National Insurance Contributions (Rate Ceilings) Bill
Lord Tunnicliffe Excerpts(8 years, 5 months ago)
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Lord Tunnicliffe (Lab)
My Lords, I thank the Minister for introducing the Bill and I look forward to working with her on what I believe is the first piece of legislation she has taken the lead on since entering your Lordships’ House. As the Minister has just outlined, the Bill will implement the Conservative manifesto commitment to cap the main rates of national insurance contributions at their current levels for the duration of this Parliament.
This is one-third of the so called triple lock—a promise not to raise VAT, income tax or national insurance contributions which the Conservatives gave during the election campaign. The Bill provides for the NICs element of that pledge. Such a measure has to remain separate from the Finance Bill, on which the VAT and income tax locks will be debated, because statutory provisions regarding NICs cannot be included in the annual Finance Bill.
Let me start by saying that we wholeheartedly support the principle of not raising taxes for working people, so we are not opposing the Bill. Indeed, Labour was the first to commit to not increasing national insurance contributions. However, we do question the necessity of implementing that commitment in primary legislation, and are concerned that this, when taken as part of the triple lock, could present a significant challenge for the Government if the economic outlook changes.
Clause 1 will prevent class 1 national insurance contributions payable by employees at the main primary percentage from exceeding 12%, and for earnings above £815 a week, cap the additional primary percentage at 2%. This was a Conservative and Labour commitment at the election. As we progress to Committee, we would appreciate it if the Minister updated the House about the investigation being undertaken by the Office of Tax Simplification into national insurance contributions and their alignment with income tax.
Clause 2 freezes the rate of employer national insurance contributions by setting the maximum secondary percentage payable by employers at 13.8%. By doing this it also fixes the class 1A and 1B contributions. The Chancellor's spending plans are predicated on a forecast rise in revenue yield from NICs, so he has placed a great deal of confidence in economic forecasting. I am sure that during consideration of the Bill, we will debate what contingencies are in place if these forecasts are wrong and the potential impact that could have on public services. I look forward to the Minister’s responses.
Clause 3 links the upper earnings limit to the highest rate of income tax threshold by setting out that it should not exceed the weekly equivalent of the proposed higher-rate threshold for that tax year. In practice, this means employees stop paying national insurance contributions at the 12% rate when their income reaches the higher income rate tax threshold for that tax year.
What is particularly interesting about these three short clauses, beyond their technical detail, is the manner in which they have been introduced, which is so telling of this Government and their approach to policy-making. They argued during the passage of the Bill in the other place that the legislation is required to ensure that the market has confidence in the Government to keep their election promises. Can the Minister tell us why the Chancellor thinks the electorate and business will not simply trust his word? Perhaps it is because the Government promised not to raise VAT before the last election—and then proceeded to do the opposite by raising it to 20%. Indeed, in the last Parliament the Chancellor raised tax 24 times despite his claims to be promoting a low-tax, high-wage economy. Let me reaffirm that we do not want to see taxes raised for working people, so we will not oppose the Bill. However, it is difficult to regard it as little more than a gimmick that could have troubling consequences.
The response to the decision to legislate on this issue was remarkably consistent. The Financial Times leader of 29 April summed it up well when it said:
“Arguably the silliest idea yet came this week when David Cameron proposed an act of parliament that would make it illegal for a future Tory government to raise various taxes to close the deficit: VAT, income tax, and national insurance. Even after five years of tough spending measures, the UK fiscal deficit is still high. Removing the option of tapping revenue streams that in aggregate raise more than £350 bn for the Exchequer would make the challenge needlessly hard”.
The summer Budget, which included significant revenue-raising measures that will amount to significant tax rises for millions of people, demonstrated decisively that this was nothing more than a political stunt.
Commenting on the Budget, the director of the Institute for Fiscal Studies said:
“The figures are quite clear—this was a tax-raising budget”.
Tax policy measures in the Budget are expected to raise £5.1 billion by 2017-18, rising to £6.5 billion in 2020-21. So the notion that taxes on working people are being protected is an illusion.
The Government are still increasing the amount they get from tax revenues under the guise of the triple tax lock. Crucially, it could also limit the pace at which the Chancellor could act if an unexpected event arose. If the Minister does not believe this, he should listen to his noble friend Lord Lawson, who said:
“I don’t think it is a good idea … nobody knows what the economic conditions are going to be like … nobody knows what world conditions are going to be like … this was clearly done for electoral purposes not for good government”.
