National Insurance Contributions (Reduction in Rates) Bill

Tulip Siddiq Excerpts

2nd reading
Thursday 30th November 2023 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

Before I start, I want to say that we have heard during the debate that former Labour Chancellor Alistair Darling has died at the age of 70. I am sure Members will agree, no matter which side of the House they sit on, that he was a man who cared deeply about people across the country, and that our thoughts are with him and his family today.

The Government may want our constituents to believe that they are easing the burden on their pay packets, but the reality is that households have not given the state this much of their earnings since the 1940s. Despite the warm words that we have heard today on tax cuts, households are now paying £4,000 more a year than they did under the previous Labour Government. This is a crippling tax burden for those struggling to make ends meet through the cost of living crisis. Despite today’s commitment to reduce NI, as a result of the Tories’ decisions on personal taxation, working people are left facing an average rise of £1,200 since 2010. So although Labour supports the measures put forward today to lighten the load that NICs are placing on our constituents, we should see this announcement for what it is: a cynical attempt to draw voters’ attention away from the fact that, under this Government, their living standards are going down and taxes are going up, while their wages continue to stagnate.

As the British people already knew, the promises made today cannot compensate for the damage that has been done. The measures announced today are equivalent to handing back £1 for every £8 of the Conservatives’ tax rises since 2019. The freeze in the personal allowance threshold means that a couple on an average wage will still be a staggering £350 worse off per year, regardless of cuts to personal taxation. The wider freezing of current thresholds has confirmed that an additional 4 million of the poorest in society will now pay income tax by 2029.

The scorecards for last week’s autumn statement are now in, and our leading independent economists do not seem that impressed. The OBR has confirmed, following the Chancellor’s announcement, that real household disposable incomes will drop by 7% next year. As my hon. Friend the Member for Ealing North (James Murray) noted, the head of the Institute for Fiscal Studies has also given a damning verdict, stating that the NICs reductions that we have been debating today “pale into insignificance” compared with the threshold freezes announced by the Chancellor. According to the latest International Monetary Fund forecast, the UK will have the slowest growth in the G7 next year. The Bank of England has confirmed that there will likely be zero growth in the economy until 2025. Those are not figures that the Government should be proud of.

If that economic backdrop were not bad enough, our constituents are also left worrying about how to pay for their mortgage and avoid having to sell the family home due to the reckless actions of this Government. Working families will see an average increase of £220 a month in mortgage costs because of the Tory mortgage bombshell, and 1.5 million households are also set to suffer as they desperately try to re-fix their mortgage deals next year. The Chancellor and other Conservative Members may want us to believe that the economy has turned a corner and that the cost of living crisis is over, but millions of people are still struggling to make ends meet. So of course we welcome the tax cut being debated today, but it is a drop in the ocean for working families who are still bearing the brunt of this Government’s economic decisions.

Despite the desperate smoke and mirrors we have seen from the Chancellor, it is now clear that this Government do not know how to find the solutions to address the fundamental challenges facing this country right now—all the challenges that our constituents are facing day in, day out. After 13 years of failure, it is time that the Government got out of the way and let Labour deliver its plan for the economy and how to grow it again, get wages rising again and get Britain its future back. For all the warm words that we have heard today, if the Conservatives sincerely believe in their policies, they should ask the general public and call a general election as soon as possible.