National Insurance Contributions Increase

Kirsty Blackman Excerpts

Tuesday 8th March 2022 Commons Chamber

[Mr Clarke]

It is, and my right hon. and learned Friend is precisely right because, in the end, it is poorest who will lose out the most if we lose control either of our public spending or of inflation. To illustrate, a 1 percentage point rise in both inflation and interest rates would increase spending on debt interest by nearly £23 billion a year, and that threat is not a notional one. In January 2021 we spent £1.6 billion on servicing our debt, but in January this year we spent £6.1 billion. We cannot fund increases in spending on our health service and social care by increasing borrowing. Members will surely agree that to leave ourselves vulnerable at this time by further increasing our debt burden would be highly irresponsible. These are not always easy choices, but we will be the ones to reconcile the need to reduce our debt burden with the growing pressures on the state, and that means responsible choices about taxation.

[Kirsty Blackman (Aberdeen North) (SNP)]

Will the Minister give way?

[Mr Clarke]

I have given way many times, and I am afraid that I must make progress.

The Opposition claim that they would instead grow the economy to finance their choices. With all due respect to the hon. Member for Leeds West, that is not a credible solution to an immediate problem. I remind the House that this is the same Opposition who want to place a windfall tax on our vital North sea oil and gas producers—companies that already pay a headline tax rate on their profits of more than double the rate of corporation tax. With investment in the sector hitting an all-time low in 2020-21, such a tax on oil and gas would not be an appropriate solution. It would only create uncertainty, deter investment and displace the investment that we need in clean, renewable technologies.

As the Chancellor has recently set out, we firmly believe in lower taxes. The pounds generated by our country are better spent by individuals and businesses than by Government. However, cutting tax sustainably requires hard work and prioritisation, especially when demands on the state are growing. We must reach our goals in a responsible way that addresses our challenges, too. This levy is the best and most equitable way to raise the funds needed to protect health and social care across the United Kingdom, and I await any credible explanation from the Opposition of how they plan to cover these costs in a responsible way.

I will end by saying that this Government recognise the difficulties that people across this country are facing right now. We know times are hard, and we are working hard to alleviate that pressure, but as a responsible Government we must not shy away from difficult decisions. It is only by meeting such challenges head-on that we will succeed in building a health and social care system that is fit for the future and that truly supports our citizens at every stage in their lives.

--- Later in debate ---

[Kirsty Blackman (Aberdeen North) (SNP)]

I want to speak about quite a few matters, but first I want to focus in the plight of younger people—and by “younger people”, I mean people under 40, not just people in their 20s. I am talking about everyone in that younger slice of the population.

We have talked about the last massive increase in inflation, which, in 1992, reached the same levels of increase that it has reached in recent times. I am 35; in 1992 I was six, and I did not know what the rate of inflation was because it did not really matter to me. For a significant period I have been living in a property that does not belong to my parents, and I have a 10-year-old and an eight-year-old. There are many, many people like me out there, people who have been living their lives and paying their bills and have never seen an inflation rate like this, have never seen the increases that are coming down the line, and have never felt the massive squeeze that we are feeling now.

This is a cost of living crisis, one that is unprecedented for members of my generation who are having to face these massive costs, and it is compounded by the UK Government’s terribly poor decisions. It is compounded by the fact that people in Scotland must pay massive fees for attending university in England. It is compounded by the fact that people will be paying off student loans throughout their lives; indeed, they will never be able to pay them off. It is compounded by the fact that we do not have a real living wage, and that is even worse for people who are younger than 23 or 25, because the UK Government refuse to provide a single living wage. The “national living wage” is a pretendy living wage, because people cannot actually live on it. The Government refuse to provide a single set rate, apparently believing that somehow a 20-year-old can survive on less food or less electricity than someone older.

It is ridiculous that the Government are doing this. People my age and younger do not have savings on which to rely. As I said in the House some years ago, the average household has less than £100 in savings—and that was pre-covid, before the period during which people’s incomes have been so massively squeezed. People my age—younger people, people under 40—cannot just dip into their savings in order to fund the massive increase in energy bills that is coming, and the massive increase that is coming as a result of the national insurance hike. This is the least sensible time to be introducing a national insurance hike. People will be paying a massive amount more purely because of the choices of this Government—purely because the Government are choosing to fund health and social care in this way.

We in Scotland went into the 2019 election spending more per head of population on our NHS than the UK Government was. We went into that election calling for the UK to up its spending on the NHS. In Scotland, we are making different choices. We are making better choices. We are already funding the NHS at a higher level per head of population than England is, and we are already increasing the Scottish child payment to make sure that the number of children in poverty is decreasing. The Resolution Foundation says that the UK Parliament

“is on track to be the worst parliament on record for income growth”.

I do not want to see a world being created by this Tory Government where my children’s generation will be poorer than my generation and where my generation are poorer than my parent’s generation, but the UK Government continue to bake that in.

If the UK Government want to make money and reduce public sector net debt, a great way to do that is through immigration. In 2016-17, migrants reduced public sector borrowing by £4.4 billion. We would get to £450 billion pretty quickly if we added up the amount of positive benefits we can get from migration. If we made better choices—if we chose to not spend money on weapons of mass destruction, for example—we could have more money to spend on the NHS. We should be making better choices that reflect and assist the wellbeing of the population. This is a political choice. The Government have been asking people at the bottom of the pile for more than a decade to just pay a little bit more and cope a little bit more with austerity for a little bit longer, and now they are in the midst of a cost of living crisis where families’ energy bills are going to be shooting through the roof next month, with a £639 increase a year for every household.

In that time, the UK Government are ploughing ahead with this increase on national insurance. This is going to compound the increases that are being put in place. The increase will be nowhere near covered by the Government’s increase to the national living wage or by the universal credit taper rate. None of that will cover the cost that my constituents are being asked to pay to fund something that could be funded from somewhere else. The UK Government are choosing to balance the books on the backs of the poorest constituents that we have, and they need to change track now.