National Insurance Contributions (Increase of Thresholds) Bill

Matt Rodda Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[Mr Clarke]

I thank the right hon. Gentleman for that point. My right hon. and learned Friend the Financial Secretary will do her best to provide an answer based on the information that our officials can provide. It is important, obviously, that we answer questions correctly. It is worth noting that the universal credit taper rate has been reduced from 63% to 55% and the universal credit work allowance has been increased by £500 a year to help make work pay. That is a tax cut for the lowest paid in society worth around £1.9 billion in the financial year that is just about to begin. It means that 1.7 million households will on average keep around an extra £1,000. We will do our best to respond to the specific question that the right hon. Gentleman raises.

The effect on an individual’s ability to access contributory benefits and to build up state pension entitlement will be unaffected as a result of the changes to class 2 NICs. Taken together with the increase in the primary threshold and the lower profits limit, we will meet in full our commitment to ensure that the first £12,500 an individual earns is free of tax, clearly illustrating that this is a Government who make good on their promises to the people of this country.

[Matt Rodda (Reading East) (Lab)]

I thank the Chief Secretary to the Treasury for giving way and for his reassurance to people contributing towards the state pension. The Chancellor did not actually mention the word “pensioners” yesterday. Does he recognise the enormous pressure on many pensioners who are struggling to get by on very modest incomes at a time of significant inflation? Is it not time that the Government looked again at their support for pensioners, in particular on heating bills?

[Mr Clarke]

I thank the hon. Gentleman for his question and I recognise the sincere spirit in which he asks it. We are, of course, determined to deliver for our pensioners. That is why the Government have done so much to help to make sure that pensioners’ standard of living was not affected during the very difficult years we have just gone through, including spending £111 billion a year on the state pension, which is more generous that it has ever been. Many of the measures we are undertaking, for example our energy package, will benefit pensioners hugely. People will be getting £150 off their energy bill next month as a rebate on council tax if they live in bands A to D, with councils having a further £144 million available for discretionary payments to people who live in higher council tax bands who need further support. As I set out earlier, if the forecasts of very high inflation for this year do indeed come to pass, that will be captured in the uprating figures that will be delivered this autumn for the 2023 benefit uprating.

I want to draw to a conclusion on some broader points that this issue alerts us to. Every day in my role as an MP representing one of the poorest towns in this country, I hear from families and individuals who are struggling with the rising cost of living. I am fully respectful of the fact that this is a genuinely difficult time for the people of this country. I want to issue the reassurance that just as the Government stood by people during the covid crisis by providing a £400 billion package of support, so we will stand behind the people of this country as they face these new challenges, too. It is important to do so in a spirit of total candour. No Government anywhere in the world directly has the ability to offset the impact of first the pandemic and then a reckless and illegal war on our continent, but we will do our utmost with the tools we have, within our overarching aim of making sure that the public finances are protected.

This financial year and next, we will provide over £20 billion to help people with the cost of living. That includes over £9 billion of direct support with high energy costs for around 28 million households. That is why yesterday we announced our wider package, including this Bill along with a range of other measures, to ease the pressure on hard-working families and secure long-term economic growth.

--- Later in debate ---

[Matt Rodda]

I am grateful for the work that my hon. Friend is carrying out on this important matter, because it seems fundamental to look at the impact on families. In my constituency of Reading East there is enormous pressure on families, many of whom are in work and on modest incomes, but are struggling to get by because of increased prices, so I thank my hon. Friend for his work.

[James Murray]

I know that my hon. Friend is a champion for his constituents, and in challenging the Government about the harm that their decisions will do to the people he represents.

National Insurance Contributions (Increase of Thresholds) Bill

Matt Rodda Excerpts

Committee stage
Thursday 24th March 2022 Commons Chamber

My anxiety at the moment is that the lack of that information is leading us to take decisions that will not resolve the issues of poverty and low pay and will in fact ensure a deterioration in the living conditions of many of our constituents. This is a simple measure, and I think it should now be standard Government practice to bring forward this sort of report, especially when we are in a cost of living crisis and so many of our constituents are already suffering and in many instances facing intolerable hardships.

[Matt Rodda]

I am grateful for the opportunity to speak in this important debate this afternoon. I would also like to thank my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and my hon. Friend the Member for Eltham (Clive Efford) for their new clauses, which I will speak to. I want to take this opportunity to talk about two groups of people, both of which are under real pressure due to the cost of living crisis. Those two groups are families in work, many of whom are on universal credit, and pensioners, many of whom have partners on universal credit.

First, I would like to give a bit of context. It is clear that we now face an unprecedented cost of living crisis due to soaring food and energy prices. Working families and pensioners are about to be confronted with the frightening prospect of the kind of cut to their standard of living not seen since the 1970s. Recent events in Ukraine have been shocking. However, the cost of living crisis predates Putin’s awful war and his vicious attack on the Ukrainian people. It was clear in the autumn that food and fuel prices were starting to rise steeply, but the Government have actually made matters worse despite those warning signs.

The Prime Minister and the Chancellor have made a series of choices that have made things worse. They decided to increase national insurance. They also decided to break the triple lock and failed to increase the state pension in line with inflation. To make matters even worse, they decided not to introduce a windfall tax, even when it was clear that such an approach would have provided cash to ease bills for families and pensioners. However, they did not have to take this damaging approach. They made a choice. They took the decision to act in this way, knowing full well the impact their policies would have. I contrast this with the approach set out by the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), whose windfall tax proposals would have helped those struggling to get by with a payment of up to £600 per household. Sadly, people across the country will now pay the price for the choices made by the Government.

I suggest to those on the Treasury Bench that it is worth looking at what is being said about the spring statement in the media and by commentators. For example, the chief executive of the Resolution Foundation said that it was hard to make sense of the spring statement. With just a hint of irony, he said:

“This package only makes sense if your only test for policy choices was can you prove you’re a tax cutter and you’ve already announced a rise in national insurance”.

The FT was somewhat less diplomatic. It described the spring statement with these words:

“Chancellor builds war chest for 2024 but offers minimal help for families reeling from increasing household bills”.

These choices will all have a huge impact on local communities up and down the country. I have been thinking about many of my own residents in Reading and Woodley, such as people running small businesses, teaching assistants, nurses, IT consultants, residents who work in retail and manufacturing, and parents who are under real pressure to pay for the weekly shop. The Government’s policies will also hit those who are a little bit older, such as pensioners who are struggling with the high cost of heating in an area with many terraced houses that are difficult to insulate.

Even at this late stage, I ask the Chancellor and those on the Treasury Bench to reconsider their approach. There is no doubt that this country faces a real cost of living crisis. That has been clear since the autumn. The Chancellor and the Prime Minister had the opportunity to look at a number of policies, including a windfall tax on the energy companies, which would have offered up to £600 of much-needed help. Sadly, they chose to impose extra costs on families and pensioners at the worst possible time.

[Richard Thomson]

The SNP is generally supportive of all the amendments that have been tabled, and I echo the comments of the right hon. Member for Hayes and Harlington (John McDonnell), who made a number of points about the importance of understanding the intended purpose and impact of legislation before it takes effect. I made that point ad nauseam during the passage of two Finance Bills, but I keep returning to it because it is important that we understand what we are doing and that we avoid, as far as possible, the law of unintended consequences.

Quite apart from the evidence base they would provide for legislative scrutiny, the amendments might provide a corrective to the poor policy choices that Ministers have made in recent times.