The Coalition is withholding billions that could be used to support the NHS
It seems we owe thanks to Labour’s former deputy Prime Minister, John Prescott, for discovering a revealing accounting measure by the Coalition Government, meaning Chancellor George Osborne has yet again failed to cover his a**e.
According to Mr Prescott, figures from the House of Lords Library show the government spent £106 billion from National Insurance (NI) contributions last year – the benefit system received £85 billion and the NHS got £21 billion.
But he was “stunned” to find the Government last year held back nearly £30 billion.
“National Insurance money can only be used for the NHS or benefits,” Mr Prescott was quoted as saying. “So since he can’t spend it on anything else and chooses not to fund hospitals, the Chancellor lets it sit there.”
Mr Prescott recommended that the surplus should be used to help shore up a buckling NHS – but it seems clear that there is enough, not only to clear the health service’s debt but also to reverse all the devastating changes to the benefit system as well.
Let us hope a future Labour government remembers how to do the right thing.
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The surplus in the ring fenced NI Fund and can be found in the NI Fund Monthly Accounts. It is currently GBP17.1 billion and is deposited with the Debt Management Offıce.
The government can borrow from this surplus and as it is funded by contributions and not from general taxatıon; it pays interest on it. The use of such borrowıigs limited to the fundıng of new government projects, not finance existıng ones and is limited to improving the infrastructure in, for example, hospıtals and schools, However, the prıorıty remaıns the fundıng of claıms made agaınst the Fund, whıch ıs dımınshıng.
Prescott should be aware of this, the transfer of the surplus, which at one time exceeded GBP 50 billion, to the DMO was introduced by Gordon Brown.
The existence of it has been a bone of contention with frozen pensioners who met all the NI contıbution conditıons ın their working lives but are denied the annual up rating because they are retired in countries other than the UK, in the EEA and some sixteen select random ones like Macedonia, Israel, the Philippines and USA. Over half a million are discriminated against in this way and the long standıng policy ımposed by all governments sınce 1956 was further condoned by all the major parties when they passed Clause 20 of the Pension Act 2014.
Interesting. This doesn’t explain why the government does not use the money for the purpose for which it was intended, though.
True but then no government since pensions became payable world wide in 1956 has been able to justify why it is index linked in some overseas countries but not others. The money in the Fund, of course, has nothing to do with the funding required for the NHS…the small percentage of the employees NI contrıbution towards the part funding of it has already been removed and it is the balance that goes into the NI Fund. .
This is something on which I’m not an expert. It’s clear that you differ from John Prescott; do any other readers have observations to make?
Some people would rather pay no NI whatsoever and sort out their own pensions, healthcare, out of work benefits etc…
They could be allowed to do this, but with the understanding that they cannot suddenly fall back on any state provision.
You pays your money, you takes your choice.
……in reply to Jim. This is not the way it is supposed to work in social reality. The idea is that some people can and should be able to pay more and as such support those who are unable to pay more. Sadly this rotten government just cares for the haves and likes to see those who are poor suffer.
I view paying taxes as a membership fee for the type of society in which I want to live and would be quite prepared to pay more tax in order to live in a more humanitarian society.
As one of the women caught in the changes to state pension age – where we’re to work until 67 before accessing the pension we have paid into all our lives – I would strongly suggest that the first option would be to reverse the changes and cough up the pension to us. 67 is too old for either gender if you’ve actually worked all your adult life.
I sense Prescott is correct in the spirit of the NI fund. I think the govt obsession and ideology with reducing the state to nothing is challenged simply by the NI fund and their obvious intentions of reducing pensioner “benefits” (or rights I would say) as a method of taking more from the poor and giving back less. How dare they tell us what we “can’t afford” when the fund is on surplus?
Yet we new they starved the nhs of monies for it to fail
ready for their sale to their greedie brothers in America
isnt it strange that unum was the forebearer of this been
waiting years for this bite of the apple yet now we get to
c it wasnt 19 billion but alot more it seems these crooks
cant wait to have the yanks taking over our hospitals telling
you its for your own good whilst lining their pockets it isnt
rocket science these devils have sold their souls for the price
of greed jeff3
The surplus is iın the National Insurance Fund – it is not the fundıng of the NHS which apart from a very small percentage of the employee’s NI contribution is funded from entirely separate general taxation.
More importantly why is this issue not being headlined or even mentioned by the media.especially the BBC.
Probably because ıt has been going on under successive governments since 1956 and is news only to Lord Prescott.
Is that a fact or just a guess Andy?
Ps these companies who like to run our hospitals
charge more than two and a half times or was it three
and a half times more in fraudulently claims than it cost
to run our nhs do you want this
If this is correct then surely it constitutes a grave deception and should be thoroughly investigated and exposed in the unbiased national press.
How can this shower be trusted with the key to the safe’ arrogant half-wits. I bet he could not even fold the towels straight only crooked like his policies, !!! Vermin
Going out on a wild limb here… is this what George Osborne has promised his ‘privateers’ is in the kitty for them when the NHS services are sold off to the private sector? After all, those fat cat expenses have to come from somewhere…
i would say that shaqui has got it right. one thing i am absolutely of is that this government is the most corrupt i have ever known in my 75 years. the sooner their lies are all out in the open the better for us all
Mike – I noted you were looking to see observations from others and it was not my intention to return but there seems to be some confusion and though I am by no means an authority on the subject may I add a further comment, please?
It must be remembered that the NI Scheme is a “pay as you go” system (PAYGO) and, as such the contributions made by the working generation fund the in-work benefits of today and the pensions of the previous generation, as has always been the case. In theory there should be no money in the fund at all as income should match expenditure but, of course, that would not work.
The Government Actuaries Department (GAD) have long since recommended, therefore, that one sixth of the anticipated annual expenditure – currently about GBP15 billion -should be held in order to meet any temporary shortfall or emergency – eg a flu epidemic causıng sick claims to escalate or even NI contributions not collected for some reason. Without this “surplus” there would be nothing with which to pay the claimants. A look at the NI Accounts over the last few years will show that this surplus has gradıually fallen – claims have exceeded income and the Fund may well not be able to meet the GAD recommendation but the projection is that with the changes in the Pensions Act coming into force ıt will not go into the red and in 2016/17 will start to increase once again.
The excess in the Fund was invested in gilts at one time; it was Gordon Brown who made borrowing a possibiiity but because the fund compriises contributions (some of which will have been made on a voluntary basis) it cannot be treated as a tax and can only be used for the payment of legitimate claıms made against it, the governement had to pay the ınterest on ıt to the Fund.
The truth is that when the fund was flush it was a source from which the government could borrow but it has had to reimburse it as the income from contrbutıons dropped and claıms ıncreased in order to meet the shortfall. As I said the fund is intended and is ring fenced to meet claims made against it and the majority of these are state retirement pensions.
The bone of contention was and to some extent still is that when the surplus was somewhat larger the government did not meet the index linking claıis of over half a mıllıon frozen UK pensioners whose basic entitlement does not get ıncreased annually (at a cost of just GBP 580 million). As regards Labour doing the right thing it was the last government that contested the frozen pensioners claim in the Grand Chamber of the European Court of Human Rights…… but that is another story!
In respect of this artıcle I suggest that there is no “hıdden agenda” and that the operation of the fund is the same as it has always been and, unfortunately, before opening his mouth Lord Prescott sholuld have done just a little more research.
.
Thank you for allowıng me to hopefully clarıfy the posıtıon.