National Insurance Contributions Increase — House of Commons, 2022-03-08
Topic: Macroeconomics
Anthony Howe Browne (Conservative, Centre-right): The Opposition are right that the rise in the cost of living is a crisis causing pain for many households across the country, particularly those on low incomes. As I said in an intervention, this is a global issue. The inflation afflicting the UK afflicts almost every country around the world. The energy price rises and the rise in food costs are as a result of global phenomena that are affecting countries such as US and Germany, where inflation is far higher than it is in the UK. In fact, if we look on an international basis, we see that inflation here is pretty middle of the road, although it is very concerning I will tell the House what else is very serious, as well as the cost of living crisis: the waiting list crisis that we have after the pandemic, with 6 million people waiting for elective surgery. There is also the social care crisis, which has bedevilled Governments for decades. They have always put it in on the "too difficult to do" pile and not done anything about it. We need to tackle those really serious issues and they require a serious, sustained increase in funding. The question is: how do we do that? How do we get that amount of money The national insurance increase will raise about £12 billion a year, when we do all the sums and cut out the costs. We can raise that amount of money only from three sorts of taxes: national insurance, VAT or income tax. If we put this on VAT, there would be an increase in the cost of living. That would go straight through to inflation. The windfall tax that the Opposition propose would raise £6 billion or so, which is half the amount and would just be for one year. That cannot pay for a sustained increase in social care funding and the waiting list backlog. The question that I was going to ask if I had been allowed to intervene earlier, including on the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves)—I notice that she has disappeared from her own debate, which is interesting—[Interruption.] It is the Opposition’s debate, not ours. I was going to ask how the Opposition would sustainably raise £12 billion a year to pay for the NHS. As I understand it, the Labour party has no solution to or proposal for that. Labour’s proposal to cut national insurance therefore basically amounts to a tax cut to starve the NHS of much-needed funding. I am astonished that the Labour party, of all parties, which likes to see itself as the party of the NHS, is proposing to do that We could ask, "Why choose national insurance rather than income tax?" There are various reasons for that. One of the most powerful is that it would be half paid for by businesses—there would be 1.25% for employees and 1.25% for businesses—whereas income tax is paid directly by earners National insurance is also progressive. I find it alarming when Labour Members keep saying that it is not. I wonder what understanding of economics they have. A progressive tax means that those on higher incomes pay more. That is clearly the case with national insurance. The top 14% will pay 50% of the whole tax. It is a tax that Labour increased in 2003 to pay for healthcare There are problems with national insurance. It does not normally go on dividends or on pensions, but this increase will, and it addresses a lot of the inequities of normal national insurance. Unlike income tax, national insurance can also be—and indeed, is—ringfenced legally and operationally for the NHS, so that we can be sure that this money is going towards the systemic problem of healthcare and social care that I mentioned earlier It is clearly important to tackle the cost of living. I completely understand Opposition Members’ concerns about raising taxes. I see myself as a low-tax Conservative, and I do not vote for tax rises with any joy in my heart, but what the Government have done is give support on household bills directly through the £200 energy bill support scheme—the rebate—and the £150 off council tax for houses in bands A to D. Eighty per cent. of houses will benefit from that, and the total package is about £9 billion a year. That goes directly to people’s pockets from April onwards. They will notice it straight away, and people want immediate support, not long-term aspiration I find this whole debate quite beguiling. I have spent my adult life watching the Labour party argue for higher taxes to fund the NHS. Today, in this debate, Labour Members are arguing for lower taxes in order to starve the NHS of money. This whole debate is about not the opportunities for the NHS but political opportunism, and I do not think it brings any credit on the Labour party to be so flagrantly opportunistic and economically illiterate as it is being today.