Reversing the National Insurance rise will give most to those who need help the least

Commenting on the Chancellor’s announcement this afternoon (Thursday) that the Government will reverse the recent 1.25 per cent increase in the National Insurance contribution (NICs) rate from 6 November this year, Karl Handscomb, Senior Economist at the Resolution Foundation, said:

“While raising National Insurance was a flawed way to fund social care provision that would initially largely benefit non-National Insurance payers, cutting NICs is an equally flawed way to tackle Britain’s cost-of-living crisis that is hitting lower-income households the hardest.

“This policy will give away most to those who need the least support. The poorest tenth of households will gain just £11.50 this year, while the top 10 per cent on average gain 60 times that amount. Twice as much of the permanent gains will go to the richest 5 per cent of households as the entire bottom half of the income distribution.”

Notes to Editors

Resolution Foundation analysis finds that:

  • The poorest 10 per cent of households will gain an average of £11.41 in 2022-23, while the richest tenth of households stand to gain £682 on average.
  • Only 15 per cent of the cost of scrapping the NI rise would go to the poorer half of the population, while 28 per cent would go to the top twentieth.