By the time you read this article, 24 million taxpayers will have received a personal tax statement informing them not only of how much tax they paid last year, but what that money has been spent on.
Someone earning £60,000, for example, will learn they paid £13,822 in income tax, and £4,414 National Insurance, giving total pay packet deductions of £18,236.
But it will also be pointed out in the crudest of terms that £4,471 went towards welfare, or in the vernacular, to keep the nation’s scroungers in clover.
Thanks to the Institute of Fiscal Studies we know that a fair chunk of this “wasters” fund in fact goes to look after children and pay for the care of the elderly, sick and disabled, and public sector pensions. Either way it is still a lot of money as is the £3,442 that goes on health. And to add salt to the wound, this is only part of the story – it doesn’t mention between £5,000 and £10,000 in indirect taxes. Pretty quickly our £60,000 earner, who considered himself moderately well off, realises that he is losing half his salary in taxes, one way or another. At some point he will ask himself precisely what that money is buying him and his family.
While these crude tactics were designed to bring a chill to anyone contemplating ticking the Labour box on the ballot paper in May, there is a more profound and unpalatable.
Our public spending numbers do not add up, yet politicans will go to the polls promising yet more tax cuts. How they will be able to do so, while NHS bosses keep warning that hospitals are in debt, and charges may have to be introduced, I do not know. But then I am not a politician.
There have been so many figures about how short of cash the NHS is, that you can virtually pick a number. Is it £2 billion or £6 billion…. what does it matter?
Well it does matter. Already our cancer survival rates are pitiful compared with the rest of the developed world. It’s not that we aren’t good at curing cancer. We just don’t get the tests in time, as GPs ration their meagre resources.
There can also be little doubt that these tax statements are all about attempting to engage the public in a grown up debate about welfare and spending.
That debate should never stop asking whether there might be a better way to manage the health of the nation. For this reason the Association of British Insurers should be congratulated on its paper calling for further discussion on welfare and insurance.
Yes of course, it is banging its own drum. But, and stick in my throat though it does to admit it, auto-enrolment has worked pretty well do date. Opt outs have been minimal. Those that know they are saving towards a pension, seem happy to be doing so.
So the ABI asks whether the auto-enrolment route could be used to encourage people to buy income protection. It is a fair question and if tax relief were added as an incentive, so much the better.
As with all mass underwriting, premiums could be kept low. There would be claims challenges of course, although the ABI tells me its income protection claims data shows well over 90 per cent of claims are paid in full.
Government would need to ensure any benefit from a policy did not deprive someone of state support, such as existed. But over time there would be scope for pulling back that state support.
The same applies with private medical insurance. Anyone who has been in an NHS hospital must acknowledge there is room for improvement. And the gap between that post-war level standard care offering and what the private sector can provide is immense.
Unfortunately, even organisations like Bupa admit that the cost of PMI is now beyond the reach of all but the seriously rich unless it is provided by group schemes. Bupa has repeatedly called for action to put a cap on PMI premiums and make them affordable.
We have the best insurance industry in the world, and yet unlike other countries it is kept out of whole areas of public life. If other European countries can afford top class health services, via insurance-based arrangements, then why can’t we.
We should at least be able to have a sensible debate.
