National Insurance Contributions Bill

James Murray Excerpts

3rd reading
Monday 6th September 2021 Commons Chamber

[Sarah Olney]

I would like to make some progress, if that is okay.

We should at this time pursue economic growth and job creation above all other concerns, because we face an uncertain few months in our economy. We could face a wave of closures and redundancies as the various support schemes that the Government introduced to get us through the pandemic come to an end. There could well be lots of redundancies as the furlough scheme closes. Business rates exemptions and deferred VAT payments are coming to an end, so if we can reduce the pressure on businesses by relieving them of some of their national insurance payments, that will help them to ride out the coming period when they will need to repay some of the costs. VAT on hospitality is going back to 12.5% from the end of this month. All such financial pressures are coming at a time when we think prices will rise and the universal credit cut may well hit household incomes and supress demand.

I propose new clause 4 because instead of a selected NICs cut for companies in freeports, I would prefer that we target the cut at SMEs, at this urgent time when we want to stimulate economic growth and support employment.

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

I am grateful for the opportunity to speak on Report on behalf of the Opposition. As we have made clear throughout the passage of this legislation through the House, we will not oppose the Bill. We have, however, used the opportunity of the debates we have had so far to raise important questions with Ministers about some of the approaches they have decided to take.

As we know, clauses 1 to 5 introduce a new zero rate of secondary class 1 national insurance contributions for employers who take on employees in a freeport. The zero rate will apply from April 2022 and allow employers to claim relief on the earnings of eligible employees of up to £25,000 per year for three years. Clauses 6 and 7 also introduce a new zero rate of secondary class 1 national insurance contributions, in this case for employers of armed forces veterans.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. It is important to address the amendments before the House at this point. We will have the Third Reading debate later.

[James Murray]

Thank you, Madam Deputy Speaker. I shall briefly address the amendments we have been discussing as they relate to veterans’ employers’ national insurance relief. As we made clear on Second Reading and in Committee, this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. The Minister may remember that on Second Reading and in Committee I asked him and his colleagues to explain why the employers’ relief for veterans is for 12 months—much less than the three years of relief for employers in freeports that the Bill also introduces.

[Mike Wood]

I wonder whether the shadow Minister could help me: which amendment is he currently speaking to that addresses employers’ relief for veterans?

[James Murray]

If the House would rather I did not address the issue of veterans’ employers’ relief, I am happy to move on, but it is an important one to address. I would welcome your guidance, Mr Deputy Speaker.

[Mr Deputy Speaker (Mr Nigel Evans)]

We are considering just the amendments before the House. You will have an opportunity to talk much more widely on the whole Bill when we come to Third Reading, which will follow immediately after the votes.

[James Murray]

Thank you for that clarification, Mr Deputy Speaker. In that case, let me decide where in my speech to pick up. Forgive me for the slight procedural difficulty—if it is okay, I shall reserve my right to speak later.

[The Financial Secretary to the Treasury (Jesse Norman)]

I am sorry that the hon. Member for Ealing North (James Murray) was not able to revisit his greatest hits from Committee or other previous stages of the Bill, but unfortunately he is required to speak to the new clauses and amendments before us, which is what I will do.

The Scottish National party has tabled new clauses that would create a new zero rate of secondary class 1 NICs for employers classed as “green manufacturing companies”, including those that produce wind turbines and electric vehicles. As the House will know, the Government take support for the green economy extremely seriously. For example, since 2013 the Government have provided £150 million per annum to the Aerospace Technology Institute—investment match-funded by industry—including £84.6 million of investment to develop zero-emission flights and further support for other potential zero-emission aircraft concepts.

In addition, the Government are to spend nearly £500 million in the next four years to support the UK’s electric vehicle manufacturing industry as part of our commitment to provide up to £1 billion for the development and mass production of electric vehicle batteries and the associated supply chains. The funding is available UK-wide and will boost investment in the UK’s strong manufacturing base.

Of course, the Government have also stated their ambition to deploy 40 GW of offshore wind capacity by 2030, alongside a commitment to invest £160 million in ports and manufacturing infrastructure. The goal of that investment will be to encourage up to £20 billion of much-needed private investment in coastal areas and to support up to 60,000 green manufacturing jobs by 2030. The Government’s commitment to support green manufacturing is therefore quite clear.

Unfortunately, new clause 1 would introduce a major change to the tax system of a magnitude that would require the careful consideration of costs and benefits and, in fact, goes far beyond what should be included via amendment in a Bill such as this one. The design of a sector-focused tax relief is not straightforward and would add complexity to the tax system. By contrast, there has been no consultation on, costing of or impact assessment made in relation to the measure proposed in new clause 1. For those reasons, I urge the House to reject it.

On new clause 3, covid-19 has proven to be the biggest health and economic threat faced by the UK in decades. Key workers, including NHS staff and social care workers, have done extraordinary things, as the House recognises, to keep the public safe in the continuing fight against the virus. For their part, the Government hugely value and appreciate such important contributions to the covid-19 response. However, as I will explain, the Government do not believe that the new clause is appropriate or necessary. Under long-standing rules, any payments made in connection with an employment incur income tax and national insurance contributions. Such payments also count as income for the purposes of calculating entitlement to certain benefits.

--- Later in debate ---

[James Murray]

I am grateful for the opportunity to speak on this Bill’s Third Reading on behalf of the Opposition. As I have made clear several times, we are not going to oppose the Bill, but we have used the various debates on it to raise important questions about some of the approaches that Ministers have decided to take. I would like to use the opportunity of Third Reading to reiterate some of the sticking points where we do not feel that we have had enough clarity.

