Draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022

James Murray Excerpts

Tuesday 29th November 2022 General Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve on this Committee with you as chair, Mrs Cummins. I thank the Minister for her opening remarks.

As we have heard from the Minister, the statutory instrument seeks to amend legislation relating to social security and to introduce a new threshold above which self-employed people are liable to pay class 2 NICs. That is referred to in the regulations as the “lower profits threshold” and is set at £11,908 for 2022-23. The SI also seeks to make sure that self-employed individuals with profits at or above the existing small profits threshold of £6,725, but below the lower profits threshold, are treated as if they had paid class 2 NICs. That means people with profits within that range will maintain their eligibility to contributory benefits and statutory payments without having to pay class 2 NICs.

As we can see from the detail of the instrument, part 1 simply gives effect to the regulations from 6 April 2022. Part 2 introduces the lower profits threshold, the new threshold at which liability to pay class 2 NICs begins. It is set at a level equivalent to the threshold at which class 4 NICs become payable. At £11,908 it is an annualised threshold, recognising an increase to £12,570 from July 2022. Part 2 also makes it clear that self-employed individuals should be treated as having paid class 2 NICs where their profits are at or above the small profits threshold but do not exceed the lower profits threshold. Part 3 of the instrument makes consequential amendments to other regulations to make sure they are aligned with the changes made by earlier parts of the regulations before us.

The Opposition will not oppose the regulations. Particularly with the tax burden having risen under the Government to its highest level in 70 years, any help to relieve the pressure on working people is welcome. It is hard, however, to avoid drawing a contrast between the Government's regulations today, which seek to increase certain thresholds at which working people pay taxes, with how they voted last night on the Second Reading of Finance Bill, through which the Government are freezing thresholds, thereby making working people pay more tax. Indeed, last night the Minister defended her and her colleagues’ decision to freeze the personal allowance until 2028—a choice that will leave an average earner paying over £500 more in income tax a year.

I wonder whether the Minister could explain whether she feels there is any inconsistency in her approach. This afternoon, she is taking credit for raising thresholds—

[The Chair]

May I gently remind the shadow Minister to keep his comments in scope of the SI before us?

[James Murray]

Absolutely, Mrs Cummins. I am simply asking the Minister to compare her comments on the regulations in front of us with what she said last night. She may choose to address that in her response.

[Victoria Atkins]

This is not in scope.

--- Later in debate ---

[Victoria Atkins]

Yes.

I am helpfully reminded that the Office for Budget Responsibility produced updated forecasts for the autumn statement, including on all previous measures. Any broader debates about the autumn statement should be dealt with tomorrow in the Finance Bill Committee.

[James Murray]

You have been very clear in your guidance, Mrs Cummins, about what is within and without scope. The points that I referenced about the tax information and impact note were referred to in the explanatory memorandum to the regulations. I therefore followed your judgment, Mrs Cummins, that they were within scope. If the Minister is not entirely clear of my argument, she can either consult Hansard or speak to me after the Committee rises.

[Victoria Atkins]

I have been assured that we produced updated forecasts, as I have already said, for the autumn statement. On the details about TIIMs, I will happily speak to him after the Committee, or write to him and put a copy of my response in the Library. We are in danger of encroaching on the Finance Bill, however, and—

[James Murray]

Will the Minister give way?

[Victoria Atkins]

I have already said to the shadow Minister that I will write to him on outstanding matters. I have taken that approach because we will be going through an awful lot of this tomorrow in the Committee stage of the Finance Bill.

Question put and agreed.