Initially, the most important contributory

Initially, the most important contributory benefits With the introduction of employer deduction (Pay-As-You-Earn or ), employees' National Insurance contributions were collected along with . This replaced the old system of purchasing a contribution certificate or stamp, but for many years some older Britons continued to describe making NI contributions as paying their stamp.

As the system developed, the link between individual contributions and benefits was weakened. The is still nominally , and national insurance payments cannot be used to fund general government spending, although as much of the fund is invested in government securities it is available for borrowing by the government for spending on capital projects, such as schools and hospitals. National Insurance contributions are paid into the various classes of National Insurance after deduction of monies specifically allocated to the (NHS). However a small percentage is transferred from the fund to the NHS from certain of the smaller sub-classes. Thus the NHS is partially funded from NI contributions but not from the NI Fund.

Recent developments of the system have meant that National Insurance provides a significant part of the government's revenue (£90 billion in 2006-2007, approximately 17% of total government receipts). At the same time it has become more redistributive as its structure has changed to remove the fixed upper contribution limits, albeit with a much lower rate payable by employees on income above a certain level. It has been mooted that the link between individual's contribution record and the remaining contributory benefits will be weakened further.

In the early twenty-first century, governments sometimes announced that income tax rates had not increased, while increasing revenue by increasing the rates and scope of NI. The unfairness of a tax that is levied on the wage income of all workers but not on dividend or interest income has also been criticised: a low-paid worker must pay NI on his income, while a wealthy owner of income-bearing assets does not.

In the March 2011 Budget, the Chancellor announced a consultation on the operational integration of the NI contributions and income tax systems. However, the options to be considered do not include extension of NI contributions to other forms of income such as pensions, dividends and savings.