National Insurance Contributions (Reduction in Rates) (No.2) Bill

Kirsty Blackman Excerpts

2nd reading
Wednesday 13th March 2024 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give a Second Reading to the National Insurance Contributions (Reduction in Rates) (No. 2) Bill because, while acknowledging that the measures in the Bill reduce the National Insurance Contributions (NIC) burden on some employees, it considers the Government should prioritise investment in public services spending over yet more cuts in spending which would be the result of lowering tax revenue by reducing NIC rates.”

The amendment stands in the name of my group leader, my hon. Friend the Member for Aberdeen South (Stephen Flynn); my colleague on the Front Bench, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry); and myself and other SNP Members.

The Bill is the wrong measure at the wrong time. We are quite comfortable having clear water between us and the Conservatives. When it comes to tax, they have a different ethos and ideology from ours. What is distressing, though, is the fact that the Labour party seems wedded to some of the fiscal rules and public sector cuts that the Tories have introduced. In fact, it is difficult to see a significant difference between the two parties at this point, whereas SNP Members are making a clear statement that we do not agree with this measure. We do not think it is the right time to introduce it, and we think the focus should be on public services.

The national insurance cuts will have a disproportionately positive impact on higher earners and a disproportionately negative impact on lower earners. Lower earners, higher earners, middle earners and non-earners are all able to benefit from access to universal public services. They are able to benefit from accessing an NHS that is free at the point of use—in Scotland, that is, not in England, where people have to pay prescription charges. They are able to benefit from their children being able to go to schools and get educated, from colleges, from mental health services, and from potholes being filled and bins being emptied. Everybody can benefit from all of those things; those public services are universal. Cuts in public services and continued austerity mean that the lowest earners and those who are not earning lose out the most, because those public services mean more to them than they do to people who are earning £120,000 a year. There have already been 300,000 excess deaths in the UK from austerity—this cannot continue.

To give an illustration, the national insurance cut means that a band 2 NHS staff member will pay £343 less in national insurance next year than they did this year. For an MP, the national insurance cut is worth £1,320, nearly four times what that NHS staff member will get. For someone earning £11.44 an hour and working 20 hours a week, the national insurance cut means nothing—they do not benefit from that cut at all. It is almost the least progressive measure that the Government could have taken at this point. It also does not impact pensioners: they do not pay national insurance, so none of them will gain from this cut.

In Scotland, we are doing what we can to protect people’s incomes through a council tax freeze, whereas the UK Government are allowing a council tax hike. Someone who lives in Lancashire will pay £79 extra on their council tax next year; someone who lives in North Tyneside will pay £92.37 extra. That is not to mention the water rates, which are significantly different in England from what they are in Scotland.

It is not just us in the SNP who are saying this. I want to contribute several quotes from various organisations about the Chancellor’s budget, the ruin in public services that will result from it, and its disproportionate impact. The Joseph Rowntree Foundation said:

“Last year nearly 4 million people in the UK experienced destitution, including 1 million children. The number of people experiencing destitution has more than doubled in the last 5 years. A 2p cut in National Insurance will not help those who need it the most”.

Miatta Fahnbulleh, former chief executive of the New Economics Foundation, said:

“Key take away from #Budget24. Household incomes won’t recover to pre-pandemic levels until 2025. An entire Parliament where incomes will not have grown. That’s @RishiSunak’s record right there.”

Harry Quilter-Pinner, director of research and engagement at the Institute for Public Policy Research, said that this was a

“‘slash and crash’ budget that prioritised tax cuts now at the expense of crashing public services and investment in the future. This isn’t economically desirable, fiscally credible nor politically popular.”

Rachael Henry, head of advocacy and policy at Tax Justice UK, said:

“We have the sugar rush of tax cuts now that will be paid for by deep public spending cuts to come.”

Andrew Harrop, general secretary of the Fabian Society, said:

“High earning households will be up to £1,500 a year better off after two rounds of National Insurance cuts and the wealthy will see sizeable tax cuts on profits from property sales and ISA investments. Meanwhile low earners gain little or nothing from the tax changes, and many of the poorest will actually see their incomes drop with the scrapping of cost of living payments.”

Chris Thomas from the IPPR said:

“As of Autumn statement 2022, the government expected NHS revenue spending to be £180.4bn in 2024-5 and capital to be £12.6bn. For all the talk of NHS investment by CX just now, the Spring Budget 2024 expects equivalent figures to be £179.6 and £12.6bn”.

That is less—less money for the NHS than was announced in the autumn statement.

Victoria Benson, the chief executive of Gingerbread, said that

“we urgently need to see an uplift to Universal Credit to protect those on low incomes who have been struggling for too long”.

Alison Garnham, the chief executive of the Child Poverty Action Group, said:

“This was a Budget all but blind to buckling family budgets and broken public services and will leave a legacy of crumbling classrooms, cold homes, and empty tummies.”

Lastly, and most damningly, the Samaritans said:

“The Government has chosen to waste another opportunity to save lives today.”

