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National Insurance Contributions Bill

There are a number of anomalies and ironies about this issue and the fact that we are discussing it. It is anomalous that this House spends time scrutinising national insurance as though it were not a tax, and it is ironic that the purpose of the amendments is to increase the power of the Commons and your Lordships' House against the Government on a matter of taxation. Your Lordships' House has not played any substantive role in taxation for the best part of a century, and it is a delight to be able to do so in relation to these amendments. The changes which have brought forward both the Bill and the amendments have two clear advantages from the Government’s point of view. First, they simplify the tax system. It is a minor advantage in practice, given that national insurance and income tax are to all intents and purposes collected separately, but for individuals and companies attempting to understand the system it effects a measure of simplification, and to that extent it is to be welcomed. As the noble Baroness said, it also brings in significant additional revenue. In present circumstances, that is clearly a major advantage to the Government and, on any objective test, is a far more significant benefit than any theoretical or actual benefit of simplification. From these Benches we have no objection either to the simplification or to the Government getting additional revenue in this way, but we have considerable sympathy with the arguments about the extent to which this Bill will give unacceptable freedom to government to change the threshold without adequate parliamentary scrutiny. As the noble Baroness said, we have had many discussions about the virtues or not of affirmative-resolution debates, but the truth is that they virtually deny Parliament the opportunity to overturn and, certainly, to amend any provision that the Government put forward. Therefore, this Bill undoubtedly adds significantly to the power of government to change national insurance and the limit, and therefore government income revenues, by a significant amount without adequate parliamentary scrutiny. The amendment has a double advantage. First, in the Government’s terms, it maintains the simplification. How unfortunate it would be if, having aligned the two thresholds, for one reason or another the Government allowed them easily to slip out of alignment. The Bill makes it easier for that to happen. Secondly, and more importantly, the amendment means that the Government cannot have another significant raid on higher earners’ income via the national insurance route without a proper parliamentary debate. I am not saying that there are no circumstances in which we would advocate that such a raid might be necessary. I fear that given the way that the public finances may be going and the constraints that the Government will be under, due to their high levels of borrowing, they may be looking for additional sources of revenue in the future. Frankly, that is not the point. The point is that it should not be possible to bring to bear a significant additional source of government revenue without proper parliamentary scrutiny. That will be the consequence unless this amendment or something very like it is put in the Bill. Therefore, we are minded to support this group of amendments.