National Insurance Contributions (Reduction in Rates) (No.2) Bill

Nigel Evans Excerpts

2nd reading
Wednesday 13th March 2024 Commons Chamber

[Gavin Newlands]

The hon. Member mentioned the green deal. I have hundreds of constituents who were essentially screwed under the 2010 Government’s green deal with the Lib Dems. Rogue builders were allowed to screw them out of thousands of pounds. The Government have done nothing for my constituents. What does he have to say about that?

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Mr Newlands, you are incredibly intelligent. Maybe next time you will think of a different way of expressing that.

[Steve Double]

I am not sure what the hon. Member’s intervention has to do with the Bill, but I am sure that all his constituents who are in work will welcome the 4% cut in national insurance. The Scottish National party has raised taxes to their highest level anywhere in the United Kingdom, so I am sure that his constituents will be grateful for the Bill.

Like my hon. Friend the Member for Aberconwy (Robin Millar), I represent a constituency with a higher-than-average number of pensioners. Some of them have been in touch with me questioning why, as far as they could see, there was nothing in the Budget for them. Clearly, cutting national insurance does not affect them because they do not pay it. We have to remember that the Government have kept the triple lock commitment. Pensioners rightly had a 10% rise in their pensions last year. I was one of those who fought hard in the autumn of 2022 to ensure that we kept that commitment. Next month, they will rightly get a further 8.5% rise in their pensions. When those measures are combined, pensions will have gone up by 18.5% over two years, which is a significant rise. We have rightly kept our promise to pensioners. It is in that context that the Government have now rightly focused on supporting people in work and in jobs, which is very welcome.

We have to set this Bill and the 2% cut that it delivers in the context of the 2% cut that we made in January and the fact that, because of our careful management of the public finances and the economy, inflation is coming down and the green shoots of growth are back in our economy. For those reasons, we are able to make the decision to cut national insurance. I am happy to vote for the Bill this evening.

[Mr Deputy Speaker (Mr Nigel Evans)]

To start the wind-ups, I call Tulip Siddiq.

--- Later in debate ---

[Nigel Huddleston]

As the hon. Member will be aware and as the Chancellor outlined, based on current spending assumptions, total departmental spending will still be £86 billion higher in real terms by 2028-29 than at the start of this Parliament. If he was listening to the debates earlier this week, he will be aware that we will increase spending in real terms by 1% during the forecast period.

The hon. Member and others have raised points about fairness and making sure that we look after the most vulnerable in society, which is of course something we are committed to. Distributional analysis published alongside the spring Budget shows that the typical household at any income decile will see a net benefit in 2024-25 as a result of Government decisions made in the autumn statement—and, indeed, from the autumn statement 2022 onwards—and that low-income households will see the largest benefit as a percentage of income.

We have mentioned many times our commitment to the national living wage. It will soon increase by 9.8% to £11.44, which is expected to benefit around 2.7 million workers. It is important to stress that from April, a full-time national living wage worker’s take-home pay will be 35% greater in real terms than it was in 2010, due to successive increases in the national living wage and changes to personal tax rates and thresholds.

To respond to a few other comments made by right hon. and hon. Members, my right hon. Friends the Members for Witham (Priti Patel) and for Wokingham (John Redwood) both gave excellent speeches, in which they not only championed workers—including the self-employed—but highlighted the fact that we have to operate in a particular context. As has been mentioned many times today, we are in a difficult financial situation because of a global pandemic that hit the global economy, which was followed by the invasion of Ukraine and the significant impact it had on inflation around the world.

The question, as my right hon. Friend the Member for Wokingham pointed out, is how much higher taxes would be if Labour had been in charge. Throughout the pandemic, the Government received a lot of support from Members on both sides of the Chamber. That was completely right, but many Members were calling for even greater intervention and even longer lockdowns, which would potentially have done immense damage to the economy.

Some hon. Members raised the contributory principle. In our ambition for further reductions in national insurance, we will make sure that the future tax system has the right mechanism for establishing entitlement to contributory benefits, including the state pension. My right hon. Friend also mentioned the rise in the VAT threshold, which is really important. It will go from £85,000 to £90,000, which means that 28,000 fewer small businesses will be registered for VAT. My hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) highlighted this Government’s record on jobs in creating 800 jobs a day and in significantly reducing youth unemployment, of which we can all be proud.

