National Insurance Contributions Bill

Baroness Winterton of Doncaster Excerpts

3rd reading
Monday 6th September 2021 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before we begin debating the new clauses and amendments to the Bill that have been selected, I want to remind the House that the scope of this debate is limited to whether or not the Bill should be altered or added to by any or all of those amendments and new clauses. This is not an opportunity to debate the Bill as a whole or the national insurance fund in general, and still less to discuss how to fund the NHS or adult social care. I expect that the House will have the chance later in the week to hear from Ministers, if and when they have any new policies to announce with regard to what I have talked about.

New Clause 1

Zero-rate contributions for employees of green manufacturing companies

‘(1) This section applies where—

(a) a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) of the 1992 Act in respect of earnings paid in a tax week in respect of an employment,

(b) the green manufacturing condition is met (see section [Green manufacturing condition]), and

(c) the employer (or, if different, the secondary contributor) elects that this section is to apply in relation to the contribution for the purposes of section 9(1) of the 1992 Act instead of section 9(1A) of that Act or section 1 of this Act.

(2) For the purposes of section 9(1) of whichever of the 1992 Acts would otherwise apply—

(a) the relevant percentage in respect of any earnings paid in the tax week up to or at the upper secondary threshold is 0%, and

(b) the relevant percentage in respect of any earnings paid in the tax week above that threshold is the secondary percentage.

(3) The upper secondary threshold (or the prescribed equivalent in relation to earners paid otherwise than weekly) is the amount specified in regulations under section 8.

(4) For the purposes of the 1992 Acts a person is still to be regarded as being liable to pay a secondary Class 1 contribution even if the amount of the contribution is £0 as a result of this section.

(5) The Treasury may by regulations make provision about cases in which subsection (2) is to be treated as applying in relation to contributions payable in respect of a tax week in a given tax year only when—

(a) that tax year has ended, and

(b) all contributions payable in respect of a tax week in that tax year have been paid.’—(Richard Thomson.)

This new clause provides National Insurance contributions relief for businesses engaged in green manufacturing

Brought up, and read the First time.

[Richard Thomson (Gordon) (SNP)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 2—Green manufacturing condition—

‘(1) The green manufacturing condition is that the employer is engaged in the manufacture of products within the categories designated under subsection (2).

(2) For the purposes of subsection (1), the Secretary of State must by regulations designate categories of products that in the opinion of the Secretary of State are manufactured with the aim of increasing environmental standards.

(3) The categories of products designated must include—

(a) wind turbines, and

(b) electric vehicles.’

This new clause is linked to NC1.

New clause 3—Scottish Government Covid payments: exemption from primary Class 1 contributions—

‘(1) A primary Class 1 contribution is not to be payable in respect of any Scottish Government Covid payment.

(2) For the purposes of subsection (1), a “Scottish Government Covid payment” means a payment of £500 pro rata to any NHS Scotland or social care worker in accordance with the announcement made by the Scottish Government on 30 November 2020.’

This new clause provides exemptions for Scottish Government Covid payments to NHS Scotland and social care workers.

New clause 4—Employment allowance for national insurance contributions—

‘(1) In section 1(2)(a)(1) of the National Insurance Contributions Act 2014 (employment allowance for national insurance contributions), for “£4,000” substitute “£16,000”.

(2) The provisions of subsection (1) will remain in force until 30 September 2023 and will then expire unless continued in force by an order under subsection (3).

(3) The Chancellor of the Exchequer may by order made by statutory instrument provide that the provisions which are in force will continue in force for a period not exceeding two years from the coming into operation of the order.

(4) No order will be made under subsection (3) unless a draft of the order has been laid before and approved by a resolution of both Houses of Parliament.

(5) The Chancellor of the Exchequer must lay before Parliament a review of the effects of the provisions in subsection (1) on employment, the performance of small businesses and GDP growth no later than 30 September 2023.’

This new clause would quadruple the employment allowance from £4,000 to £16,000 for two years. At the end of the period, the Chancellor of the Exchequer would be required to assess its effects and would be able to seek parliamentary approval for the policy to continue for up to a further two years.

