National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill — House of Commons, 2019-04-30
Topic: Mixed Topics
Peter Christopher Dowd (Labour, Centre-left): The condensed national insurance Bill before us is a shadow of its former self. I would have liked to be able to say that I was bowled over or knocked for six by the Minister’s speech, but there were more own goals than anything else. It is far from the extensive Bill that was promised by the Chancellor’s predecessor at the 2016 Budget, which included the Conservative’s 2015 manifesto pledge to abolish class 2 national insurance contributions. Instead, that manifesto pledge, like many of the Government’s promises, has quietly been sent to the landfill, barely even being recycled in this five-clause Bill. As for scrutiny, we have not even been able to amend the last three or four Finance Bills, but I am pleased that we will have an evidence session in Committee. I will be grateful for small mercies because we may be able to tease matters out a little more The cannibalisation of the national insurance Bill, which has been driven by the Chancellor’s volte-face on a tax cut for 3 million self-employed workers, reflects once again why the Conservative party has long ceased to be the party of the self-employed in particular and business in general. To many observers this will be viewed as another missed opportunity—one of the many opportunities that this Government have missed—to seriously address the relationship between the growing levels of self-employment in the UK and the levels of taxation and national insurance contributions that are paid The rushed timetable of this Bill has shown, once again, the Government’s complete lack of respect for parliamentary convention and the procedures of this House. The Opposition were notified only last Wednesday of the Government’s intention to timetable the Bill’s Second Reading, with an updated version of the Bill published last Thursday. The Government do not know one day from the next, although they do try to live from one day to the next. They gave parliamentary colleagues just one sitting day to examine the content of the Bill before today’s debate. The Government might not take their legislative responsibilities seriously, but the Opposition do Of course this is nothing new. Members have become accustomed to the Government’s handling, or mishandling, of legislation. The Government are engulfed in chaos and infighting on Brexit, and The Times reported yesterday that their rushed introduction of this hollow, some may say vacant, Bill is a further desperate attempt by the Prime Minister to keep this zombie Parliament in session Unwilling to face the electorate and unable to bring her dead-in-the-water Brexit deal back to Parliament for the fourth time, the Prime Minister is attempting to pack parliamentary business in the hope of avoiding an early Queen’s Speech that would no doubt be opposed by the DUP and her own Back Benchers. This is a new embarrassing low for a Government who are all at sea. It is high time that the Prime Minister did the honourable thing and set a date for a general election and her departure. We have a kakistocracy dressed up as a Government The Bill is comprised of two key measures: the introduction of a new national insurance contributions charge for employers on the taxable element of termination payments above £30,000, as the Minister set out; and the introduction of a national insurance contributions charge on income from non-contractual sporting testimonials over £100,000 The new class 1A employer NICs charge will be levied at 13.8%, if I understand it, and its introduction will align the NICs treatment of termination awards and income from non-contractual sporting testimonials. On the face of it, the Minister would have us believe that these changes are technical and benign. However, there is nothing technical about fundamental changes to the treatment of termination payments either for the employer paying them or for workers facing redundancy, who regard this final payment as an evaluation of the work they have done for their employer Termination payments, therefore, have both an emotional and a financial significance, and the amount awarded is often determined by painstaking and careful negotiations between managers and trade union representatives. A good employer might offer a generous termination payment to an employee as a sign that, even though they have had to make them redundant, it is not a judgment on the intrinsic worth of staff who are leaving. However, a likely by-product of the Government’s proposed employer NICs charge is that it will incentivise employers to reduce the level of non-statutory termination payments to employees so that the overall level of non-statutory payments declines. This will diminish the level of termination payments available to workers who lose their job, while increasing the amount that the Government receive in NICs receipts The tax information and impact note for this measure goes to great lengths to clarify that this new charge will be limited to employers, and the Minister asserts that the Government have no plans to make further changes to the £30,000 statutory threshold, yet the Government’s own policy note states that this additional cost for employers will be reflected in lower wages The Office of Tax Simplification, which the Minister mentioned, noted in 2015 that imposing tax and national insurance contributions on all termination payments is "likely to have a significant cost impact for some people, particularly those lower paid employees who may…often be the ones receiving smaller termination payments" Despite the clear impact that this measure will have on workers and employers alike, the original consultation noted that the Treasury had failed to undertake a distributional analysis of the impact of this new charge. With that in mind, will the Minister confirm whether, a few years on, that remains the case Similarly, the Chartered Institute of Taxation has raised concerns that the Bill does not set out how the new class 1A charge will be collected by HMRC, stating that it will instead be left to secondary legislation—more secondary legislation, the Government’s default position. The Treasury says it anticipates that the charges will arise and be paid in "real time," rather than after the end of the tax year. However, tax experts note that this is a break from normal practice and will prove extremely cumbersome, requiring additional resources at a time when the Government are continuing their disastrous reorganisation of HMRC.