National Insurance Contributions Bill

Report stage
Monday 7th February 2022 Lords Chamber

Report

Relevant documents: 11th and 19th Reports from the Delegated Powers Committee

16:04

Clause 1: Zero-rate contributions for employees at freeport tax sites: Great Britain

Amendment 1

Moved by

[Viscount Younger of Leckie]

1: Clause 1, page 1, line 22, leave out “regulations under” and insert “, or in regulations under,”
Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

[Viscount Younger of Leckie (Con)]

My Lords, this group of government amendments in my name responds to the recommendations of the Delegated Powers and Regulatory Reform Committee report and sets the upper secondary threshold, the so-called UST.

I thank the committee for its diligent care in scrutinising the Bill and noble Lords for their thoughtful comments in Grand Committee. The Government have further reflected on these views and have tabled Amendments 12, 13 and 14 in response to the report of the DPRRC and noble Lords’ comments in Committee.

Clause 10 provides an exemption from self-employed NICs in respect of self-isolation payments provided to support those on low incomes so that they can self-isolate and help stop the spread of coronavirus. Clause 10(2)(d) currently provides that the Treasury may, in relation to any part of the United Kingdom, designate new schemes that are corresponding or similar to the schemes specified in Clause 10(2)(a) to 10(2)(c). Payments under schemes designated in that way will benefit from the exemption in Clause 10(1) and will not be taken into account for the purposes of computing the amount of profits in respect of which class 4 and 2 contributions are payable. The committee recommended that the power in Clause 10(2)(d) be subject to the negative procedure rather than no procedure. The amendment in my name to Clause 10 makes this change.

Secondly, Clauses 3(1) and 6(6) allow the Government to extend the period for which the freeport and veterans relief are available. The committee recommended that the power to extend the relief for freeport employers and employers of veterans should be subject to the affirmative procedure rather than the negative procedure. The Government have taken on board the DPRRC’s recommendation and agree that it is appropriate that these powers are subject to the draft affirmative procedure. The two amendments to Clause 12 make these changes. In summary, the Government take the work of the DPRRC very seriously, and Amendments 12, 13 and 14 go a long way towards accepting its recommendations.

I turn to the amendments that set the upper secondary threshold for these measures. Government Amendments 1, 4 and 7 to 11 simply put on the face of the Bill what secondary legislation is out of time to do. This is not new policy or a change to public expectation. Ordinarily, rates and thresholds are set annually through a rerating exercise, which involves the Government of the day laying affirmative regulations. The debates for the 2022-23 rates and threshold will take place in this House on 23 February. However, due to the timing of this Bill and to ensure that the thresholds are in place for 6 April, the upper secondary thresholds for these measures need to be set in primary legislation.

I will now explain what an upper secondary threshold is. It is the threshold up to which employers can claim a zero rate of NICs. After this point, employers will be liable to secondary class 1 NICs at the standard rate. Without an upper secondary threshold, employers would be eligible for unlimited relief. There is a threshold for freeport employers and a separate threshold for employers of veterans.

The upper secondary threshold for the freeport measure is £25,000 per annum and was first announced in the Freeports Bidding Prospectus published in November 2020. The upper secondary threshold for the veteran measure is £50,270 per annum and was first announced when the policy was consulted on in July 2020. Both these figures have been reconfirmed by Ministers in this House and in the other place during the passage of this Bill. The Chancellor also confirmed these thresholds at the Autumn Budget 2021.

There are justified policy reasons for the different thresholds. The freeport measure has been designed to support growth in underdeveloped areas, so general support is required. The veteran measure has been designed to support veterans as they transition into civilian life, and therefore a targeted, more generous annual threshold is required to help them to overcome the barriers to employment.

I trust that noble Lords will recognise that this is a formality and will vote in favour of this amendment. I beg to move.

[Baroness Kramer (LD)]

My Lords, this group of amendments includes government Amendments 13 and 14, which, as the Minister described, respectively change Clause 3(1) on freeports and Clause 6(6) on veterans, so that any extension to the zero rating of employers’ NICs in these schemes is subject to the affirmative, rather than the negative, resolution procedure. Changing negative to affirmative for both these clauses was an important recommendation of the Delegated Powers and Regulatory Reform Committee. The noble Lord, Lord Tunnicliffe, and I both asked for the changes that it recommended to be enacted, and I thank the Government for delivering them on Report.

