The case for the contributory principle
Jeremy Hunt’s decision in his last two financial statements to go for cuts in national insurance contributions was the right thing to do. It focussed tax cuts on people in work. Just for once, it shifted Conservative priorities towards people of working age rather than providing yet more help for pensioners who have done very well since 2010. Their benefits are up by far more than inflation whilst families have had cuts.
The Chancellor’s decisions are also an opportunity to shape a wider political narrative. There is an opportunity to make these national insurance cuts part of a positive story of help for younger people. That means a shift to the strong Conservative theme of spreading property-owning democracy. It is an optimistic message about boosting opportunity for people in work.
The next step to deliver this could be cuts in stamp duty– lowering the costs of buying a house and also encouraging older property owners with more space than they need to trade down. Young people now occupy less living space than they had a generation ago whereas older people have more living space – one of the many ways in which the balance between the generations has shifted. The big prize would be a Britain where people could build up assets by saving out of their earnings rather than one where inheritance is increasingly important as the main route to wealth.
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