Ahead of @RishiSunak announcements tmrw we should talk about cuts to employers National Insurance - an option the government has been considering to help tackle rising unemployment...
Why it's right to be considered: cutting employers NI brings down the costs of employing workers. It's a wage subsidy via the tax system - and wage subsidies in the likes of hospitality and leisure are a good idea right now...
...BUT there is a big problem: the jobs we're trying to protect are low paid - many of which are already exempt from National Insurance (if wages are under £169/wk) = 1/3 hospitality workers and 1/4 retail workers. And since 2015 firms already pay zero NI for workers under 21s
This is why a direct wage subsidy scheme for hardest hit sectors (ie just pay 10% wage costs) is better suited to the specifics of this crisis than National Insurance cuts - despite those being the generally popular policy level for Conservative chancellors.
IF you are going to cut employers National Insurance it should be done by raising the threshold at which employers start paying it NOT by cutting the rate employers pay (currently 13.8%) so that support is focused on lower (but not the lowest) earners
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Understandably lots of debate about child poverty this morning – something we as a country should spend much more time focusing on
The context here is the first Labour Kings Speech in 14yrs – implementing a manifesto just endorsed by the election result. No-one should be surprised that 98+% of Labour MPs voted for it/against amendments from other parties. That’s business as normal just days after an election
More importantly we shouldn’t confuse parliamentary procedure with what actually matters - reducing child poverty, something I’ve spent my life working on – in the last Labour government (which did exactly that) and ever since.
The case for @RachelReevesMP’s sweeping changes to the planning system announced today…
1. For 15yrs, we’ve been attempting to dig a tunnel under the Thames. No digging has taken place, but £800m has been spent & 9k pages of planning applications drafted. This is double what Norway spent actually building Lærdalstunnelen, the world’s longest road tunnel…
2. If we want net zero to happen, and to happen without higher costs, then things are going to have to be built. Things that not everyone loves. And they will also have to be built if we want our firms to be able to invest, grow and pay higher wages
This is yet another example of total tax policy chaos - this proposal is to reintroduce the exact same higher tax allowance for pensioners that George Osborne abolished a decade back. As with the personal allowance & corporation tax it’s going back to square one (ie Gordon Brown)
What is going on? A Tory panic that recent tax rises having been particularly large for richer pensioners (see the blue bars) rather than having confidence in all pensioners having gained from the triple lock (red bars)
Lots of focus on whether the radicalism of Labour's proposed employment law changes are being neutered - but the discussion is weirdly abstracting from the specifics and 'watering down' talk is overdone - this is largely the inevitably turning of slogans into govt action. Quick🧵
Here's @PickardJE list of what he thinks @AngelaRayner programme is. Let's take each in turn
1. creating a single "employee" status. This is about merging current "employee" & "worker" categories + clarifying boundary vs self-employment. It's a fiendishly difficult technical task - if you think it can be done without consultation you've never looked at any employment law
Time to talk Universal Credit. We're 10yrs into its roll-out, so understandably interest has waned. But it's impact on Britain has built - whoever wins the next election will be governing a "Universal Credit Britain" with 7m families - and big winners and losers - on it by 2029🧵
In 2019 the debate was whether to scrap Universal Credit, as Labour proposed. This time is very different. The pandemic showed UC had big advantages (processing millions of claims fast) and the roll-out has gone way too far to be reversed. So we should focus on its impact
What makes this difficult is that UC was introduced at the same time as big cuts to benefits. It's those cuts NOT UC that mean 71% of families are worse off on UC today than the legacy benefits it replaced as they were in 2013/14 (overall the change = average £1,400 worse off)
This is a REALLY good tool, that busts the myth that the biggest problem facing deprived areas is that there talented young people leave. Let's take the case of Hartlepool... 🧵
Overall, young people growing up in Hartlepool are less likely to get a degree than the national average. You already knew that. Let's get to what's interesting
Of those who do get a degree they are far far MORE likely to stay in Hartlepool than graduates generally are to stay where they grew up. The brains are not draining despite what you're always told.