National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill — House of Commons, 2019-06-10
Topic: Macroeconomics
Peter Christopher Dowd (Labour, Centre-left): I beg your pardon. So it is a tax-avoidance measure, apparently, without any evidence, as far as we can gather, that there is any substantive tax avoidance going on with regard to this. I am all for tackling tax avoidance, as the Minister well knows. We support the tackling of tax avoidance, but we always want to do it when there is some evidence for it. We have lots of evidence of tax avoidance in other areas that the Government are not tackling, and in an area for which they do not have a particular amount of evidence, they are tackling it. It is a bit topsy-turvy—a bit round about. We find ourselves in a rather bizarre scenario I suggest that the Government’s rationale is wholly to do with the revenue that they expect to raise and is little more than an attempt to increase national insurance receipts for the Exchequer while shying away from any major tax or national policy change. The previous Chancellor got his fingers well and truly burned because he did not do it right. That is the issue here. We are having all this tinkering around, which is making matters more and more confused. That is certainly the opinion of the Office of Tax Simplification, as advocated in its 2014 report, which stated that a new national insurance contribution charge could raise revenue for the Exchequer and offset the costs of any tax treatment change affecting termination payments. The report went on to concede that the policy was likely to lead to increased NIC costs to the employer—not just more NICs, but increased costs to the employer—and to individual employees receiving reduced termination payments, as employers would be unlikely to increase their redundancy budgets The Government’s own impact assessment notes that this measure will present an "additional cost to employers". Here we are yet again, with the party of business putting more and more costs on to employers through this national insurance contributions proposal, at a time when they are all under terrible stress for a whole range of reasons—not least because of the uncertainty of Brexit. The impact assessment also says that this will be "reflected in lower wages and profit margins" Not only are the Government attacking businesses and bringing their profits down; they are also accepting that they are attacking workers’ wages. It is a double whammy, as the employer and the employee both get stung. What a state of affairs! Sadly, it is some of the most vulnerable people in the workforce who will pay the ultimate price. Whether it is a pregnant female employee voluntarily leaving the workforce or an older worker opting for early retirement, the new national insurance contributions charge will have a significant impact on the level of termination awards received To address the issue, the Opposition have tabled new clause 5, which would require the Government to undertake a review every two years looking at the impact of this measure on women, pregnant women, workers over the age of 50 and any other group of people with protected characteristics. New clause 5 would ensure that the impact of the new national insurance charge is carefully monitored; that is very important. It would also require Ministers to take personal responsibility for its outcome, with regular statements to the House. I know Ministers do not like doing that—Mr Speaker in effect acts as the person who gets them to come here to speak to us—but it is important that Ministers come to this Chamber to explain what they are doing. They are responsible to Parliament for their actions. The Executive are responsible to us and that is what we are demanding through new clause 5 Similarly, new clause 1 would require Treasury Ministers to undertake a distributional analysis of class 1A national insurance contributions, looking specifically at the impact on the level of termination awards received by employees and, importantly, at the impact on employers. I am particularly thinking about small and medium-sized business owners, who are likely to see added costs as a result of the measure. We want to ensure that such employers are not going to be penalised because of the lack of evidence base for the Government’s proposals—other than, quite simply, that the measure will raise money. The Government should stop telling the House that this is about simplification, because it is not. We have to be honest about that. It is just about raising revenue. There is nothing wrong with doing that—it is crucial—but it is important that the Government are honest about what they are doing. They often get their figures wrong when they indicate how much they intend to raise. In fact, some of the figures identified in their proposals are almost a work of fiction The second and final measure covered by this very short Bill relates to a new class 1A charge for non-contractual sporting testimonials of more than £100,000. [Interruption.] I can hear the Government Front Benchers saying that I am making a long speech. Well, I know that Conservative Ministers do not like to be held to account at all; it is in their DNA. One of their colleagues, who is a contender for the leadership, even wants to prorogue Parliament—to close it down—so it is important that I make these points clear As my hon. Friend the Member for Oxford East (Anneliese Dodds) said in Committee, there remains a huge lack of clarity over how the charge will be applied, particularly when it comes to a payment that would be "customary". She made a very important point and hit the nail on the head, and I am not quite sure that we are any further on at all from those discussions in Committee. There remain seriously unanswered questions as to how a national insurance contribution charge on sporting testimonial payments, which are in effect charitable donations from fans, would affect sporting charities and foundations set up by individual sportspeople. The Chartered Institute of Taxation has also pointed out the clear inconsistency that would arise between the national insurance treatment of sporting testimonial payments and the treatment of voluntary tips in the service industry. To answer these concerns, the Opposition have tabled amendment 1, which would require the Government to review the impact of this class 1A national insurance contributions charge on donations to charities.