Kick the Can

Much hoo-ha about tax increases to fund the NHS and social care.

At first I was mystified when the BBC reporter talked of working people paying nix. Then I realised it meant NIC, National Insurance Contributions. To slightly digress have you noticed a lot of BBC reporters are doing more than one job? Simon Jack is Business Editor and presents the Today programme; Chris Mason fronts Any Questions? and PM; Ed Stourton helps out everywhere; you get the idea and it must save a lot of money.

Anyway, NIC contributions, deducted at source from pay, will go up by 1.25% in April next year. Less prominently tax on dividend income will also be raised by 1.25% and I am pleased. It would be outrageous to expect today’s workers to pay for today’s old folk – remember the UK like most countries has a pay-as-you-go tax system. I’m glad to contribute a bit too. By the way, NIC contributions are the stealthiest of taxes as if an increase coincides with a pay rise it is effectively invisible.

This will do nothing to solve the problem of debt. The solution is usually to kick the can down the road and it will become another government’s problem. Reginald Maudling to Jim Callaghan, 1964: “Sorry to leave it in such a mess, old cock.” Liam Byrne in 2010: “I’m afraid there is no money.”

Of course all this would be different if the UK had started a Sovereign Wealth Fund seeded by North Sea oil revenues forty years ago. It surprises me that the biggest SWF is China. No surprise that Norway and Singapore are high up the list. No sign of the UK; a national piggy bank is too tempting to raid. Government A builds up the fund only for government B to spend it and win votes. So, with the honourable exception of Norway, the seven biggest SWFs are not unstable democracies; mostly perhaps unstable autocracies.