As the Minister knows, I was particularly exercised by the original drafting of Clause 10, which designates that payments under certain “self-isolation support schemes” should not be included in computing NICs. I have no problem with the principle but, unamended, the clause would have allowed new schemes to be added without any change to the regulations or any reference to Parliament. The Delegated Powers Committee objected that this offered far too much leeway, and recommended that any designation under the relevant parts of Clause 10 should be “contained in regulations” and subject to the negative resolution procedure. Again, I thank the Minister for delivering on that.

I read the remaining amendments in this group as being technical, and we have no objection. The Delegated Powers Committee will not be fully satisfied by these amendments because certain recommendations have not been agreed by government—for example, the recommendation that the power to modify the criteria for the schemes in freeports should be affirmative, not negative. But we have made progress on some important points, and I hope that the Minister will make sure that the message goes back to those who draft Bills that it is important to take note of the appropriate constitutional balance. He has done so, and I thank him for it.

[Lord Tunnicliffe (Lab)]

My Lords, I am grateful to the Minister for bringing forward these amendments. As he outlined in his introduction, several of the texts clarify the upper secondary limit for the 2021-22 and 2022-23 tax years, with future amounts to be set in regulations. Given our proximity to the new tax year, it seems sensible to include these figures on the face of the Bill, rather than rush to lay regulations following Royal Assent. Oh, I should take my mask off; that is much better.

The remainder of the Minister’s amendments address three of the five recommendations put forward by the Delegated Powers and Regulatory Reform Committee. It is disappointing that the Government have chosen not to constrain the powers conferred by Clause 3(3), which the DPRRC labelled “inappropriate”. However, we have got quite a bit further than anticipated, following the Minister’s remarks in Committee. We thank him for this but, as a generality, we hope that the Government will get back to the convention of taking the DPRRC’s recommendations more seriously; I think that is a fair comment. However, the concession on Clause 10 is important, and I look forward to the short debates that will follow regulations made under Clause 3(1) and Clause 6(6).

[Viscount Younger of Leckie (Con)]

My Lords, I will reply very briefly to the comments of the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer. I simply say that I am grateful for their support for our amendments. Perhaps more than that, I thank them and others who contributed, particularly in Committee, on these amendments. I also thank the DPRRC; the comments that I made in my opening remarks say it all in terms of my view on it.

Amendment 1 agreed.

Clause 2: Freeport conditions

Amendment 2

Moved by

[Baroness Kramer]

2: Clause 2, page 2, line 26, at end insert—
“(e) the freeport governance body of any freeport tax site in which the employer has business premises maintains a record of all the businesses operating, or applying to operate within the tax site and this record—(i) contains information, which the freeport governance body must make reasonable efforts to verify, about the beneficial owner of the business; and(ii) is easily accessible to relevant enforcement agencies and to the general public.”Member’s explanatory statement
This amendment adds an additional condition whereby the relief would only be available if the freeport maintained a public record of the beneficial ownership of businesses operating on the site.

[Baroness Kramer (LD)]

My Lords, I am afraid that I carry responsibility for Amendments 2 and 3. I will start with Amendment 3, because it is one that I will not move today. It would provide for a review of the effectiveness of the NIC exemption for employers in freeports. Is it delivering additional jobs and economic growth, rather than displacing jobs and growth from other areas? How much is it costing in lost NIC payments at a time when we are requiring the lowest-paid workers to pay higher NI contributions? Are the big companies benefiting rather than SMEs? Those are the issues that we hope a review would look at and report back to this House. I will not repeat the evidence that suggests that freeports deliver few new jobs, mostly of low quality, but I am putting the Government on notice that we will look at these issues and demand evidence from them as the policy on freeports is implemented.

