National Insurance Contributions (Rate Ceilings) Bill

Rehman Chishti Excerpts

Tuesday 15th September 2015 Commons Chamber

[Harriett Baldwin]

I thank the hon. Lady for her sensible suggestion. I know that those who put together the impact assessment online will have taken her wise words to heart and will make a change. Clearly, when one brings in legislation to freeze national insurance rates, the impact is that there is no change in national insurance and therefore no impact to report.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I have businesses in my constituency that work hard and do the right thing. They do not want to be clobbered with more taxes. The impact of the Bill is that if people do the right thing and work hard, the Government will support them to succeed in life.

[Harriett Baldwin]

I thank my hon. Friend for making that excellent point. The Government want to back small businesses, entrepreneurs and those who want the certainty over the next five years that if they employ four people on the new national living wage, they will not have to pay any national insurance because of the employment allowance.

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[Harriett Baldwin]

My hon. Friend is right. The Bill’s measures strongly back business and other employers, many of whom will benefit from the employment allowance too.

The Bill legislates our commitment to provide certainty on national insurance rates for the duration of the Parliament. Hon. Members will be aware that our other commitments in the manifesto to lock taxes were that we would not increase the main rates of income tax and value added tax, as well as not increasing national insurance. The Finance Bill will deliver those commitments and this Bill delivers the commitment on national insurance.

[Rehman Chishti]

The Bill is very much welcome and goes hand-in-hand with what the Government are doing in other areas, such as the local growth fund. The Government have set aside £12 billion, £7 billion of which has already been spent on building homes and supporting businesses. The wider picture is that the Government are supporting businesses on the front line, creating homes, jobs and opportunities. That is the right way forward.

[Harriett Baldwin]

My hon. Friend is absolutely right. This is part of a package of measures the Chancellor announced in the July Budget.

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[Kit Malthouse]

That is exactly the point that I am making. Businesses are much more likely to employ people if they have some certainty about the overall cost of employment—not just wages, but on-costs such as expenses. Within that, national insurance is a very significant cost, and providing an element of certainty over the next four or five years is therefore extremely important.

Let me now return to a point that I was making earlier about signals. When I was Deputy Mayor for business and enterprise at City Hall, a position that I occupied for three and a half years, I was in charge of foreign direct investment. My job was to go around the world encouraging people to come and invest in London and the south-east. One of the things I learnt from that experience was that signals from City Hall about what we were willing to do, and how welcoming we were likely to be to particular companies, individuals or investors, was critical to whether they wanted to come here. In that context, an element of certainty and predictability, not just political and legal—we are seen to have that around the world—but fiscal, was absolutely vital

[Rehman Chishti]

Of course I agree with what my hon. Friend says about certainty and clarity. Does he not think that the shadow Minister’s argument—that when a promise has been made, there is no need to legislate for it—is quite contradictory? The Blair Government passed more legislation than any other Government: they passed 26,849 pieces of legislation. Labour cannot have one rule in government and another in opposition. Clarity is the way forward.

[Kit Malthouse]

My hon. Friend is absolutely right. It must be said that the Brown years injected an enormous sense of uncertainty into business. Although, for some of that period, we were benefiting from what could be described as a global boom, businesses existed in an environment, and on a battlefield, that was for ever changing. Anything that calms down such situations, and makes decision making much more predictable, is key.

That is particularly important when it comes to foreign direct investment. When businesses want to locate large manufacturing plants that are both capital and labour-intensive, employment taxation and employment law are the two biggest drivers of whether they decide to come to the UK. The Bill will make employment taxation much more predictable, and seen to be predictable, for the next five years, and not just on the say of a “here today, gone tomorrow politician”—was it John Nott who objected to being so described? The facts will be there on paper, in black and white, and the fact that they can be relied on will make a big difference to foreign direct investment decisions.

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[Huw Merriman]

I absolutely agree with that. I recall that five years ago there were howls of derision when the Government announced that they would seek to create one new job in the private sector for every one public sector job lost. At the end of the five-year period I believe that the actual figure was five for every one. We had great success, and it shows that we are the Government who can manage the economy and turn it around, despite what we were faced with in 2010.

