National Insurance Contributions Bill

Jim Shannon Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[Fay Jones (Brecon and Radnorshire) (Con)]

I am not used to being called so early in the batting order, Madam Deputy Speaker. I am very grateful.

I made my maiden speech on a small but mighty Bill, and this is another. I very much welcome the contents of the Bill. These small but meaningful changes will make a real difference to many of my constituents.

There are two elements of the Bill on which I would like to focus. The first is what it would do for freeports. I was elected in 2019 on a manifesto that promised to create up to 10 freeports around the UK. They are a cornerstone of the Government’s levelling-up agenda, which recognises that talent is spread evenly across the country but opportunity is not. As someone who represents an often-forgotten part of the world, I am determined to see that agenda through.

We know that a freeport is an area within a country’s geographic border but outside its customs area, but there is no one model for freeports. That is their strength: they can be implemented in a number of ways.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady share my interest in and my demand for having a freeport in Northern Ireland too? I understand that this legislation does not necessarily help that happen, but does she support us in our calls to have a freeport in Northern Ireland?

[Fay Jones]

As a Member of the Northern Ireland Affairs Committee, I certainly welcome that suggestion. I was greatly reassured by the Minister’s reference to that in his opening speech, and I hope that further details will come forward as soon as possible.

Freeports can be implemented in a number of ways. For example, manufacturing businesses operating in a freeport can benefit from tariff inversion, whereby tariffs from a finished products are lower than those on its component parts. Further tax and non-tax incentives, such as lower rates for corporation or even employment tax, which we are discussing this afternoon, as well as simplified customs processes can also be offered.

Although a freeport is a fairly new buzzword in our political discourse, it is important to remember that this is not a new idea. The UK used to operate a number of freeports. In fact, prior to the creation of the Welsh Assembly, now the Senedd, a freeport even operated in Cardiff.

Back in 2016, the then up-and-coming Member for Richmond (Yorks) (Rishi Sunak), now my right hon. Friend the Chancellor of the Exchequer, argued that freeports could turbocharge the UK’s post-Brexit economy. Free of the customs union and state aid rules, he argued that tens of thousands of jobs could be created with a successful freeports programme. He was right then, and he is right now.

In 2018, my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) highlighted in a Westminster Hall debate just how positive a freeport in the UK could be. He cited the example of the Jebel Ali Free Zone in the United Arab Emirates and explained how it has transformed Dubai. It now hosts 7,000 global companies, employs 145,000 people and accounts for around 40% of the UAE’s total direct foreign investment. That is a dramatic example, but there is no reason to believe that freeports in the UK cannot be just as successful as those around the world, perhaps even more so given our strong links with the United States, Europe and the Commonwealth.

I warmly welcome clause 1 of the Bill, which introduces a new zero-rate national insurance contribution for employers taking on employees in a freeport. The Government have already outlined the 10 areas of the UK where freeports will be created. Eight sites in England have been successful, and the Government have committed to creating one in Wales. I understand that the First Minister of Wales has expressed reservations and an unwillingness to work with the UK Government on a Welsh freeport, so may I urge the Minister, my close neighbour and friend across the border, who knows Wales extremely well, to press full steam ahead and work with his colleague the Secretary of State for Wales in setting up a Welsh freeport.

A rising tide lifts all boats—to continue with the maritime theme—and a freeport in Wales will create jobs and growth in all parts of Wales. That is especially important for me in mid-Wales, because, throughout the recent Senedd election, constituents told me that all they want is for their kids to have a future in Brecon and Radnorshire. They want them not to leave at 18 to go to university, only to come back 30 years later when they can afford to buy a home. They want them to have good jobs when they leave education. This is not part of the Welsh Government’s current plan for Mid Wales. We are forgotten about, but I am determined that that will not be the case. My constituents are determined that we will not be ignored and will not stand still.

