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

Jonathan Reynolds Excerpts

Monday 6th March 2017 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to see you in the Chair, Mrs Main.

As the Minister has outlined, the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017 enact the annual re-rating of various national insurance contribution rates, limits and thresholds and allow for the payment of a Treasury grant not exceeding 5% of the estimated benefit expenditure for the coming tax year into the national insurance fund. The draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017 provide for increases in certain tax credit rates and an increase in the weekly rate of guardian’s allowance—a small benefit paid to people looking after a child who is effectively an orphan—from April.

Labour is acutely aware that average real hourly pay remains 10% below its level before the financial crisis and that rising inflation is devaluing people’s wages further. Indeed, analysis by the Institute for Fiscal Studies that came out last week shows that low-income working families with children are suffering most and that, by the end of the Parliament, average households will be £5,000 a year worse off than they might have otherwise expected. We will therefore not oppose any rise, however small, in vital support for people who are struggling to get by. However, we would not want that to be mistaken for any type of endorsement of the Government’s overall insistence on making the majority of people pay for tax cuts for the more affluent while continuing to pursue cuts to in-work benefits.

Although the Government are uprating some benefits—though not by very much—they are excluding others entirely. As a result of the benefit freeze for benefits and tax credits administered by Her Majesty’s Revenue and Customs, child benefit is frozen for four years; the basic 30-hour, second adult and lone parent elements of working tax credit are frozen for four years; and the individual per child element of child tax credit is frozen for four years. How can that be right? If the economy is growing, it is surely only just that the benefits are shared fairly. Labour is committed to ensuring that the lowest-paid in our society are not further burdened by having to subsidise tax cuts elsewhere that arguably are not needed.

We will not divide the Committee, but I have placed on the record our objections to the Government’s strategy, as of course we will in response to the Budget on Wednesday.