National Insurance Contributions Bill

John McDonnell Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab) [V]]

I want to focus my remarks on the parts of the Bill that relate to freeports, as others have done. During the debate on the Finance Bill, I highlighted the corporate tax reliefs available and the lack of any projections of the impact on the Exchequer, or of any impact assessments on the areas where freeports will be located and on their neighbouring areas. I might be a bit old-fashioned, but I still believe in evidence-based policy making. Ministers seem to have come to Parliament asking MPs to sign a blank cheque and—apologies for the mixed metaphor—to take a leap in the dark on a policy that, in my experience, failed to deliver in the 1980s, when I was in local government, and in the 2010s, when I was an MP in Parliament.

I asked the Financial Secretary to the Treasury, the right hon. Member for Hereford and South Herefordshire (Jesse Norman), what estimate the Government had made of the cost to the Exchequer. The Minister could not answer, but insisted:

“The National Insurance contribution relief will be important in supporting the Government’s objectives for the Freeports programme, which includes regeneration through job creation.”

Given that the Government’s objective, as stated by the Financial Secretary, is job creation, I then asked him how many jobs would be created as a result of the national insurance contributions relief contained in this Bill. I received the answer to my written parliamentary question today, and it is a classic—worth framing. It states:

“The National Insurance contribution relief will be key in supporting the Government’s objectives for the Freeports programme, which includes regeneration through job creation. The Freeports tax sites have not yet been confirmed and so the Government is currently unable to give an accurate estimate of the number of employees that benefit in 2022-23 as this will depend on how many employers use the relief and will vary depending on a number of circumstances, including the location of the Freeport tax site.

The Government will publish an updated Tax Information and Impact Note (TIIN), when further information is available following confirmation of the tax sites.”

Can the Minister estimate when that will be published? Can he commit to publishing it during the passage of this Bill? I do believe in evidence-based policy making, and in recent months I have seen not just evidence-light policy making; we are now in a bizarre situation of non-existent-evidence-based policy making.

I just hope that the Government have learnt something from the failure of this policy under George Osborne. I remind the Minister that in May 2014 the Public Accounts Committee described the impact of George Osborne’s enterprise zones as “particularly underwhelming” and criticised the Government for “over optimistic” claims about job creation. The job numbers failed to materialise. The Centre for Cities, the think-tank, found that the jobs created were “overwhelmingly low skilled” and therefore low paid.

Despite their refusal to countenance in the Finance Bill the proposals that I put forward, just to get the information, I hope that the Government have reflected and will commit to publishing data annually on the impact of freeports on local and regional job creation; on tax revenues, locally and nationally; and on neighbouring economies. They failed to countenance that in the Finance Bill, but they could in this Bill.

This Bill is also a missed opportunity. The Government could have made provision for increasing the national insurance contributions paid by the highest earners. Currently, higher earners pay only 2% above the upper earnings limit. Raising that by just a small percentage would raise billions from those with the broadest shoulders. Instead, the Government are imposing a huge stealth tax on millions of low-income workers by freezing tax thresholds. They have imposed a pay cap or pay freeze on millions of public sector workers. In just a few months, shamefully, the Government are proposing to cut the incomes of some of the poorest families in the country by £20 a week. I have heard a lot of the Government’s claims to be levelling up. Instead, they seem to be keeping people down.