National Insurance Contributions (Reduction in Rates) Bill

Drew Hendry Excerpts

2nd reading
Thursday 30th November 2023 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

We have heard an awful lot about choices at the start of this debate. What is abundantly clear for families in Scotland and across the nations of the UK is that the Government have chosen to ignore the burning cost of living crisis that they put in place for families.

Let me be unequivocally clear from the outset that the Chancellor’s attempt to masquerade the Bill as meaningful support for people is nothing short of a farce. I said to him at the statement that it would not bear scrutiny and it has not borne scrutiny. Families in Scotland already grappling with the harsh realities of the soaring cost of living are acutely aware of the UK Government’s role in their deteriorating financial situation. No amount of Tory spin can disguise the stark truth of their policies, or the fact that those families are faced with a future of perma-austerity under Westminster.

The autumn statement was a critical opportunity for meaningful intervention. It was, to say the least, a profound disappointment. It offered scant relief to households across Scotland—households already beleaguered by the catastrophic decisions of this UK Government. The audacity of the Chancellor in trying to package the reduction in national insurance rates as a major tax cut is an insult to the intelligence of the Scottish people. We are witnessing funding for public services pushed to breaking point due to years of real-terms cuts to the Scottish budget. The Scottish Government have sought to protect workers and services, and are having to do that with diminishing resources, yet the UK Government have shamefully neglected to prioritise investment in the NHS and other public services, which will, according to the OBR, see a cut of £19 billion in the coming years.

The Bill, in legislating for the changes to national insurance outlined in the autumn statement, is a glaring example of the Government’s disconnect from the realities on the ground. The changes announced by the Chancellor, some to take effect from January onwards, are a mere drop in the ocean of what is urgently needed now by families struggling with rampant food price increases, punishing increases in rents and mortgages, and the dreaded prospect of another winter with soaring energy bills. The Government could have listened to our pleas to provide a £400 energy bill rebate, to reduce the price cap and more. Instead, they will preside over a 5% increase in the energy price cap to land on 1 January—hardly a happy new year for those who cannot afford now to switch on the heating.

Let us dissect the facts. The main rate of NICs for employees is to be cut from 12% to 10%, a change affecting those earning between £12,571 and £50,271. For the self-employed, the rate drops from 9% to 8%, with the flat-rate NIC charge also being scrapped for some. On paper, those changes might appear beneficial, but in reality they are superficial. The Resolution Foundation’s Torsten Bell aptly noted that

“taxes are up not down”.

This is no generous gift to the public; it is a thinly veiled attempt at distraction. The Institute for Fiscal Studies highlighted a concerning trend: despite these nominal cuts, we are facing the most significant rise in taxes in recent memory. The tax threshold freezes since 2021 will largely, if not entirely, counteract any benefits of the Chancellor’s 2p cut to NICs next year. For someone with average full-time earnings, that means a saving of £449 in NI contributions, but an increase of £413 due to the unchanged tax thresholds. The Chancellor’s so-called giveaway then amounts to a paltry £36 for the average earner—a far cry from the over £450 boasted about today.

From the detrimental effects of austerity to the chaos of Brexit and now the mismanagement of the cost of living crisis, it is abundantly clear that the Westminster Government are a liability for the working people of Scotland. They are left to shoulder the burden of Westminster’s disastrous decisions. Our public services, the very foundation of our society, are under threat. The Chancellor’s spending plans, particularly his silence on them post March 2025, signal a disturbing turbo-boost of austerity. The OBR’s report rings alarm bells. The UK Government’s fiscal strategies are shrouded in uncertainty and wishful thinking.

The Scottish Government are handed a real-terms reduction in the block grant, yet are expected, miraculously, to maintain public services with, for example, a health budget increase of less than 0.01% for 2024-25. Inflation sits, even today, at 4.7%, so that NHS money equates to only £10.8 million blown away by inflation before it arrives, leaving only the cold sting of a sharp cut in reality.

The autumn statement and the Bill will serve as stark reminders that Westminster Governments are fundamentally misaligned with the values and needs of the people of Scotland. Our aspirations for a fair, just and prosperous society cannot be realised under such governance. Independence remains the only viable path to ensuring the wellbeing and prosperity of the Scottish people.

In conclusion, it is imperative that the Government acknowledge their failings, even at this late stage, and take decisive steps to truly support households and public services across the nations and in Scotland. Until such time, we in the SNP will remain unwavering in calling for real help for people struggling with rising rents and mortgages, struggling to pay for their shopping, and terrified of the cost of their energy bills this winter. Our values are to champion the interests of the Scottish people to safeguard our communities and the families who live in them. We will continue to call for the real power of independence to deliver on them.