National Insurance Contributions Increase — House of Commons, 2022-03-08
Topic: Macroeconomics
Lucy Claire Leigh (Frazer) (Conservative, Centre-right): Thank you, Madam Deputy Speaker. I was just highlighting the number of Opposition Members, including the hon. Members for Easington (Grahame Morris) and for Liverpool, Riverside (Kim Johnson), who challenged the Government, as others have, on their approach to the cost of living. But the plain truth is that we recognise the pressure that people face. We have done what we can to ease that pressure and will continue to explore other measures Frankly, our actions speak for themselves. During the pandemic, we provided more than £400 billion of direct support to the economy, protecting millions of jobs and livelihoods. The hon. Member for Cynon Valley (Beth Winter) said that we should invest more, but we are spending more than £600 billion on gross public sector investment over the course of the Parliament The hon. Member for Leeds West (Rachel Reeves) said that we should have acted on the cost of living in September. But we did. The Government are providing support worth more than £20 billion across this financial year and next that will help families with the cost of living. We provided that funding not just in September; we have consistently tried to support those on the lowest incomes. As the hon. Member for Vauxhall (Florence Eshalomi) mentioned, it is important that we support those who need it most and, since 2010, Conservative Governments have kept lower-paid people out of tax. The income tax personal allowance threshold has increased by over 90%, meaning that a typical basic rate taxpayer now pays £1,200 less a year than they would have done without our changes A number of Members have discussed whether the system we are introducing is progressive. The hon. Member for Luton South (Rachel Hopkins) and the hon. Member for Cynon Valley challenged that, but it obviously is when 15% of taxpayers are paying 50% of the tax and the highest 2% of taxpayers are paying 20% of the tax. As well as that, the levy will ensure that those on the lowest income get the most support. In our reformed system, total social care spend on the least wealthy 20% of older adults will be £4.24 billion in 2021-22 in a steady state compared with £0.51 billion on the wealthiest 20% of older adults. That shows that the lowest wealth quintile continues to receive the most state support The hon. Member for Salford and Eccles (Rebecca Long Bailey) and the hon. Member for Luton South said that we should cancel this tax because it was unfair, and they both quoted the IFS. When we introduced this levy, Paul Johnson, the director of the IFS, said that this was an "overall much needed" reform to social care and that "unavoidable pressures on the NHS are being funded through a broad based and broadly progressive tax increase" I turn to the very important topic of fiscal responsibility. As my hon. Friends the Members for South Cambridgeshire and for Broadland commented, if we do not bring in this tax rise, the alternative is more borrowing. We cannot and should not abdicate our fiscal responsibilities. As my hon. Friend the Member for North Norfolk (Duncan Baker) said, we spent £400 billion during the course of covid. We are in debt and we need to be honest about the situation. Our level of debt means that we are vulnerable to shocks, including changes in interest rates and inflation. The public finances are stronger as a result of our early, bold action to support the economy during the pandemic and because we did not shy away from tough choices Our new fiscal rules demonstrate fiscal responsibility and will keep the public finances on track in the years to come. [Interruption.] The hon. Members for Gordon (Richard Thomson) and for Aberdeen North (Kirsty Blackman) talked about young people, but if we do not bring in these taxes—[Interruption.]