Clause 1
National Insurance Contributions Bill
4:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
May I say, Mr. Chope, that it is a great pleasure to serve under your chairmanship—there was no opportunity to say that formally in the morning’s evidence session? I also thank the Financial Secretary and her officials for their assistance this morning. It is the first time that I have conducted an evidence session of that sort, and I think the same goes for the Financial Secretary. It was an interesting experience, enjoyed by some but possibly not by others.
Before discussing amendments Nos. 1 and 5 in detail and what precisely we are trying to do, it might be helpful to touch upon the broader issue that we discussed this morning. Although we welcome the simplification of the system and share the Government’s view that the objective of aligning national insurance with income tax is desirable, one of our concerns, which we seek to address with amendment No. 1, is that the way in which the Bill is drafted could lead to a substantial reduction in Parliament’s ability to scrutinise legislation in those areas.
As we discussed this morning and questioned the officials, national insurance contributions—their rates and thresholds—are generally amended by secondary legislation within a framework of restrictions laid out in primary legislation. One of those restrictions is that the upper earnings limit must be between six and half and seven and a half times the primary threshold. That restriction is being taken away. I put it to the Financial Secretary this morning that she was “dismantling” those restrictions—a word that she did not disagree with. We are left in a position in which a Government are capable of increasing the upper earnings limit through a simple affirmative resolution procedure, which has not previously been possible. Consequently, personal taxation could be increased by 11 per cent. for all earnings over £43,000, with very little parliamentary scrutiny.
Some Members might welcome that as a desirable policy. My point is not to argue the pros and cons of that particular policy but to argue that it would be wrong to make such an increase without proper parliamentary scrutiny. It is worth stressing that there is a strong body of opinion within the governing party that there is an argument for increasing tax rates. I will not dwell on that, but there is the Fabian Society paper “Narrowing the Gap”, launched in March 2006 by the Foreign Secretary and the Secretary of State for Children, Schools and Families, which called for a 50p top rate tax. Also the Exchequer Secretary—who spoke on Second Reading—was asked, at a Fabian society fringe event at the last Labour party conference, if her party faced a challenge from its opponents regarding the top end of the tax scale; she replied that it did and that she for one hoped that they would be doing a bit of talking about it. Here is an easy way of legislating for just that—one affirmative resolution and we can have, effectively, a 52 per cent. top rate band.