National Insurance Contributions (Reduction in Rates) Bill

Debate between Laura Trott and Harriett Baldwin

2nd reading
Thursday 30th November 2023 Commons Chamber

[The Chief Secretary to the Treasury (Laura Trott)]

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

This is a landmark moment: the economy has turned a corner. Having rightly supported people through covid with £400 billion of spend and then £100 billion over the winter to support people with energy costs, we on the Government side of the House know that we have to pay back what we have borrowed. The Labour party opposed every single measure to do that, and every difficult decision, but because of those difficult decisions, we are in the position we are in today. Because of those difficult decisions, the Chancellor can put forward an autumn statement that focuses on growing our economy, supporting businesses and, crucially, cutting taxes, and that is what we are here to talk about today.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Chief Secretary to the Treasury tell the House, for the record, how many Labour Back Benchers are here for this milestone debate?

[Laura Trott]

I think by my count none, which is unfortunate and I think speaks to their lack of the commitment to cutting tax that we have on this side of the House. The Bill will cut taxes for 29 million working people. It has three measures: the reduction in national insurance contributions in class 1 primary main rate; the reduction of the NICs class 4 main rate; and the removal of the requirement to pay class 2 NICs. We are prioritising national insurance for two key reasons. First, we want to put more money in the pockets of working families, and NICs are the most targeted way to do that. Secondly, better reward for work makes working more appealing, and the more people work, the more there is a boost in growth.

Let me take the House briefly through the measures in the Bill. The first is the reduction in the employee class 1 NICs main rate, which the Chancellor announced in the autumn statement. By reducing the main rate by two percentage points, from 12% to 10%, on earnings between £12,570 and £50,270, we will cut taxes for more than 27 million employees. That will save the average worker more than £450 a year, and they will see the benefit in their payslips right at the start of the new year, as this legislation will come into effect on 6 January.