My hon. Friend the Member for Aberconwy (Robin Millar), who raised many important points in his speech, pointed out the rather irresponsible scaremongering we have heard today from those on the Labour Front Bench relating to spending on pensions and the NHS. The Opposition should be well aware, especially if they wish to form a Government, that the money raised by NICs does not determine the amount going to the NHS and state pensions. We have announced increasing funding to the NHS and we are uprating state pensions by 8.5% this year, as I have mentioned. We on these Benches can tolerate a decent debate—we are fairly robust— but we will not tolerate irresponsible scaremongering, especially when targeted at the most vulnerable in society, purely to try to take political advantage from making up policies that do not exist. I hope that at some point the Opposition will either get some economic competence or apologise for that.

This really important Bill delivers tax cuts for over 29 million working people. A yearly saving of over £450 for the average worker will result from this Bill alone. Taken together with the cuts to NICs at the autumn statement, it will be worth over £900 per year for the average worker. This will benefit households throughout the United Kingdom and in every single constituency represented in this place. However, here we are again, and in nearly three hours of debate, we have heard nothing but doom and gloom from the Opposition. How disappointed they must have been this morning to hear that the economy has grown. While I am not pretending for one minute that everything is perfect—as I have said, our constituents and the country have been through a very challenging time—it is important to recognise, welcome and applaud success, especially if a party wants to lead a country, champion trade abroad and attract investment. What a terrible advert for the UK we have heard from the Opposition today, who are completely lacking in confidence and ambition for our economy and our workers.

The national insurance cuts we are debating reward work and will provide a further boost to the economy. We are turning a corner, and the plan is working. While we want to put more money back into people’s pockets, the Opposition want to take more out, and while we take every opportunity to talk the country up, they take every opportunity to talk Britain down. The choice is very clear: a plan for growth and a brighter future with the Conservatives, or no hope, no clue and no plan with the Opposition. I commend the Bill to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

Should there be a vote on the amendment, 10 minutes will be allowed, and if there is then a vote on Second Reading, eight minutes will be allowed.

Question put, That the amendment be made.

National Insurance Contributions (Reduction in Rates) (No. 2) Bill

Nigel Evans Excerpts

Committee of the whole House
Wednesday 13th March 2024 Commons Chamber

[Mr Nigel Evans in the Chair]

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

I remind Members that in Committee of the whole House they should not address the Chair as Deputy Speaker. They should please use our names when addressing the Chair. Madam Chair, Chair, Madam Chairman or Mr Chairman are also acceptable—I think I have been called all of those at some stage.

Clause 1

Reduction in rates

Question proposed, That the clause stand part of the Bill.

[The Second Deputy Chairman]

With this it will be convenient to consider clauses 2 and 3 stand part. I will take the selected new clauses as a separate debate after the clause stand debates.

--- Later in debate ---

[The Second Deputy Chairman]

That was marginally longer, as the hon. Gentleman said. I call Kirsty Blackman.

[Kirsty Blackman]

Thank you very much, Mr Chair—hopefully that is an acceptable form of address to use. I want to speak about the Bill in general and some of our concerns about it. The reality is that this is the wrong measure at the wrong time, as I said on Second Reading.

Earlier, the hon. Member for Hampstead and Kilburn (Tulip Siddiq) spoke about her concerns about the SNP’s policies on oil and gas. She says that we are not putting workers first. Unfortunately, the Labour party’s plans for green investment in energy mean that 100,000 jobs will be lost in Scotland, which is very clearly not putting workers first—unless it is only workers in England who count—given that the money will go on nuclear power.

On the details of this Bill, the reality is that public services are creaking and really struggling. I have spoken to the Electoral Commission, which is concerned about whether it will even be able to deliver elections properly, given that mandatory voter ID has been introduced. The commission was able to co-opt people from other areas in order to ensure that all the recent by-elections were run properly. Will the Minister make it absolutely clear that if there is a general election this year—which there almost has to be; there certainly has to be one in the coming financial year—local authorities will have enough money and people to be able to deliver and service those elections? Will they have enough resources to be able to do that?

