This March 2022 briefing presents original analysis from the Legatum Institute using the Social Metrics Commission’s approach to poverty measurement to demonstrate the impact on poverty of the announced change to the National Insurance Contributions (NICs) threshold in July 2022.
This briefing assesses the poverty impact of the proposed change by considering the difference between two alternative uprating schemes for the NICs threshold, in July 2022.
- The NICs threshold is uprated according to the rate of inflation in the previous September at the beginning of the 2022-23 financial year. This 3.1% uprating increases the annual threshold from £9,568 to £9,865 in July 2022.
- The NICs threshold is increased to £12,570 in July 2022, as announced in the 2022 Spring Statement.
The difference in the results between the scenarios shows the reduction in poverty due to the NICs threshold increase announced in the 2022 Spring Statement. This briefing also presents breakdowns of the poverty impact by age, family work-status and disability.
This briefing shows that the NICs threshold increase reduces the number of people in poverty by 170,000. This reduction comes entirely among working families, with no protection afforded to the working-age workless or to pensioners. The policy also does little to protect households that include a disabled person.
The policy, costed at over £6bn, is similar in cost to the uprating of all benefits (including the state pension) by inflation for the 2022-23 financial year. Uprating all benefit payments by inflation is modelled to have a far greater impact on households in poverty, and to protect a wider group from poverty, with protection extending to pensioners and workless households.
Download the briefing here