In Scotland, we prioritise public services. In the SNP, we prioritise public services. Per 1,000 people in Scotland, we have 8.4 nurses or midwives, while England has only 6.3 nurses or midwives. Our nurses are also paid more than they would earn in England in an equivalent band, and those earning under £28,000 a year are taxed less than they would be if they lived in England. In NHS Scotland, we have 28.9 wholetime equivalent staff per 1,000 of the population, but NHS England has only 22.9 staff. We have put in place the baby box, which is a universal gift to new parents to provide extra support for their children. We have the Scottish child payment, which has kept 100,000 kids out of poverty. We have free buses for under-22s, eligible disabled people and the over-60s, and we have P1-5 free school meals.

What happened to those who are just about managing? This Government have done amazing things for them: they have managed to massively increase the number of people who are just about managing; and they have managed to tip so many people from just about managing into absolutely not managing and living in desperation. People want their bins to be collected, their potholes to be filled, their children to be educated and their NHS to be available when they need it. They want all these services to be available to them. The cuts that the Tories are making to public services will damage even further the society we are living in. People will lose the very little support measures that they have left, and I absolutely condemn this decision and this Bill.

--- Later in debate ---

[Tulip Siddiq]

I will not take any lectures from a party that puts oil and gas companies ahead of working people. If the hon. Member wants to change his policy on oil and gas companies having priority over working people, he can intervene again, but somehow I do not think that it will change.

The last time the Conservatives implemented a proposal like this, just 18 months ago, they crashed the economy. In fact, the Chancellor’s plan to abolish national insurance contributions would cost more per year than the proposals in that disastrous mini-Budget. The Conservatives might deny it, but millions of people are still paying the price of their last ideological experiment: the typical family faces an extra £240 a month when remortgaging this year. The Chancellor’s commitment last week exposed a Conservative Government who are putting party first and country second.

Labour is under no illusions about the state of the public finances after 14 years of Conservative government. We know that if we are elected at the next general election, we will have to take tough decisions in government, but instead of the chaos and recklessness we have seen under the Conservatives, Labour will bring stability and security back to the economy. We will never make a commitment without first saying where the money will come from. We will always be honest with the public because that is the responsible approach.

I hope that the Minister, whom I like very much, will finally come clean with the British people in his response. I hope that he will finally break with his party’s irresponsible promises and endless spin. I hope that he will be honest and say that, as a result of decisions taken by his Government, the tax burden on working people is forecast to go up each year over the next five years, and that for every 10p extra that working people pay in tax under the Conservatives, they will get only 5p back. Most importantly, I hope that he takes the opportunity to be straight with the British people, as we have repeatedly asked him to do, by setting out exactly how his Government will pay for their unfunded £46 billion promise to abolish national insurance.

[Kirsty Blackman]

Will the hon. Lady give way?

[Tulip Siddiq]

No, I am finishing.

The British people deserve better. This is just another Conservative pledge without a plan. The Conservatives should call a general election now.

National Insurance Contributions (Reduction in Rates) (No. 2) Bill

Kirsty Blackman Excerpts

Committee of the whole House
Wednesday 13th March 2024 Commons Chamber

[The Second Deputy Chairman]

That was marginally longer, as the hon. Gentleman said. I call Kirsty Blackman.

[Kirsty Blackman]

Thank you very much, Mr Chair—hopefully that is an acceptable form of address to use. I want to speak about the Bill in general and some of our concerns about it. The reality is that this is the wrong measure at the wrong time, as I said on Second Reading.

Earlier, the hon. Member for Hampstead and Kilburn (Tulip Siddiq) spoke about her concerns about the SNP’s policies on oil and gas. She says that we are not putting workers first. Unfortunately, the Labour party’s plans for green investment in energy mean that 100,000 jobs will be lost in Scotland, which is very clearly not putting workers first—unless it is only workers in England who count—given that the money will go on nuclear power.

On the details of this Bill, the reality is that public services are creaking and really struggling. I have spoken to the Electoral Commission, which is concerned about whether it will even be able to deliver elections properly, given that mandatory voter ID has been introduced. The commission was able to co-opt people from other areas in order to ensure that all the recent by-elections were run properly. Will the Minister make it absolutely clear that if there is a general election this year—which there almost has to be; there certainly has to be one in the coming financial year—local authorities will have enough money and people to be able to deliver and service those elections? Will they have enough resources to be able to do that?

The 2022 autumn statement allocated more money to the NHS for 2024-25 than this Budget allocates, so it is a bit of a cheek for any Conservative Member to stand up and say that the Government are putting more money into the NHS. They are putting less money into the NHS than they proposed in autumn 2022. The consequentials that arise from the increase this year are actually less than the in-year consequentials that the Scottish Government had for the NHS in this current year, so it is a very minor increase, because it only works out to in-year terms—[Interruption.] Does the Chief Secretary to the Treasury, the right hon. Member for Sevenoaks (Laura Trott) want to intervene? It is ridiculous for the Government to say, “This extra money is going into the NHS” when it is demonstrably less than they intended to spend on the NHS back in autumn 2022.

