National Insurance Contributions (Reduction in Rates) (No.2) Bill

Clive Lewis Excerpts

2nd reading
Wednesday 13th March 2024 Commons Chamber

[Gareth Davies]

Yet again my hon. Friend makes a valuable contribution. I commit to taking his idea away to consider, as we look at reducing the unfairness in the tax system in future and reducing national insurance contributions when it is prudent and responsible to do so.

The Labour party is completely all over the place on this. As a Conservative Government, we have delivered a clear message to the British people, and it is based on the delivery of the lowest personal taxation level since 1975. We have almost doubled the personal allowance, bringing the lowest earners out of paying any tax at all, and we have delivered a thriving jobs market, which is ultimately the best way to ensure that people are brought out of poverty.

[Clive Lewis (Norwich South) (Lab)]

I hope to speak a bit later on this. I may have a slight difference of opinion with the Minister on tax cutting, but I want to deal with the facts as I see them. He is making a great amount of noise about the tax-cutting vim and vigour that his party has had over the past 10, 20 or 30 years, or even longer than that—it is meant to be something that goes to the heart of the Conservative party—but according to the OECD, for every £1 generated in the UK, the Government collect 35.3p of it as tax. That figure is projected to keep on increasing to 37.7p by 2029, despite this 2% tax cut. Can the Minister explain how, if the Conservatives are the party of tax cuts, actual tax levels will in fact be going up, according to the OECD? How do the Government square that circle?

[Gareth Davies]

I am grateful for the opportunity to clarify that, because there has been a lot of noise from the Labour Benches, too. It is true that we have had to make some difficult decisions about overall taxation on the back of the pandemic, but today we are cutting taxes on work, because that is the way to grow our economy. As I said, we now have the lowest personal taxation level since 1975. Some taxes have gone up, absolutely—supported by the Labour party—as we have increased tobacco duty and other items, for example, but we are focused on ensuring that if people are in work and have a job, their tax level will be reduced. Today, that work of reducing tax on work continues. We are cutting taxes for millions of people across this country. That is why I commend the Bill to the House.

--- Later in debate ---

[John Redwood]

I largely agree with my right hon. Friend, but if we look at the numbers, I think the fall-off was from 2020 to 2024. Prior to that, with good Conservative policies and lower taxes, we were growing the self-employed army very noticeably, and it was making a very important contribution to general growth and the way all our local communities are serviced. It is so often self-employed people who allow us to make personal contact in a way that large companies do not seem to want any more. They are the people who turn up in the evening or at the weekend, if necessary, to get work done, and they are the people who wrestle with the increasingly impossible streets created by Labour and Liberal Democrat councils, which make it more difficult for them to get their vans around.

[Clive Lewis]

Does the right hon. Member not understand that perhaps the other reason for the decline in the self-employed and small and medium-sized enterprises is the growth of large businesses or large corporations that push them out of the marketplace and that monopolise and dominate? That is a big part of it, and it is a massive part of how our economy has developed over the last 30 or 40 years.

[John Redwood]

No, I do not think that is the main point. I think the two main points are the ones I have made—the covid lockdown and the tax regime affecting the ability to set oneself up. I will meet the hon. Member a little of the way, because I do think that the 2021 reforms in particular put companies off dealing with the self-employed, and the self-employed often need business from other companies, as well as directly from the public, and that has been a problem. If he and his party are seriously interested, they should look at the 2017 and 2021 reforms, which I think they supported, to understand how they have backfired. That is a good example of the OBR and the Treasury thinking that they can get more money out of the self-employed by forcing more of them to be employed but ending up with a far less successful economy with far fewer people working.

--- Later in debate ---

[Clive Lewis (Norwich South) (Lab)]

It is always good to speak after the right hon. Member for Wokingham (John Redwood), because he genuinely makes the idea of deepening economic inequality sound so plausible and convincing. If I could do the same from these Benches for the idea of deepening economic equality, I would feel that I had achieved something. He does it so well. When listening to our opponents on the Benches opposite, such as the right hon. Gentleman and the right hon. Member for Witham (Priti Patel), it is as interesting to think about what they do not say as what they do say, and one thing they always seem reluctant to talk about is taxing wealth. I imagine that I will be a lone voice in this debate, but I intend to make the point none the less that there is a route by which we can have public services that actually work and a fairer economic system, and it requires an increase in the burden on those with the most, not those with the least.