The 2022 autumn statement allocated more money to the NHS for 2024-25 than this Budget allocates, so it is a bit of a cheek for any Conservative Member to stand up and say that the Government are putting more money into the NHS. They are putting less money into the NHS than they proposed in autumn 2022. The consequentials that arise from the increase this year are actually less than the in-year consequentials that the Scottish Government had for the NHS in this current year, so it is a very minor increase, because it only works out to in-year terms—[Interruption.] Does the Chief Secretary to the Treasury, the right hon. Member for Sevenoaks (Laura Trott) want to intervene? It is ridiculous for the Government to say, “This extra money is going into the NHS” when it is demonstrably less than they intended to spend on the NHS back in autumn 2022.

The Bill is going to make changes to the national insurance rates, and those changes will disproportionately impact higher earners. The Minister was slightly disingenuous when he said that the changes represent a higher percentage for people on lower incomes. Yes, but that is significantly less money. A band 2 worker in the NHS will be getting a £341 reduction in their national insurance rate. An MP in this House will get four times that. How is it fair that somebody in this House who is, in the main, not struggling to make ends meet will get £1,300 when someone working in the NHS will get only £300?

NHS workers have seen exactly the same increase in their energy bills as we have. They have seen exactly the same increase in council tax—actually, no, they have seen a much higher increase in their council tax bills if they live in England compared with those who live in Scotland. They have seen the same 25% hike in food prices. Given that those on lower incomes spend more money on food proportionately than those on higher incomes, that 25% inflation in food prices disproportionately hits families who are earning less. Therefore, we need to give even more to those families, rather than saying, “Well, it’s a higher percentage of your income so you’re okay. You’ll be fine with £340, but those people who are earning 85 grand a year standing in the House of Commons deserve £1,300.”

The hon. Member for Norwich South (Clive Lewis) made a very good speech on this change, and as he said, it is the essence of trickle-down economics in action. The Government are hoping that if rich people get richer and inequality increases, those people at the bottom of the pile will somehow magically get richer as well. There are much better ways to do this. One of the worst things about this whole situation—apart from the fact that Labour Members are unwilling to oppose it—is the decimation of public services that will result from it. The fact is that we have had 14 years of austerity and that is set to continue. People are going to lose out on vital services. The NHS is absolutely vital. Every one of us has had some sort of interaction with the NHS, yet the Government are setting themselves up for decades of pay battles with staff members because they will be unable to give the pay uplift that people deserve. They are setting us up for the decimation of those services.

I mentioned in my Budget speech last week that £1 billion-worth of cuts have been made by local councils to arts funding. That means children cannot access arts education, cannot go to a local theatre with reduced-price tickets from their local council, and cannot access all these extra things. People are struggling to access the most basic services because local authorities are creaking at the seams, yet the UK Government’s priorities are to allow a 4.99% increase in council tax and to ensure that higher earners get £1,300 whereas those on the minimum wage of £11.44 an hour who work 20 hours a week see absolutely no benefit.

[James Murray]

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

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

With this it will be convenient to consider new clause 2—Review of effects of frozen thresholds—

“The Treasury must lay before the House of Commons within three months of the passing of this Act a report which sets out its forecasts of the change to the number of people paying national insurance contributions as a result of the thresholds for payment of national insurance remaining frozen over the period 2023/24 to 2027/28, rather than rising in line with CPI.”

[James Murray]

As I made clear in the previous debate, we support the national insurance reductions that the Bill seeks to deliver. However, the Chancellor followed the announcement of these reductions in last week’s Budget speech by pulling a rabbit out of his hat that, frankly, left us shocked and deeply concerned.

The Chancellor closed his Budget statement by committing the Conservative party to an unfunded £46 billion tax plan. It is quite incredible, and it tells us everything we need to know about the state of the Conservative party that he would use his last Budget before the general election to promise a plan that leaves a £46 billion hole in the public finances, that puts family finances at risk, and that raises the prospect of higher tax bills for pensioners across the country.

