Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021

Lord Tunnicliffe Excerpts

Monday 8th February 2021 Grand Committee

[Lord Tunnicliffe (Lab) [V]]

My Lords, I am grateful to the Minister for introducing these uprating measures and to the small band of other noble Lords who have taken part in this debate. The Minister will be familiar with my standard line about the Opposition not voting down statutory instruments in this House. With our recess only a few short days away, I certainly have no appetite for creating a constitutional crisis. Nevertheless, even if I were feeling mischievous, we would not oppose these measures. As we all know, there is no mechanism for amending SIs, and without passing the instruments before us there would be no uprating of the various charges and entitlements.

As has been outlined, the first instrument gives effect to the annual re-rating of various national insurance contribution rates, limits and thresholds. As the acronym-heavy Explanatory Memorandum outlines, most of these increases are tied to the annual rate of CPI inflation, which was 0.5% in the year to September 2020. The instrument relating to tax credits, child benefit and guardian’s allowance enacts the increases previously announced in a Written Ministerial Statement of November 2020. Again, those increases are generally linked to the CPI figure of half a percentage point. Paragraph 6.4 of the Explanatory Memorandum notes the position with regard to the Coronavirus Act 2020. This increased the basic rate of working tax credit in the 2020-21 financial year, from £1,995 to £3,040. This has been disregarded for the purposes of calculating the usual uplift.

That Act was passed some time ago. We had expected public health restrictions to have fallen away by now and the economy to be growing. Given that we find ourselves in less than ideal circumstances today, is the Treasury considering a review of its approach to the tax credit uplift, perhaps as part of the upcoming Budget? I also say to the Minister that while cases and deaths now appear to be falling, which we clearly welcome, we remain some way off the conditions required for the economy to fully reopen and for the withdrawal of wider Treasury support for workers, claimants of universal credit, and so on. I hope we will hear soon from the Chancellor, who has been uncharacteristically quiet in recent weeks, rather than people being left facing a financial cliff edge, as has been the case previously.

I will finish with a broader question, relating to the data in the report from the Commissioners for Revenue and Customs to the Treasury on the number of tax credit awards and offences. Is the Minister able to opine on the reasons for significant decreases in the number of penalties and prosecutions in 2019-20, when compared to the previous year? Are there cases outstanding which are therefore not included in these figures? Is it a result of better guidance for claimants? Alternatively, is there a link with the Covid-19 uplift?

We very much welcome the decreases. While, sadly, there are cases of fraud in the benefits system, I hope the Minister will acknowledge that these new figures demonstrate that the numbers are very small as a percentage of overall claims. We are all familiar with past comments from some members of the Government, which have exaggerated the situation and created stigma around claiming additional help. With the events of the past year having highlighted the importance of our social security safety net, I hope we can start to discuss these matters in a more productive manner.