NIC and Universal Credit: hike and slash

Jane Darling, Policies officer for Folkestone and Hythe Constituency Labour Party

“A job taxing, manifesto-shredding, Tax bombshell” 

This was Rachel Reeves’ comment, as Labour’s Shadow Chancellor of the Exchequer in response to the rise in National insurance which Boris Johnson claims will provide funds to clear the NHS backlog and create a fair Social Care system.

The decision to raise National Insurance Contributions cannot be seen in isolation:

• A rise in NIC will hit working people and employers the hardest.
• Many working people earn too little and currently rely on Universal Credit to manage
• Universal Credit itself will be cut back by £20 a week at the beginning of October.
• Some employers will be forced to cut either wages or staff jobs to survive.

Facts on Universal Credit:              From BBC News 10 9 21

Universal credit is claimed by more than 5.5 million households across the UK.

Opinion

These two actions by the government, along with expected higher prices for food and other necessities, will hit the poorest the hardest, while the wealthy will just have to get their accountants to work a bit harder to make sure that they continue to pay as little tax as possible. 

The charity Citizens Advice has warned that a third of people on Universal Credit will end up in debt when the extra payment is removed.”

“The Health Foundation, has warned that the cut could lead to poorer mental health and wellbeing for thousands of families.”

The Centre for Social Justice argues that “the consequences of removing it (the uplift in Universal Credit) would outweigh the benefits from any savings”.

According to a House of Lords Library publication (3/9/21), “In September 2021, 100 organisations including charities, children’s doctors, public health experts and think tanks, signed a letter calling on the government to abandon its plans to remove the uplift”.

Action

I wrote to our MP Damian Collins a week ago about this double- whammy about to hit the less well-off, to point out that it was unfair, immoral and wrong to target working people and employers, whilst the rich would continue to punch well below  their weight in contributions to the taxation. His reply was a standard letter, only dealing with the cut in Universal Credit, which he attempted to justify.

I wrote back again, voicing my opinion on the hike and the slash, and suggested that, once again Johnson is paying lip service to setting up a social care system, and that “This government has serious form for breaking promises and telling lies. It’s record on caring for people, whether they be ordinary working people and the disadvantaged in this country, Afghans fleeing from tyranny and terror, or those dependant on international aid, is abysmal”.

The postbags of MP’s are at record levels and that their office staff are overwhelmed with requests for help.
Is it any wonder? I will await a further reply from Damian Collins.

If you would like to add your voice to mine, you can email him on damian.collins.mp@parliament.uk . Please make sure you give your address in the email to show that you are his constituent.

Where can I go for help?

There is a host of free guidance and advice available, including:

• The Money Navigator tool from the Money and Pensions Service relates to coronavirus-related money matters
• The Turn2Us charity has a benefits calculator
• Guidance is available from Citizens Advice and from the Low Incomes Tax Reform Group