by James Cartlidge
"That being so, in my mind we should have focused the whole argument on pensions. Many self-employed will now receive more generous state pension provision because of recent reforms and the money raised will help pay for that extra liability for the state’s coffers. In my view, this is the one justification you need. If people think we should reverse the NICs rise, do they also think we should reverse the better state pension provision for the self-employed?
We should recognise at this point that we have a ‘Pay as You Go’ state pension. None of us, regrettably, have a state pension pot with our name on it accruing gains after much needed investment to spur the UK economy (if only); rather, workers pay their NICs and tax to fund the pensions of today on the expectation (more like hope) of receiving the same when they retire.
In other words, in absolute terms, the new higher NICs are not immediately funding the more generous state pension for self-employed persons affected since they are yet to retire. Rather, without the rise, the self-employed are shouldering an ever smaller share of an ever rising bill for funding today’s pensions and today’s pensioner benefits. That is the true impact of the current imbalance in the context of a ‘Pay as You Go’ system."
Some sense on the budget. Those opposing the chancellor's rise in National Insurance contributions are fiscally irresponsible.