The Bill is not just another arbitrary, reckless and misguided act by this Government; rather, it comes from a long and distinguished line of such Bills stretching back to the 1970s, although their pedigree is far older. This Bill is integral to an economic creed that we have heard much about today, which preaches low tax and small privatised public services, and a belief that inequality is good because it drives competition—competition for jobs and for resources. The creed says that we need not worry about the losers, because we will have something called “trickle-down”, whereby the riches of the few flow down for the many to enjoy.

The only problem is that 60 years later, we are still waiting at the bottom and it has not come down to us yet. Perhaps the Minister can tell us—the millions waiting for that trickle-down who are now routinely using food banks and worrying about how they will pay the next bill—when that trickle-down will arrive. This Bill is the culmination of 60 years of tax cuts, outsourcing, privatisation, impoverishment, profiteering, corruption and greed; 60 years that have left this country more divided than ever, susceptible to climate threats and deeply unequal in everything from income to life expectancy.

What we need is a Government and a legislative programme that will reverse that decline and invest in infrastructure, healthcare, jobs and, yes, people. What we have instead is this Bill making a national insurance tax cut that will, according to Tax Justice UK, see the average worker benefit by—wait for it—£8 a week. It is small beer compared with the £3,000 they have lost to inflation in the last couple of years.

Of course, in keeping with the creed of those on the Government Benches, the better off people are, the more this tax cut will pay out to them. For those on £20,000 a year or so, the cut is worth about £150 a year; for those on £50,000 and above, it is worth almost £750. But whether it is a tax cut of £150 or £750, this Bill does nothing to rebuild our shattered public services, nothing to bring down NHS waiting times, nothing to adapt this country to the approaching climate crisis, and nothing to fix our broken adult social care system. As the Resolution Foundation noted, public sector investment spending—a key driver of growth—is set to fall by 31% as a share of GDP between 2024 and 2029. That is a real-terms cut equivalent to £17 billion.

What does that mean for my constituency? What does that mean for people in my community? Norfolk and Waveney has the highest rate of malnutrition in the United Kingdom. A little while ago, I went to a school in West Earlham in my constituency and spoke to the headteacher about a national article that said it was routine, after 13 years of this Government, for children to have parents who use food banks and to turn up to school with bowlegs. I said to her, “When you’re teaching these children, how do you know that they’re hungry?” She said, “It’s quite clear. They eat the sand in the sandpit.” Those are the signs that teachers look for to know that children are genuinely hungry.

Norfolk and Suffolk have the worst mental health services in the country. Norfolk and Waveney is among the top five dental deserts in England. Ambulance delays have been going on for over a decade with little sign of improvement. This national insurance cut will do nothing for those services. On the day of the Budget, I spoke to the BBC. The interviewer, Andrew Sinclair, said to me, “Clive, there’s a cost of living crisis, and you want more money in the pockets of your constituents.” I said, “Yes Andrew, I do, but I also want functional public services.”

With those few hundred extra pounds each year in someone’s pocket—£8 a week—they will not be able to pay for a private surgeon for their hip operation that they are waiting for. They will not be able to pay for a private dentist to extract their teeth, do dental surgery or work on their teeth. They will not be able to buy a classroom for their child, who is sitting in one with rotting concrete. That will not help them. The Budget, and this Bill, will not help my constituents who are waiting for mental health services. I heard this week at a meeting that I organised with my Conservative colleagues about our failing mental health care system that children have killed themselves because they cannot see a psychiatrist or psychologist. The Bill will do nothing for them.

Who will pay for those services? There is an answer. We are one of the most unequal economies in the western world when it comes to wealth. Let us look at wealth. In this country, those with the lowest incomes are likely to have a combined tax rate on income and wealth of approximately 44% per annum. Meanwhile, those in the highest decile of earners are likely to pay no more than 21.5% per annum on their combined income and wealth. The answer is clear. We can raise billions to pay for the public services we need without raising tax on the lowest paid or middle earners, and without increasing the income tax burden, by putting a little more tax on those with the greatest wealth and the broadest shoulders—those who should pay their way and contribute to our public services, which are so badly needed. This Bill does none of that.