National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill — House of Commons, 2019-04-30
Topic: Macroeconomics
James Roger Cartlidge (Conservative, Centre-right): Before I start discussing the Bill, Mr Deputy Speaker, I hope you will not mind my saying that it is a pleasure to follow the hon. Member for Bootle (Peter Dowd), as always, but it is a particular pleasure to follow the brilliant speech made by my hon. Friend the Member for Cheltenham (Alex Chalk) about climate change and his Bill about the net zero UK carbon account. It was one of the finest speeches I have heard since entering this place. It was an inspiring speech on an incredibly important subject. Having said that, although I intervened on the hon. Gentleman to say that this was a minor matter, that does not mean it is unimportant. I meant that it was minor in terms of the revenue, albeit that its revenue is important and welcome. We should add that it has been baked into the Government’s accounts, so if anyone were to oppose it, they would have to suggest where £200 million a year of revenue was going to come from, as we would be spending this money on public services, from which we will all benefit Given the context of politics today, I would understand it if someone sitting in the Public Gallery or watching this debate elsewhere were to look at the title of this debate, "National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill", and think to themselves, "With all that is going on in the country—with these Union Jack and European Union flags outside, and all the talk about European elections, local elections, Nigel Farage back out on the stump and so on—is this really what we should be debating?" I would say that this Bill is important because, in its own way, it is the future of taxation in this country. Members may think that that is an odd thing to say, but we are going to be seeing a lot more of this type of Bill on taxation: measures that deal with specifics. I would not necessarily say that it deals with avoidance, but it is certainly a tidying-up measure that brings in welcome revenue Contrary to what the hon. Gentleman said, the Bill has little noticeable impact. Why do I say that? Ever since the early 1990s—since the 1992 general election and the 1997 one—and for the time being perhaps, the days when one of the main parties would go into a general election promising to change one of the main rates of taxation have gone. When I was elected in 2015, the Government we served in had specific legislation saying that we would not increase the main rate of national insurance. I think it also said we would not raise the main rates of income tax and VAT. There was legislation about the aid budget. We then found out that we would not increase tax on the self-employed and we would not increase the main tax on the employed. In fact, we changed inheritance tax. You soon run out of anywhere left where you can change any substantive tax, which must have been a concern in the Treasury; you are left with those yet to come and the good, old-fashioned national credit card. Our party has tried to avoid using that as much as possible. If Labour were successful at the next election, I am not sure it would be quite so successful on that—I think the card would take something of a hit The reason we support these types of measures is not because we welcome tax increases per se. In the context where the Government have pledged not to increase main rates of tax—I am sure Labour would be the same, although perhaps not on corporation tax—and in a political climate of no parliamentary majority, it is difficult to pass those "more radical" tax changes. So we will see more and more of these types of changes. We may call them tidying-up exercises or tax simplification measures—we have had many similar measures called "anti-avoidance"—but the point is that in total they bring in a lot of revenue. We are talking about significant revenue—£200 million a year is significant. If we put that in the context of the police budget, we see that it is a significant sum, so it is important. I will certainly be supporting this measure. I do not know whether the Labour party will, because I was confused by the hon. Gentleman’s speech. Perhaps we will get some clarity later One thing we should be wary of is that the specific area of taxation we are changing and increasing here is employers’ national insurance. I declare an interest, as an employer. I am a controlling director of a small business and have been for many years. It is fair to say that there are pluses and minuses with using employers’ NI as a method of obtaining revenue for Her Majesty’s Treasury. On the upside—this is why I have sympathy with this measure—it is saying, "Here are a lot of similar activities and it just so happens that in some of them employers’ NI is not paid. It is in the other ones, so we are harmonising the situation." That is perfectly fair and reasonable. We have seen this in other contexts, with the classic one being IR35; people, often knowingly and perhaps sometimes unknowingly—it is hard to say—have constructed their tax affairs in such a way that, in effect, they are not having to pay either some employees’ taxes or the costs that there would be for a traditional company paying employees of paying employers’ NI. It is important always to consider the application of employers’ NI because, if it is not applied fairly, it can offer a perverse incentive in the tax system and create strange behaviours My right hon. Friend the Chancellor has talked about people who became self-employed and were not genuinely self-employed—I cannot recall the precise phrase he used, but we all know what that means. It means that someone is setting up their tax affairs in such a way as to reduce the amount of taxation they pay, rather than doing so because they are a plumber who, by their very nature, is going to be self-employed.