16:15

Amendment 2 addresses a problem that, sadly, could not be more topical. Russia’s gathering of troops on the Ukraine border has put on the front pages of newspapers the concern that kleptocrats and oligarchs use the UK as their money laundering centre of choice—the London laundromat, which allows autocrats, among others, to shrug off economic sanctions. I and others talked about the evidence for this in some detail last week in Grand Committee, so I will not rehearse all the facts and figures. I will just say that the Government themselves estimate that £100 billion of new corrupt money flows into the UK each year.

Freeports are notorious for attracting crime, because the customs and tax declarations that usually underpin transparency are absent. Our freeports will provide the added lure of tax-free processing to enhance the money laundering process. The Government insist that the freeport governing bodies will have to keep registers of beneficial ownership of operations and make reasonable attempts to verify their accuracy. That is their attempt to try to contain and limit this form of crime. But, importantly, they are refusing so far to make those registers public. Frankly, this is almost mind-blowing, since every Conservative Chancellor since George Osborne has stressed that registers must be public to be effective. We regularly lecture every country around the world on this issue, including the overseas territories and the Crown dependencies.

Civil society groups and activists across the globe can examine records and registers when they are public, and can alert the enforcement and regulatory agencies. I think we all acknowledge that those enforcement and regulatory agencies have far too few staff and resources to do the work alone without the information flow from civil society and activist groups. I could send your Lordships to many sources that describe the shortage of resources in enforcement, but I will simply quote the National Crime Agency’s inspection by Her Majesty’s Inspectorate of Constabulary in July 2021—only seven months ago. It says very clearly:

“There is insufficient capacity in the investigations command to meet the demand”.

We cannot rely solely on enforcement to keep freeports clean.

Amendment 2 would require that registers of beneficial ownership are not only held, verified and available to enforcement agencies but made public. This is not a time to step backwards in the work we do to try to bring an end to money laundering. If the Minister cannot accept this—it is beyond me why not—I will seek to divide the House.

[Lord Tunnicliffe (Lab)]

My Lords, we welcome the tabling of these amendments by the noble Baroness, Lady Kramer. It is fair to say that there is huge scepticism around the Government’s freeports policy. This was reflected at Second Reading. There is no need to go over these arguments again. Sites are coming on stream and time will tell whether the many promised benefits are realised. I was very pleased to sign Amendment 2, and I hope the Minister will respond positively in his remarks.

The topic has taken on additional significance in recent weeks but these concerns are by no means new. Promises of increased transparency have been made year after year. Some limited reforms have come but the level of ambition has been low. We are all aware of the risks involved in freeports. If the Government are serious about mitigating these risks and moving towards a public register of beneficial ownership in a wider sense, why not start here? It feels like an easy win. If the Minister is unable to give the noble Baroness, Lady Kramer, the assurances she seeks, we will join her in any Division she calls.

We are also supportive in principle of the review clause, which would enable us to see the practical impacts of freeport tax relief. Freeports are a leap of faith. The Government hope that they will bring both local and national benefits, but we cannot be sure on either front. The Government will no doubt be keeping all these things under review—to do otherwise would be inconceivable—but can the Minister assure us today that we will get to see the data? I am sure that he will want to shout from the rooftops if their predictions on job and wealth creation are correct, but what if they are not? Sadly, we cannot always expect transparency and honesty from this Administration. If the Prime Minister is serious about turning over a new leaf, perhaps we can start here.

[Viscount Younger of Leckie (Con)]

My Lords, I start by directly addressing Amendment 2, which seeks to create an additional condition whereby freeports relief would be available only where the freeport maintained a public record of the beneficial ownership of the businesses operating on the freeport site. I thank the noble Baroness, Lady Kramer, for raising this important issue. Before I go any further, I would like to broaden the debate, as the House will be aware of the considerable interest that continues to be shown in related matters—as the noble Baroness touched on—taking account of the register of overseas entities’ beneficial ownership, economic crime in general, illicit finance and money laundering. Because of this, I hope that the House will forgive me if I give a full and considered response to the noble Baroness and, indeed, the noble Lord, Lord Tunnicliffe.

The Government are taking firm and co-ordinated action to crack down on economic crime and are determined to go further. We will not tolerate criminals profiting from illicit money and will do whatever is necessary to bring these criminals to justice. The Home Office and the Treasury lead the policy response for government. We have well-established governance structures that oversee activity across the system, building on the landmark Economic Crime Plan, which brought the public and private sectors together to tackle economic crime.

