National Insurance Contributions (Rate Ceilings) Bill (First sitting)

Huw Merriman Excerpts

Tuesday 27th October 2015 Public Bill Committees

[Rebecca Long Bailey]

Q 5 This is linked to the previous question. In the light of the response that you just provided, how would you say the fund would cope if there were an unforeseen crisis, given the restrictions that are placed upon it?

John Whiting: I know that the mechanics of the fund are such that the balance on the fund is assessed every year by the Government Actuary’s Department, and of course, if it looks as if the fund is too low, or if there is not sufficient coverage for its likely liabilities, as happened earlier this year, the Treasury will make a grant to the fund to keep it at the level that the Government Actuary’s Department feels is appropriate. I suspect that in terms of a sudden crisis—given that the fund’s main function is pensions and similar outgoings, hopefully there will not be a sudden crisis; it is a demographic trend that we can see or not—or a problem with the funding, it is over to the Treasury to make a grant and I have no doubt that Committees such as yours would have a view on such matters.

[Huw Merriman (Bexhill and Battle) (Con)]

Q 6 This question is linked to previous questions on the fund. Perhaps using your expertise, would you tell us what steps have been taken to ensure that the fund’s 16.7% threshold is maintained?

John Whiting: It really is down to the Government Actuary looking at how adequate that is and preparing reports for Her Majesty’s Revenue and Customs and Ministers on the balance of the fund. That leads to decisions as to whether the fund is adequate or whether supplementary grants are needed and will, I presume, influence Treasury Ministers’ minds on what level of contributions is appropriate. However, without wishing to duck the question, I have to say that we are getting into matters of rates, which is beyond matters of the OTS.

[Huw Merriman]

Q 7 May I further ask whether you agree with the Government Actuary that a subsidy from the Treasury will be required this year? If you do agree, do you have a view on how big this would need to be?

John Whiting: From figures I have seen, a grant will probably be needed this year. I do not have the figures to hand, but I believe that a grant will be needed. I believe an amount has already been tabled and discussed.

[Huw Merriman]

Q 8 In a way, you have just touched on this, but to be absolutely clear, how much money from the fund do you think will be required to maintain it above the threshold for the remainder of the Parliament? I know that is perhaps a little more into the future.

John Whiting: It is. I am not an actuary—I can only refer you to the Actuary’s reports that have been published. The annual reports of the national insurance fund will shortly be laid. I believe that the Comptroller and Auditor General, Sir Amyas Morse, has just signed them off on behalf of the NAO, so they will shortly be tabled.

--- Later in debate ---

[Andy McDonald]

Q 31 Is keeping things as they are, not making any changes and putting Parliament through this, really a wise use of parliamentary time?

Mr Gauke: Yes, I think it is. I think it is a justifiable use of parliamentary time to underline the commitment that my party made at the general election to not increase the rates. The fact that we have legislation to that effect underlines that commitment, and I hope that, at the end of the day, Mr McDonald, you do not feel that you have had a futile day.

[Huw Merriman]

Q 32 To turn the question from the hon. Member for Middlesbrough on its head, does the Treasury keep estimates of how the stability that this gives business will benefit the economy?

Mr Gauke: It is difficult necessarily to measure that. It is difficult to take the things in isolation. Overall, if you look at what we have done, as both a coalition Government and a Conservative majority Government, in terms of, for example, reducing our rate of corporation tax, addressing the worst effects of the jobs tax, which we inherited in 2010, some of the measures we have taken regarding capping business rates, and so on—over a period of five and a half years or so—we have taken a large number of measures to help businesses and to ensure that we have a thriving private sector, creating the jobs and tax receipts that we need to fund the NHS and so on.

[Rob Marris]

Q 33 Reversing that, I would suggest that the Bill arguably creates greater uncertainty, because although the Government have chosen, following your party’s manifesto commitment, to lock in a cap on national insurance contributions, you are taking action in some areas and not others. For example, there are about 1,300 tax reliefs and you are not locking all of those in.

In answer to an earlier question, you referred to a review of business taxation, which I think you said would be launched in the spring. That in itself creates uncertainty, and I suggest that the argument that the Bill creates greater certainty is wrong. It creates greater uncertainty because people say, “You’re locking in this but we notice you’re not locking in other stuff, so other stuff might change and adversely affect businesses or individuals.”

Mr Gauke: First, to be clear, we will publish our business tax plan—road map, if you like—in the spring, setting out what we will do. It is not the announcement of a review as such. It is, to some extent, conclusions.