The content of this Bill was at the heart of this Government’s manifesto commitment. Today is all about honouring promises—it is not about gimmicks or stunts. What has this House become if, when we stand proudly and enact our manifesto in legislation, it is branded as a gimmick? What does that say about the manifestos of other parties, given that it is only four months since the previous election? I was reassured to hear from the Cabinet Office that a unit is in place to ensure that every Department is making good on this Government’s manifesto pledges, as opposed to the Labour party which, as mentioned, is tearing up its pledges after only four months and a leadership change.

With the commitment not to increase national insurance, which is, after all, a tax on job creation, Conservative Members are making good on our commitment to support business and create a platform for jobs.

[Rehman Chishti]

Our commitment to creating more jobs and bringing more jobs to our country goes hand in hand with what we are doing on corporation tax, where we have one of the lowest rates in the western world. As a result, Deloitte is saying, “These measures will bring more businesses into this country.” This lower taxation measure is therefore in line with the other measures put forward by the Chancellor to create more jobs and opportunity by having one of the lowest levels of corporation tax in the developed world.

[Huw Merriman]

I fully agree with that point and I think I can link it to the one made previously by the SNP. This Government have a commitment ultimately to reduce the deficit and run a surplus by 2020, and that requires some changes and some levelling in taxes. The key thing is to look at which taxes we use: which taxes will have to increase to pay back some of the debt and which ones can be cut, because every £1 cut creates more in the private sector and more spend.

Let me touch on two things. The annual investment allowance is a tax measure that was due to revert to £25,000 per annum at the end of this year, but after the July Budget it will now increase to £200,000 per annum. That is a good example of a tax change that will boost the UK supply chain and cause private industry to purchase more plant, causing more pounds to be created as a result. Alternatively, let us consider the insurance premium tax, which will rise but which will be way below levels in the European Union, particularly in Germany. I envisage that it is unlikely to have a negative effect. This is all about this Government understanding how the economy is managed and how these macro levers can be manoeuvred to favour private investment. [Interruption.] There may be chuntering from Opposition Members, but our record in government over the past five years—we have created jobs and started to balance the budget—cannot be denied, despite what is said by Opposition Members.

I come back to my personal commitment in Bexhill and Battle. The number of my constituents on jobseeker’s allowance stands at 613, which is a decrease on the 2010 figure of 1,400, of whom 135 are aged 18 to 24—that compares with a figure of 385 in 2010. Our focus on reducing youth unemployment makes me incredibly proud of what this Government have done. These figures show that some of the 2 million new jobs created in the UK over the past five years have been delivered in my constituency. But my local task is to attract new employers to Bexhill and Battle.

I was listening to my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) talking about the science park and the developments there. I was fortunate enough to visit her constituency and Milton Keynes last weekend, when I was struck by the differences between those areas and East Sussex, which is home to my constituency and where I reside. We have a real need for regeneration and we do not have those new jobs being created. The challenge for us is incredibly difficult. We do not have the motorways, the dual carriageways or the rails—as yet; I am delighted by the commitment from the Government in this Budget to try to fix that. Our regeneration is a hard quest and moves such as those in the Bill, which provide certainty, make the job much easier. Thanks to this Government, a new link road is being built from Bexhill to Hastings, which will deliver thousands of houses, a 42-acre business park and a country park, all of which should attract thousands of high-skilled jobs and boost our economic regeneration and productivity.

Creating this infrastructure is one thing, but turning it into a jobs factory requires a persuasive case to be made to business to take risks. Being able to tell businesses that they can expand and grow without the danger of taxes rising is a key ingredient for them to take that risk involved in financing expansion.

[Rehman Chishti]

My hon. Friend talks about taxes rising. The Bill provides certainty, whereas rising taxes cause uncertainty. In his manifesto, the Leader of the Opposition said that he wanted to increase corporation tax from 20% to 20.5%. That would create uncertainty and hinder jobs and investment coming into this country.

[Huw Merriman]

I agree completely. The cut in corporation tax allowed this Government to justify the increase in the living wage, as it offsets that. Such a change would put all that at risk, although I very much hope that we will never see that day.