National Insurance Contributions Bill

Anthony Browne Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

I know that the public like it when different political parties work together for the common good, and I notice that the National Insurance Contributions Bill, which we have been discussing this evening, has been subject to absolutely glutinous harmony. I have counted five different political parties expressing support for it, which means it must be doing something good, and I fully support the measures in it.

I am particularly keen on the freeports, which have been widely discussed, but I will keep my very brief comments to the national insurance contributions deductions for veterans. We all know, as various other Members have said, that veterans have amazing skills and great strengths, which they bring to many different jobs, including in this House. We have many Officers who are veterans and, indeed, Members of Parliament who are veterans, but we also know that veterans suffer from a veteran employment gap. They suffer higher unemployment than the national average. That is not just a UK thing; it applies to other countries and is a very big issue in the United States.

One thing we can do with national insurance is tilt the employment market in veterans’ favour. I say this from an economics background, but there is a market failure occasionally in the employment market, where the interests of wider society, employers and the state in terms of the Treasury are not always aligned. Making small adjustments to incentives through the national insurance system or otherwise can actually help align those incentives for the benefit of employees, employers and the Government.

I fully support the veterans measure, but the principle of it could be extended to other areas where there are structural issues around different groups and unemployment, particularly the long-term unemployed and the disabled. There is a particular issue. If someone has been unemployed for a year, they lose motivation and lose contacts. Employers start looking askance at them and do not want to take them on. If someone has been unemployed for two years, they are more likely to retire, never having worked again, than to ever find a job. There is a reason for that.

Say an employer has two candidates who are equally good in front of them. One is already working and one has been unemployed for two years. The employer will take the risk-averse approach and think, “There might be something about that long-term unemployed person. I will stick with the employed one.” That might be a rational decision for the employer—one might argue that it is not, but most employers would behave that way. It means that the Government will carry on paying the welfare bills of the long-term unemployed person. It means that the long-term unemployed person finds it even more difficult in future to find a job, and it is not good for society to have a cohort of people who are so detached from the labour market.

There is therefore a big economic rational argument for the Government to tilt the labour market in favour of long-term unemployed people. They could do that through national insurance—there are other ways of doing it—by having deductions for people who have been unemployed for a year or two years.

The second group I will mention is the disabled, and the same issues apply there. Somebody who is blind or severely visually impaired may be very good at a job, but a lot of employers would be worried about the adjustment costs, for example, or other things—they may just be nervous and have not had experience of it before. There is a huge societal and Treasury incentive to help disabled people to get into work rather than languishing in long-term unemployment. Again, there is a rational economic argument to create an incentive to align the interests of employers, the Government and the long-term unemployed to get the disabled or others into work.

I fully support this national insurance deduction for veterans precisely for that reason: it will be good for veterans, good for employers, good for society at large and good for the Treasury. I wish this Bill the swiftest and smoothest passage through this House.