The ever-evolving nature of economic crime means that it cannot be combated by law enforcement alone; the capabilities, resources and experience of a wide range of partners from across justice agencies, government departments, regulatory bodies and, of course, the private sector, are required. The Government are bringing forward significant investment to tackle these crimes, including through legislating for the Economic Crime (Anti-Money Laundering) Levy. The upcoming fraud action plan and second Economic Crime Plan this year will further enhance the public and private sector’s response in cracking down on economic crime and fraud.

In recent years we have taken important actions to strengthen our fight against economic crime. Let me give noble Lords some examples. The first was the creation of the new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime. The second was the establishment of the Office for Professional Body Anti-Money Laundering Supervision to improve oversight of anti-money laundering compliance in the legal and accountancy sectors. The third was the Criminal Finances Act 2017, which introduced new powers, including unexplained wealth orders and account freezing orders. Finally, we introduced a global human rights sanctions regime.

The UK is fully committed to coming down firmly on entities which contravene the UK’s robust counter-illicit finance regime, as demonstrated by the actions of our anti-money laundering supervisors. This is apparent in the FCA’s recent success in securing its first criminal prosecution against NatWest bank under the money laundering regulations. NatWest pleaded guilty to three offences of breaching the regulations, resulting in a £268.4 million fine. Similarly, in April 2019 the FCA fined Standard Chartered bank £102.2 million, which was the second largest financial penalty ever imposed by the FCA for anti-money laundering control failings.

The noble Baroness touched on Russia, as I thought she might. The UK has also taken decisive action to tackle Russian illicit finance. We have acted, in unison with our key partners, most notably the European Union and the United States, against Russia directly on issues that have arisen in areas such as anti-corruption. We have introduced the global anti-corruption sanctions regime and have already sanctioned 14 individuals involved with the $230 million tax fraud in Russia, perpetrated by organised crime groups and uncovered by the brave Sergei Magnitsky. The Government are also bringing forward investment to tackle economic crime. The combination of this year’s spending review settlement and private sector contributions through the economic crime levy, as mentioned earlier, will provide funding to tackle economic crime totalling around £400 million over the spending review period.

Let me now return to corporate transparency. The UK is a global leader in beneficial ownership transparency. The Financial Action Task Force’s 2018 assessment recognised this: the UK is one of only five advanced economies to have achieved a pass mark for beneficial ownership transparency. The UK is the only G20 country with a free, fully public and easily accessible beneficial ownership register. The people with significant control register—the so-called PSC—at Companies House has more than 5.6 million names of people with significant control over nearly 4.4 million UK-registered companies. As well as the PSC, the Government intend to implement a register of beneficial owners of overseas entities that own or buy property in the UK. This register will be one of the first of its type in the world and will go further to bring transparency to the UK property market. This, in turn, will make it easier for regulators, legitimate businesses and the general public to know who the true owners of UK property are, and enable law-enforcement agencies to carry out effective investigations.

We are also committed to leading international reform efforts on beneficial ownership. Last year, under the UK’s leadership, all G7 countries committed to strengthening and implementing beneficial ownership registers. This builds on discussions we are driving forward at the Financial Action Task Force to bolster wider international standards on company beneficial ownership. Our actions are helping to ensure there are no weak links in the global financial system. The Government’s proposed reforms to Companies House will further strengthen our position as a world leader in corporate transparency, therefore enabling us to tackle economic crime and protect the UK from hostile actors, thereby enhancing the attractiveness of the UK as a place to invest.

The Companies House reforms will deliver more reliable information on the companies register via verification of the identity of people who manage, control or set up companies; greater powers for Companies House to query and challenge the information submitted to it; and the removal of technological and legal barriers to allowing enhanced cross-checks on corporate data with other public and private sector bodies. To ensure that these changes can be delivered as swiftly as possible, at last year’s spending review the Government committed to an additional £63 million to facilitate Companies House reform. These reforms require primary legislation and, as noble Lords will have heard from the Prime Minister last week, we are committed to bringing this legislation forward. However, in anticipation of any questions on this, I am not in a position, I am afraid, to announce timings or refer to any Queen’s Speech.

