Blair defends national insurance increase

The prime minister said bosses would run a mile when they compared it to the costs of French and German style ‘social insurance’ and the US system of mainly private care, where companies often faced huge bills to ensure their employees.

Blair also took the opportunity to praise Gordon Brown as a ‘fine’ chancellor.

And he remained convinced the controversial Budget, with its penny on NICs to pay for improvements in the NHS, will be a vote winner and good for business.

Responding to criticisms in Accountancy Age last week from shadow chancellor Michael Howard, who said he would vote against the NIC increase, Blair said:

‘It’s an excellent Budget for the country because everybody accepts we need more money for health care. The alternatives are making people pay directly out of their own pockets, which is basically what the Conservatives propose, or going for a social insurance system, which they have in France and Germany, which is very expensive on employers.’

Defending the NIC increase, he said: ‘In France, employers pay on average £60 a week per employee. That’s a lot of money. In America, premiums on private insurance are going up 13%.’

Blair also cited a recent article he had read, describing how employers in the US, are now faced with massive increases of between 15% to 20% in the health care premiums they’re paying for their employees.

‘A penny on national insurance is actually less of a burden on business than the alternatives, which is why, I think, when some of the businesses come to look at these alternatives, particularly social insurance, they’ll run a mile from them.

‘The French and German employers I’ve spoken to say we would be absolutely crazy to introduce such a system here.

He also dismissed Tory accusation that the penny on NICs would lead to massive council tax rises. ‘It’s important to get this into context. Of course there will be some additional cost to councils and employers but it is very small compared with the overall wage bill.

‘And,’ he added, ‘they’re receiving far in excess of this in the other money’s we’re giving.’

Lastly, Blair said, he was confident the government could deliver on health as a result of the increase. ‘I am confident we will deliver significant improvements in the NHS. In particular we will have a maximum waiting time of six months and an average waiting time of seven weeks,’ the prime minister said.

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