National Insurance Contributions Bill

Nick de Bois Excerpts

Monday 4th November 2013 Commons Chamber

[Mr Gauke]

My hon. Friend makes two valuable points, but I detect that you do not want me to dwell on the issue, Madam Deputy Speaker.

[Nick de Bois (Enfield North) (Con)]

The Minister has talked about wages. Interestingly, the Federation of Small Businesses has said that about 29% of its members will use the employment allowance to give a pay rise to some of their employees, which they have been unable to do because of the economic circumstances. Does that not show that this policy is a way of delivering sustainable growth and sustainable wages, and not just a gimmick that will do more harm than good?

[Mr Gauke]

My hon. Friend is absolutely right. It is worth bearing it in mind that tax plays an important role in the cost of living. If taxes are put up, it increases the pressure on the cost of living. Ultimately, that is where the policies of the Labour party would lead.

--- Later in debate ---

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

I salute the Minister’s valiant effort to gloss over recent history and his record. I can tell Government Members that the reason their Minister was not making any predictions about the impact of the policy in the Bill was that he got all his previous ones wrong.

[Nick de Bois]

Given the Opposition’s dreadful predictions about how many jobs would be lost under the Government, does the hon. Lady agree that it would be wise for her to tread carefully on predictions?

[Shabana Mahmood]

That was a valiant effort to change the subject, but today we are talking about this Minister’s record and the regional national insurance holiday plan. I note that the Minister could not bring himself to admit that the Opposition were right and that he was wrong about that. Perhaps we can return to that point later.

The Minister sought to focus as much as he could on the employment allowance and desperately tried to forget its predecessor scheme that the Government introduced in their 2010 emergency Budget—the regional national insurance holiday, which was enacted in the National Insurance Contributions Act 2011. The national insurance holiday was an abject failure, so I am not surprised that he wants to pretend it never happened, but it did, and it failed utterly. He has wasted three years clinging to that policy rather than doing what Opposition Members told him to do, which was to rip it up and design a new scheme that took account of the criticisms made by us and others.

The Bill introduces the employment allowance, which we support, so perhaps we should give the Minister credit for getting there in the end, but it is somewhat difficult to do so, because it has taken him far too long to rectify the flaws of the previous scheme, which we warned him about from the beginning, as my hon. Friend the Member for Nottingham East (Chris Leslie) has reminded him. As a result, businesses desperate for help have struggled in the meantime.

Those businesses, particularly small and medium-sized enterprises, which are the engine of our economy, have continued to suffer. Bank lending to SMEs is still contracting, and analysis published by the Department for Business, Innovation and Skills shows that tightening credit has disproportionately affected low and average-risk SMEs. Last year, Project Merlin missed its target for lending to SMEs by more than £1 billion. In 2010, the Office for Budget Responsibility predicted that lending to businesses would have risen 34% by now, but in fact it has fallen by 10%.

Given this climate of the past three years, action has been necessary to support business, but, on national insurance, it has taken the Government too long to get there.