National insurance contributions, together with VAT and income tax, are the three largest revenue raisers for any Chancellor, so it is surprising that the Government feel the need to tie their hands in this way. The Chancellor is taking an incredible gamble that seems to be based on nothing other than the hope that no further unexpected events will occur over the course of this Parliament. If the economic outlook does change, the Chancellor will have to do more than be in listening mode—he will have to act. We are concerned that this Bill makes it harder to do that.
Baroness Altmann
My Lords, I thank noble Lords for the contributions they have made to this interesting debate and I am grateful to the noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe, for their support for the Bill.
Lord Tunnicliffe
My Lords, I did not say that we support the Bill. I merely said we would not oppose it.
Baroness Kramer
If I might just confirm, we have no problems with the policy decision, but the decision that this needs to be encapsulated in binding legislation is a very troubling precedent.
Baroness Altmann
Then I thank the noble Lord and the noble Baroness for their support for the policy of this Bill, and also for supporting the £3,000 employment allowance and the abolition of national insurance contributions for apprentices.
Before I address the specific points raised by the noble Lords, it is important to put the Bill within the context of the significant action that the Government have already taken to reduce the burden of class 1 national insurance contributions on earnings and employment. These measures have all been strongly welcomed by business and have contributed to the current record levels of employment. I also emphasise that from April next year the Government will abolish employer class 1 national insurance contributions for apprentices under the age of 25, as I have said. Apprenticeships are at the heart of the Government’s drive to equip people of all ages with the skills most valued by employers. This is a very important move. It will help employers who provide apprenticeships to young people and provide a significant boost to youth employment rates more generally.
The Bill before us today introduces the final aspect of the Government’s five-year tax lock. This is further testament to the Government’s commitment to provide certainty on tax rates for the duration of this Parliament, and it delivers on the commitment to lower levels of taxation that was made in the Conservative manifesto.
On the question from the noble Lord, Lord Tunnicliffe, as to whether the taxes announced in the summer Budget have breached this lock, that is not the case. The Government have been clear that the tax lock will not prevent future changes to the tax system to make it fairer or to deal with avoidance—those were the measures in the Budget. Furthermore, the Government remain committed to lowering taxes and supporting hard-working people through increases in the personal allowance.
The noble Lord also asked about an update on the measures being considered by the Office of Tax Simplification. The Government are committed to simplifying tax and to transparency. The overall aim of the project is to build on earlier work undertaken in this area, to understand the steps that would be needed to achieve closer alignment of the taxes and the costs, benefits and impact of each step. The terms of reference were published on 21 July, and the Office of Tax Simplification will publish a final report ahead of Budget 2016.
As regards whether this Bill is a gimmick, I do not believe that it is. This was a Conservative manifesto pledge and, as I have said, there is the ability in secondary legislation to increase national insurance rates by 0.25% each year on class 1. This will give an added element of certainly to businesses and employees as to the maximum rates of national insurance that they might face.
The noble Baroness and the noble Lord are right that there could be circumstances in which tax revenues fall short and some contingency planning is required. However, future funding of contributory benefits, should national insurance contribution receipts prove insufficient, is a matter for the Chancellor, and that decision would need to be made at the relevant fiscal event based on the latest projections available at the time and taking into account the National Insurance Contributions (Rate Ceilings) Bill that we are introducing. Indeed, as the noble Baroness indicated, if there were an economic emergency, it would not normally be the economic policy of choice to increase national insurance contribution rates. The aim of this Government is to continue to drive growth and to create 2 million more jobs during this Parliament.
Lord Tunnicliffe
I think the noble Baroness is saying that I suggested that the Government had broken the triple lock in the summer Budget. I was not suggesting that they broke the triple lock but that the summer Budget had very significant tax increases—of the order of £4 billion-plus. I hope that she is not disagreeing with that assessment. If she is, perhaps she will write to me and set out the logic behind her disagreement.
Baroness Altmann
I was not assuming that the noble Lord was talking about the triple lock. Indeed, the Government are absolutely committed to the triple lock. I was talking about some of the other measures that do not breach this commitment.
I am grateful for the opportunity to explain the issues we have debated today. There are clearly a number of points that we might debate at greater length when the Bill moves to Committee. I commend the Bill and ask the House to give the Bill a Second Reading.
