Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017 Draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017

Debate between Jane Ellison and Anne Main

Monday 6th March 2017 General Committees

[The Financial Secretary to the Treasury (Jane Ellison)]

I beg to move,

That the Committee has considered the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017.

[The Chair]

With this it will be convenient to consider the draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017.

[Jane Ellison]

It is a pleasure to serve under your chairmanship, Mrs Main.

I am in Committee to introduce the changes that we are making in the two areas covered by the two sets of draft regulations. I will speak first to the changes being made to the disability elements of tax credits, as well as the guardian’s allowance, and then to the draft regulations on the rates, limits and thresholds that govern national insurance contributions. Many of the changes are being made to the rates in line with inflation, as measured by the consumer prices index, which put inflation at 1% in the year to September 2016.

The draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017 provide for an increase in line with inflation to the disability elements of tax credits. That means that we are maintaining the value of support for disabled children in receipt of child tax credits and disabled workers in receipt of working tax credit. I should add that the rise in rates covers the new element for disabled children who were born on or after 6 April this year, regardless of the two-child limit for claims of child tax credit. The regulations also increase the guardian’s allowance in line with inflation. That is to sustain the level of support for children whose parents are absent or deceased.

As hon. Members know, an aim of the Government has been to reform the welfare system over a number of years, not only to bring the country’s public finances under control and to act responsibly to set our public services on a long-term and sustainable path, but to address a point of fundamental fairness for British people by ensuring that work always pays. In that spirit, we set about reforming the welfare system. We looked, for example, at the fact that between 2008 and 2015, the rise in how much people got in child tax credits had far outstripped any rise in what people were earning—an increase of 33% in the rate of the child element of child tax credits, versus only 12% in earnings growth. On a number of occasions, we have spoken about our determination to address the trend of benefits going up faster than salaries. The Welfare Reform and Work Act 2016 therefore legislated to freeze the majority of working-age benefits and tax credits for the following four years.

The disability elements of tax credits and the guardian’s allowance are exempt from that freeze so that we may provide support to those who face the additional costs of disability and care. The exemption should be seen as part of a wider commitment that we have demonstrated in government to support the most vulnerable in our welfare system. Spending on disability benefits has risen by more than £3 billion in real terms since 2010. It will remain higher in each year to 2020 than in 2010.

As the Committee knows, ultimately universal credit will replace the system of tax credits as a much more effective way of providing means-tested support for working-age people who are in or out of work. Universal credit is a significant reform that has at its heart the proposition that work should always pay.

The draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017 will make changes to the rates, limits and thresholds for national insurance contributions and make provision for a Treasury grant to be paid into the national insurance funds if required. I will provide a brief outline of the detail of the changes, which will take effect from 6 April 2017. On class 1 national insurance contributions, the lower earnings limit or the level of earnings at which employees start to gain access to contributory benefits will rise in line with inflation. The primary threshold, which is the level at which employees begin to pay class 1 national insurance at 12%, will also rise with inflation.

The upper earnings limit, which is the level at which employees start to pay class 1 contributions at 2%, is being raised from £827 to £866 a week. That reflects the Government’s commitment to align the limit with the UK’s higher rate income tax threshold, which is being raised from £43,000 to £45,000 for the 2017-18 tax year. I might return to that point about the higher rate income tax threshold in more detail.

As the Chancellor announced in the autumn statement, the levels at which employers and employees start to pay class 1 national insurance contributions are being aligned. To do that, the secondary threshold, where employers start to pay, is being increased from £156 a week to £157 a week. That will be the same as the primary threshold for employees from 6 April 2017. That will make it easier for employers as they will no longer have to operate two similar thresholds at slightly different rates. That was recommended by the Office of Tax Simplification in a report some time ago.

Finally for the employed, the level at which employers of people under 21 and of apprentices under 25 start to pay employer’s contributions will keep pace with the upper earnings limit and rise from £827 to £866 a week. That maintains our commitment to reduce the cost of employing young apprentices and young people. That above-inflation increase, which will maintain alignment with the upper earnings limit, means that employers will pay national insurance only for the highest earning apprentices and under-21-year-olds.

To move on to the self-employed, the level at which they have to pay class 2 contributions will rise with inflation to £6,025 a year. The weekly rate of class 2 contributions will also rise in line with inflation to £2.85. Self-employed people who earn above the lower profits limit also pay class 4 national insurance contributions at 9%. That threshold will rise with inflation.

Above the upper profits limit, the self-employed instead pay 2%. Like the upper earnings limit for the employed, that limit for the self-employed will rise from £43,000 to £45,000 a year. For those making voluntary class 3 contributions, the rate will increase in line with inflation from £14.10 to £14.25 a week.

Let me draw the attention of hon. Members to two reports that have been published alongside the regulations. The report made under section 40 of the Tax Credits Act 2002 contains the numbers of tax credit awards, inquiries, penalties imposed, and prosecutions and convictions for tax credit offences made in tax year 2015-16. The report made under section 41 of the 2002 Act shows the rate of all non-frozen tax credits other than the childcare element in relation to inflation.

