Starmer's vision quest

[Stevo 666]

I'm not an economist, but your figures look about right to my eye. Points to notice though ...
* Increased NI sends money to the government's second account which is ring-fenced in law to pay pensions and benefits. The only permitted exception is to top up the NHS (currently thought to be about 18% of its budget).
* Government can borrow from the secondary account in times of emergency but must pay it back - hence the war chest claims.
* Employer's NI is tax deductable. Therefore at current rates, employers pay 75% of the increase rather than 100%.
* Therefore this means less corporation tax going to the general account - so a shortfall.
* There's plenty of money in the second account, so the government can easily afford to pay NHS pay demands - they just don't want to.
* Paying NHS workers more will help correct the imbalance due to the 'virtuous fiscal circle' that successive governments pretend doesn't exist - paying NHS workers more, brings increased PAYE money to the general account, NI payments back to the second account, and other taxation such as VAT back to the general account. This will also assist growth.
* The boats is misdirection. Successive governments have pandered to populism - they maintain levels for scapegoating purposes.

Can you show us a link to this 'second account' you refer to?

Also, how is borrowing from this 'second account' different from regular government borrowing?

 

[monkers]

Can you show us a link to this 'second account' you refer to?

Also, how is borrowing from this 'second account' different from regular government borrowing?

I didn't look this up, so no link. I used what I happen to know.

When a government borrows money as sovereign debt, there are no conditions set to repayment - no schedule, no agreed interest rate. The UK is under no obligation to ever repay sovereign debt, only to pay the charges related to servicing that debt.

The UK has no hypothecated taxes by use of strict definitions. The government runs two accounts, the general account, and a secondary account which although not hypothecated is nonetheless ring-fenced in law. The secondary account is used to pay state pension, welfare payments. It has one permitted exception and that is to 'top up' the NHS. From memory that is about 18% or so of NHS budget - (easily checkable) - for our purposes the exact figure is not really required.

While the government is not required to pay down sovereign debt, it is legally required to repay money borrowed from the secondary account, which it would need to do by transferring money back to it from the general account.

Addendum. I just asked Copilot pro for you ...

What is the current balance of the government's secondary account?


As of the end of the 2024–25 financial year, the UK National Insurance Fund (NIF)—the government's secondary account—had a projected balance of £76 billion.

📊 Key Details from the 2025 Up-Rating Report​

• The NIF is legally ring-fenced for contributory benefits like the State Pension, Maternity Allowance, and certain sickness benefits.
• The employer NIC hike announced in the Autumn Budget 2024 significantly boosted contribution income.
• Contribution income is now expected to exceed benefit expenditure in every year through 2029–30.
• No additional Treasury financing is anticipated during this period under current assumptions.

🧠 Strategic Implication​

This surplus means the government has ample funds available in the NIF to support NHS spending under the permitted exception, including pay settlements for doctors and other staff. The general account may be in deficit, but the secondary account is financially healthy and growing.

 

[Psamathe]

Re: Infuriating Labour (Again & Unrelated to NI/Economy)
Had to watch NewsNight last night and they had a Labour MP talking about the growth they are creating and on planning he was still pushing that changes are needed as we can't afford (his example) £100m on a bat tunnel.

Given his role on a committee, hasn't he even bothered to learn that this is a complete Labour lie (again). It was not Natural England that required the bat tunnel. even the Government now admit this
From Government website (https://naturalengland.blog.gov.uk/2024/11/08/natural-england-role-in-high-speed-2/)

There has been inaccurate coverage about Natural England’s involvement in the development of HS2's bat tunnel.

Natural England has not required HS2 Ltd to build the reported structure, or any other structure, nor advised on the design or costs.

Yet Labout MPs still keep pushing this lie as it helps justify their flawed planning changes with regard to environmental protectuions

eg

UK government admits almost no evidence nature protections block development
Whitehall analysis provides no data or research to support the government argument that environmental legislation holds up building

There is very little evidence that protections for nature are a blocker to development, the government has admitted in its own impact assessment of the controversial new planning and infrastructure bill.

I'd hoped for some honesty from a Labour Government yet we still see the same lies and untruths to justify their ideological policies.

Ian

 

[Pblakeney]

Re: Infuriating Labour (Again & Unrelated to NI/Economy)
Had to watch NewsNight last night and they had a Labour MP talking about the growth they are creating and on planning he was still pushing that changes are needed as we can't afford (his example) £100m on a bat tunnel.

Given his role on a committee, hasn't he even bothered to learn that this is a complete Labour lie (again). It was not Natural England that required the bat tunnel. even the Government now admit this
From Government website (https://naturalengland.blog.gov.uk/2024/11/08/natural-england-role-in-high-speed-2/)

Yet Labout MPs still keep pushing this lie as it helps justify their flawed planning changes with regard to environmental protectuions

eg

I'd hoped for some honesty from a Labour Government yet we still see the same lies and untruths to justify their ideological policies.

