National Insurance cut is fooling nobody – Tories want the ultimate ‘dead cat’

Was last Wednesday’s economic statement from Chancellor Hunt devised with the coming general election in mind? Of course it was. But whether it works in bolstering Tory fortunes is anyone’s guess. It was certainly a very Tory budget: tax cuts, attacks on public spending, and the demonisation of a new target group in the shape of those suffering long term illness.

Let’s start with National Insurance. We persist in the myth in this country that this is not a tax but a contribution to a pension fund. It isn’t. There is no fund where NI contributions go to be invested so that returns can benefit the contributors in later years – there’s just the treasury. Increases in the basic state pension don’t happen because fund managers made a good return in the previous year – but because of policy. And the state pension isn’t paid for just from NI contributions but from general exchequer spending.

So, the cut in the rate of NI people pay is to all intents and purposes a cut in the tax on their income. The cut of 2% will benefit 27 million people, that’s half the electorate. And to make sure everyone notices, the cut is being fast-tracked to January so that the effect is not lost in other changes.

Will the bribe work? Probably not. For four reasons. The first is that just as imposing flat rates on everyone is regressive, so too is cutting them. Clearly 2% of £50k is a lot more than 2% of £25k. So, the more people are struggling on low incomes, the less benefit the 2% cut will have.

Secondly, the reduction in NI is a lot less than the extra income tax pretty much everyone is paying due to thresholds having been frozen – estimates suggest about a quarter. And while the Tories try to pull the wool over people’s eyes, when it comes to studying their wage slip most aren’t daft and can see what’s happening. The centre-right Resolution Foundation predicts that average household will be £1900 poorer at the end of this parliament than they were at the beginning. That’s an historical first.

Thirdly, and speaking of not being stupid, most people will feel that the small increase in their bottom line that this change will bring still falls far short of the rising costs they are being squeezed by. The overall rate of inflation may be falling but many costs for low- and middle-income families are still going through the roof. The Bank of England estimates the four million UK households who will move onto a new mortgage deal in the next three years face average increases of £220 a month. Energy prices are two or three times higher than two years ago and set to rise again, just as the government refuses to offer any support with bills.

Fourthly, the government is giving with one hand and taking away with the other. This minor cut is tax is to be funding by another squeeze on public spending, achieved mainly by cutting real term wages.

Perhaps choosing NI as a mechanism may throw some scrutiny on just how strange this levy on earnings is. Because of the fiction that it funds the state pension, NI contributions stop when you get to pension age – even though you can keep on working, or in some cases, receive considerable earnings from investments without working at all. This ceased to be fair a long time ago and it is time we had an honest discussion towards building for a decent income in retirement, which everyone gets because they are a citizen, not because they have contributed to the NI scheme.

NI is completely reserved to Westminster, but we ought to be thinking now about how we can design and find a better, fairer system of social insurance in an independent Scotland. It wouldn’t be hard to do better than what we currently have.

Back to the budget, sorry, statement. Much has been made about boosting productivity by changing business taxation, particularly by exempting capital expenditure from corporation tax. Just before we examine that claim, a word about corporation tax itself.

The UK has one of the lowest rates of tax on business profits of any advanced capitalist economy. This is not a tax on business, only a tax on the profits they make after everything else is paid for. A fairer, more progressive system would mean not only that new small and medium size businesses could be better supported, but that the big corporations would be expected to put more back into the communities which helped them generate their surpluses in the first place. That is what we could do if we had power over taxing business profits – the power that comes with being a normalindependent country.

The UK’s regressive approach to taxing business profits runs through the latest wheeze on capital spending exemptions. Of course, business should be incentivised to invest in becoming more productive and just as importantly, in becoming more sustainable. But that would require a plan, a set of targets about what the country wanted its businesses to do. There is no plan.

Instead, businesses can simply offset pretty much any spending on buildings, plant and vehicles for tax purposes. And it doesn’t have to have any impact on productivity. You could replace a machine that makes ten widgets an hour with a new one that only makes eight. You would still get the tax relief. In truth this is just a bung to businesses to get them to vote Tory, a bung which will cost taxpayers billions. 

