Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2022 Draft Tax Credits, Child Benefits and Guardians Allowance Up-rating Regulations 2022

James Murray Excerpts

Tuesday 22nd February 2022 General Committees

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

I am grateful for the opportunity to respond on behalf of the Opposition to the two statutory instruments. The first statutory instrument gives effect to the annual re-rating of various national insurance contribution rates, limits, and thresholds for the purposes of calculating liabilities for the coming tax year. The regulations increase the primary threshold above which people start to pay NICs by the rate of CPI in September 2021, while freezing the upper earnings limit in line with the income tax higher rate threshold also being frozen. We support the increase to the primary threshold, as any help for lower paid workers is particularly needed at the moment, given lower wage growth and the highest inflation in decades.

However, while the primary threshold is being increased by the draft regulations, the explanatory notes remind us that the Government are increasing employees’ national insurance contributions by 1.25% for tax year 2022-23, ahead of an equivalent charge being introduced by way of the health and social care levy. I would be grateful if the Minister could tell me the combined effect on the tax liability of someone on average earnings of both the increase to the primary threshold and the increase in employees’ national insurance contributions in 2022-23.

The second SI before us sets the annual rates of working tax credit and child tax credit and the weekly rates of child benefit and guardian’s allowance for the coming financial year. We support those increases as, again, any help for people who are struggling in the face of soaring energy bills and inflation is particularly needed at this time. Although the explanatory notes do not mention it, we know that the working tax credit basic element was cut last year, along with universal credit, by £20 a week. I would be grateful if the Minister could confirm what the level of the working tax credit basic element will be in April 2022 compared with the same time two years previously.

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[Lucy Frazer]

In response to the hon. Member for Ealing North, in my opening speech I set out in some detail how the thresholds will increase for those starting to pay NICs. I am happy to combine information on those thresholds with that on the social care levy in writing to the hon. Gentleman.

[James Murray]

On a point of clarification, I was asking about the increase in the primary threshold and the increase in NICs for 2022-23. As the Minister will know, the health and social care levy is not due to come in for another year.

[Lucy Frazer]

In my introductory remarks, I set out how each threshold will be increased, but I am happy to set that out in writing to him. He also spoke about the steps we are taking to protect the most vulnerable. He will know that, last September, we put in place a support package of half a billion pounds to support the most vulnerable. He will have heard the Chancellor’s statement only last month about the steps we are taking in response to the energy price increases. He will also be aware of the £400 billion support provided by the Chancellor in the past two years.

The SIs before us are important to ensure that we continue to uprate the thresholds.

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[Lucy Frazer]

I value the hon. Gentleman’s contribution to the debate. He has obviously followed the issue very closely so he will know of the steps the Chancellor has taken to ensure that we combat fraud not only in relation to the coronavirus schemes but more broadly. The hon. Gentleman will have heard the Chancellor talk about the coronavirus fraud taskforce that has been set up—more than 1,000 people are now engaged to tackle fraud and the taskforce has already recovered half a billion pounds and is set to recover a further billion.

[James Murray]

May I again ask the Minister to respond to my second point about the second SI before the Committee and confirm what the level of the working tax credit basic element will be in April 2022 compared with the same time two years previously?

[Lucy Frazer]

As I said earlier, I am happy to write to him on the subject.