Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021 Draft Tax Credits, Child Benefit and Guardian’s Allowance Up-rating Regulations 2021

Abena Oppong-Asare Excerpts

Tuesday 9th February 2021 General Committees

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I am grateful to the Minister for his explanation of the draft regulations. I will first address the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021, which give effect to the annual re-rating of the various national insurance contribution rates, limits and thresholds, as the Minister has just said.

The Opposition will not contest the regulations. However, we are concerned about the lack of targeting of the regulations and the lack of a cost-benefit analysis in relation to other measures. The lower earnings limit is a level of earnings at which employees start to gain access to certain contributory benefits. From April 2021—so, in just two months’ time—the lower earnings limit will be increased in line with the CPI. However, due to the rounding rules when calculating the lower earnings limit, this has resulted in no change occurring in cash terms, meaning that the lower earnings limit will remain at £120 per week. Does the Minister intend to continue raising the lower earnings limit in line with inflation? Does he feel that it is sufficient, given the current crisis that we face? And are additional measures needed to ensure that people can contribute towards the social security that they might need, which will all depend on the lower earnings limit?

The draft Tax Credits, Child Benefit and Guardian’s Allowance Up-rating Regulations 2021 relate to tax credits, child benefit and guardian’s allowance, and enact increases that had previously been announced in a written ministerial statement in November 2020. As with the previous regulations, these regulations are generally linked to the CPI. Again, the Opposition will not oppose them.

As the explanatory memorandum notes, the Coronavirus Act 2020 increased basic working tax credits from £1,995 to £3,040 for the 2020-21 tax year only. This £20 per week increase to the basic rate of working tax credit does not apply for the purposes of the annual review, and the annual rates for consideration will therefore be £1,995. Given that the economic situation is still dire for many families across our country, which I see in the cases that I get in my constituency as a local MP, we have also seen the worst recession in the G7 and one of the highest death rates in Europe.

In those circumstances, can the Minister say whether the Treasury is considering a review of its approach to tax credit uplift as part of the upcoming Budget? The Secretary of State for Work and Pensions refused to make her position clear on whether the uplift ought to be removed in the middle of the pandemic when facing questions from the Work and Pensions Committee last week. Can the Minister update us any further?

What has become grimly clear in the last 11 months is that the UK social security safety net is severely inadequate. However, I must emphasise again that the major omission from this debate is clarity over the proposed withdrawal of the £20 a week uplift to universal credit that is due to take place in April 2021. The Opposition believe that it is deeply irresponsible for the Chancellor to be winding down the support for families with his cut to universal credit, which will leave unemployment support at a 30-year low in the middle of an economic crisis.  The Government should do the right thing and secure our economy by cancelling the cuts to universal credit. It is discriminatory and unfair that the £20-a-week uplift was never extended to people on legacy benefits, many of whom are carers or disabled.

Although we do not oppose either of the instruments presented to us today, we remain concerned about the Government’s approach to ensuring social security for the people of Britain, and about the lack of adequate support for so many families who are struggling to get through this crisis.