a broad brush of the state of the economy. He does not reveal the entire contents of the budget to MPs and some of the more controversial aspects are deep within the overall package, prepared in depth by civil servants. Osborne will say how great he is, how everything’s going well and how we’ve never had it so good. All chancellors do that. But my advice is to watch the small print.
The NI increase was announced long ago so ministers can simply brush it off by saying, “Well, we announced that ages ago so there’s nothing new or controversial about it” and there is a convincing case to suggest that the her majesty’s opposition might just have made more of it. Perhaps I am underestimating opposition leader Jeremy Corbyn and shadow chancellor John McDonnell (not hard) and maybe they have a cunning plan to derail the budget next week, reminding the public that they are being stung in April, regardless of what Osborne announces next week.
I suspect that budget will be low on controversy because a) Osborne doesn’t want to piss people off just before the EU referendum and b) he wants to be the next Tory leader, but you can bet your bottom dollar than somewhere, hidden in the bowels of the budget statement, there will be further measures that will affect us negatively.
Beware the smoke and mirrors.
