National Insurance Contributions (Rate Ceilings) Bill

Angus Brendan MacNeil Excerpts

Tuesday 15th September 2015 Commons Chamber

[Kit Malthouse]

My hon. Friend has made a strong point. During the debate on the referendum concerning our possible divorce as nations, businesses piped up very loudly about what was likely to be a very uncertain horizon for them on the far side of the debate. The majority opted for the status quo, because a bird in the hand was worth God knows what in the bush.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I can tell the hon. Gentleman that it was certainly worth two Lords in the Lords.

In fact, the uncertainty has arisen as a result of our lack of independence. Scotland lost powers under the Energy Act 2013. The Government made a lot of promises on that. Now we are to lose the renewable energy obligation in Scotland because of the uncertainty caused by our losing the referendum. I wanted to put that on record, and to give the hon. Gentleman a bit of clarity.

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[Stewart Hosie]

That is the kind of thing any Opposition politician should say about any set of Tory policy decisions that ends up with the kind of outcomes the hon. Gentleman describes.

The Government also committed to legislating within 100 days of the election to rule out increases in the rates, which is what we are seeing today, but of course serious unintended consequences for spending and for other taxes may flow from this measure. Let me explain. The Government laid out in the summer Budget discretionary consolidation—that is, cuts and tax rises to you and me—amounting to £97 billion in this Parliament. Of that, new draconian cuts to welfare amounted to a full third—£33 billion—but the entire spending plan was predicated on, among other things, NICs bringing in £115 billion this year, £126 billion next year, rising to almost £152 billion in 2021. That is a forecast rise in revenue yield from NICs of 9.6% this year to next, 4.3% the year after, 4.7% in 2017-18 to 20118-19, and a rise of over one third—£37 billion—between last year and the end of the forecast period.

One of the questions the Minister has to answer today is this: given the arbitrary freeze on NICs and some other rates, should the forecast yield be significantly less than expected, will other taxes rise and if so, which ones; and will the Chancellor take the axe to yet further spending, perhaps on pensions, or will borrowing rise and deficit reduction forecasts simply be abandoned, delivering exactly the same failure on debt and deficit we saw in the last Parliament?

[Mr MacNeil]

Of the options my hon. Friend has given, may I go for option three, which means the Government will borrow? As every schoolboy in Scotland who has been paying attention knows, the UK has not paid its way since 2001; it has borrowed each and every year since then. I would go for option 3 for the UK: in debt, with a black hole.

[Stewart Hosie]

My hon. Friend is right. Harking back to 2009 and the Fiscal Responsibility Bill, the then Chancellor made great play of legislation to bring down the debt and deficit, and what was the sanction should he fail? “We would just change the targets,” he said. I suspect the current situation is rather similar, and I may come to what the current Chancellor said about that particular legislation shortly.

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[Helen Goodman]

Well, it might or it might not, depending on the circumstances.

This quest for certainty is quite reasonable in regard to small businesses—

[Mr MacNeil]

rose—

[Helen Goodman]

I shall give way to the hon. Gentleman from the Scottish National party.

[Mr MacNeil]

In any debate about taxes, it is instructive to look at what the OECD tells us about global tax-to-GDP ratios, which is what I have just done. Denmark has a tax-to-GDP ratio of 47.2%. Mexico, at the other extreme, has a tax-to-GDP ratio of 19.7%. The Conservatives’ mantra is “lower taxes, lower taxes, lower taxes”, but that would appear to be sending us in the direction of Mexico. That is not the sort of society I want; I want a society that is high on the UN human development index such as Denmark. The figure for the UK is 33%. How far do the Government want to go? Do they want to give us a society like that of Mexico, or do they want us to be like Denmark?