Ian

Excuse my ignorance, but why is anyone still banging on about HS2. I thought it had been cancelled?

 

[Psamathe]

Excuse my ignorance, but why is anyone still banging on about HS2. I thought it had been cancelled?

The Labour MP was banging on about the need for their tearing up environmental protections and he cited the example of £100m for the now famous HS2 bat tunnel as justification (despite it being untrue).

Ian

 

[First Aspect]

I thought those bat tunnels (also on some roads) had been shown to be utter bunkum?

 

[Pross]

Re: Infuriating Labour (Again & Unrelated to NI/Economy)
Had to watch NewsNight last night and they had a Labour MP talking about the growth they are creating and on planning he was still pushing that changes are needed as we can't afford (his example) £100m on a bat tunnel.

Given his role on a committee, hasn't he even bothered to learn that this is a complete Labour lie (again). It was not Natural England that required the bat tunnel. even the Government now admit this
From Government website (https://naturalengland.blog.gov.uk/2024/11/08/natural-england-role-in-high-speed-2/)

Yet Labout MPs still keep pushing this lie as it helps justify their flawed planning changes with regard to environmental protectuions

eg

I'd hoped for some honesty from a Labour Government yet we still see the same lies and untruths to justify their ideological policies.

Ian

That's a bit disingenuous by Natural England. They may not have required a bat tunnel or any other structure specifically but they would have required certain protection / mitigation for the identified bat populations and the ecologists for HS2 proposed the tunnel in order to address those requirements. FWIW I'm not against the protections, I've worked on enough developments with enough developers who will do the bare minimum to get planning approval so know that these measures are required but that response by Natural England is a bit weasly (no pun intended!).

 

[Psamathe]

I thought those bat tunnels (also on some roads) had been shown to be utter bunkum?

It's more complex eg depends on what species of bat is in the area. Without any tunnels involved one area I record bats noctule bats used to be common but then somebody from a town moved in and illuminated their garden 24/7 and within a week the noctules disappeared. I them managed to convince the individual illuminating their back garden through the night was "unnecessary" and next spring noctules returned. And to highlight the complexity general view is noctule bats are not badly impacted by light pollution ... except it depends where as in their feeding areas they are not badly affected by light pollution (though their prey is) but on their flight path between feeding areas they are.

There are probably many reasons why measures can fail but eg in Norfolk Highways went for a system they were warned would not work (having failed elsewhere) but Highways considered they knew more about it than others. And it failed (no surprise there). And made worse when Council commissioned surveys identifying listed NT (globally) protected species are just "edited out" of submitted reports.

Ian

 

[Psamathe]

I thought those bat tunnels (also on some roads) had been shown to be utter bunkum?

It's more complex eg depends on what species of bat is in the area. Without any tunnels involved one area I record bats noctule bats used to be common but then somebody from a town moved in and illuminated their garden 24/7 and within a week the noctules disappeared. I them managed to convince the individual illuminating their back garden through the night was "unnecessary" and next spring noctules returned. And to highlight the complexity general view is noctule bats are not badly impacted by light pollution ... except it depends where as in their feeding areas they are not badly affected by light pollution (though their prey is) but on their flight path between feeding areas they are.

There are probably many reasons why measures can fail but eg in Norfolk Highways went for a system they were warned would not work (having failed elsewhere) but Highways considered they knew more about it than others. And it failed (no surprise there). And made worse when Council commissioned surveys identifying listed NT (globally) protected species are just "edited out" of submitted reports.

Ian

 

[Psamathe]

That's a bit disingenuous by Natural England. They may not have required a bat tunnel or any other structure specifically but they would have required certain protection / mitigation for the identified bat populations and the ecologists for HS2 proposed the tunnel in order to address those requirements. FWIW I'm not against the protections, I've worked on enough developments with enough developers who will do the bare minimum to get planning approval so know that these measures are required but that response by Natural England is a bit weasly (no pun intended!).

Requiring protections is very different from requiring £100m on a single tunnel (the Labour claim). Protections can be very easy and cheap - all depends on the species and locality eg if the development is between roosting and foraging sites can be as simple as leaving a good tree line to keep bats flying high enough and able to navigate. All depends on the detail.

But in this example what is very very wrong is Labour continuing to use a claim debunked by the Government to justify removal of environmental protections.

Ian

 

[Pross]

Requiring protections is very different from requiring £100m on a single tunnel (the Labour claim). Protections can be very easy and cheap - all depends on the species and locality eg if the development is between roosting and foraging sites can be as simple as leaving a good tree line to keep bats flying high enough and able to navigate. All depends on the detail.

But in this example what is very very wrong is Labour continuing to use a claim debunked by the Government to justify removal of environmental protections.

