Draft Social Security (Contributions) (Amendment No. 2) Regulations 2022

James Murray Excerpts

Monday 28th March 2022 General Committees

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

Thank you, Mr Hosie, for the opportunity to respond on behalf of the Opposition as we consider delegated legislation relating to the rate of national insurance. As we have heard from the Minister, the purpose of these regulations is to amend existing regulations that relate to the reduced rate of primary class 1 national insurance contributions payable by certain married women and widows. The intention of these regulations is to increase that rate, in line with the wider increase to national insurance introduced by the Health and Social Care Levy Act 2021.

There is a long history of debates about the operation and impact of the married women’s reduced rate. These regulations, however, affect only its rate in the year 2022-23, raising this by 1.25 percentage points, from 5.85% to 7.1%. I will stay within the scope of these regulations by focusing on its rate and the impact that this increase could have.

Since the Government decided to increase national insurance by 1.25 percentage points last September, we have repeatedly pressed the Chancellor to think again. We did so most recently at the spring statement and during consideration of the National Insurance Contributions (Increase of Thresholds) Bill last week. We have urged the Government time and again to accept that their national insurance hike is the worst possible tax rise at the worst possible time—it is due to start operating just days after energy bills will soar by an average of over £600, and with inflation already at its highest in decades. We have repeatedly urged the Chancellor and his team to think again and ask those with the broadest shoulders to contribute more, rather than forcing a tax hike on working people. As we know, the Government have resolutely refused to change course, and next week tax will rise for 27 million working people.

Today’s regulations are a final sting in the tail for that tax rise. They will apply the rise in national insurance to what is likely to be a very small number of women, but a group who will see a disproportionately high tax rise. We know that the national insurance tax rise is 1.25 percentage points. For workers paying the standard rate of national insurance, which is currently 12%, that is a rise of just over 10%. For those paying the married women’s reduced rate of 5.85%, however, the increase that we are debating today is, in fact, a tax rise of more than 20%.

Yet in the notes accompanying these regulations, the Government have not set out any detail of the impact that this tax rise will have on the specific group of women they believe will be affected. The notes rely instead on a general reference to the tax information and impact note published alongside the Health and Social Care Levy Bill. I would therefore like to ask the Minister—I am repeating the questions put forward by my hon. Friends—to set out now, or in the coming weeks by way of written reply, further detail on who will be affected by the tax rise that we are debating today, and how.

According to an article published in the Financial Times in 2019, a freedom of information request elicited information from HMRC to confirm that there were still around 200 women in the UK paying the reduced rate at that time. It therefore seems certain that HMRC has data on how many women are still paying that rate today.

I would also like the Minister to respond with further information giving more detail about this group of women affected, from HMRC or any other appropriate source, including: their average earnings, the kinds of jobs they are doing, and details of their wealth or level of deprivation. That is important information to know, as we are being asked to approve a tax increase of 20% on this group of older married women or widows. We know from Office for National Statistics research that widows are among those people in society most likely to have the poorest personal wellbeing.

We cannot support today’s regulations. We have opposed the increase in national insurance across the board at every opportunity since its introduction. As I said earlier, today’s regulations feel like the final sting in the tail—having raised the national insurance rate by 10% for working people across the country, the Chancellor’s team is today raising it by over 20% for a small group of older women and widows. The national insurance hike continues to be the worst possible tax rise at the worst possible time, and we will be opposing these regulations today.