High earners should pay more National Insurance, says report

Fabian Society says war on poverty has "failed"

Higher earners should pay more National Insurance to fund a more generous system of universal benefits, according to a report by the Fabian Society.

The Solidarity Society, the report by the Labour-affiliated think-tank, is due to be published next week. It will say that the measure is needed to reignite the government's "failed" war on poverty.

The report will suggest that the current ceiling on National Insurance contributions should be removed. This would mean that the rate taken on income above £43,888 would increase elevenfold from 1 per cent to 11 per cent.

It will call on parties across the political spectrum to sign up to a "poverty prevention strategy" for the next 30 years, safeguarding the poor from spending cuts resulting from the recession.

It suggests that people do "socially useful work" in return for unemployment benefits, reserving automatic pay-outs for pensioners.

The report also warns that the Tories should not shift resources from the middle classes towards the most vulnerable, as such an approach could jeopardise support for the welfare system as a whole.

Tim Horton, the Fabian Society's research director and co-author of the report, said: "History teaches us that nothing would be worse for the long-term interests of the poorest than taking the middle classes out of the services that the most vulnerable rely on."