Amendment 1, in clause 2, page 2, line 26, at end insert—

“(e) the employer pays, as a minimum, a living wage to all staff it employs, and

(f) the businesses operating in the freeport in which the employer has business premises have collectively—

(i) put in place a strategy setting out how the freeport will contribute to the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019,

(ii) put in place a strategy setting out how the businesses will ensure that no goods passing through the freeport are the products of slave labour, and

(iii) carried out an environmental impact assessment of the operation of the freeport.”

This amendment provides conditions to businesses in freeports. These include a strategy on how the freeport will contribute to the target for net UK greenhouse gases emissions, a strategy ensuring no goods passing through the freeport are products of slave labour, and an environmental impact assessment of the freeport.

Amendment 2, page 3, line 11, at end insert—

‘(4A) For the purposes of subsection (1)(e), the living wage per hour—

(a) for the financial year 2021-22 is—

(i) £9.50 outside of London, and

(ii) £10.85 inside London; and

(b) for each year after the financial year 2021-22 is to be determined by the Living Wage Foundation.’

This amendment defines the living wage, payment of which is one of the conditions businesses would have to meet under Amendment 1.

Government amendment 3.

[Richard Thomson]

I rise to support amendments 1 and 2 and new clauses 1 to 3 in my name.

I went over the reasoning for these amendments in some detail on Second Reading and in Committee, so I am sure the House will be relieved to hear that I do not intend to go into quite that level of detail again. The arguments I made then still stand, that the Government should not forgo tax revenues or give advantages to some businesses that are not available to others in terms of national insurance exemptions without securing meaningful commitments in return and in advance.

For that reason, we believe reciprocal benefits should be baked in from the start, both in the strategic economic objectives that we presume are being sought and in ensuring the very best employer behaviour, so that we are incentivising the kind of corporate behaviour that we want to see and encouraging future manufacturing to develop in that way.

We particularly wish to see greenports evolve—greenports are the Scottish Government’s model for freeports—to help tackle the climate crisis and to ensure the protection of workers’ rights. SNP amendments 1 and 2 would help to ensure that freeports and greenports do not end up contributing to a race to the bottom on workers’ rights and broader standards.

New clauses 1 and 2 get to the heart of the matter, by ensuring that employers within the designated freeports pay, as a minimum, a living wage to all staff they employ; by setting out how businesses can ensure that no goods passing through freeports are in any way the product of, or have benefited from the contribution of, slave labour; by setting out how freeports can contribute towards achieving legally binding climate change commitments; and by ensuring that the environmental impact of freeports is properly considered in each case, so that they can be seen as an exemplar, rather than simply being compliant with existing legislation.

We believe firmly that if national insurance exemptions are to be made available, they should be for enterprises that are helping us to transition towards a low-carbon economy. In those new clauses, we have specified two categories of manufacture—wind turbines and electric vehicles—that we consider should be covered. The opportunity is inherent within new clause 2 for the Secretary of State to designate a much wider range of products that also can contribute towards that objective.

We have a choice here: we can grant these incentives and hope—this depends on one’s political taste—that we let 1,000 flowers bloom or that the invisible hand of the market will somehow deliver the economic and social objectives being sought; or, with some judicious framing of the Bill, we can help to increase the likelihood of achieving a set of positive outcomes from those objectives.

--- Later in debate ---

[James Murray (Ealing North) (Lab/Co-op)]

I am grateful for the opportunity to speak on Report on behalf of the Opposition. As we have made clear throughout the passage of this legislation through the House, we will not oppose the Bill. We have, however, used the opportunity of the debates we have had so far to raise important questions with Ministers about some of the approaches they have decided to take.

As we know, clauses 1 to 5 introduce a new zero rate of secondary class 1 national insurance contributions for employers who take on employees in a freeport. The zero rate will apply from April 2022 and allow employers to claim relief on the earnings of eligible employees of up to £25,000 per year for three years. Clauses 6 and 7 also introduce a new zero rate of secondary class 1 national insurance contributions, in this case for employers of armed forces veterans.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. It is important to address the amendments before the House at this point. We will have the Third Reading debate later.

[James Murray]

Thank you, Madam Deputy Speaker. I shall briefly address the amendments we have been discussing as they relate to veterans’ employers’ national insurance relief. As we made clear on Second Reading and in Committee, this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. The Minister may remember that on Second Reading and in Committee I asked him and his colleagues to explain why the employers’ relief for veterans is for 12 months—much less than the three years of relief for employers in freeports that the Bill also introduces.