I turn now to freeports, which are really the subject of the remarks of both the noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe. We have gone further: throughout the bidding process and subsequent business case processes, prospective freeports have been required to set out how they will manage the risk of illicit activity, with those plans being scrutinised by officials in the Border Force, HMRC, the National Crime Agency and others.

On beneficial ownership specifically, I start with a reminder that the freeports bidding prospectus stipulated that each freeport must agree a governance structure with the Government. The precise governance structure is tailored to each freeport’s needs but it must be consistent with the requirements set out in the publicly available freeports bidding prospectus.

The Government already require each freeport governance body to undertake reasonable efforts to verify the beneficial owner of businesses operating within the freeport tax site and to make this information available to not only HMRC but law enforcement agencies and other relevant public bodies. This is a condition of freeport status. It is a proportionate approach which means that local area law enforcement can take effective measures to ensure the security and propriety of operations within the freeport.

16:30

Specifically on Amendment 2, tabled by the noble Baroness, Lady Kramer, the difference between this and the existing requirement on freeport governance bodies is that the amendment would require the freeport governance body to make its record of beneficial ownership available to the general public as well as to law enforcement. Given the nature of the information, we do not think it would be appropriate for the freeport governance body to release this information publicly. After all, the freeport governance body is a third party. It does not have the locus to release such information about a business to the general public. For example, it would be inappropriate for a port operator, sitting on a freeport governance body, to make public the details of the beneficial owner of a manufacturer operating elsewhere in the freeport. Such a requirement would also duplicate and undermine the people with significant control register at Companies House. The onus is already on the company itself.

The amendment, although well-meaning, is not necessary. The broad requirement is already in place. It would be inappropriate because, as mentioned earlier, it would place a requirement on the freeport governance body to release to the public information about a third party. It would duplicate the wider work that I have set out. I hope that the measures this Government have taken more widely in relation to anti-money laundering, to free ports and to beneficial ownership more broadly, will reassure the House.

I note that the noble Baroness said that she was minded not to move Amendment 3. However, I owe it to her to give an explanation from our side about the amendment that she tabled. Amendment 3 would require the Government to conduct a review into the effectiveness of the policy 18 months from the date at which this Act receives Royal Assent. The Government acknowledge the importance of monitoring reliefs of this nature and of evaluating ambitious programmes such as these freeports. For this reason, the Government have already committed to reviewing the use and effectiveness of this relief before deciding whether to extend it further. This review will look at the data available through HMRC’s systems.

With this brief response, I again thank the noble Baroness and the noble Lord for their contributions. I hope that the noble Baroness will agree to withdraw her amendment.

[Baroness Kramer (LD)]

My Lords, the Minister has not persuaded me. In fact, if anything, most of his speech reinforced my position. We already have a public register of ownership of companies in the UK. We hope that this will be strengthened through verification when we next see this legislation. The Government have committed to a public register of the beneficial ownership of property in the UK. We think that the legislation is sitting somewhere in the department. We hope that it will see the light of day very soon.

Last week, the Minister, the noble Lord, Lord Ahmad, assured us that he had brought the overseas territories to the point at which they were committed to public registers of beneficial ownership by 2023, but here we have a new register which is suddenly not public. We do not need this anomaly or backward step. I do not understand the Government’s resistance. I am afraid that, although I very much respect the Minister, his arguments reinforced my conviction, as I hope that it will have reinforced the conviction of this House, that we need to divide on this issue.

16:34

Division 1

Ayes: 195

Noes: 179

16:55

Amendment 3 not moved.

Clause 6: Zero-rate contributions for armed forces veterans

Amendment 4

Moved by

[Viscount Younger of Leckie]

4: Clause 6, page 4, line 34, leave out “regulations under” and insert “, or in regulations under,”
Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

Amendment 4 agreed.