This is desperate stuff from the Tories, trying to pose as the party of business but without the first clue as to how to actually support and develop manufacturing. We can do better than this.

But the most desperate ploy of all in the chancellor’s statement is the creation of yet another Tory target. People to blame when the Tories won’t accept the blame themselves. Enter the long-term sick, particularly those suffering from mental illness.

They say the sign of a civilised society is how it treats its most vulnerable. By that measure we are heading for barbarism. The proposal to “close the file” on claimants who cannot jump through the myriad of hoops in their path to subsistence payments is beyond anything Thatcher and Tebbit ever conceived. It won’t work, how could it? And it won’t save any money. It’s not designed to. It’s the ultimate dead cat. We know we have messed up, made you poorer, less safe, more miserable, say the Tories. But hey, look at these disabled “scroungers” taking your money. Vile and reprehensible. The sooner they’re gone the better.

Don’t write off SNP’s election chances

Last week I was chosen by local members of Edinburgh East and Musselburgh SNP to be their candidate in next year’s general election. It’s a great honour. For me, that election cannot come soon enough.

But I am under no illusions that it will be easy to keep the job I’ve been doing for the last eight and a half years. The coming election will be the biggest challenge the SNP has faced in a long time. It will be a hard fight. But one I am determined to win.

As I write this the votes are yet to be counted in the Rutherglen and Hamilton West by-election. You’ll know the result now. And I would be astonished if Labour did not win. It used to be one of their safest seats. The incumbent MP, elected under the SNP banner, disgraced herself and was effectively sacked by her own constituents. If Labour couldn’t win in these circumstances, they really ought to give up.

But don’t be too quick to write off the SNP in places like this. I know from having spoken to over 150 people in Rutherglen that there is still strong support for the party. Of course, some are fed up and disillusioned. They read of the resignations and enquiries. They see a party arguing with itself and they question whether it can achieve the change it seeks.

In part this is the consequence of the refusal of the Tories to respect the wishes of the Scottish electorate. Not one, but three mandates have been ignored as the Tories just say no. It wears people down. It saps their confidence. It destroys their self-belief. That’s what it is intended to do.

In some ways we have brought these problems upon ourselves – or at least made them worse. But we are rebuilding now. We have a new leader, a new CEO, and this month’s conference will allow us to refresh our message as we agree our strategy for the election.

Despite all the political turmoil the arguments for Scotland becoming an independent country have never been more compelling. Over the last few years many more people have realised that the powers that come with independence are exactly what we need to tackle the cost-of-living crisis and the climate emergency.

Now more than ever we will need to press that case and demonstrate that this is not some abstract debate about the constitution but a matter of real changes here and now.

This country is blessed with abundant natural resources yet too many of our citizens live and die in poverty. Lives unfulfilled. Potential wasted. Only by taking control of our own affairs can we ensure our wealth is marshalled for the common good and not global corporations.

Across the UK voters are being offered a choice between two sad and uninspiring options. The sickening right-wing populism of the Tories on the one hand and the pathetic lack of ambition of Sir Keir Starmer’s hollowed out Labour Party on the other.

Thankfully, Scotland and Edinburgh have an alternative. We can be better. We can demand more from a new UK government than Labour wants to give us. And we can maintain our journey to self-government. That is why this election is so important.
Bring it on.

UK Budget must reverse Tory cost of living crisis

Tommy Sheppard MP and Deidre Brock MP: Slash energy bills and put money back in people’s pockets

The SNP has said “the number one priority for the UK budget must be to put money back into people’s pockets” – warning the Tories can’t continue to hammer household incomes.

