Former Chancellor Lord Hammond Speaks to T&G on Raising Taxes to Fund Social Care and More

The former chancellor of the exchequer, Lord Hammond, has said that a proposed rise in National Insurance Contributions would be wrong and that he will oppose it in the Lords. He said it would provoke a "very significant backlash" that would damage the government.

He was speaking to Tom Newton Dunn and Paul Waugh on Times Radio. The interview will be broadcast on Times Radio at 1135 this morning.

"An increase in National Insurance Contributions is asking young working people, some of whom will never inherit the property, to subsidise older people who've accumulated wealth during their lifetime and have a property and on any basis, that has got to be wrong."

"I think that if the government were to go ahead with the proposed increase in National Insurance Contributions, breaking a manifesto commitment in order to underwrite the care costs of older people with homes, I think that would provoke a very significant backlash. I think it would cause the government - the Conservative Party - significant damage. I also think it's the wrong thing to do. It's not just about party political advantage. Economically, politically, expanding the state further in order to protect private assets by asking poor people to subsidise rich people has got to be the wrong thing to do."

He said people should be able to take out insurance to pay for their care:

"The only fair and workable answer is an insurance based scheme, and if necessary, that needs to be government backed... So that families that wanted to protect the assets that have been built up were able to do so by paying a fixed and known amount of insurance premium, but it's wrong to ask poor taxpayers to subsidise richer, older asset owners."

Tom Newton Dunn asked if he would vote against a rise in NICs in the Lords:

"The House of Lords doesn't get to vote on the finance bill. But National Insurance is not usually included in the finance bill - it would be separate legislation. And yes, I would vote against that."

He also said the triple lock on pensions didn't make sense this year:

"I think we should not move away from the principle of it. However, when a strange statistical quirk occurs that's going to produce an unfair result, you should address it. And the answer here is to smooth the application of the triple lock over two years. So that the extraordinary falling average wages and then the surge in average wage that followed after the lockdown shouldn't give rise to an unfair, unwarranted increase in pensions, we should just smooth it over two years as a one off, extraordinary measure to deal with the consequences of COVID and then allow the triple lock to carry on. Because we've pledged to do so."

Lord Hammond was reprimanded by Westminster's lobbying watchdog for sending emails to treasury officials on behalf of a bank he was paid to advise. He said the rules should be clearer, and possibly tougher too:

"I don't think that my contact was inappropriate. I thought very carefully before I sent a single email to the Treasury. And because I was corresponding with the Treasury about a free offer that a bank had made to provide software to the Treasury. I didn't believe that that was within the rules, and I still don't believe that it is breaking any rules. But leave that aside. The rules are very complicated. The definitions are quite technical. And I do think I think it might be better if the rules were made clearer, even if that meant they were a bit more restrictive. I do think the rules are quite restrictive now, but they are very complicated."

He also said that the UK should have kept troops in Afghanistan.

"The sensible thing to do would have been to continue that presence indefinitely in Afghanistan... Sometimes you have to make a long term commitment to ensure the peace. And I think if we'd been prepared to continue that small scale presence in Afghanistan, life would have been able to go on and the future of Afghanistan would have been a lot more positive than it's looking now. And by the way, we would have continued to deny Afghanistan to our strategic challenges Russia and China, who will now make hay in the space that the US has created."

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