Think tank proposes tax switch to raise £6bn for defence spending

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  The Resolution Foundation has proposed cutting National Insurance contributions by 2p in the pound for all workers and raising income tax by the same amount.

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  The think tank says the switch could raise £6 billion for increased defence spending because more people pay income tax than National Insurance.

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  It says most employees’ take-home pay would remain roughly the same, while people with other forms of income could pay more.

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  The proposal could leave some retired people worse off if they have private pension income or other means.

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  The report says the government’s fiscal buffer has fallen to £12 billion as borrowing costs have risen.

Who

The Resolution Foundation proposed the tax switch. Chancellor John Healey has been urged to announce it.

What

Cut National Insurance contributions by 2p in the pound for all workers and raise income tax by the same amount. The think tank says the change could raise £6 billion for defence spending.

When

The proposal was reported on 12 October 2026. Healey was expected to set out the Budget later that month.

Where

The United Kingdom.

Why

The Resolution Foundation says the switch could raise money for increased defence spending and help fund major new expenditure.

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