Will Labour’s national insurance hike be a nasty surprise for the NHS?

October 28, 2024 –
From Socialist Worker (UK)

7 views

Keir Starmer wants to reassure the rich and big business ahead of the budget (Picture: Flickr/No 10)

Labour prime minister Keir Starmer declared that “politics is always a choice” on Monday ahead of the budget. He then made clear that his party would choose not to break with 14 years of Tory austerity.

Starmer said his government would embrace the “harsh light of fiscal reality” and “ignore the populist chorus of easy answers”.

Millions of working class people expected Labour’s first budget on Wednesday to bring change. Instead, Starmer asked them to “judge us by whether, in five years’ time, you have more money in your pocket”.

He knows that Labour rode to office on working class people’s anger at crumbling schools and hospitals, falling wages and the housing crisis.

Starmer and chancellor Rachel Reeves want to give the appearance of change through “low cost” measures while lowering people’s overall expectations.

Reeves announced £1.4 billion for rebuilding schools and £1.8 billion for free breakfast clubs for poorer pupils last weekend. She even said children “should not suffer” due to the “dire state” of Britain’s finances.

But mainstream economists warned that the funding would only be enough to keep existing initiatives going—not an injection of new cash.

Institute for Fiscal Studies researcher Christine Farquharson said that “in a tight fiscal context” the commitments “largely reflect decisions to continue programmes”. “£1.8 billion for the rollout of new childcare entitlements confirms plans set out under the previous government,” she said.

“£1.4 billion into the school rebuilding programme next year will be enough to keep what was always intended as a 10-year programme going in its sixth year.”

She added, “Bumping up the breakfast club budget to £30 million does seem to be a boost on the previously-announced £7 million. But this is still only a tenth of what the Labour manifesto plans to spend by 2028-29.”

Rachel Reeves addressing a group of people

Tax the rich: five measures that would raise billions for public services

Reeves was expected to announce an increase in National Insurance Contributions (NICs) for bosses from 13.8 percent to 15.8 percent.

This won’t directly hit workers—but could still have implications for public services. The NHS, which is one of the biggest employers in Britain with 1.6 million workers, could face an NICs bill of over £2 billion.

This would come out of existing NHS budgets unless Labour coughed up more cash—the opposite of what it’s doing.

Starmer and Reeves claim that taking “tough decisions” now will boost economic growth and lead to prosperity down the road.

But Labour is desperate to prove to big business and the rich that it’s no threat to their interests. And that means removing—or at least not increasing—barriers to profiteering such as higher taxes on corporations.

Starmer says Labour’s strategy is built on three pillars—“stability, investment, reform”. In reality, the Labour government’s austerity mark 2 won’t bring very much of either one to working class people.

The Labour government’s strategy has caused tensions with some union leaders—and fuels a more widespread sense of betrayal among its voters.

Unions need to capitalise on that and organise resistance on the picket lines and streets to force Labour to cough up.

Source: Socialistworker.co.uk