I spoke earlier about clauses 1 to 5 and then moved on to discuss clauses 6 and 7, which introduce a new zero rate of secondary class 1 national insurance contributions for the employers of armed forces veterans. As I made clear on Second Reading and in Committee, we believe that this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. Other Members may remember that both on Second Reading and in Committee I asked the Minister and his colleagues to explain why the employers’ relief for veterans is for 12 months—much less than the relief for employers in freeports, also introduced by the Bill, which is three years.

In Committee, I made it clear that I felt that the Exchequer Secretary’s response during Second Reading had failed to address my question about why the Government had chosen to make veterans’ employers’ relief available for only one year. The Financial Secretary responded by expanding on the Government’s position. In relation to the relief for freeport employers, he said that the intention was

“to create circumstances in which they can have long-term secure employment, in particular with all the employment rights that come with more durable employment.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 18.]

At another point in Committee, the Minister said about the Government’s plans for freeport employers:

“The way in which this measure has been structured is focused towards longer-term employment, as the relief runs for three years…From that point of view, it reflects a commitment by the Government to create high-quality and stable longer-term employment.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 6.]

What my colleagues and I find hard to understand is why the Government, despite what the Minister has said throughout the passage of the Bill, do not seem to want to design a system for veterans that both supports transition into civilian life and, at the same time, like the scheme in freeports, seeks to create long-term employment with employment rights.

[Sir Mike Penning (Hemel Hempstead) (Con)]

I am sorry that I was not party to those discussions, but perhaps I can contribute as an ex-serviceman and a former armed services Minister. It is in the first 12 months out of the armed forces when a serviceman finds themselves in a completely different arena. I understand this. In my first six months, I re-joined the armed forces because I could not settle and I could not find the right sort of employment. That was the sort of help our veterans needed then and that is exactly what this part of the Bill does today.

[James Murray]

I thank the right hon. Gentleman for his intervention and for adding to the debate. I certainly recognise what he says about the importance of supporting veterans into civilian employment in the first six months and the first year. The question from the Opposition to which we did not have a satisfactory response is why, in addition to that, there is not a consideration or an option of support for long-term durable employment with employment rights. As that point was made several times by the Minister in relation to the relief for employers in freeports, why does the same support for longer-term employment not apply to veterans as well?

During discussions in Committee, the Minister pointed to a consultation with interested parties about how to design the scheme and mentioned how different parties had been “well sighted” on the options, so I looked at the Government’s consultation to understand what different parties had said. I was expecting to see questions about the length of the relief and whether 12 months or longer would be appropriate, but all I could find was a statement saying:

“The Government has announced that this relief will be available for the first 12 months of a veteran’s civilian employment.”

There did not seem to be any option or question about whether a longer relief would be appropriate.

Moving on to other measures we debated during the passage of the Bill, clause 10 provides a national insurance contributions exemption for payments made under a self-isolation support scheme. As we have heard, that ensures that these payments are not taken into account for the purposes of computing profits liable to class 4 NICs or for the purposes of class 2 NICs. As I set out on Second Reading and in Committee, we welcome this exemption from national insurance contributions for payments made under a self-isolation support scheme. It is crucial that people who need support to self-isolate receive it, so we welcome any steps that make the system for self-isolation payments more effective and less subject to administrative burden.

The Minister may recall that during the debate in Committee there was a brief discussion about why the exemption for class 2 and class 4 contributions was not implemented earlier. We discussed the comments that the Exchequer Secretary made on that point on Second Reading, and in Committee I asked the Minister to confirm exactly when the Treasury announced, by way of ministerial statement or other appropriate means, that the exemption for national insurance contributions would be extended to class 2 and class 4 contributions for payments made under a self-isolation support scheme. The Minister responded by saying:

“I do not have the date that he describes at hand, and I am happy to write to him on that.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 22.]

I am sure he will forgive me if I have missed his letter on this matter, but my office and I cannot find a record of its having been received, so perhaps he could write to me this week, for the first time or again, to confirm that point.

We also debated clause 11, which widens existing regulation-making powers so that regulations can be made for national insurance to mirror the amendments to the disclosure of tax avoidance schemes procedures—DOTAS—that are included in the Finance Act 2021. As I made clear in earlier debates, we welcome any measures that help HMRC to tackle tax avoidance. In earlier debates I also took the opportunity to draw Ministers’ attention to a point made by the Chartered Institute of Taxation: that it believes there is a hard core of between 20 and 30 promoters of tax avoidance schemes, identified by HMRC, who clearly do not play by the rules. I asked the Minister whether he recognised this number, and, as he may recall, welcomed his confirmation that HMRC recognises the number of 20 to 30 hardcore promoters. He said, however, that he did

“not think that it would be prudent to make an estimate or assessment of what the appropriate number of promoters is or could be.”

It is therefore important that we have a better understanding of what progress we have actually made. The Minister said that

“over the past six years, more than 20 promoters have left the market.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 24.]

However, he did not sign up to a commitment or a target for the coming years. I would welcome him writing to me in the coming days to explain what the number of hardcore promoters was six years ago, so that I can understand whether those who have left the market have been replaced by new promoters.

Finally, to conclude—I am very conscious, Mr Deputy Speaker, of your and Madam Deputy Speaker’s steer about what not to focus on in this debate—it is frustrating to rely only on newspaper briefings to know what is going on. I had hoped, as the Treasury Minister is the first to address the House of Commons since we first heard that the Government might be considering a national insurance rise, that we could have heard the position from him directly today. I leave the thought in his head that we would like to know why the Government’s plan for social care is one that hits hardest low earners, young people and businesses creating new jobs.