National Insurance Contributions Bill

Part of the debate – in the House of Lords at 3:30 pm on 2nd July 2008.

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Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury 3:30 pm, 2nd July 2008

My Lords, these amendments do not in any way undermine the aims of the Bill for next year and succeeding years in its current form. What the amendments seek to address is an important principle, which is that you should not be able to make a significant change to tax or national insurance without primary legislation. As the noble Baroness has said, if this Bill goes through unamended, it will be possible for the Government to make a tax raid of £8.5 billion without requiring primary legislation to implement it. That seems to us to be an unacceptable basis on which to proceed.

The Government argue that we are being too squeamish and that parliamentary scrutiny is adequate—or would be adequate even in those circumstances—because the Government would have to introduce an affirmative resolution statutory instrument to implement the change. Our contention is that a statutory instrument does not give adequate parliamentary scrutiny for a change of this nature. Those who have participated in statutory instrument debates know that they are of a different type from normal debates on the Floor of the House except in very rare circumstances. The possibility of amending a statutory instrument is nil. The possibility of overturning a statutory instrument is extremely small. Incidentally, if one should attempt to do so, the Government always make the case that it is a constitutional outrage that one should try to do it. Frankly, therefore, we do not believe that the argument that the statutory instrument is a sufficient safeguard in terms of Parliament's rights and powers is adequate.

If one takes that view, how can one constrain the Government? The noble Baroness has come forward with a relatively straightforward approach. In some respects it mirrors the Rooker-Wise amendments and we are extremely sorry that we do not have the benefit of the advice of the noble Lord, Lord Rooker, this afternoon as to whether he thinks this would be an appropriate addition to the Rooker-Wise principle. However, it is a straightforward way of proceeding. Why would the Government object to it?

The principal arguments advanced by the Government are essentially practical. No doubt they have technical issues about the drafting of the amendment, but the practical argument they advance, which has some substance, is that, because national insurance is collected on a weekly rather than an annual basis, and because for that purpose you have to legislate for changes in national insurance before rather than during the year in which the changes come into effect, you run into huge problems because you will not have time to legislate for changes in cases where the threshold is going up by more than the rate of inflation before the end of February, when the national insurance changes have to come in.

This is not an insuperable problem: there are at least two ways round it. First, the Chancellor could announce changes for the following year's Budget, as he did last year. Noble Lords will remember that he did that with the abolition of the 10p rate—he just did it a year early. You could announce that in a Budget in, say, March and the legislation for national insurance for the following tax year could be introduced in, or around the same time as, the Finance Bill for the first year. The second option, as currently happens anyway, would be simply to announce it at the time of the Pre-Budget Report, leaving aside the problem of ridiculously late Queen's Speeches. If we had the Pre-Budget Report after the Queen's Speech, a Bill could be introduced, presumably in another place in November, and it could be carried over from one Session to another. It could be argued that taking a Bill through its normal stages in both Houses takes quite a long time. However, given that the kind of Bill that we are talking about would be relatively rare, that it would have probably no more than one or two clauses and that the likelihood of your Lordships' House seeking significantly to change the threshold rate for what is in effect a tax is small, it would be perfectly possible to concertina parliamentary scrutiny of such a Bill into three months—November, December and January—without too much difficulty. I do not believe that this is an insuperable problem.

When we discussed this in Committee, the Minister said:

"Programming Bills into the system is often not that easy, particularly with the competing priorities that always confront Governments".

It is not necessarily easy but nobody said that life was easy. This would probably be a relatively infrequent occurrence, and I am sure that the Chancellor would be able to persuade the Legislative Programme Committee to include such a Bill. The Minister raised a second objection about parliamentary scrutiny. He said that this,

"would amount to a huge increase in parliamentary oversight".—[Official Report, 9/6/08; col. GC 117.]

That is a good basis on which to proceed. We are therefore happy to support the amendments.