National Insurance Contributions (Rate Ceilings) Bill (First sitting)

Rob Marris Excerpts

Tuesday 27th October 2015 Public Bill Committees

[Wendy Morton]

Q 20 How can the fund cope if there is an unforeseen crisis?

Mr Gauke: First, as Mr Whiting pointed out, the fund is unlikely to face an unforeseen crisis due to expenditure. There is flexibility within the regime for top-ups from the Consolidated Fund from the Treasury to ensure that the national insurance fund can fulfil its obligations. In terms of our commitments, this requires us to have a strong economy and sound public finances and to control public spending in other areas, so that we are in a position to see the increase in departmental spending in the NHS that I am sure we would all like.

[Rob Marris (Wolverhampton South West) (Lab)]

Q 21 In terms of the national insurance fund, the trend is not looking good. In 2008-09, the fund was sufficient to cover 71% of its liabilities. By last year, that had dropped to 25%. Some commentators are suggesting that this year it will fall below the Government Actuary’s recommended one sixth, which is 16.7%. I understand that the Government Actuary has indicated that a top-up will be required this year from the Consolidated Fund, I imagine as you just indicated. I understand what you said about flexibility. Can you give an indication of how big that top-up from the Consolidated Fund for the national insurance fund is likely to be for this financial year and for the remaining years of this Parliament?

Mr Gauke: I can say that, for the 2015-16 tax year, a top-up of £9.6 billion has been provided for in legislation. That is the potential number; it is not to say that that will be necessary. I am not sure that I can give a number for future years as such. It will depend upon various factors, but there is provision for top-up from the Consolidated Fund if necessary.

[Rob Marris]

Q 22 Forgive my ignorance, but does it require primary legislation? You talked about the £9.6 billion being provided for in legislation for this financial year. Is that secondary or primary legislation? What is the mechanism?

Mr Gauke: It is secondary legislation.

[Rob Marris]

Q 23 So if the transfer needed to be more than £9.6 billion in this financial year, that would require fresh secondary legislation this year? I am not saying that will be the case, but asking what would happen if it were.

Mr Gauke: I think that is an assessment of what could be necessary this year, but for future years we would require further secondary legislation to provide such a top-up.

[Rebecca Long Bailey]

Q 24 What steps have the Government put in place to review this legislation in terms of reports or otherwise? Are there any triggers that will lead to its suspension?

Mr Gauke: There are no formal processes for reports or triggers for suspension. All legislation is of course kept under review. I remind the Committee of the purpose here. It is to emphasise and underline our commitment not to increase national insurance contribution rates in the course of this Parliament. That is what my party set out at the general election, and this legislation is to support that.

--- Later in debate ---

[Huw Merriman]

Q 32 To turn the question from the hon. Member for Middlesbrough on its head, does the Treasury keep estimates of how the stability that this gives business will benefit the economy?

Mr Gauke: It is difficult necessarily to measure that. It is difficult to take the things in isolation. Overall, if you look at what we have done, as both a coalition Government and a Conservative majority Government, in terms of, for example, reducing our rate of corporation tax, addressing the worst effects of the jobs tax, which we inherited in 2010, some of the measures we have taken regarding capping business rates, and so on—over a period of five and a half years or so—we have taken a large number of measures to help businesses and to ensure that we have a thriving private sector, creating the jobs and tax receipts that we need to fund the NHS and so on.

[Rob Marris]

Q 33 Reversing that, I would suggest that the Bill arguably creates greater uncertainty, because although the Government have chosen, following your party’s manifesto commitment, to lock in a cap on national insurance contributions, you are taking action in some areas and not others. For example, there are about 1,300 tax reliefs and you are not locking all of those in.

In answer to an earlier question, you referred to a review of business taxation, which I think you said would be launched in the spring. That in itself creates uncertainty, and I suggest that the argument that the Bill creates greater certainty is wrong. It creates greater uncertainty because people say, “You’re locking in this but we notice you’re not locking in other stuff, so other stuff might change and adversely affect businesses or individuals.”

Mr Gauke: First, to be clear, we will publish our business tax plan—road map, if you like—in the spring, setting out what we will do. It is not the announcement of a review as such. It is, to some extent, conclusions.

[Rob Marris]

Until then there is uncertainty.

Mr Gauke: But my wider point is that it is important in terms of the larger taxes to provide greater certainty to the British people. We will not be putting up tax rates. We do not believe that that would be the right thing to do. I also make the point that my understanding is that, at the general election, the Labour party also made a commitment not to increase the rates of employer and employee national insurance contributions, income tax and VAT. The difference between us that we are legislating for it but, as I say, the idea of ruling out increases in tax rates is not, as I understand it, something to which your party, Mr Marris, is opposed.

[Rob Marris]

Q 34 We did not say that we would do it for business certainty.

Mr Gauke: Well, whatever the reason for doing it, that, I think, was your party’s position. It was a manifesto commitment, and it is right that we fulfil it.

[The Chair]

Those are all the questions of which I have been notified. Does any other hon. Member wish to ask a question or raise an issue that has not been covered thus far?

[Rob Marris]

On a point of order, Mr Rosindell. May I thank you for your chairing of the Committee today, particularly as I suspect that, like me, you missed the Canadian breakfast this morning?

[The Chair]

No, I went to it, actually.

[Rob Marris]

I had a meeting. I thank you, Mr Rosindell, for your commitment to your service as a Chair and for chairing the Committee today.

[The Chair]

Thank you. I thank the witnesses for their attendance today and for duly answering the questions. If there are no further questions, I thank hon. Members for their attendance.

Ordered, That the debate be now adjourned.—(Mel Stride.)