Finally, I note that the regulations make provision for a Treasury grant of up to 5% of forecast annual benefit expenditure to be paid into the national insurance fund, if needed, during 2017-18. That is a routine measure that does not impact on the Government’s overall fiscal position. A similar provision will be made in respect of the Northern Ireland national insurance fund.

I hope that that is a useful overview of the changes we are making to bring rates of support and contributions to the Exchequer in line with inflation. I commend to the Committee the draft regulations on tax credits and the guardian’s allowance, as well as those on social security contributions.

Children and Families Bill

Debate between Jane Ellison and Anne Main

Monday 10th February 2014 Commons Chamber

[Jane Ellison]

This is a matter for the Chantler review; it is one of the things we have asked Sir Cyril to look at. I am not going to second guess the outcome of his review.

[Mrs Anne Main (St Albans) (Con)]

Will the Minister clarify a point that she has just made? I understood, perhaps wrongly, that she said that the Government were getting these powers into their armoury in case they needed to be used. Are the Government putting these measures into legislation for potential future use, rather than because there is evidence of a need for them now?

[Jane Ellison]

This question came up in the other place, and we have always made it clear that we are seeking the power to make regulations in the event that the Government should decide to proceed with standardised packaging, having received the Chantler review and considered everything in the round. Making the decision on those powers now would enable us to proceed apace at that point. I hope that that clarifies the matter for my hon. Friend.

As I was saying, the Government would not necessarily use all the powers I have just described, and if we proceed, we will need to decide which aspects would be included in any regulations. The House would have the chance to comment further on the matter, through the affirmative resolution procedure, were the Government to decide to go ahead. It is prudent to take a comprehensive approach now, however, so that we can be prepared for the future.

--- Later in debate ---

[Jane Ellison]

That is a good point, to which I will return, if my right hon. Friend will allow me. I will consider that and we will have an answer for him.

[Mrs Main]

How does this affect 17-year-olds who have already taken up smoking and wish to try to stop through using e-cigarettes? How would they manage to buy this product?

[Jane Ellison]

My understanding is that if a nicotine-containing product is licensed for medicinal use—licensed as a quit-smoking tool—it can already be prescribed by doctors. Some e-cigarette manufacturers have already indicated that in order to make a medicinal claim about their product’s ability to help people quit, they will seek to use the medicines regulations. If such a product becomes licensed as a medicine, it will be able to be prescribed as a smoking cessation aid in the same way that other nicotine-containing products can be. I hope that answer is helpful.

On proxy purchasing, we believe we must take action to address both the supply of and demand for tobacco products among young people if we are to reduce the uptake of smoking. Many retailers over the years have felt a little left alone to bear the burden of enforcement in this area, so I welcome both the work of responsible retailers to ensure that tobacco is not sold to people under the age of 18, and the support provided to them by retailer bodies such as the Association of Convenience Stores. There is support in both Houses for creating a proxy purchase offence for tobacco, and the Government have carefully reflected on the arguments that have been made. Retailers feel it is unfair that it is an offence for retailers to sell cigarettes to children and young people, yet there is no offence of proxy purchasing on behalf of children and young people. Retailers also feel it is inconsistent to have a proxy purchase offence for alcohol but not for tobacco. The Government want to continue to tackle the access that young people have to tobacco, which is why we have proposed this amendment.

The provisions would make it an offence for an adult to buy, or attempt to buy, tobacco for someone under the age of 18. That will be enforced by local authority trading standards officers, who will be able to issue a fixed penalty notice if they believe an offence has been committed, rather than taking prosecution action in the first instance. Local authorities will not be required to carry out regular programmes of enforcement in the way they have to on age of sale of tobacco, so we do not believe that this offence will bring into place any significant new regulatory burdens. Local authorities know their communities better than anyone and will know how best to address their public health priorities. We have devolved wide public health responsibilities and ring-fenced budgets to local authorities, and this amendment allows them to take targeted enforcement action on proxy purchasing where they consider it is needed.

The arguments relating to effective enforcement have been well rehearsed in previous debates. Experience in Scotland suggests that we should not to expect a vast number of convictions, and we should not measure the success of this new offence by the number of prosecutions or fixed penalties issued. I expect, however, that the new offence will generate worthwhile deterrent effects. As I said, in a new public health landscape where more powers are devolved to directors of public health there may be opportunities to explore work where there is a particular local problem.

Finally, I will address the issue of smoking in private vehicles carrying children. In another place an amendment was agreed to enable the Government to make regulations to make it

“an offence for any person who drives a private vehicle to fail to prevent smoking in the vehicle when a child or children are present”.

The amendment we are debating today was drawn up by the Government, with the support of the peers who tabled the initial amendment, to deliver the intention of the amendment in a legally workable way. We have a responsibility to be sure that any amendment that could make its way on to the statute book should work in practice. The technical amendment was agreed on Third Reading in another place.

Health Care (London)

Debate between Jane Ellison and Anne Main

Wednesday 8th January 2014 Westminster Hall

[Jane Ellison]

Forgive me, but I really will not have a chance to respond to any of the points made if I give way. I will catch up with the hon. Lady afterwards if there are points that she specifically wants to discuss.

