Following the cuts to National Insurance contributions in the Budget, Jeremy Hunt hinted at the idea that the Conservative Party’s long-term goal is to abolish it altogether. Sanjit Nagi revisits the ideological origins of National Insurance, based on ethical ideals of citizenship and duty towards one’s community, replaced today by an unfettered individualism.
In pursuit of ideological tax cuts, the Conservative government have used two consecutive budgets to reduce National Insurance (NI) contributions. As a result, workers (employed and self-employed) will contribute a smaller portion of their income towards funding various social rights. Following these cuts, the Chancellor of the Exchequer, Jeremy Hunt, has sparked debate by suggesting the Conservative Party may pledge to abolish NI altogether – arguing that NI amounted to an double taxation of worker’s income.
Whilst supporting reductions to NI contributions, the Labour Party have only responded to NI abolition in fiscal terms, describing it as “reckless” and an “unfunded tax cut”. Overall, little attention has been given to the foundational ideas that informed the introduction of NI. The post-war Labour government’s National Insurance Act 1946 – the bedrock of modern-day NI – was underpinned by communitarian concepts of citizenship and rights being linked to correlative duties. It aimed to foster a more cohesive and other-regarding society, something lacking in today’s debate over NI.
The Attlee government and citizenship rights and duties
From its inception, until 1955, the Labour Party took an active interest in reconfiguring the nature and moral character of society. Early figures like Ramsay MacDonald and George Lansbury rejected a laissez-faire society that was atomised and placed a disproportionate emphasis on absolute and passive rights. It was thought that these societal arrangements created self-interested individuals. In response, they advanced ethical ideas of organicism and fellowship which envisioned an interdependent, cohesive, and cooperative society. Importantly, key figures in the post-war Labour government continued to harbour such ambitions by a belief in citizenship. This involved fostering an ethical disposition within citizens that resulted in active consciousness of their duties towards the common good, community, and nation.
Prime Minister, Clement Attlee, didn’t think citizenship and social cohesion could be fostered only during times of national emergencies. Attlee often claimed that “socialism was a way of life” and it demanded a “higher standard of civic virtue“. As such, he aimed to reorganise the community around service. Herbert Morrison, Leader of the House of Commons, claimed the Labour Party’s programme for government centred around peoples’ contribution to the common effort and good. Whilst Deputy Leader of the Labour Party, Arthur Greenwood, argued citizenship via voting was insufficient to produce an electorate imbued with a sense of duty. Stafford Cripps, Chancellor of the Exchequer, also explored ideas of citizen participation in relation to a planned economy.
The Labour government’s conceptual support for citizenship led it to frame social rights within the welfare state as being linked to duties. Attlee argued it was essential “to see it that the citizens sense of obligation to the community keeps pace with the changes affected in the structure of society – we need to show duties as well as rights”. Tellingly, Morrison stated that the social rights created by the Labour government were not granted passively; they were to be earned by people doing valuable work in society.
The Beveridge Report
Given the ideological framework of social rights and duties within the Labour Party, it’s unsurprising they supported the social insurance scheme proposed by William Beveridge’s Social Support and Allied Services Report – otherwise known as the Beveridge Report.
The report set out, “as of right”, citizens’ entitlement to withdraw from a social insurance fund irrespective of means when either ill, unemployed, disabled, or retired. Crucially, this was not passively granted and the report attempted to balance rights with duties. As such, access to social insurance entitlements would be based on a citizen’s service and contribution through work; this was a direct correlative duty. Only the chronically ill or disabled escaped said duties, via a needs-related assessment. Beveridge commented that whilst there would be no paternalistic means test or punitive punishments, the duty to contribute was, amongst other things, based on people standing together with their fellows.
Attlee was entirely supportive of the Beveridge Report’s would-be NI proposals, declaring it a new era of social services that should be implemented immediately. At the 1942 Labour Party conference, James Griffith, future Minister for National Insurance, claimed the time had come to create a comprehensive scheme of social services, one scheme administered by one minister, one contribution and one benefit. Later, in his memoirs, Griffith reflected on social insurance being paid “as of right” based on contributions. He wrote it was not enough to construct a society which did no more than guarantee material well-being and freedom; it must also be a society that provided citizens with the ability to live out their lives in cooperation. Support for social insurance being linked to duties was so great, a motion calling for universal entitlements without contributions was heavily defeated at a Labour Party conference.
National Insurance Act 1946
The Labour government’s National Insurance Act 1946 was based on workers’ flat rate contributions in return for entitlements during times of need: unemployment, sickness, dependants’ allowance, maternity, retirement pension, and specific funeral costs. In the House of Commons, Griffith claimed citizens would be given “a feeling that the benefits they get are a right” and the contributory system was “the best kind of scheme suited to the British character“. Some Labour Party MPs, like Barbra Castle, raised specific concerns about the time-limited access to NI-unemployment support for those who lost their job. They believed such an entitlement should only be contingent on the existence of the conditions which give rise to claiming said right. However, this was justified as citizens having a social duty to adapt themselves and acquire new skills.
Clearly, the Labour government aimed to create dutiful citizens and a more cooperative society by designing NI-legislation around ethical notions of rights and duties. Morrison was unequivocal. Whilst it was proper for the state to supply NI-related social entitlements, so that a minimum standard of life could be achieved, these entitlements meant the citizen had to play their part towards the community; the new status of the worker meant social duties as well as social rights.
Overall, John Bew is correct when he argues that the post-war Labour government’s legislation – which included NI – centred on a progressive patriotism that was built on rights and duties and an emphasis on commonwealth over individualism. The duty of contributions and working to contribute was ethical in nature, applied to all workers regardless of background, sought to evoke an internal desire to assist the community, and created a platform for a sense of shared solidarity amongst citizens.
Today’s arid NI reduction or abolishment debate is starkly different from the original, ethically driven, discourse. But why? It’s a result of, firstly, a misguided attachment to freedom of the individual; specifically, policies that prioritise individual monetary interests over collective contributions. Secondly, NI is consistently framed in consumerist terms rather than a social solidaristic network that needs preserving. Where government policies have reduced the quality and extensiveness of NI-entitlements, it is easier to argue “service” and “delivery” is no longer value for peoples’ money. Lastly, modern-day NI administration is complex and almost indistinguishable from general taxation or payments to the state; this prevents the specific contributions-entitlement link from fostering its intended reciprocity and mutuality amongst the citizenry. Without substantively defending the foundational ideas underpinning NI, we risk total erosion of its interdependent system.
All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.
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