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National Insurance Contributions Bill

I do not look forward to the Bill reaching the statute book. It is a nasty little measure. The Exchequer Secretary described it as a technical measure and, although it is short, it is complicated. A website on the subject begins: ““Prepare to be baffled””. It says that the state second pension is the most ridiculously complicated benefit on the face of the planet. ““Prepare to be baffled”” is the correct term, as is ““Prepare to be taxed””. The Bill will especially disadvantage those who earn between £37,000 and £43,000. As has been said, the overall measures in the Budget, including the Bill, will involve raising a tax of some £1.5 billion and creating 5.3 million losers. The Financial Secretary has pointed out that 3.5 million of those losers will lose less than £3 a week, but it follows that 1.8 million people will lose more than £3 a week. Hon. Members will remember the French statesman Talleyrand, who was widely believed to be incapable to telling the truth. He was extremely devious and everyone tried to work out a second motive for everything that he did. When he died in 1838, Metternich is reported to have said, ““I wonder what he meant by that.”” I felt that way when I listened for more than 10 years to the Budgets of the then Chancellor of the Exchequer, now the Prime Minister. Let me quote from the Budget speech of 21 March 2007. The then Chancellor said that he was"““creating a tax system for income that has just two rates and two thresholds.””" He also said that he was creating a system"““to reward work, to ensure working families are better off and to make the tax system fairer””.—[Official Report, 21 March 2007; Vol. 458, c. 827-8.]" First, he said the basic rate of tax would be cut by 2 percentage points from 22 to 20 per cent. and the 10 per cent. starting rate of income tax on earnings would be abolished from 2008-09. Consequently, income tax and earnings would be charged at two rates—the basic rate of tax at 20 per cent. and the higher rate at 40 per cent. ... I am grateful to you, Madam Deputy Speaker. The then Chancellor of the Exchequer also said—this is the key point, leading to the introduction of this Bill—that the upper earnings limit for national insurance contributions would be aligned with the higher rate threshold. It is those words alone that led to the Bill. My quote showed the then Chancellor's typically glutinous preening, which contrasted with the comments that are behind the Bill. It would have been helpful if the then Chancellor had developed the capacity for telling things the way they were. He made a great pitch for presenting the whole picture to the House. He made a great point about simplifying. He said that the upper earnings limit for national insurance would be aligned with the higher rate threshold for tax. However, he was not genuinely simplifying. He is simply bringing the rates together—aligning the rates but not the systems. Two systems remain—an annual taxation system and a weekly system for national insurance. It was therefore incorrect to claim that he was simplifying. The system remains too complicated. We were told that the Bill and the other measures relating to the 2007 Budget were part of a package. We have been told many times, including today by the Financial Secretary, that we must look at the relief of child poverty and at lifting pensioners out of poverty. ““Child poverty”” is rather a misleading expression. A child might ask his father, ““Daddy, are we quite rich?””, to which the reply might be, ““Well, I'm quite rich, but you, like all children, are incredibly poor.”” We are not talking about child poverty; we are talking about family poverty, which includes children. The expression is therefore misleading. Tax is too complicated at the moment. Pensioner tax credit take-up is very low, and for Ministers to— ... Thank you, Madam Deputy Speaker. The Bill is of course part of the overall Budget measures, and this is a revenue-raising issue. The amount of tax, and revenue generally, taken by the Budget is too high. The Bill is part of that— ... I am grateful to you, Madam Deputy Speaker. I oppose the Bill, which, among other things, will give the Government the opportunity to raise further national insurance contributions without coming back to the House and introducing primary legislation. One of the purposes of the Bill is to allow the Government to come back with regulations to increase national insurance, and on that basis and for the other reasons that I have given, I shall readily vote against it on Third Reading.