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National Insurance Contributions Bill

I did not seek to imply that nobody would be worse off, but the vast majority of taxpayers and pensioners will be better off as a result of the reforms in the 2007 Budget. Most employees earning at the upper earnings limit or above will be better off, using the 2008-09 tax year as an example. The loss of the starting rate band means that they are better off by £232 per annum. The raising of the upper earnings limit to £770 means that they are better off to the tune of £390 a year. The reduction of the basic rate to 20 per cent. means that they are £673 worse off. So overall they are £51.60 a year better off. There are groups that are worse off—about 300,000 taxpayers at the upper earnings limit—and I have answered questions recently that make that clear. We anticipate, however, that the vast majority would be better off or no worse off as a result. Our intention in making the changes was to introduce a much simpler personal tax system—one of the simplest in Europe and the developed world. Amendment No. 10 would also amend clause 1, and is an alternative to amendment No. 8. It would allow the upper earnings limit to be set without the current restrictions and subject to approval by both Houses of Parliament. However, it would then introduce the review, which we have had exchanges about. Under the amendment, after the regulations came into force the review would examine whether the upper earnings limit calculated on an annual basis exceeds the level of earnings at which higher rate tax becomes payable. If there is such a difference, the Treasury would need to make new regulations by the following January that would apply from the following April. Broadly, that is what the amendment asks us to undertake. In principle, I have no objection to the Treasury's reviewing its work. It conducts such work thoroughly and there should be no reason for anybody to doubt the integrity of any review, but the amendment is unnecessary. The upper earnings limit and the level of the higher rate tax threshold will be announced at the time of the pre-Budget report. Announcing the levels then is necessary in order for changes to national insurance contributions legislation, guidance and software changes to payroll systems to be put in place for the next tax year. The regulations that set the level of the upper earnings limit will already be subject to affirmative resolution. I have argued that that is a perfectly proper means of parliamentary scrutiny. The change suggested by the amendment would be inconsistent with the Bill's objective, which is to allow alignment of the upper earnings limit with the level at which higher rate tax is paid. The change proposed in the Bill should not give any cause for concern in terms of parliamentary scrutiny. We have the necessary parliamentary controls in place because the regulations will be subject to careful scrutiny under the affirmative procedure. The Bill provides the correct balance between allowing appropriate scrutiny and not putting pressure on limited parliamentary time for other legislative objectives. I therefore hope that the hon. Member for South-West Hertfordshire will withdraw the amendment.