“Part of the tapestry of public life” – Carmichael urges caution on government proposals to abolish National Insurance

Orkney and Shetland MP, Alistair Carmichael, has spoken in Parliament to urge caution on proposals by the Conservative government to abolish National Insurance contributions. Speaking in Parliament on Wednesday evening, Mr Carmichael noted that National Insurance is “identifiably different from the other taxes we pay” as “the symbol of our shared obligations” over pensions and other benefits.

The government has reduced National Insurance Contributions by 2% in the Spring Budget, but senior ministers have suggested a long term ambition to abolish the levy altogether, which would reduce government income by approximately £46 billion per year.

Speaking in the House, Mr Carmichael said:

“It is apparent that comments made by the Chancellor, the Prime Minister and others about the idea of abolishing national insurance altogether have started a debate. It is a substantial commitment to make—£46 billion—and we do not yet know where that money would come from.

“Functionally, national insurance is more or less like any other tax, in as much as money is paid into the Exchequer, and then is spent as the Government sees fit—in relation to health, policing, transport, Ministers’ legal fees or whatever else.

“As a matter of intent and purpose, however, national insurance is identifiably different from the other taxes we pay. More than any other levy, it is the symbol of our shared obligations—what we owe each other as a society and as communities in support throughout our lives.

“The point of national insurance is that we pool and share resources geographically and generationally. We pay our stamp on each payslip, trusting that, when the time comes for us to retire, someone else will continue to pay taxes that will fund our pensions.

“At the heart of any healthy liberal democratic society, there is the idea that we have lasting obligations to one another. We have obligations to those we know, to those we do not know, to generations that are older than us, and to those who are yet to be born. We can be bound by policies with which we disagree, and sometimes we must pay taxes for things that we dislike or that we feel we do not need.

“That is the system in which the national insurance contribution has a demonstrably significant and different impact than other taxes. It is part of the tapestry of government and public life in this country. This is perhaps just pulling at a thread, but the Minister and, indeed, people in all parts of the House would be well advised to consider exactly what they may be unravelling by pulling at this thread.”