The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 1st April 2016
MORE than six million workers will suffer a £37 cut in their monthly wage from 6th April due to a change to National Insurance (NI) payments made in George Osborne’s budget earlier this month. The change will save the Treasury £5.5 billion per year. So much for Cameron’s claims to be increasing wages for hard-working families!
That promise made last autumn consisted simply of changing the name of the minimum wage and calling it the living wage — though it still bears no resemblance to a real living wage that would allow workers to live a reasonable life. It will not even keep up with rising housing, travel and domestic fuel costs.
Now the Government is directly cutting wages again through raised NI payments. But this rise will not go to ensuring a comfortable old age. The pension these workers will get will be less than that paid to their parents in real terms and the age at which they will qualify is to be raised regularly until it is in their mid-70s. The burden of working on through those years when their health and stamina are declining will ensure that many never live to draw their pension at all — their pension contributions turned into a free gift to the state.
When the first old age pensions were introduced over a century ago they were described as a bond between the generations. The working-age population paid taxes that funded the pensions of their retired parents and they depended on their children in turn being willing to keep the scheme going by paying taxes to keep them in their old age.
Now that safety net is also being cut to pieces. The Government claims to be doing away with pension credits — a small top up on the basic state pension paid to those who have no occupational pension or other income and an indirect acknowledgement that the basic pension is too low to survive on — to be replaced by a slightly higher level of basic state pension for all and no more top-ups.
But there are serious complications to the new state pension. Those reaching state pension age on or after 6th April 2016 will get the new regular payment, which has been set at £155.65 per week. As part of the shake-up, the state second pension — also known as S2P and formerly known as SERPS — will be abolished. As a result, members of defined benefit workplace pension schemes will no longer be permitted to “contract out” of the state second pension.
At the moment these workers and their employers pay NI at a lower rate — but this will end from next month. This affects millions of people: there are 1.3 million active members of contracted-out private sector schemes, plus a further 5.4 million members of public sector pension schemes.
The vast majority of the public sector pension scheme members are currently contracted out, said Tom McPhail, head of retirement policy at investment and pension firm Hargreaves Lansdown. “All these people are about to see their national insurance costs increase by 1.4 per cent, which could mean a monthly deduction from their pay of up to an additional £37.31 a month in national insurance,” he added.
The public sector union Unison has said the change is “unacceptable” and said it would take workers by surprise. The scheme will also increase the wages bills of public sector employers such as schools and hospitals — effectively cutting what they can spend on delivering their services.
We must return to a basic state pension paid at a level that will give the elderly a decent standard of living and fund it from general taxes. We must demand that corporation tax is restored to the levels it was payable at three decades ago and that the Government stops running the City of London as a tax haven for dodgy dealers and asset-strippers.
We must demand that giant multinational companies pay proper taxes on the money they earn in this country. In that way we will know that when we are paying for the services provided by these companies we are helping to pay for our parents’ pensions and welfare benefits for all who need them.
This would bring in many more £billions than sneaky increases in workers’ NI contributions to pensions they may never receive. Better still, we can work to overthrow the whole sad system and replace it with socialism.