When I joined the Treasury in 1987, one of my first responsibilities was the Treasury supplement to the national insurance fund (NIF), then worth about £2bn. Entrusting a 21-year-old who had never worked anywhere but restaurant kitchens with the administration of what, even by Treasury standards, is not an insignificant amount of money seemed a little odd to me until it was explained that the fund, and by extension national insurance as a whole, was in the Treasury's view mostly an accounting fiction with very little relevance to the modern tax and benefit system.
In the three decades since, under governments of all parties, there has been a further steady erosion of the contributory principle. From the 1988 Fowler reforms through tax credits to universal credit, the main objectives have always been to improve work incentives, alleviate poverty (especially for families with children), and contain expenditure while simplifying the system. Inevitably, that means basing benefits primarily on income, not on past contributions. Thursday's report from the Institute for Public Policy Research (IPPR) aims at reversing that historic trend.
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