Social Security (Contributions) (Amendment No. 2) Regulations 2022

Lord Jones Excerpts

Monday 28th March 2022 Grand Committee

[Baroness McIntosh of Pickering (Con)]

I am grateful to my noble friend for introducing the regulations before us this afternoon. I spent a year in the other place shadowing the Department for Work and Pensions, with specific responsibility for women’s pensions at the time. However, it was a source of some disappointment. I spent that year trying to look at ways in which women’s pensions could be improved, if ever the opportunity arose for us to come into government—which then happened in 2010—so we would actually do something to improve the lot of women’s pensions. Therefore, it was a huge blow to me when we kept what a previous Labour Government had decided, with WASPI, that women’s eligibility for state pension would rise to the age of 65 and then 66 in subsequent years without, at the time, giving women 10 years to prepare. That was a matter of regret to me. I would have welcomed if, for once, women were unfairly disadvantaged in this case, if we had not passed—or if we were not to pass—the regulations before us this afternoon. However, that is not my intention.

I think it was our noble friend Lady Morrissey, who is very experienced in financial matters, who flagged this up to us after the Spring Statement in a tweet—which I now cannot find, unfortunately—alerting us to the fact that, as my noble friend set out today, the national insurance threshold is going up to £12,570. The point that our noble friend Lady Morrissey made was that we have to be very careful to ensure that working women are not left out of being able to contribute to their pension and of having their employers contribute at that time. I ask my noble friend to assure us that that, as was so astutely flagged up by our noble friend Lady Morrissey, is not going to be the case.

We are told that this is going to raise a sizeable amount of money—£12 billion, I think—and I assume my noble friend will explain that that is the total amount that the increase in national insurance contributions to which the Government are committed through the health and social care levy will deliver. My noble friend said that the regulations have been produced at speed. We recognise the great burden that has been placed on her department, but can she assure us that there are no errors in this albeit small statutory instrument? Just about every statutory instrument I have debated over the past two to three weeks has contained an error of some sort.

Finally, I ask for confirmation that the rate applying to men in the same bracket will be in the same order—the increase of 1.25% in this regard—or were men already paying a higher rate?

It is my understanding that many working women have lost their jobs through the Covid pandemic, particularly those in retail positions, in shops especially, as opposed to online and others. I would like to pause for a moment and acknowledge what a difficult time those women will be having at the moment, given the pressures if there is only one income coming into a family or if they are in the unfortunate position of being a single mother.

With those few questions, I support the regulations before us.

[Lord Jones (Lab)]

My Lords, I thank the Minister for her cogent exposition and acknowledge the expertise of my noble friend Lord Davies. I will be very brief.

The Explanatory Note refers, in relation to Regulation 2, to

“certain married women and widows”.

What is the estimate of how many married women and widows these regulations impact upon?

My second question is that, since we read in the Explanatory Memorandum that these regulations refer to the United Kingdom, can the numbers of the people affected be broken down to matters concerning England, Scotland, Wales and Northern Ireland?

Finally, the Explanatory Memorandum refers in paragraph 13 to small businesses. Is the Minister able to say what consultation there has been with the business community? For example, was the Federation of Small Businesses involved in the consultation, should it have taken place? If I have asked a question that it is not possible to answer now, the Minister might offer to write.

[Baroness Kramer (LD)]

My Lords, my expertise in the field of pensions is absolutely de minimis, so my questions may sound very basic. I am not going to raise any particular objection to this SI, but can the Minister explain to us what impact the increase in the threshold amount, which will come in later this week, will have on the women who are impacted by this statutory instrument? I am struggling to see how the two pieces interweave, and it might be quite helpful to understand the overall picture—I would appreciate that.

--- Later in debate ---

[Baroness Penn (Con)]

I thank all noble Lords for their engagement on these regulations, and indulging in what the noble Lord, Lord Davies of Brixton, referred to as a piece of social policy archaeology. It is important that we have been able to bring forward these regulations, and I therefore completely acknowledge the points made by the noble Baroness, Lady Kramer, the noble Lord, Lord Tunnicliffe, and others about the complications in our approach, and the speed with regard to these particular regulations.

Just by way of a bit of a further explanation for this set of regulations, HMRC had previously identified a different legislative vehicle to provide for this measure. However, that legislative vehicle was not a viable option once it had been confirmed that there was no longer sufficient time for scrutiny to take place within the usual timeframe. That was an oversight, and HMRC has moved quickly to prepare this piece of relevant legislation. It is with regret that we had to expedite the consideration for this measure. However, to ensure that the levy is applied fairly, these regulations need to come into force ahead of 6 April. We have written to both the JSCI and the SLSC to explain the reasons for this delay and to ensure appropriate scrutiny.

I heard the point made by my noble friend Lady McIntosh of Pickering, echoed by the noble Baroness, Lady Kramer, about the need to extend this measure to this particular cohort. While that may be debated, when the measure was announced it was included in that cohort, and now payroll and others are expecting it to go ahead. That is why it is important that we have been able to provide for it.

In response to the question from the noble Lord, Lord Jones, about engagement with business, especially small businesses, we have engaged with payroll providers to ensure that the new rates, including the married women’s reduced rate, are updated.

A number of noble Lords asked for further zoning in on the numbers affected. As I said, in 2019 we reviewed the number of eligible women who could apply for this rate and compared this against multiple data sources. We recently conducted a scan of NICs records in the 2020-21 tax year, which looks at around 2% of employees. We found two individuals qualifying for the married women’s reduced rate. Extrapolating from this would suggest that there are currently around 100 cases, but I remind noble Lords that these are not actual figures but estimates. Due to both the fact that this is an estimate and the small numbers involved, it is not possible to break down those affected into England, Wales, Scotland and Northern Ireland, et cetera.

[Lord Jones (Lab)]

Shall there be an answer to the specific question on numbers, on which I gave a quote?

[Baroness Penn (Con)]

I believe there were two specific questions on numbers. The first was on the number of people who may be affected by this change. Our best estimate from an updated scan indicates around 100 cases, but that is an extrapolation rather than a specific figure. Secondly, the breakdown for the different nations of the United Kingdom is not possible to provide. Even if I were to write, we would not have that figure.

My noble friend asked whether the increase in the thresholds announced at the Spring Statement will impact state pension entitlement. It will not. The lower earnings limit has not changed, so that is not impacted.

I say to the noble Baroness, Lady Kramer, that this cohort will benefit from the increase in the primary threshold limit announced at the Spring Statement and being legislated for later this week. The noble Baroness also asked about the impact on the NIF. For this measure we would not be able to score it; because of the small numbers involved, it would be classed as a negligible impact. I take her point when she also asked more broadly about the impact on the NIF of the increase in the thresholds. We might come back to that on Wednesday.

I think I have covered most of the points raised in this debate. My noble friend mentioned that she shadowed the Department for Work and Pensions when she was in the Commons. That was also one of my first jobs in opposition. My knowledge does not date back to the 1970s but is certainly a little out of date for a debate on pensions today. I hope I have covered all noble Lords’ questions.