National Insurance Contributions Increase

Ben Lake Excerpts

Tuesday 8th March 2022 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the hon. Member for Sheffield South East (Mr Betts), who spoke powerfully about a number of the challenges facing households across the country. I particularly support his comments about the inadequacy of the council tax regime. I very much hope that the work of the Welsh Government and Plaid Cymru will bring about a more progressive system, at least as it relates to Wales.

I urge the Government to cancel the planned national insurance increase. If they cannot bring themselves to do so, they should at least postpone its implementation. It has been said a number of times in this debate, but it is worth repeating, that now is not the time to place a further cost on families and businesses. The hon. Member for Leeds West (Rachel Reeves) mentioned in her opening remarks that when the facts change, so should our policies. It is worth repeating that the situation in which we find ourselves is drastically different from last week, let alone last year. It is important that the Government consider that fact.

The cost of living crisis has been well discussed this afternoon. Inflation is surging and could exceed 8% in the coming months, if some estimates are correct, as energy, food and other essentials become even more expensive. The situation is especially acute in rural areas like mine in Ceredigion, where rising fuel and energy prices are inflicting a heavy toll on household finances. Nearly a fifth of households in Wales are not connected to the gas grid, and in rural areas like Ceredigion the figure can be as high as 80%, meaning they are completely unprotected from spikes in energy prices. Indeed, constituents of mine have seen the price of heating oil treble since September, and many have been informed this week that delivery to our area is currently unavailable. With rural fuel poverty already at some 14%, I fear for my constituents if the situation continues. I support the Bill proposed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), which would at least bring off-grid homes into some sort of regulatory arrangement that would mitigate them in respect of some of the more volatile differences in the energy market. Rising energy costs are matched by rising fuel costs, and in rural areas the lack of public transport infrastructure forces many to be dependent on private car use. Some 80% of commuters depend on the car, so it is a real concern when pump prices increase by some 10p a litre in a matter of days. I have been told that some stations in my constituency have seen increases of 15% or even 20% in the past week or so.

That is why the proposed national insurance hike, which will increase tax on average earnings in Wales by more than £250, is so mistimed. Wales already has the highest poverty and child poverty rate among the four nations of the UK, with almost one in four people, and 31% of our children, living in poverty. As we face potentially the worst drop in living standards in more than half a century or, as the hon. Member for Aberdeen North (Kirsty Blackman) said so clearly and eloquently, in a generation, households can ill-afford this tax hike and neither can our businesses. From Brexit to covid, with all the corresponding supply chain disruption, loss of business and inflationary pressures, there is growing evidence that businesses just cannot withstand further pressure. Indeed, there is a risk that by increasing national insurance contributions, the Chancellor will increase the cost of employment, which will be reflected either in job losses or in even higher prices to the consumer down the line. We need targeted relief, perhaps through a reformed rural fuel duty relief scheme, to help with costs for the motorists in my area, who do not have the luxury of public transport infrastructure to use just to go to the shop or to attend work every day. This would help hard-pressed communities weather this crisis, rather than what the Government propose to do, which is to increase the tax on them.

The decision to increase national insurance contributions is a choice, and we have heard a lot about that this afternoon; politics is always about making difficult choices. People across Ceredigion have told me loudly and clearly that this is the wrong choice for the situation in which we find ourselves.