National Insurance Contributions Increase

Drew Hendry Excerpts

Tuesday 8th March 2022 Commons Chamber

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

In an intervention earlier, the hon. Member for Strangford (Jim Shannon), who is no longer in his place, talked about the 1.25 percentage point increase having the potential to break the back of families—being the last straw, as it were—and he was right. I often look across at Government Members and wonder whether they have any capacity for understanding the pressures that families face. Under a previous leader they used to talk about the just about managing, but those who were just about managing—the JAM—are toast under the circumstances that people currently face. On International Women’s Day, we should spare a thought for those mothers who are already struggling—now, before the increase comes in—to feed their children and heat their homes.

The Office for National Statistics says that those who earn below the average wage will pay up to £255 a year. That is a significant amount of money for people who do not have it. If someone’s household budget is already blown, £255 a year is devastating. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) pointed out the disproportionate effect of the national insurance increase on young people and the lowest-paid, and that is the case, but it will also hit business. The Federation of Small Businesses has pointed out that the increase will affect businesses by, on average, around £3,000 per year. It says that will put the brakes on investment, upskilling, apprenticeships and, of course, community growth.

Government Members like to say that Brexit has nothing to do with the crisis we are currently in but the ONS points out that since Brexit—incidentally, a Brexit that Scotland did not vote for and roundly rejected—the cost of producing goods has gone up by 13%. That is forcing up prices, increasing inflation and sucking the oxygen out of exports. Some 4,300 fewer businesses are exporting now than were exporting in 2019. That is a shocking figure. These are UK companies that are no longer exporting. Their exports to the EU are down £20 billion. All of this means less money in the economy and less money getting through to our communities—especially in Scotland and especially in places such as the highlands and the north of Scotland where we rely on Europe for fishing, seafood, fruit and veg and clothing. Many small and medium-sized enterprises are losing market and money. It is no wonder that the FSB has described this act as “chilling”.

This national insurance increase, which will stall planned wage increases, comes on top of household pressures gradually crushing ordinary households across the nations of the UK. As the hon. Member for Ceredigion (Ben Lake) pointed out, rural constituencies are disproportionately affected. The Institute for Fiscal Studies has pointed out that we are seeing inflation of 8%, but for basic foodstuffs it is even higher. Things such as margarine are up 45%. Rice, one of the cheapest foods, has seen an increase of 344%. These are real effects on real people in real households, and they will be facing these pressures every day.

In the colder climate in rural areas, the costs are higher for fuel and for transport. For those in off-gas grid areas, it is not only about the £800 increase—as it was. It will now be more. It may cost £2,000 a year for the average household, but it could be £4,300 a year for energy costs. That is an astonishingly hard bill to pay for people who do not have a lot of money. This is another straw that will hurt them. An often used phrase is that people have to choose between heating or eating. Many of my constituents do not have that choice any more. They cannot choose the heating because there is just no money for it in the budget. People are being pushed into extreme fuel poverty and actual poverty, and they no longer have a choice.

The Government should scrap the national insurance hike. The Chancellor’s payday loan will not help, as it has to be repaid and, as we have just heard, that just exacerbates the problem. Council tax help is not enough. People need an emergency package. The Government should turn that £200 payday loan back into a grant that is paid to people directly. The £1,040 universal credit cut should be reversed. The Government should adopt the Scottish child payment across the nations of the UK and bring in a real living wage, not the “pretendy” one, as it was called earlier. They should scrap the bedroom tax; Scotland is having to mitigate that at the moment, but it should not be there. Let us scrap it.

I call on Members to support my ten-minute rule Bill to regulate off-grid gas supplies. The Government should make the changes: scrap the benefit cap; take away the hideous rape clause; and remove the barriers so that people are able to afford their very existence.

There is a lot more that we could cover today. This subject affects people’s income, affects their livelihood, affects the development and the growth of their children and affects their families into the future, but there is no time to cover it all. The one thing that this Government could do today, because they know that it is unpopular with their own Back Benchers, is to scrap this national insurance hike.