All the reconfigurations must focus on delivering modern health care, better patient outcomes and services as close to home as possible, but, most importantly, they must focus on saving lives and improving quality of life. Those service changes are best led by clinicians, with all of us getting involved and engaging with the process, as we must do. That is what we all want for our constituents, and there are different ways to achieve that.

Change is inevitable, as most, but not all, hon. Members have acknowledged. We have debated questions such as the changes to stroke services in London, which many campaigners predicted would have dire and dreadful outcomes. In fact, the opposite has been true, and London clinicians believe that hundreds of our constituents’ lives have been saved by the concentration of excellence in certain centres. We must be realistic about the fact that reconfiguration can bring great health benefits, as long as it meets the important tests set out by the Secretary of State, and is clinically led.

The health service has to respond to growing demand. Much of the debate has focused on the long-term challenges to the health service in London and across the country. The Government are trying to respond to those huge long-term pressures. We are looking at GP opening hours and at access. That could not be a bigger issue in London, which has a highly diverse and highly mobile population in a 24-hour city. People need to be able to access health care at a time that suits their work patterns and lifestyle, and we are pushing for changes to contracts in that area. There will be named GPs for over-75s. We are looking at the integration of social care and public health. We know that there are big challenges around that, but a big project is under way to try to tackle it.

Ring-fenced public health budgets will empower local authorities to do the very thing that many hon. Members have drawn our attention to, which is to look at the needs of local communities and respond to them at the most local level. We do not want to take a “Whitehall knows best” approach; we want to tell local authorities, “We have ring-fenced your local public health budget so that you can look at the needs of your local population and work with health and wellbeing boards and clinical commissioning groups to devise services that help people to live longer and healthier lives without the need to resort to acute services.”

There has not been much recognition of the need for the changes made to public health budgets, but of all the measures raised in the debate, those changes have some of the most exciting potential to tackle the challenges that we face.

I have touched on health and wellbeing boards. The challenge around Newham GPs would be ideal for discussion at a health and wellbeing board, where all the key people are present. It is a big challenge, and one of the first questions I asked as a Health Minister is why we struggled so badly to get GPs in our most deprived areas. There are varying answers to that, but it is a problem across the country.

The health and wellbeing board is exactly the right forum for discussion because the right people are around the table. Tackling health inequality is now built into statute through the Health and Social Care Act 2012, which must be given due attention in all parts of the health service. The Darzi-led London Health Commission will be interesting. I spoke to Lord Darzi about it just before Christmas to improve my understanding of its objectives. As a Minister with responsibility for public health and as a London MP, I will be looking closely at the commission’s outcomes and I will be keen to work with people on that. It is a big opportunity.

To touch on the point raised by my hon. Friend the Member for Cities of London and Westminster (Mark Field), the formula does not currently reflect non-resident population or the homeless, but that is something that the Advisory Committee on Resource Allocation and NHS England continue to consider. I will ensure that I draw my hon. Friend’s concerns to their attention and that those are fed into the ongoing process of looking at formulas.

For the first time, the formulas for CCG patients and public health allocations take into account health inequalities, and they look at GP populations rather than census-based populations. The formulas are also designed to be more locally sensitive. As the hon. Member for Westminster North and I know particularly well, in a city such as London areas that appear to be quite affluent can contain pockets of tremendous deprivation. The new formula allows for that by enabling consideration of sub-areas and the real health inequalities that they suffer. I hope that hon. Members feel some reassurance about that. We keep the matter under close watch.

Several detailed concerns were raised by the hon. Member for Lewisham East (Heidi Alexander) about Lewisham, the south London reconfiguration, maternity services and accommodation. The shadow Minister, the hon. Member for Denton and Reddish (Andrew Gwynne) referred to clause 118. I will ensure that I draw his concerns to the attention of the Minister who is leading on that Bill. No doubt that point will be responded to when the Bill is brought before the House. The Court of Appeal overturned the decision to make service change in Lewisham, and we respect that. The Secretary of State has put that on the record.

Several points were raised about the north-west London reconfiguration. That was debated in this Chamber on 15 October, after which a letter was sent by the local NHS to the hon. Member for Westminster North. If other hon. Members have not seen that letter and would find it helpful to, I am happy to put it in the Library. I note the ongoing concerns expressed by the hon. Member for Hammersmith (Mr Slaughter) about the reconfiguration, and I will relay to the Secretary of State the detailed points that he has made and his desire for a meeting.

Other hon. Members have made comments about the same reconfiguration. For all the criticism of the plans and the analysis, I note that the shadow Minister did not commit his party to changing any of the reconfigurations or to changing NHS funding levels. If I may say so, his speech was long on analysis and short on commitment.

I conclude by saying that the issues raised today are important to all of us as London MPs. There are some big long-term challenges and the Government are trying to respond to them in the best interests of all our constituents.

[Mrs Anne Main (in the Chair)]

Before we commence the debate on Scotch whisky excise duty, I should say that we are expecting a vote—hence my glances at the Annunciator screen. Should that happen, I will call for the sitting to be suspended until the vote has taken place.