National Insurance Contributions (Increase of Thresholds) Bill

Debate between Sally-Ann Hart and James Murray

2nd reading
Thursday 24th March 2022 Commons Chamber

[James Murray]

We have had a number of comments about what is within the scope of this debate, and I suspect that issue is rather out of scope. I will focus on national insurance and the Chancellor’s spring statement yesterday, and matters related directly to that.

Following the spring statement and the package announced by the Chancellor yesterday, Torsten Bell, chief executive of the Resolution Foundation, stated:

“This package only makes sense if:

- your only test for policy choices was can you prove you’re a tax cutter

- you’ve already announced a rise in National Insurance.”

Overnight analysis by the Resolution Foundation has set out the stark truth that considering all income tax changes to thresholds and rates announced by the Chancellor, seven in eight workers will pay more in income tax and national insurance in 2024-25.

[Sally-Ann Hart]

If the Opposition had to plan for a spring statement, would they rule out raising income tax?

[James Murray]

We have made it very clear that we believe in a fair taxation system. The key point for us in the Chancellor’s package is that he is raising taxes for working people, while ruling out measures such as our one-off windfall tax on the profits of North sea oil and gas producers. That is not a fair taxation system.

The inescapable truth is that whatever the Chancellor puts on his Instagram account, he has left Britain facing the highest tax burden in 70 years. As Paul Johnson, director of the Institute for Fiscal Studies said yesterday:

“almost all workers will be paying more tax on their earnings in 2025 than they would have been paying without this Parliament’s reforms to income tax and NICs, despite the tax cutting measures announced today.”

The Institute for Fiscal Studies has calculated that median earners on around £27,500 can expect, even after the increase in national insurance thresholds, to be £400 worse off in the coming financial year. The Office for Budget Responsibility has confirmed that this year will see the biggest hit to incomes on record. That will be the true legacy of this Chancellor, not the phoney tax-cutting image that he has been so desperate to cultivate.

Although today we are debating national insurance thresholds, and the impact that will have on people’s lives, there is much more that the Chancellor simply failed to address in his spring statement. We have been repeatedly pushing the Chancellor to levy a one-off windfall tax on North sea oil and gas producers’ profits, to help fund a one-off cut to people’s energy bills. Our plans would cut everyone’s bill by £200 and would do so by £600 for the 9 million households facing the toughest squeeze.