National Insurance

Tom Watson MP draws attention to papers released under the thirty-year-rule which discuss the possibility, as far back as 1982, of scrapping National Insurance and replacing it with compulsory private insurance.

Tom Watson MP wants people to believe this was an ideological conspiracy to dismantle the welfare state.

However he glosses over the fact that National Insurance WAS a scheme of compulsory insurance, the insurance "company" being provided by the state.

This proved to be unworkable for three reasons:

1  Politicians were not prepared to put up NI rates when the cost of providing welfare went up - they have consistently failed to explain to the electorate what was happening with the cost of welfare.

2  Politicians (especially Labour governments) could not resist using NI money as yet another pot of money they could use to bribe sections of the electorate, especially by allowing millions of incomers to benefit from welfare insurance they had not paid for.

3  By turning NI into yet another variation of income tax the Labour government of 1975 destroyed the national consensus that the welfare state belonged to everyone equally (everyone paid equally, everyone benefited equally).

It would have been better to have implemented the 1982 proposal.  Not because private insurance is better than state insurance.  But because private insurance cannot be raided so easily by greedy politicians wanting a convenient war chest to fight the next election.

If I had the time I would write a book about the way the Labour party has destroyed the British welfare system by using communal assets to buy votes.