National Insurance Contributions Increase

Gerald Jones Excerpts

Tuesday 8th March 2022 Commons Chamber

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I rise to support the motion from my right hon. and hon. Friends. We all remember too well that during the 2019 general election campaign, just over two years ago, the Prime Minister said to voters:

“Read my lips, we will not be raising taxes on income or VAT or national insurance.”

The Chancellor of the Exchequer was also keen to point out that his plan was to cut taxes for the lowest paid through cutting national insurance. It is clear that the Government have blatantly broken their promises to the country on national insurance, as they have on international development and the pension triple lock.

As my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, mentioned, things have changed in the six months since the national insurance contributions increase was announced back in September. It is clear to many Opposition Members that the Government need to rethink the planned rise in national insurance contributions. In these extraordinarily difficult times, if the rise goes ahead, it will see people’s incomes squeezed even more. People are finding it more and more difficult just to survive and that is before we see the increase in national insurance contributions and the huge increase in energy bills that will have a heavy impact from April.

In my constituency and across the country, we are all hearing stories of huge sacrifice. Families are facing a real cost of living crisis, with energy bills set to rise again in April—

[Anthony Browne]

Will the hon. Member give way?

[Gerald Jones]

No, I will not. Given that oil and gas producers in the North sea have posted huge profits during the pandemic, why do the Government not halt their unfair tax rise, back a windfall tax to help to fund a cut in VAT on home energy bills and ease the burden on working people?

Government Members have also called on the Government not to go ahead with the rise. They have urged Ministers to make tackling the cost of living their No. 1 priority and noted that this year will be exceptionally hard for families, so why are the Government still not listening?

The Government claim that this situation is down to the pandemic, but in March last year—a year into the pandemic—the Chancellor promised that national insurance would not go up, saying:

“We’re not going to raise the rates of income tax, national insurance, or VAT.”

He added:

“Nobody’s take home pay will be less than it is now”—

another broken promise.

Analysis from the New Economics Foundation shows that 2.5 million working households will be hit by the Tory double whammy of cuts to universal credit and the increase in national insurance, losing out on as much as £1,170 next year. That is all at a time when we know that the price of food, the price of petrol and the cost of rent are going up and families are genuinely fearful about making ends meet.

There are other ways to raise that money, but the Chancellor wants the country to believe that this is the only way to do it. Half of Britons say that they could not afford an additional £50 a month on their cost of living. The Government should halt the national insurance rise so that people see their cost of living concerns ease. Surely the Minister recognises that stopping the rise would provide immediate support and help families at this really difficult time.

We know that citizens advice bureaux have seen a huge increase in debt advice services and that is before we reach April, when there will be the national insurance rise and the increase in energy costs. Labour has long called for the national insurance rise to be halted so that it does not make the cost of living crisis worse.

[Anthony Browne]

Will the hon. Member give way?

[Gerald Jones]

No, I will not. The Federation of Small Businesses warned that

“this increase will stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.”

The trade unions have joined the FSB in that regard. The FSB stated:

“The Government’s regressive jobs tax hike will put jobs at risk, stifle start-ups and prevent new jobs from being created…It could mean 50,000 more people out of work after it takes effect in April. That means 50,000 livelihoods harmed—50,000 people who would otherwise be at work in our economy.”

The TUC also says that it is wrong to hit young and low-paid workers while “leaving the wealthy untouched”.

Surely the Government must recognise that we are in a totally different situation from when the rise was announced six months ago. The economic outlook for thousands of families across the country is much bleaker, so I urge the Government to change course, support today’s Opposition motion and help to ease the pressure on families in Merthyr Tydfil and Rhymney and right across the country.