People across Britain are still paying the price for the reckless and unfunded tax plans in the disastrous mini-Budget, so it beggars belief that the very top of the Conservative party—the Prime Minister and the Chancellor —now want to go into the general election with an unfunded tax plan even greater than we saw in the autumn of 2022. We know just how damaging and irresponsible the Conservatives’ unfunded tax plans are for the British economy and for families across the country. Yet for a week now, and in Parliament today, Ministers from the Prime Minister down have been unable to say how this £46 billion tax plan will be funded.

People deserve answers. Are the Conservatives planning to increase taxes, including on Britain’s 8 million taxpaying pensioners? Are they planning to increase borrowing? Are they planning to cut our vital public services to pay for their £46 billion black hole? Ministers are refusing to answer, so our new clause 1 will force them to do so.

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[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Thank you for calling me, Mr Evans—surely it is long overdue that it should be Sir Nigel, but we will go with Mr Evans for today.

I stand to move new clause 2 in the name of my hon. Friend the Member for Richmond Park (Sarah Olney). Hon. Members will see that the effect of new clause 2 would be fairly short in its compass. It would compel the Treasury to report to this House its forecasts of the change to the number of people who are set to pay national insurance contributions as a result of the thresholds for payment remaining frozen until 2028, instead of increasing in line with the consumer prices index, which would be the case otherwise. The Chancellor and other Ministers have spoken today about the pride the Government take in what they are doing. In the interests of transparency, the Government should have no difficulty accepting new clause 2. I am sure it is merely an inadvertent omission that those measures are not part of the Bill already.

It is apparent that comments made by the Chancellor, the Prime Minister and others about the idea of abolishing national insurance altogether have started a debate, as we have seen this afternoon. It is a substantial commitment to make—£46 billion—and we do not yet know where that money would come from. That is maybe not the novelty that it used to be, certainly before the mini-Budget. However, it offers us an opportunity to think a little bit about the nature of national insurance as a tax, because it is quite distinct in its composition and operation.

In practical terms, functionally, national insurance is more or less like any other tax, in as much as money is paid into the Exchequer and fills the coffers, and then is spent as the Government or Governments see fit—in relation to health, policing, transport, Ministers’ legal fees or whatever else it is going to be.

As a matter of intent and purpose, however, national insurance is identifiably different from the other taxes we pay. More than any other levy, it is the symbol of our shared obligations—what we owe each other as a society and as communities in support throughout our lives. The point of national insurance is that we pool and share resources geographically and generationally. We pay our stamp on each payslip, trusting that, when the time comes for us to retire, someone else will continue to pay taxes that will fund our pensions.

Let us remember that the roots of this tax are in Lloyd George’s Budget, and that the introduction of national insurance came with the introduction of the pension. That is why we have the legacy of the link between national insurance and pensions, which was pointed out by the hon. Member for Denton and Reddish (Andrew Gwynne) in an intervention. That is significant. These are matters that must be clarified before we undertake a change of this sort.

At the heart of any healthy liberal democratic society, there is the idea that we have lasting obligations to one another. We have obligations to those we know, to those we do not know, to generations that are older than us, and to those who are yet to be born. We can be bound by policies with which we disagree, and sometimes we must pay taxes for things that we dislike or that we feel we do not need. That is the system in which the national insurance contribution has a demonstrably significant and different impact than other taxes. It is part of the tapestry of government and public life in this country.

This is perhaps just pulling at a thread, but the Minister and, indeed, people in all parts of the House would be well advised to consider exactly what they may be unravelling by pulling at this thread. Full transparency from the Government on the effect of freezing national insurance contributions in the way that has been proposed should be an important part of this debate as it proceeds.

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Thank you very much. Can someone from the Liberal Democrats inform the Chair who their tellers will be, as their amendment has been selected for a separate Division?

[Nigel Huddleston]

As I mentioned earlier, the impact of policy and any changes to policy will be subject to the usual public scrutiny, including from the OBR on costs. It is therefore not necessary to produce additional reports. I will not play into the hands of the Opposition today by commenting further on their scaremongering. I refer the shadow Minister to the answer that I gave earlier, which I thought was quite clear. I am sorry that he is incapable of understanding the difference between an ambition and a policy, but the rest of the House seems to understand it. Hopefully, he will catch up at some point.

Question put, That the clause be read a Second time.