Amendment 5

Moved by

[Lord Tunnicliffe]

5: Clause 6, page 4, line 35, at end insert—
“(3A) Relief under this section may apply in respect of any employment of an earner who meets the veteran conditions, irrespective of whether it has applied to a concurrent or previous employment of that earner.”Member’s explanatory statement
This amendment clarifies that employer zero-rate relief when employing veterans may apply to multiple employers, in cases where a veteran has more than one form of employment during the eligibility period.

[Lord Tunnicliffe (Lab)]

My Lords, I will also speak to Amendment 6 in this group, which brings us to the issue of zero-rate relief for employers of new Armed Forces veterans. I am grateful to the noble Baroness, Lady Kramer, for her support on this issue at Committee, and for signing Amendment 6, which is in this group.

As we discussed in Grand Committee, many veterans make a smooth transition back to civilian life. They will find stable accommodation and a job within a year, becoming happy and productive members of society. However, while this applies to a clear majority of ex-service personnel, there are a sizeable number who struggle with the process of adaptation. The reasons for this are varied and complex. Some veterans simply are not adequately prepared for life outside the forces. This is an area where improvements have been made in recent years, but individual experiences of leaving active service suggest more needs to be done.

Others may find themselves contending with issues in their personal lives: living in temporary or sub-standard housing, facing difficulty reintegrating back into their family or friendship group, or dealing with mental or physical health issues. Any one of these would make the process of finding and holding down a job more difficult; a combination may make it impossible.

Many veterans will eventually settle, although they may not do so within 12 months. They may find that their first job or two do not suit them. These challenges cannot be fully addressed in the Bill—we know that. But we are generally supportive of the NIC relief being offered to employers of veterans. I continue to be of the view that if this policy helps just a single person, it will have been worth it.

The question before us today is whether—and how —we can make the relief work for as many veterans as possible. The Treasury’s policy note is clear that the relief can cover multiple periods of employment—concurrent or subsequent—within the qualifying period. However, as drafted, the Bill is silent on this point. I do not wish to be a cynic, but policy notes can change. Paragraphs of text can mysteriously disappear with no explanation. Amendment 5 has been tabled with this in mind, to protect that important point of clarification. I hope the Minister can accept the text. If the wording is not quite right, it can be addressed at Third Reading.

I also hope the Minister will feel able to accept Amendment 6, which would grant the Treasury the power to change the one-year period specified in Clause 7(1)(c) of the Bill. In Committee, we argued for three years of relief. This would have ensured consistency with the relief offered to employers in freeports, while affording veterans more time to adjust. The Treasury seems certain that a single year’s relief will do the job. We hope it does, but that will become apparent only with time. If it becomes clear that a longer period of 18 months, two years or perhaps longer would have a beneficial impact on the employment and retention of veterans, Amendment 6 would allow that change to be made quickly and simply, and—crucially—outside the Budget and Finance Bill cycle. The Government would not be compelled to use the power, but the option would be available to Ministers should the scheme be extended.

I hope that noble Lords—and the Minister—respond positively to these amendments. They are offered in a spirit of co-operation. We want to be helpful to the Government and we want the Government to be helpful to the men and women who have defended this great nation. It is our duty to serve the interests of those who have served us. I beg to move.

17:00

[Baroness Kramer (LD)]

My Lords, we on these Benches fully support these Labour-led amendments. The noble Lord, Lord Tunnicliffe, has made the arguments in powerful terms, and I will not repeat what has been said so well. Most service men and women return smoothly to civilian life, but it is often those who have experienced the most trauma on our behalf who find themselves in a difficult place. Nothing would be more frustrating than putting in place a scheme such as that proposed in the Bill and then finding that, in many cases, the support does not last long enough as life events throw people temporarily off course. Frankly, the cost of providing a longer employment incentive for this group would cost the Treasury next to nothing, so we find it a privilege to support these amendments.

[Viscount Younger of Leckie (Con)]

My Lords, the veterans’ relief legislated for in the Bill and consulted on publicly has been introduced to support veterans as they transition into civilian life, and to encourage employers to utilise the considerable and often formidable skill sets of veterans. Between 10,000 and 15,000 leave the regular Armed Forces each year, whose employers will be able to benefit from this measure. This measure fulfils the Government’s 2019 manifesto commitment and builds on the UK-wide Strategy for our Veterans launched in November 2018, which includes specific commitments to support veterans to “enter appropriate employment”.

