When National Insurance becomes a 'Jobs Tax'

By Bernadette Meaden
April 4, 2013

Today I got an email from George Osborne. It wasn’t personal. I signed up for them on the basis that I like to keep my eye on what he’s doing; or more accurately, what he claims he’s doing.

The email was headed ‘Why we are on the side of hardworking people’ and said that the government was ‘making welfare fairer, helping to create jobs, and making sure you can keep more of what you earn’

Where to start? There were so many questionable assertions it would take quite some time to unpick them all, but one statement stood out as particularly irritating, in light of recent events. Mr Osborne wrote: ‘We’ll be abolishing the jobs tax altogether for many hundreds of thousands of our small businesses in the coming year’.

‘Jobs tax’? That’s a new one. This is the term which the Conservatives now use to refer to what is actually the employers’ contribution to National Insurance. (Apparently we’re not allowed to call the under-occupancy penalty the 'Bedroom Tax', but it’s alright for them to rename other things).

When this cut to the ‘jobs tax’ was announced in the Budget, Mr Osborne claimed it would lead to job creation, but many in business were sceptical. Jonathan Dudley, of national accountancy firm Crowe Clark Whitehill described it as: "very unlikely to be a decision turner in terms of whether or not you employ someone". So what’s going on?

I see this latest attempt to tweak the language of political debate as being quite ominous, and another step in the attack on our welfare state. We have been here before.

Advocates of welfare reform managed to persuade the media, and eventually the public, to refer to our benefits system as ‘welfare’, which is what benefits are called in the US. Ruth Lister has written a very good piece about this here. In the US welfare is a pejorative term with almost completely negative connotations, synonymous with ‘scrounging’ and laziness. When they imported the term they also imported the connotations, which is why Iain Duncan Smith can now claim public support for ‘welfare’ cuts.

Many people have been persuaded that we are spending a massive proportion of our national wealth on benefits for lazy scroungers, when in fact only a small percentage of the ‘welfare’ budget goes on out of work benefits. Most of it goes to pensioners, landlords, and low paid workers. The propaganda campaign against welfare perhaps reached its nadir in the Daily Mail front page bearing the headline ‘Vile Product of Welfare UK’ above a large photograph of Mick Philpott and his six dead children. In an early edition, the Sun commented ‘let’s hope this is the last time the State unwittingly subsidises the manslaughter of children’ as if receiving benefits can turn you into a killer.

If the government can similarly change the perception of National Insurance, leading to it being perceived as a burden that threatens jobs, it could be gradually reduced, perhaps eventually phased out. The term ‘national insurance’ sounds quite positive, something which provides help in times of trouble, something that suggests we really are all in this together. ‘Jobs tax’ sounds negative, as if it is guaranteed to discourage employment, perhaps even destroy jobs.

This first cut in the ‘jobs tax’ may be the first step in a long-planned process. No doubt many employers would be delighted to stop paying National Insurance, and so the welfare state would be attacked from both angles: by stigmatising recipients and undermining contributions.

On the right of British politics an antipathy to all things collective and mutual is strong and growing, alongside an avowed belief in individual responsibility and self reliance. Prior to the last General Election a caller to a radio phone-in expressed the view that as far as he was concerned, he worked hard, was prosperous, and could take out private insurance to protect himself against every eventuality: job loss, illness, or disability. He had a good private pension, and he saw no reason why he should be paying tax and national insurance to provide for other people. In fact he resented it. As far as he was concerned, it was every man for himself.

Encouraged by our government and certain sections of the media this attitude appears to be growing in the UK, with hard times pushing many people into selfishness, not solidarity. It is vital that we try to challenge and counteract this process.

The Joint Public Issues Team has made an excellent start with their report ‘The lies we tell ourselves: ending comfortable myths about poverty’, Mr Osborne has dismissed such criticism as ‘ill-informed rubbish’ but I hope and believe he will eventually be proved wrong, and solidarity will prevail over selfishness.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor.

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.