Ian

I don't disagree with that, I'm finding it hard to believe a bat tunnel cost anything like £100 million as HS2s own cost estimates for a km of single rail tunnel is £33 million but I'm also pretty sure that no consultant (even ecologists that tend to like spending developer's money) would propose that as a solution if it wasn't necessary to satisfy NE's requirements.

 

[Psamathe]

I don't disagree with that, I'm finding it hard to believe a bat tunnel cost anything like £100 million as HS2s own cost estimates for a km of single rail tunnel is £33 million but I'm also pretty sure that no consultant (even ecologists that tend to like spending developer's money) would propose that as a solution if it wasn't necessary to satisfy NE's requirements.

In Norfolk it was Highways that were proposing the measures and ecologists saying "won't work 'cos didn't work elsewhere".

But cost wise there is something weird in the UK. Unrelated to ecological protections but eg

Ofwat investigating ‘rip-off’ cost of water firms’ infrastructure works
Experts have said privatisation of water companies has led to an overinflation of the costs of building infrastructure such as sewage works, as they are less incentivised than governments to find value for money for taxpayers. They are also allowed to borrow more money based on the valuation of their assets.

A report by the campaign group Windrush Against Sewage Pollution (Wasp) has found that upgrading a sewage works serving the Oxford area will cost £435m, more than 10 times the £40m cost quoted when the project was proposed. The sewage works is expected to serve between 255,000 and 267,000 people.

In comparison, it cost £29m to build a new sewage works in Assens, Denmark, where the cost of living is on average 13% above that of the UK and the cost of water and sewerage is one of the highest in Europe. It was designed to cater for a population of 100,000, with the capacity to upgrade to 150,000.

Ian

 

[Pblakeney]

The Labour MP was banging on about the need for their tearing up environmental protections and he cited the example of £100m for the now famous HS2 bat tunnel as justification (despite it being untrue).

Ian

In which case it sounds like he is entirely correct to be getting rid of nonsense.

 

[Stevo 666]

I didn't look this up, so no link. I used what I happen to know.

When a government borrows money as sovereign debt, there are no conditions set to repayment - no schedule, no agreed interest rate. The UK is under no obligation to ever repay sovereign debt, only to pay the charges related to servicing that debt.

The UK has no hypothecated taxes by use of strict definitions. The government runs two accounts, the general account, and a secondary account which although not hypothecated is nonetheless ring-fenced in law. The secondary account is used to pay state pension, welfare payments. It has one permitted exception and that is to 'top up' the NHS. From memory that is about 18% or so of NHS budget - (easily checkable) - for our purposes the exact figure is not really required.

While the government is not required to pay down sovereign debt, it is legally required to repay money borrowed from the secondary account, which it would need to do by transferring money back to it from the general account.

Addendum. I just asked Copilot pro for you ...

What is the current balance of the government's secondary account?


As of the end of the 2024–25 financial year, the UK National Insurance Fund (NIF)—the government's secondary account—had a projected balance of £76 billion.

📊 Key Details from the 2025 Up-Rating Report​

• The NIF is legally ring-fenced for contributory benefits like the State Pension, Maternity Allowance, and certain sickness benefits.
• The employer NIC hike announced in the Autumn Budget 2024 significantly boosted contribution income.
• Contribution income is now expected to exceed benefit expenditure in every year through 2029–30.
• No additional Treasury financing is anticipated during this period under current assumptions.

🧠 Strategic Implication​

This surplus means the government has ample funds available in the NIF to support NHS spending under the permitted exception, including pay settlements for doctors and other staff. The general account may be in deficit, but the secondary account is financially healthy and growing.

I don't know where you get your info from about UK government debt but it is definitely interest bearing. Who exactly will lend money at a zero rate of interest? See OBR report where the interest cost on UK govt debt is around 111bn.
https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/debt-interest-central-government-net/

These debt instuments are repayable as gilts have a finite life, although typically more they issue more on maturity of the expiring ones.

Your statements about the secondary account need more evidence to be credible.

 

[Psamathe]

In which case it sounds like he is entirely correct to be getting rid of nonsense.

What he's getting rid of is not causing the ludicrous building and costs. It's not the environmental protections causing these costs or constructions so why get rid of the protections. As I quoted above

UK government admits almost no evidence nature protections block development
Whitehall analysis provides no data or research to support the government argument that environmental legislation holds up building

There is very little evidence that protections for nature are a blocker to development, the government has admitted in its own impact assessment of the controversial new planning and infrastructure bill.

To go into more details is moving the thread from Starmer/politics into environmental issues but protecting our environment does not have to be expensive. Maybe the wrong people are proposing the wrong solutions eg Norfolk Highways proposing the failed protection measures, Natural England not requiring this HS2 bat tunnel.

Ian