Amendment 5 tabled by the noble Lord, Lord Tunnicliffe, seeks to clarify that multiple employers can claim that relief on behalf of the same veteran. However, the amendment is not necessary as this is already the policy intent, and the legislation, as drafted, supports this. It may be helpful to explain exactly how the relief works. Any employer can claim the relief during a veterans’ first 12 months in civilian employment. That period is calculated by taking the veteran’s first day of civilian employment after leaving the Armed Forces and adding 12 months. Concurrent and subsequent employers can claim the relief in that period. That approach ensures that a veteran does not use up access to the relief if they take on a temporary role immediately after leaving the Armed Forces. Where the first day of civilian employment is before 6 April 2021, the period for which an employer can claim the relief will be from 6 April 2021 to 12 months after the first day of civilian employment.

It may help the House if I provide it with an example. Veteran A starts their first civilian employment on 30 August 2022. On 30 November 2022, veteran A enters into a separate employment with employer B. Employer B will also qualify for this relief, and both employers can continue to claim this relief until 29 August 2023. That approach has been communicated publicly to employers in the Government’s response, published on 11 January 2021, to the policy consultation; in the tax impact and information note that accompanies the Bill; in guidance for employers published ahead of this measure being available from 6 April 2021; and in speeches made by Ministers in both this House and the other place. I hope that the noble Lord is reassured about the policy and withdraws his amendment.

Amendment 6, tabled by the noble Lord and supported by the noble Baroness, Lady Kramer, gives the Treasury a power to extend the qualifying period of this relief, as defined at Clause 7(1). The Government have considered this measure in detail and consulted extensively on the relief, including a policy consultation which ran from July to October 2020 and a technical consultation which ran from January to March 2021. A significant number of respondents agreed that the relief is a positive step towards supporting the recruitment of veterans and could help to break down the barriers and negative perceptions surrounding veterans. After considering the responses, we felt that a 12-month qualifying period struck the right balance between supporting veterans as they transitioned to civilian life and wider taxpayers’ interests. Noble Lords may want to note that employer representatives such as the Federation of Small Businesses welcomed the 12-month relief when it was announced.

This policy provides employers in the 2021-22 tax year with up to £5,500 of relief and is one part of the Government’s broader strategy to support veterans. The Government recently published the veterans’ strategy action plan for 2022-24, which contains over 60 policy commitments worth over £70 million in a diverse range of areas, reflecting the varied streams of government support offered. Furthermore, at the 2021 Budget and spending review, £10 million was provided to support mental health via charity provision and £5 million to the Health Innovation Fund. In August 2021, £2.7 million was provided to further strengthen veteran health support, including facilitating the expansion of Op COURAGE, and a further £5 million in September 2021 for those struggling after the Afghanistan withdrawal.

Furthermore, the Bill already contains other levers to increase the generosity of this relief if needed, such as increasing the upper secondary threshold, as debated earlier, and extending the overall period of the relief. These proposed additional powers are therefore not necessary. With these reassurances, I hope that the noble Lord and noble Baroness will not press their amendments.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the noble Lord for his response. I hope that I am wise in not pressing Amendment 5 any further. I will, however, be pressing Amendment 6 to a Division. The Government believe that this process is good, and we agree. There is consensus that the NICs relief is a benign piece of legislation and, if it is successful and cost effective, it may need to be extended. This amendment permits extension without further primary legislation. It is entirely within the control of government. It can do no harm and may do some good. I commend Amendment 6 to the House. In the meantime, I beg to withdraw Amendment 5.

Amendment 5 withdrawn.

Clause 7: Veteran conditions

Amendment 6

Moved by

[Lord Tunnicliffe]

6: Clause 7, page 5, line 24, at end insert—
“(3) The Treasury may by regulations amend the period specified in subsection (1)(c) where it believes this will contribute to improved employment and retention rates among veterans.”Member’s explanatory statement
This amendment would grant the Treasury a power to extend the eligibility period attached to zero-rate relief for armed forces veterans, should that be deemed desirable to improve the ability of veterans to find long-term employment.