The other clause that I want to focus on is clause 6, which makes a small but important change for our military community—employers who hire an armed forces veteran immediately after they leave the forces will be able to claim a new zero-rate national insurance contribution. Employers will be able to claim the relief from April ‘22, and transitional arrangements will allow a retrospective claim for the 2021-22 tax year. This is extremely close to my heart, and I declare an interest in that my partner is a serving member of the armed forces.

Brecon is a proud garrison town and, like the Minister, we have a number of military sites and personnel of whom we are very proud. The barracks and the infantry battle school, Sennybridge training area, are important military assets and I am fiercely proud of them. Although my campaign to save Brecon barracks from closure is a persistent thorn in the side of the Ministry of Defence, our support for veterans must go beyond maintaining high-quality sites and shiny silverware in the mess. We must look at a suite of policy instruments and make swift but sweeping changes to improve things for veterans once they leave active service.

The changes outlined in the Bill could save an employer, who employs a veteran, up to £5,500. This makes a veteran even more attractive to an employer, and the Minister should be commended for pursuing this, especially as we remember that our veterans are getting younger. The House of Commons Library estimates that the percentage of veterans of working age is projected to increase from 37% at the moment to 44% in 2028.

I am particularly pleased that the Bill covers veterans right across the United Kingdom equally. All four nations need to be comprehensive in the way that we look after our veterans. Wales is currently the only part of the United Kingdom not to have a dedicated veterans commissioner—someone on the side of veterans who can challenge local authorities and health boards to ensure that veterans can access the services that they need. Earlier this year, I called on the UK Government to address this imbalance and create a veterans commissioner for Wales, and I am extremely grateful to both the Secretary of State for Wales and the former Minister for veterans’ affairs, my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), for the work that led to the announcement on St David’s Day that they were actively considering creating such a post, but this needs to be done in co-operation with the Welsh Government, so that the postholder has oversight to challenge Welsh health and education services. May I take this opportunity to urge both sides to come together and create this role so that Welsh veterans can benefit from the protection that their colleagues have in England?

I am grateful for the opportunity to speak on this small, but important Bill and wish it swift passage through the House.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

Thank you, Madam Deputy Speaker. When you are in the Chair, I always seem to get called earlier. I am not sure why that is, but thank you very much.

It is a pleasure to speak in this debate. I add my support for the Government proposals. A lot of hours have gone into them, so I will make some comments about them.

Broadly, the national insurance contributions that are raised in a year look after the benefits that are used in that year. They are therefore very important. We deal with an enormous number of people every day in our offices who have benefits issues, and we know that our contributions and everybody’s contributions make a difference. I have stated numerous times in this House over recent months that now is the time to ensure that the investments we have made through the furlough scheme and the coronavirus grants system to secure business pays off by having businesses repay their debt through tax and national insurance over many years of success.

The end must be clear: sustainable and expanding small and medium businesses. In my constituency and, I believe, in many other constituencies, small and medium businesses contribute to everyday life through employment and by creating the prosperity we wish to see. I want to see them encouraged on every possible occasion.

The Bill is one cog in that mechanism of growth, regrowth and enhanced growth. I welcome that the Government are completely committed to that. My attention was immediately drawn to a few components of the Bill. Of course, time prevents me from delving into them all, but I first highlight the proposed new zero rate of secondary class 1 national insurance contributions for employers who hire an armed forces veteran during their first year of civilian employment after leaving the armed forces. Employers will be able to claim relief on the earnings of an eligible employee up to the NICs upper secondary threshold from April 2022, and transitional arrangements will allow retrospective claims for the 2021-22 tax year. Like everyone, I really welcome that. I am pleased as punch to see it in the Bill. There is a clear commitment to our veterans, and here is one way of showing it.

I say gently to the Minister that many veterans are missed by the charities. I know some of them in Northern Ireland, and I deal with them regularly in my constituency. They seem to fall under the radar of the charitable organisations. I want to ensure that when the Treasury works to make the proposal happen, there is clear help, co-operation and co-ordination with the veterans’ charities, because they identify the people and then this system can help those people get the jobs. It is therefore logical to me that they work together. If they work together closely, they can bring the real benefit that I wish to see.