Ahead of tomorrow’s budget, Tommy Sheppard MP and Deidre Brock MP have urged Jeremy Hunt to deliver a comprehensive package to boost household incomes and economic growth. The MPs for Edinburgh East and Edinburgh North & Leith have challenged the Chancellor to deliver the SNP’s five-point plan:

  • Saving families £1400 on energy bills – by cutting the Energy Price Guarantee to £2000 and maintaining the £400 Energy Bill Support Scheme to the summer.
  • Raising public sector pay and benefits by CPI – putting money into the pockets of millions of workers and delivering Barnett consequentials for Scottish spending.
  • Scrapping Tory plans to raise the pension age to 68 and reinstating the Triple Lock – so no one must struggle in old age.
  • Re-joining the European Single Market – to boost economic growth and halt the multi-billion pound long-term damage being caused by Brexit.
  • Investing in green growth – by competing with EU and US subsidies to attract green investment.

In addition to the headroom identified by the IFS, and the billions of pounds saved as a result of the falling wholesale price of gas, the SNP is calling for the Chancellor to scrap non-dom tax status, tax share buy backs, and expand the windfall tax, which would raise billions more to fund cost of living support for ordinary households.

Commenting, Edinburgh East MP, Tommy Sheppard said:

“The number one priority for the UK budget must be to put money back into people’s pockets – and reverse this Tory-made cost of living crisis.

“Scotland is a wealthy, energy-rich country but families are being fleeced by Westminster. By refusing to act, the Tories are showing why Scotland needs independence, so we can escape Westminster control, re-join the EU, and build a fair and prosperous economy.

“Families are sick to the back teeth of being ripped off by the Tory government. Instead of hammering household incomes, the Chancellor must save families £1,400 by slashing energy bills and deliver a comprehensive package of support.

“The SNP’s five-point plan would reduce bills, raise incomes and boost economic growth, at a time when many families are struggling to get by. With energy companies making record profits and the wholesale price of gas falling, there is no excuse for failing to act.”

Adding, Edinburgh North & Leith MP, Deidre Brock said:

“The SNP Scottish Government is doing everything it can with limited fiscal powers, including delivering the Scottish Child Payment, higher energy bill support, and higher public sector pay.

“The UK government must finally step up to the plate and use its reserved powers to introduce a Real Living Wage and raise public sector pay and benefits by CPI. In doing so, it would raise the incomes of millions of workers and deliver Barnett consequentials which would benefit Edinburgh and Scotland.

“This UK Budget is all about choices. Instead of making families in Edinburgh pay for Westminster failure, the Tories must fund support by scrapping non-dom tax status, expanding the windfall tax and taxing share buy backs, which would raise billions.

“And if we are serious about delivering economic growth and reversing decline, the UK government must re-join the European single market and properly invest in green energy.

“Scotland is suffering the consequences of Westminster control. The Tories trashed the economy with Brexit, austerity cuts and thirteen years of mismanagement. And with the pro-Brexit Labour Party becoming a pound-shop Tory tribute act, it’s clear independence is the only way for Scotland to secure the real change we need.”

Edinburgh East MP urges pensioners not to miss out on £324 cost-of-living payment

Tommy Sheppard MP is urging all pensioners on low-incomes to make sure they’re signed up for Pension Credit to ensure they receive a special cost of living payment.

As the Tory-made cost of living crisis continues the Edinburgh East MP warned households could miss out on the vital payment if they don’t apply soon.

In May 2022, the UK Government announced a Cost-of-Living Payment to be paid to those in receipt of Pension Credit and other qualifying benefits. To be eligible for the payment, an older person must have been entitled to a Pension Credit payment (or later found to be entitled to a payment) between 26 August and 25 September. 

Applications for Pension Credit can be backdated by three months – those who begin the claiming process by Sunday 18 December and are successful can be eligible for the second Cost-of-Living Payment of £324.00. 

Applicants can begin their application 4 months before they reach pensionable age and apply anytime afterwards and can do so online, by post, or over the phone.

Commenting, Tommy Sheppard MP said: 

“As the Tory-made cost-of-living crisis continues to ravage household finances, more and more people are set to see a reduction in their living standards, particularly those on lower incomes.

“Increasing food bills, rents, mortgage payments and energy prices are all heaping on the pressure, and pensioners especially can be vulnerable this winter. 

“Pension Credit is money to which people are entitled, and I would urge all low-income pensioners in Edinburgh East to make an application today.  