The Bill is going to make changes to the national insurance rates, and those changes will disproportionately impact higher earners. The Minister was slightly disingenuous when he said that the changes represent a higher percentage for people on lower incomes. Yes, but that is significantly less money. A band 2 worker in the NHS will be getting a £341 reduction in their national insurance rate. An MP in this House will get four times that. How is it fair that somebody in this House who is, in the main, not struggling to make ends meet will get £1,300 when someone working in the NHS will get only £300?

NHS workers have seen exactly the same increase in their energy bills as we have. They have seen exactly the same increase in council tax—actually, no, they have seen a much higher increase in their council tax bills if they live in England compared with those who live in Scotland. They have seen the same 25% hike in food prices. Given that those on lower incomes spend more money on food proportionately than those on higher incomes, that 25% inflation in food prices disproportionately hits families who are earning less. Therefore, we need to give even more to those families, rather than saying, “Well, it’s a higher percentage of your income so you’re okay. You’ll be fine with £340, but those people who are earning 85 grand a year standing in the House of Commons deserve £1,300.”

The hon. Member for Norwich South (Clive Lewis) made a very good speech on this change, and as he said, it is the essence of trickle-down economics in action. The Government are hoping that if rich people get richer and inequality increases, those people at the bottom of the pile will somehow magically get richer as well. There are much better ways to do this. One of the worst things about this whole situation—apart from the fact that Labour Members are unwilling to oppose it—is the decimation of public services that will result from it. The fact is that we have had 14 years of austerity and that is set to continue. People are going to lose out on vital services. The NHS is absolutely vital. Every one of us has had some sort of interaction with the NHS, yet the Government are setting themselves up for decades of pay battles with staff members because they will be unable to give the pay uplift that people deserve. They are setting us up for the decimation of those services.

I mentioned in my Budget speech last week that £1 billion-worth of cuts have been made by local councils to arts funding. That means children cannot access arts education, cannot go to a local theatre with reduced-price tickets from their local council, and cannot access all these extra things. People are struggling to access the most basic services because local authorities are creaking at the seams, yet the UK Government’s priorities are to allow a 4.99% increase in council tax and to ensure that higher earners get £1,300 whereas those on the minimum wage of £11.44 an hour who work 20 hours a week see absolutely no benefit.

[Nigel Huddleston]

I probably will not respond to everything we have heard today, as we thoroughly addressed many of the issues in the Budget debate.

In response to the new comments, I assure the hon. Member for Aberdeen North (Kirsty Blackman) that we always ensure that the democratic process is adequately funded. She is dismissive of the £2.45 billion increase in NHS spending that was outlined in the Budget, but it is a significant amount and, as she is aware, it is a real-terms increase. I agree with the hon. Lady on the importance of arts, culture and the other areas she mentioned, which is precisely why the Budget had measures to extend tax reliefs.

My opposite number, the hon. Member for Ealing North (James Murray), asked about the logistics of implementing and executing the tax change. We understand the impact of policy changes, and I put on record how grateful we are for all those who have implemented and executed the recent changes so speedily and effectively. Employees whose employer is unable to make changes in time, and who have left their employment, may request a refund from HMRC. The Government are confident that the majority of software developers will be able to make changes to their payroll software in time for 6 April.

On the new clauses, we have outlined the policy today. The impact of any changes to policy would, of course, be subject to the usual public scrutiny of costs, including from the OBR. It is therefore not necessary to produce a report at this stage. The OBR’s “Economic and fiscal outlook” publication for the spring 2024 Budget includes an analysis of the impacts of threshold freezes, including on the number of people brought into paying tax. It is therefore not necessary to produce an additional report at this stage, so we do not believe new clause 1 is necessary.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

New Clause 1

Review of the effects of reducing employee and self-employed NIC contributions to zero

“(1) The Treasury must publish before the end of the parliamentary session in which this Act is passed an analysis of the effect of —

(a) replacing “8%” with “0%” in section 1(1) of this Act,

(b) replacing “1.85%” with “0%” in section 1(2) of this Act, and

(c) replacing “6%” with “0%” in section 1(3) of this Act.

(2) The analysis in subsection (1) must set out the expected impact of the changes in subsection (1)(a) to (c) on total receipts to the National Insurance Fund in each of the financial years from 2024/25 to 2028/29.

(3) The Treasury must request the Government Actuary to make an assessment of the consequences for the Consolidated Fund in each of the financial years from 2024/25 to 2028/29 of shortfalls in the National Insurance Fund that would result from a zero rate for employee and self-employed national insurance contributions.”—(James Murray.)

This new clause would require the Government, before the end of the current parliamentary session, to set out what the impact would be on total receipts from national insurance and overall public finances of reducing national insurance contributions for employees and self-employed people to zero.

Brought up, and read the First time.

--- Later in debate ---

[Kirsty Blackman]

We do not support this change. This cut disproportionately benefits those earning the most. We in the SNP recognise the value that the public sector provides. We believe it should be properly funded to deliver our vital public services, and we do not believe that they can cope with more cuts on the back of 14 years of austerity and the trials of Brexit and the pandemic. We want excellent public services for all, and we are not scared to make that absolutely clear.

Question put, That the Bill be now read the Third time.