This is a fantastic step, and I thank the Minister and the Government for it. It is welcome that we will remember veterans in actions, not simply in prose. I congratulate the Government on proposing these steps to make it more attractive for a business to put its faith in a serving soldier, who may well be acclimatising to civilian life and the different burdens it entails. I have regularly met soldiers who come out of the forces after 20 or 25 years, or even fewer, and who find civilian life extremely difficult. Two weeks ago, I went to a horse charity, People for Horses, where June Burgess helps people who have served in the military or in the police or prison service in Northern Ireland to deal with their post-traumatic stress disorder through contact with horses. I believe that we can do the same thing here in a really important way.

The point that this provision flags up for this humble man is the fact that the Government have managed to extend it to the whole of the United Kingdom of Great Britain and Northern Ireland, and rightly so. I am truly grateful for that, because every regiment in our armed forces is made up of men and women from every corner of this great United Kingdom. That is right and proper, yet it does highlight that other armed forces promises do not similarly extend to each part of the UK. The ungenerous might highlight that such failings have perhaps made President Macron think it acceptable to comment that Northern Ireland is not part of this great nation; wow, does he need a lesson in geography. A mixed message may be seen by those who wish to push their own narrative, but I commend the Prime Minister and the Foreign Secretary for making it clear to President Macron that Northern Ireland is an integral part of the United Kingdom of Great Britain and Northern Ireland. For that reason, I again wish my Government to make abundantly clear the absolutely bedrock foundation that, in every aspect of life, without a successful border poll the six counties of Northern Ireland were, are and will be British.

This legislation regarding troops is for every serviceman and woman, regardless of their accent. Whether we have my very broad Northern Ireland accent, the Scots accent of my colleague on my right, the hon. Member for East Lothian (Kenny MacAskill), or a Welsh accent, we are all going to qualify for this, which is good.

We also welcome the Minister’s commitment to freeports. From reading the Library notes and listening to the Minister beforehand, it is clear that the commitment is not only to freeports here in the mainland but to freeports in Northern Ireland as well. That is really good news and I welcome it. There is some work for the Northern Ireland Assembly to do; there seems to be work for the Northern Ireland Assembly to do every day, and that is the way it should be. In this case it has clear job to do, and I want to make sure that that happens and that we all gain advantage.

I also noted that some of the correspondence on freeports in the notes referred to ensuring the incentives are not exploited for tax avoidance purposes. The Government have taken on the task of making those who pay tax accountable in their own country, as they should be, and I want to make sure of that and therefore ask the Minister to comment on it in summing up. Some correspondents pointed out that freeports had gained a negative reputation for enabling tax evasion through the storage of high-value goods, but the Government have proposed the creation of a tax site within any UK freeport to support and facilitate a robust system of monitoring and ensure that the available reliefs are claimed legitimately. I therefore think the Government have addressed this, but want to make sure that it is on the record. I also ask the Minister to indicate what discussions the Government have had with the Northern Ireland Assembly to ensure that the freeports issue continues to move forward for Northern Ireland.

I welcome as well the move to address tax avoidance in the form of a provision to allow changes to the disclosure of tax avoidance schemes regime as it applies to national insurance contribution avoidance schemes. I am informed that these changes also mirror amendments to the disclosure of tax avoidance schemes regime as it applies to other tax avoidance schemes made by provisions included in the Finance Act 2021.

When I speak to the ordinary businessman in the street—the self-employed trader, or the employer of five members of staff in a small shop—they talk about the fact that they cannot afford to hire a high-flying accountant who can find and use loopholes, and they watch on with increasing frustration as the big companies that could afford to pay any contributions get away with not paying. I believe that the Government are again setting the marker for those companies by ensuring they are accountable; they should pay tax in their own country and make sure that they pay the right amount as well.

Our businesses need a level playing field and help, and it is my hope that this Bill will enable those avoiding and evading tax to be brought into line. It is my hope that this Bill helps to ensure that those who can pay should pay and do pay. If we make that happen, we will be going in the right direction. If we all do the right thing—us here and those outside—we will all benefit.