National Insurance Contributions Increase — House of Commons, 2022-03-08
Topic: Macroeconomics
James Stewart Murray (Labour, Centre-left): Today, we have heard from hon. Members representing people across the country about why it is so important that the Government cancel their national insurance hike on working people and their jobs. My hon. Friends the Members for Merthyr Tydfil and Rhymney (Gerald Jones), for Easington (Grahame Morris), for Vauxhall (Florence Eshalomi), for Ellesmere Port and Neston (Justin Madders), for Cynon Valley (Beth Winter), for Birkenhead (Mick Whitley) and for Liverpool, Riverside (Kim Johnson) all spoke powerfully about how so many of their constituents are struggling with the costs of living and how those pressures have been rising rapidly in recent months. My hon. Friends the Members for Sheffield South East (Mr Betts), for Salford and Eccles (Rebecca Long Bailey) and for Luton South (Rachel Hopkins) spoke about the fundamental unfairness of the Government’s approach with their national insurance hike In September last year, the Government pushed their national insurance hike through Parliament in a day. From the very start, it was clear that this was a deeply unfair tax hike that would hit working people and their jobs. We urged the Government to think again and reverse course, but they refused do so, and they have kept refusing to reverse course, despite people facing mounting difficulties in making ends meet. Inflation, already at its highest rate in decades, is forecast to hit 8% in April. Energy bills that have been rising rapidly are set to soar next month, and now the crisis in Ukraine will bring even greater pressure on the cost of energy, petrol and food. Yet in four weeks’ time, the Government’s tax rise will kick in, costing the average family £500 a year. It is the worst possible tax rise at the worst possible time Back in September when the Government pushed this tax rise through Parliament, we immediately knew how unfair it would be. The Government’s own published assessment of this tax rise made that clear. Their tax information and impact note, which Ministers had to approve, set out what effect this tax rise would have. The note looked at this tax rise from a number of angles, including how it performed against the Government’s so-called family test. As hon. Members may remember, the family test was introduced by David Cameron in 2014. When the then Prime Minister announced this new test, he said he wanted to "strengthen and support family life in Britain" His plan to do so was to make sure that "every single domestic policy that government comes up with will be examined for its impact on the family." That test was applied to the national insurance increase last September, and the outcome of that test was to warn of "an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce." That warning alone should have given Conservative MPs reason to stop in their tracks and think again. They should have stopped and listened to the Institute for Fiscal Studies warning of this tax rise involving "a large, unjustified and problematic bias against employment and labour incomes" They should have listened to the TUC general secretary, Frances O’Grady, warning of the hit faced by young and low-paid workers with this tax rise. They could have listened to any of the many voices against their plans, as the impact of this tax rise on people’s ability to make ends meet was clear back in September The impact on jobs and businesses was clear then, too. Again, the Government’s own assessment made that clear. It admitted the tax rise would impact on business decisions on wage bills and recruitment. The Federation of Small Businesses described the tax rise as "devastating for small businesses and the local communities they serve." The British Chambers of Commerce described it as a "hammer blow to jobs growth" Despite all those warnings, the Prime Minister and the Chancellor refused to think again. The Conservatives refused to listen to our calls for those with the broadest shoulders to contribute more. Their response to the low-growth, high-tax economic cycle they have created was to make working people foot the bill Even if some Conservative Members managed to hold their noses and vote with the Prime Minister and the Chancellor last September, it is astonishing that they still feel able to do so after all that has happened since then. Energy bills have been rising fast and now are set to soar. We know that energy bills will rise by an average of more than £600 this April. Inflation is already—[Interruption.]