Inclusion or Insurance?National Insurance and the future of the contributoryprinciple

This paper examines the decline of National Insurance in Britain, as witnessedby its declining share of all social security spending and the steady dilution ofthe “contributory principle” on which it was originally based. It argues that thisdecline is not an accident: under governments of the Left, arguments in favourof inclusion have been predominant, non-contributory benefits expanded andcontribution conditions softened; under those of the Right, the emphasis hasbeen on focussing limited resources on the poorest through means-testing.Given where we are now, the strong arguments in principle for social insurancelook much weaker. However, there are also reasons why the system has notbeen swept away, notably the way in which the bulk of the system is concernedwith state pension rights which have already accrued.[...]