Employer National Insurance Contributions

Debate between Mel Stride and Toby Perkins

Wednesday 4th December 2024 Commons Chamber

[Mel Stride (Central Devon) (Con)]

I beg to move,

That this House regrets that increasing the rate of employers’ National Insurance contributions (NICs) to 15%, and reducing the per-employee threshold at which employers become liable to pay NICs on employees’ earnings to £5,000, will lead to increased costs for businesses and lower wages for employees, including in particular young people; will force companies to cut employment, leading to some 130,000 job losses according to Bloomberg Economics; will increase costs for retailers by £2.3 billion according to the British Retail Consortium, leading to higher prices for consumers; will create an annual additional bill of £1.4 billion for charitable service providers according to the National Council for Voluntary Organisations, so they will struggle to maintain support for vulnerable people; and will increase childcare costs for families; further regrets that the Government has not published its complete assessment of the effect this policy will have on the public and private sector, or indeed any impact assessment; and regrets also that, as a result of the Government’s economic policies, GDP forecasts are down, inflation is up and business confidence is down.

“Growth” was the leitmotiv of the Labour party. Its members chuntered on about it during the run-up to the last general election, and in their manifesto, under the heading “Kickstart economic growth”, they said that they would secure the highest sustained growth in the G7. They also said—and I know that you like a good joke, Madam Deputy Speaker, but I would ask you to contain yourself—that they would forge a

“new partnership with business to boost growth everywhere”.

Given what has happened, those are fantastical statements. Reading Labour’s manifesto was somewhat like stepping through the looking glass. It had something of Lewis Carroll about it. This lot were less the Prime Minister and the Chancellor than the Walrus and the Carpenter, cruelly leading businesses to their demise. For all the fantasy in the manifesto, they might just as well have spoken

“Of shoes—and ships—and sealing-wax—

Of cabbages—and kings—

And why the sea is boiling hot—

And whether pigs have wings.”

Because what happened to growth? The Office for Budget Responsibility tells us that the Budget will lead to less growth across the forecast period than was the case back in the spring under the last Government. The Office for National Statistics tells us in the third-quarter GDP data that the economy grew by 0.1%—one seventh of the growth in the United States. In the third month of that quarter, which was September, growth was actually negative. That is the record of this Government.

[Mr Toby Perkins (Chesterfield) (Lab)]

The right hon. Gentleman talks about the OBR figures, but he fails to mention that his party misled the OBR to the extent that it had to put the failure in writing. Given that he is talking about Lewis Carroll, is it not true to say that the figures that the OBR was working with were more likely to have been received from the Mad Hatter?

[Mel Stride]

That is an amusing intervention, but it is thoroughly inaccurate, I am afraid. The OBR did indeed look into the suggestion that there was a black hole of £22 billion, and what did it conclude? It concluded that the fiscal pressure in that year was less than half that amount. The OBR readily accepted that had it had discussions with Treasury officials about that at the time, it may well have reduced the amount still further. Members from across the House know that it is not unusual for the Treasury to manage down in-year fiscal pressures as a matter of course, so the argument has been debunked. It is the dead parrot. It is pushing up the daisies. It is no more.

The hon. Gentleman’s point is indicative of what this Government have done: they have talked down the UK economy. In turn, business confidence has slumped in a way seldom seen in our history, with purchasing managers index surveys falling through the floor. We have seen the Institute of Directors’ optimism tracker scoring minus 60 in November—one would have to go back to April 2020 to find a lower score than that. We also know that at the centre of the Budget is the biggest broken promise of all: the increase in employer’s national insurance contributions. That is weighing on growth.

And what of jobs? Labour’s fantastical manifesto talks about job creation, which is mentioned several times, but the Government are destroying jobs by breaking a manifesto commitment. It was there in black and white in their manifesto that they would not raise national insurance. Do not take my word that they breached their manifesto; take that of Paul Johnson of the Institute for Fiscal Studies, who says precisely the same.