Social Security (Contributions) (Amendment No. 2) Regulations 2022

Lord Tunnicliffe Excerpts

Monday 28th March 2022 Grand Committee

This is an issue that I have raised over and over again with almost everything that we get from the Treasury. There needs to be some sort of coherent published tracking system. Indeed, it would help officials as well if they had a place to go to where essentially everything was marked up to date and they could see the history and the process of change. I have said before that this was done in the European Union in a far more complicated and complex setting—and done extremely successfully. I know that there is a government feeling that anything that was done well by the European Union needs to be disparaged and that we cannot follow or adopt it, but can we make an exception in this case, which is leaving so many people, frankly, confused?

[Lord Tunnicliffe (Lab)]

My Lords, I start by supporting the point that the noble Baroness has just made. The practical access to legislation in this country—somebody may say it happens in every other country—is dreadful. It is almost impossible to follow all the tracking, know what the documents say and understand how they relate to each other. I understand that the National Archives are trying to remedy this situation—I wish them luck; they will certainly have my support.

I am grateful to the Minister for introducing this measure, albeit at the 11th hour. She knows that the Labour Party does not agree with the health and social care levy. Following last week’s Spring Statement, it seems the Chancellor is not entirely on board with it either. We were told that the additional funds would be used to solve the social care crisis. However, we know that most of the money raised will go to the NHS rather than social care.

Addressing the record NHS backlog is a worthy cause, but it should not come at the expense of social care reform. Indeed, the Prime Minister has still not produced his long-promised plan for solving the challenges around social care, despite his promise on the steps of Downing Street in July 2019 to publish a plan within days. When we debated the fast-tracked Health and Social Care Levy Bill, we were told that full parliamentary scrutiny was simply not possible, as HMRC needed the maximum available time to implement the changes.

That Bill was introduced in another place on 8 September 2021, with this House taking all stages on 11 October. It has been the law of the land since 20 October, which is more than five months. Why, then, has it taken until now for somebody to notice that the married women’s reduced rate has not been increased in line with the requirements of that Act? The number of beneficiaries of the reduced rate will be only a small proportion of the overall number who pay national insurance. When she responds, perhaps the Minister could cite the figure; she has done so already, but she might be able to home in on a more precise figure—you never know. Could she cite the figures so that they are on record?

The numbers are not huge, but we understand the need for a consistent approach. On that basis, we do not oppose the passing of these regulations. However, let me say to the noble Baroness that this is not how government is supposed to do business. We should not be fast-tracking legislation for political purposes and using delegated legislation to correct the deficiencies at a later date. Later this week, we will debate another fast-tracked Bill, and we expect also to support that legislation’s passage, but this experience does not instil confidence in the process. Let us hope that the Government do better in the next parliamentary Session.

[Baroness Penn (Con)]

I thank all noble Lords for their engagement on these regulations, and indulging in what the noble Lord, Lord Davies of Brixton, referred to as a piece of social policy archaeology. It is important that we have been able to bring forward these regulations, and I therefore completely acknowledge the points made by the noble Baroness, Lady Kramer, the noble Lord, Lord Tunnicliffe, and others about the complications in our approach, and the speed with regard to these particular regulations.

Just by way of a bit of a further explanation for this set of regulations, HMRC had previously identified a different legislative vehicle to provide for this measure. However, that legislative vehicle was not a viable option once it had been confirmed that there was no longer sufficient time for scrutiny to take place within the usual timeframe. That was an oversight, and HMRC has moved quickly to prepare this piece of relevant legislation. It is with regret that we had to expedite the consideration for this measure. However, to ensure that the levy is applied fairly, these regulations need to come into force ahead of 6 April. We have written to both the JSCI and the SLSC to explain the reasons for this delay and to ensure appropriate scrutiny.

I heard the point made by my noble friend Lady McIntosh of Pickering, echoed by the noble Baroness, Lady Kramer, about the need to extend this measure to this particular cohort. While that may be debated, when the measure was announced it was included in that cohort, and now payroll and others are expecting it to go ahead. That is why it is important that we have been able to provide for it.

In response to the question from the noble Lord, Lord Jones, about engagement with business, especially small businesses, we have engaged with payroll providers to ensure that the new rates, including the married women’s reduced rate, are updated.

A number of noble Lords asked for further zoning in on the numbers affected. As I said, in 2019 we reviewed the number of eligible women who could apply for this rate and compared this against multiple data sources. We recently conducted a scan of NICs records in the 2020-21 tax year, which looks at around 2% of employees. We found two individuals qualifying for the married women’s reduced rate. Extrapolating from this would suggest that there are currently around 100 cases, but I remind noble Lords that these are not actual figures but estimates. Due to both the fact that this is an estimate and the small numbers involved, it is not possible to break down those affected into England, Wales, Scotland and Northern Ireland, et cetera.