“Organisations such as the Citizens Advice can assist with applications, and the extra cash can go a long way in alleviating some of the stress and worry over the colder months.” 

Apply here:

Tommy Sheppard MP Invites Public to Event to Help with Cost of Living

Tommy Sheppard, MP for Edinburgh East, is hosting a free advice event with key local and national organisations to help constituents through the current cost of living crisis.

Confirmed attendees include: Home Energy Scotland, Citizens Advice Edinburgh, Age Scotland and the Edinburgh Food Project. It will take place on Tuesday, October 4 at Richmond Craigmillar Church, 227 Niddrie Mains Road, EH16 4PA, and will run on a drop-in basis from 2pm to 4pm.

Commenting, Tommy Sheppard MP said:

“Every day people are waking up to reports that the cost of living crisis is spiralling out of control – with each headline more worrying than the last. I’m determined to do everything I can to help those in Edinburgh East who are struggling, and ensure they have the information they need to tackle the rising cost of living.

“From practical ways to save money on your energy bills to pointing you towards extra money you may be eligible for, the organisations invited have been chosen to cover a range of problems that local residents might be facing right now.

“The measures introduced by the UK government to tackle this emergency have fallen far short of what is needed to help ordinary families get through the winter. Therefore, the work done by these organisations will be even more important in the coming months as more people see their incomes slashed by rising energy bills and Brexit price rises.

“Everyone is welcome and encouraged to attend, help and support is available.”

More details:

Liz Truss’s fuel bill plan is just Robin Hood in reverse

The last item of parliamentary business of Boris Johnson’s premiership was a debate on sewage pollution. Fitting, don’t you think? After all, more than anyone he turned our political discourse into a cesspit, setting mendacity as standard and jettisoning integrity and morality as he went. So, farewell then, Alexander Boris de Pfeffel Johnson. You won’t be missed. 

But could the next one be even worse? Liz Truss emerged victorious this week from a long Tory leadership race that was tedious and terrifying in equal measure. Early signs aren’t promising. 

Rarely has there been such a mismatch between the problems facing a government and their prescription for dealing with them. Truss seems ideologically opposed to the measures necessary to tackle the cost-of-living crisis. 

Her mantra of tax cuts may have won votes from the small clique of middle-aged right-wing people that comprise the Tory rank and file, but it makes absolutely no sense in the real world. The Tory party was founded to give voice to the rich and powerful, and Liz Truss is taking them back to their roots. That’s why she will protect those with capital and penalise those without. 

Her attitude to energy prices is a case in point. Of course it’s right to freeze energy prices. If we don’t, millions will face extra hardship, small businesses will go to the wall and inflation will run rampant. But the freeze should be paid for by taxes on the obscene profits corporations are now making, rather than by consumers. 

The Truss plan protects profits, keeps siphoning money out of the real economy to be accumulated as private wealth, and places a future burden on all of us to fund it. And those who are worst off, on low and fixed incomes, will pay the biggest proportion of their income in future bills. It’s basically Robin Hood in reverse. 

It doesn’t have to be this way. Instead, the UK government should do four things. First, levy a windfall tax on excess profits of the giant corporations and use it to peg domestic energy bills. Second, uprate social security payments generously. Third, bring in a more extensive business support programme to help small business meet rising costs. And fourth, use an emergency budget to fund cost-of-living wage increases for public sector workers. 

The Tories won’t do this of course. Nor will they devolve economic powers to Scotland to allow us to take a different approach here. So, the Scottish Government will do what it can, and commendably has already done a lot. Freezing rents, outlawing evictions, increasing child payments to low-income households, increasing free school meals and other measures will help people here. But we still have no control over most social security, business taxes, government borrowing, and the essential levers we need to manage our economy. 

There is a way to make sure government policy serves the people rather than the corporate elite. To have the capacity to deal with rising living costs and the increasing poverty and inequality that follows. we need independence.

The arguments in the Supreme Court next month about having another referendum matter.  As a normal independent country we could be sure to have both the agency and the will to make the changes necessary to protect the people the Tories keep letting down.