[Lord Tunnicliffe]

I beg to move.

17:07

Division 2

Ayes: 197

Noes: 175

Clause 8: Upper secondary threshold for earnings

Amendments 7 to 11

Moved by

[Viscount Younger of Leckie]

7: Clause 8, page 5, line 26, at end insert—
“(A1) For the purposes of section 1, for the tax year beginning with 6 April 2022—(a) the upper secondary threshold is £481, and(b) the prescribed equivalent for earners paid otherwise than weekly is—(i) where the earnings period is a month, £2,083;(ii) where the earnings period is a year, £25,000;(iii) where the earnings period is a multiple of a week, £25,000 divided by 52 and multiplied by the multiple;(iv) where the earnings period is a multiple of a month, £25,000 divided by 12 and multiplied by the multiple;(v) in any other case, £25,000 divided by 365 and multiplied by the number of days in the earnings period.(A2) For the purposes of section 6, for the tax years beginning with 6 April 2021 and 6 April 2022—(a) the upper secondary threshold is £967, and(b) the prescribed equivalent for earners paid otherwise than weekly is—(i) where the earnings period is a month, £4,189;(ii) where the earnings period is a year, £50,270;(iii) where the earnings period is a multiple of a week, £50,270 divided by 52 and multiplied by the multiple;(iv) where the earnings period is a multiple of a month, £50,270 divided by 12 and multiplied by the multiple;(v) in any other case, £50,270 divided by 365 and multiplied by the number of days in the earnings period.(A3) Amounts determined in accordance with—(a) subsection (A1)(b)(iii) or (iv), or subsection (A2)(b)(iii) or (iv), if not whole pounds, are to be rounded up to the next whole pound;(b) subsection (A1)(b)(v) or (A2)(b)(v) are to be calculated to the nearest penny, and any amount of a halfpenny or less is to be disregarded.”Member’s explanatory statement
This amendment, together with the other amendments tabled in the Minister’s name to Clause 8, and the amendments tabled in the Minister’s name to Clauses 1 and 6, set upper secondary thresholds and prescribed equivalents for the purposes of Clause 1, in relation to the tax year 2022-23, and Clause 6, in relation to the tax years 2021-22 and 2022-23, and make consequential amendments.

8: Clause 8, page 5, line 29, after “year” insert “after the tax year 2022-23”
Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

9: Clause 8, page 5, line 32, leave out subsection (3)
Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

10: Clause 8, page 5, line 35, leave out subsection (4) and insert—
“(4) The regulations may prescribe an equivalent of an upper secondary threshold in relation to earners paid otherwise than weekly (and references in any Act to the “prescribed equivalent”, in the context of an upper secondary threshold for the purposes of section 1 or 6, are references to the equivalent prescribed in reliance on this subsection in relation to such earners). (4A) The power to prescribe an equivalent includes power to prescribe an amount which exceeds, by not more than £1.00, the amount which is the arithmetical equivalent of that threshold.”Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

11: Clause 8, page 5, line 38, at end insert—
“(5) The regulations may amend this section.”Member’s explanatory statement
See the explanatory statement for the first amendment tabled in the Minister’s name to Clause 8.

Amendments 7 to 11 agreed.

Clause 10: Treatment of self-isolation support scheme payments

Amendment 12

Moved by

[Viscount Younger of Leckie]

12: Clause 10, page 6, line 24, after “paragraph” insert “in regulations made”
Member’s explanatory statement
This amendment provides for the designation of schemes for the purposes of Clause 10 to be by regulations.

Amendment 12 agreed.

Clause 12: Regulations

Amendments 13 and 14

Moved by

[Viscount Younger of Leckie]

13: Clause 12, page 7, line 8, at end insert—
“(za) section 3(1);”Member’s explanatory statement
This amendment provides for regulations under Clause 3(1) to be subject to the draft affirmative procedure.

14: Clause 12, page 7, line 10, at end insert—
“(ba) section 6(6);”Member’s explanatory statement
This amendment provides for regulations under Clause 6(6) to be subject to the draft affirmative procedure.

Amendments 13 and 14 agreed.