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National Insurance Contributions Bill

I pay tribute to the comments of my hon. Friend the Member for Gosport (Peter Viggers). He was right to point out the larger context in which we should place the Bill, and the errors that we have found creeping into the last Budget that we have been faced with. It is important to put in context the consequences of the Bill to the person in the high street and the people in our constituency. These consequences must be placed into the context of council taxes, increased fuel bills and so forth. This is not a tax-neutral measure, as the Government would have us believe. They might be able to convince the Labour Members that it is, using the figures in the Red Book, but the middle-income earners who will be hit by it will end up out of pocket. We strongly support the idea of tax simplification. As my hon. Friend the Member for Gosport pointed out, we have a very complicated tax system, and it behoves us all to try to simplify it. There is a consequence to the Bill, however; it is the price tag that is associated with it. That is why the Conservatives will not support it on Third Reading. If we were to ask any of our constituents exactly what national insurance contributions were, I doubt that they would be able to give us a proper definition. Some might say that they were supposed to link in with the original desire to protect against unemployment, or that they had some connection with the health service. Others might say that they had a link with pensions. The system is now so confusing, with all its smoke and mirrors, that it is seen simply as another stealth tax. It is a confusing tax that is used to raise more funds for the Government. As we have heard from my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), the impacts of the proposals will be twofold. The first will involve the changes to the upper earnings limit. This has come about because of the curious gap that has emerged between national insurance contributions and the higher rate of income tax. Simplification of the tax system is, of course, important, but we see this as a clever way of introducing a stealth tax that will give the Government a revenue increase of about £1.5 billion, which will be taken directly from middle-income earners. It has been estimated that that will affect about 5 million households across the UK, involving people who earn between £39,000 and £40,000 a year.