t: 020 7219 8155 e: fieldm@parliament.uk

National Insurance Contributions Bill

January 31, 2008

National Insurance Contributions Bill

Mark supported David Gauke MP for the Third Reading of the National Insurance Contributions Bill. He served on the standing committee in January 2008 for this technical Treasury Bill and in the Third Reading expressed the Conservative Party’s concerns that in the name of simplification, the government will be bringing in a Bill that will raise tax for those on middle incomes.

Mr. Mark Field (Cities of London and Westminster) (Con): It is a great pleasure to follow the hon. Member for Taunton (Mr. Browne). I suspect I may be getting into the spirit of things, and perhaps reflecting the concerns that my hon. Friends the Members for West Chelmsford (Mr. Burns) and for Bournemouth, East (Mr. Ellwood) wished to raise earlier, when I say that the fact that the hon. Member for Taunton is here on his own shows either that his 62 fellow Liberal Democrats are convinced of the case for simplification or that they are all hurriedly filling in their tax returns in advance of the deadline this evening.

One way or another, it has been a pleasure to have served briefly on the Committee considering this Bill. The evidence session that we had was an excellent innovation. It was the first time I had dealt with a Bill where there was quite that level of interplay between Ministers, officials and Members of Parliament. Such sessions are considerably more revealing than the stylised debate form, even within the relatively informal surroundings of a Public Bill Committee. The session that we had allowed some deeper questioning, and far more clarity. That ensured that the process was rather more revealing and, I suspect, more straightforward than it would have been if we had to constrain comments within the confines of stylised amendments. It was a useful process, and I thank the Minister and her officials for ensuring that we had that sort of debate.

My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) made some important points in his contribution today, and in Committee. He repeatedly pressed the Minister on the changes made in the 2007 Budget, and on the fact that there were clearly winners and losers thanks to the changes. It seemed to me that the Financial Secretary accepted that there would be as many as 5.3 million losers due to the budgetary changes, as stated by a senior civil servant to the Treasury Committee. It was interesting, however, that the Prime Minister refuted that figure. We will see how matters pan out.

The debate on national insurance and pensions is important. It will go on for many years and decades to come, so it is perhaps a little perverse that the Government have rather hysterically held on to this idea that we must have everything sorted out by 2031. I respect the idea, and very much agree with it, that we need long-term thinking in this area, but the world of work, pensions, national insurance and taxation will be very different in 23 years’ time. If we consider the situation almost a quarter of a century ago, we find that the accepted norms of tax rates were higher, and that we were living in a less globalised world. One thing of which we can be sure is that the next 23 years will bring even greater change, with the emergence of China and India as great economic superpowers—

Madam Deputy Speaker (Sylvia Heal): Order. I am sure that the hon. Gentleman knows that he is going wide of the Bill. I hope that he will confine his remarks on Third Reading to the matters contained in the Bill.

Mr. Field: Thank you, Madam Deputy Speaker. I stand duly admonished by you. With that in mind, the concept of simplification is very much to be admired, whether in speaking style or in relation to the Third Reading of the Bill.

I support the recommendation of my hon. Friend the Member for South-West Hertfordshire that we vote against the Bill because there is a sneaking doubt on the part of myself and my colleagues that it is driven by a desire to raise revenue more than anything else. As the hon. Member for Taunton pointed out, a mechanism could have been put in place to ensure that the process was revenue-neutral, instead of raising £1.5 billion or more as a back-door tax increase.

I support the recommendation of my hon. Friend the Member for South-West Hertfordshire that we vote against the Bill because there is a sneaking doubt on the part of myself and my colleagues that it is driven by a desire to raise revenue more than anything else. As the hon. Member for Taunton pointed out, a mechanism could have been put in place to ensure that the process was revenue-neutral, instead of raising £1.5 billion or more as a back-door tax increase.

The Bill is very useful, but I hope that it is a starting point for a broader debate that needs to take place on fiscal drag. There are now almost 4 million people who pay higher-rate tax, compared with just 2 million just 10 years ago. I am probably taking words out of the Minister’s mouth, but she may suggest that that is a sign of great affluence, and there is an element of truth in that. However, it seems to me that the lowest-paid in our society pay far too much tax as it is. It is not just an issue for higher-rate tax payers, but for those at the lower end of the band. Detailed thought is required, through this sort of legislation and in Finance Bills in years to come, to ensure that the lowest-paid pay far less tax. Certainly in my constituency in central London, taxation is a massive disincentive to the lowest-paid, especially those in social housing, to get any job, notwithstanding benefits such as tax credits and the minimum wage.