National Insurance Contributions Increase

Rachel Hopkins Excerpts

Tuesday 8th March 2022 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

I rise to speak in support of the motion calling for the Government to cancel their planned 1.25% rise in national insurance contributions, which will cost families an average of £500 a year from April 2022. Many of my constituents have been telling me that they are struggling with the increase in the cost of living. I spoke to a mother of a disabled child living in Dallow, who was scared about whether she could afford to pay her rising gas bill as she needed to keep the heating on for her disabled child’s condition. Similarly, in Farley, an older couple with serious health conditions who live on a fixed income are struggling with increased food prices and energy bills.

Many of my constituents have also been in touch about petrol price increases and have pointed out that the Tory cost of living crisis is being further exploited by sharp and often inconsistent rises at different petrol stations. People are driving to different areas in desperation to find the cheapest one to save a few pounds so that they can get to work. Will the Minister set out what action the Government are taking to tackle the large increases in petrol prices and any apparent profiteering that is taking place?

The reality is that people are really worried about their future and in just a few weeks, there will still be a devastating set of tax hikes. According to the Resolution Foundation, the average combined impact of the freeze in income tax thresholds and the 1.25% increase in personal national insurance contributions is about £600 per household. Combined with the £444 increase in energy bills expected in the next financial year for a household that gets the Chancellor’s loan and council tax reduction, that means that most households will still be more than £1,000 worse off in 2022-23.

It is clear that the Conservative Government are choosing to increase national insurance on working people and businesses at the worst possible time. The increase is deeply unfair because it will hit 27 million workers directly in their pay packets while leaving other forms of income, such as from buying and selling property, owning multiple buy-to-lets and dealing in stocks and shares, untouched. Many of my constituents do not have such wealth and assets, which is why it is unfair and why Labour has long called for the national insurance rise to be halted, so that it does not make the cost of living crisis worse.

In response to points made by Conservative Members—I am sad that the hon. Member for South Cambridgeshire (Anthony Browne) is no longer in his place—I say that the tax increase is regressive. Figures from the income tax calculator published in The Guardian a few weeks ago show that earners of £100,000 a year could end up paying proportionately less in national insurance than those on middle incomes if the increase goes through. They will pay just 7% of their overall salary, which is the same proportion as someone on £20,000 a year. The Treasury’s claim that this is progressive is not borne out when those earning between £30,000 and £50,000 will be the hardest hit by far. Someone on £50,000 a year will pay national insurance contributions of about 10% of their gross salary after April, and those on £30,000 will pay about 9% of their gross salary. From April, it will be about 13.25% on most earnings up to £50,000, but just 3.25% on any income above that threshold. We in the Labour party know that people need help now, and that is why the Government should act now.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister, James Murray, and I do hope that hon. and right hon. Members will listen to the wind-ups. I realise that a lot of people have come in for the next business, but we have had a long debate and we want to hear from the shadow Minister and the Minister.