National Insurance Contributions (Rate Ceilings) Bill

Lady Hermon Excerpts

Tuesday 15th September 2015 Commons Chamber

[The Economic Secretary to the Treasury (Harriett Baldwin)]

I beg to move, That the Bill be now read a Second time.

This Bill implements our manifesto commitment not to increase national insurance contributions for employers and employees. It will be interesting to discover whether it will be opposed by Her Majesty’s Opposition now that their new leader favours a 7% increase in national insurance for higher earners.

Hon. Members will be aware of the Government’s strong record of significantly reducing the burden of national insurance. At Budget 2011, my right hon. Friend the Chancellor announced a £21 a week above-inflation increase to the employers national insurance threshold. In 2014 we introduced the employment allowance to support businesses and charities across the UK by saving them up to £2,000 every year, and that has already benefited well over 1 million employers. The Government are now going further, and hon. Members will recall that the Chancellor announced in the summer Budget that that saving would be increased to £3,000 from next April. That means that a business will be able to employ four people full time on the national living wage and pay no national insurance at all.

From April 2015, the vast majority of employers employing under-21-year-olds were lifted out of employers national insurance as well. The exemption will be extended to cover apprentices under 25, helping young people to stand on their own two feet and fulfil their aspirations.

[Lady Hermon (North Down) (Ind)]

I am sorry to intervene so early in the Minister’s speech, but for the sake of clarity will she explain the long title to the Bill, which appears to apply only to class 1 national insurance contributions? I presume that the other classes will be covered in due course.

[Harriett Baldwin]

My remarks will be so short that hon. Members will need to intervene quickly with their points of clarification on this five-clause Bill. The hon. Lady will be aware that in the summer Budget the Chancellor announced that we are asking the Office of Tax Simplification to look at class 2 and class 4 contributions. We are expecting that consultation, which opened on 21 July, to inform the Budget next year. She asks a sensible question and I welcome her curiosity.

--- Later in debate ---

[Barbara Keeley]

No, I have nearly finished.

As I have argued, the Bill provides no protection for millions of hard-working families, and if the statutory instrument on tax credits is voted through by Conservative Members, those families will be £1,000 a year worse off on average. That will be a direct result of the Chancellor’s fiscal decisions, and I believe many Conservative Members will come to regret it. Ministers should not be wasting their time on legislative gimmicks such as this so-called tax lock.

[Lady Hermon]

I am most grateful to the hon. Lady for allowing me to intervene. She will know that the Bill extends to Northern Ireland. I have listened very patiently to what she has said here today, but I think the people of Northern Ireland and of the United Kingdom generally are entitled to know the policy of the Labour party, the main Opposition party, after a change in the leadership and with a new shadow Chancellor of the Exchequer. What exactly is their policy on national insurance contributions? Is Labour not going to increase them? Does Labour agree with the Government that they should not be increased for five years? Is that the clear policy of the Opposition?

[Barbara Keeley]

Yes, it is. I am the shadow Treasury spokesperson responsible for the Bill today. [Interruption.] Well, I am standing here today. We made the pledge first. I am very pleased that the hon. Lady raised the question in the manner she did. As I say, we made the pledge first: it is our pledge. Let us get back to that point.

Rather than wasting their time with gimmicks such as this so-called tax lock, Ministers should perhaps direct their focus on supporting low and middle-income families. [Interruption.] Ministers should really bear in mind that every time they sit there laughing on a day when they are going to take £1,000 off 8 million hard-working families, they simply provide grist to the mill of people who contribute to newsletters up and down the country. The Government’s fiscal policies are too serious for Ministers to sit there laughing. I really advise them to stop it. They should direct their focus at supporting low and middle-income families who will be worst hit by the summer Budget of this Conservative Government—with or without a tax lock.