Rachel Reeves has argued Conservative Chancellor Nigel Lawson was “right” when he “dismissed the idea of abolishing national insurance nearly forty years ago”.
Labour’s shadow Chancellor, speaking in the City of London today, set out her party’s attack lines on the Tories’ economic record following the local and mayoral elections last week.
Reeves claimed Prime Minister Rishi Sunak’s government is “deluded and completely out of touch with realities on the ground” and said: “The Conservatives are gaslighting the British public”.
And in a nod to her continued efforts to woo the Square Mile, Reeves criticised what she called the government’s “£46 billion unfunded plan to abolish national insurance contributions (NIC)”.
At the Spring Budget Chancellor Jeremy Hunt cut the rate of NIC by 2p and said his party’s long-term ambition was to ditch the tax on workers entirely. But he was later forced to concede the measure could take more than a decade and required hasty economic growth.
Reeves said ministers had offered “no answers” as to how the policy would be paid for and warned replacing the measure with “higher basic and higher rates of income tax” would see the levy rising by eight per cent, which she called a “tax bombshell” for the UK’s pensioners.
She added: “There is no coherent argument behind this plan. You don’t have to take my word for it.
“Because it was the Prime Minister’s hero – the former Chancellor Nigel Lawson – who dismissed the idea of abolishing national insurance nearly forty years ago.
“He advised the then Prime Minister, Margaret Thatcher, that such a choice had, I quote, “little practical merit” – that “it would destroy the contributory principle and create many losers, especially among the elderly.”
“Now, I realise that a few weeks ago I spent a long time arguing in my Mais lecture that Nigel Lawson was wrong. But on this, he was right. And his argument then is still right today.”
In response to Reeves’ speech, Conservative Party chairman Richard Holden said: “The personnel may change but the Labour Party hasn’t. Rachel Reeves still hero-worships Gordon Brown, who sold off our gold reserves and whose hubris took Britain to the brink of financial collapse.
“Labour have no plan and would take us back to square one with higher taxes, higher unemployment, an illegal amnesty on immigration and a plot to betray pensioners, just like Gordon Brown did.”