Letter: Swindled by the Budget

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The Independent Online
Sir: It isn't only the enormous and unprecedented increase in tax - an extra pounds 17bn in the two years 1994-6 - which ought to concern people about the Budget. There is also, unremarked on but an increasingly serious issue in recent years, the unilateral breach of contract by the Government towards its citizens.

Kenneth Clarke and Peter Lilley have just announced major cuts in benefits which citizens have contracted to receive through payment of National Insurance contributions, an enforced and hypothecated tax on employment. Invalidity benefit, for which people may have been contributing for 20 years, is to be abruptly abolished in 1995. Unemployment benefit is to be suddenly cut from 12 to six months, so that, on Government figures, 240,000 will be deprived of entitlement, 90,000 of whom will not be eligible for income support. Women under 44 who have been contributing towards a pension at 60 for up to 28 years - almost two- thirds of the total contribution requirement - are suddenly told their pension will be delayed another five years.

The National Insurance Fund is, as the title makes explicit, an insurance scheme. Citizens as employees contract with the Government to buy clearly stated rights to benefit on the basis of contributions laid down. Any private insurance company that unilaterally cut the benefits publicly offered would be sued in the courts for breach of contract.

The Government is keen to apply the Citizen's Charter to public services, no doubt because it sees it as paving the way for market testing (for which read privatisation). Yet it itself plays fast and loose with public financial rights, for which people have insured. It refuses to put up income tax overtly, but thinks it is acceptable to do so through increasing employee National Insurance contributions, while at the same time reducing benefits. It is not.

If Robert Maxwell had done this, he would be rightly accused of swindling people out of their insurance pay-out and savings. In terms of standards of public life, it is even more dishonest and disreputable when the Government does it.

Yours faithfully,


MP for Oldham West (Lab)

House of Commons

London, SW1