Apprenticeships
Lord Tunnicliffe Excerpts(10 years, 1 month ago)
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Lord Young of Norwood Green
To ask Her Majesty’s Government what action they are taking to increase the number and quality of apprenticeships for 16 to 18 year-olds.
Lord Tunnicliffe (Lab)
My Lords, by our normal conventions, we would start the QSD but there was wide expectation in the House that there would be a vote now and at least half of our speakers are not present. Perhaps I may put it to the government Whip that she adjourns the House during pleasure for 10 minutes so we can all assemble for the next debate.
Baroness Jolly (LD)
I beg to move that the House do now adjourn until 5.49 pm.
Marriage (Same Sex Couples) Bill
Lord Tunnicliffe Excerpts(10 years, 10 months ago)
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Lord Tunnicliffe
My Lords, I rise to move Amendment 33A in the name of my noble friend Lord Stevenson of Balmacara, which is a probing amendment. Our interest in this issue is to draw attention to people born with an intersex condition; individuals whose anatomy or physiology differs from contemporary cultural stereotypes of what constitutes male and female.
Being intersex is not a disease, it is not a disorder, it is a perfectly normal—and quite common—variation within human development. The need to use the term is made necessary by society’s insistence on maintaining a rigid classification of all human beings as male or female. In many ways, those with an intersex condition can be termed non-gendered. Sometimes a person is not found to have an intersex anatomy until she or he reaches the age of puberty or she or he finds himself an infertile adult, or dies of old age and is autopsied. Some people live and die with intersex anatomy without anyone, including themselves, ever knowing.
If we take the classic stereotypes of what constitutes male and female and consider the biological, social, gender or sexual orientation in the round, there are very few human beings who completely conform in all aspects to the rigid stereotypes. Most people vary from the standard stereotypes in some ways, sometimes in small details, sometimes significantly. Some commentators would now consider sexuality as a continuum with the standard stereotypes as the extremes of this continuum.
One major difficulty with the use of bipolar stereotypes is that there is no precise way of determining into which of the two boxes someone should be placed at birth. All the available yardsticks are flawed: karyotype, gonads, secondary sexual characteristics, appearance—none of these, or even any combination of them, can determine sex with absolute certainty. It is only by ignoring the vast amount of biological evidence to the contrary that this fiction of a strict bipolar sexuality can be maintained. Those who clearly do not fit these classifications—a substantial minority—are dismissed as being disordered or biological errors which require fixing.
It is understandable to discover that, when an infant is born, there is often great pressure on parents and clinicians alike to come up with a clear definition of sex for the newborn. Such people are often subjected by the medical professions to surgical and chemical interventions, usually without their explicit permission, to normalise them and thereby eradicate the evidence of difference.
Your Lordships will understand that, with this amendment, we are talking about a largely hidden and often overlooked minority of people. Estimates of this population run to as many as 1% of live births exhibiting some degree of sexual ambiguity and between 0.1% and 0.2% of live births being ambiguous enough to become the subject of specialist medical attention, regretfully including involuntary surgery to address their sexual ambiguity.
If we lived in a legal jurisdiction where marriages were defined without reference to the sexual identity of the couples concerned, these complications would not occur. However, the approach underlying the Bill is based on an assumption that the sex of the participants is settled. The UK of course recognises the legal and official change of gender, which would allow a transsexual person to be legally married in accordance with their adopted gender identity. However, those intersex people who identify as non-gendered do not always, if they are allowed to, attempt to transition and are therefore excluded at all levels. Our amendment would specifically include in legislation, for the first time, those who identify as non-gendered.
Unless there is some consideration given to this largely hidden and often overlooked minority, they will be isolated yet again from the rights accorded to other, higher-profile groups. I beg to move.
Baroness Northover
My Lords, this amendment seeks to ensure that the Bill would allow individuals who identify themselves as being non-gendered—neither male nor female—to marry. We understand the challenges that intersex conditions can pose and appreciate the difficulties people affected by this can face. The noble Lord has, with great sensitivity, outlined the case for consideration of this group of people. I have great sympathy for their situation but, as the noble Lord is aware, we cannot accept this amendment.
As the noble Lord acknowledges, the law of England and Wales recognises only two genders—male and female. Although we understand that some people do not see themselves as either male or female, none the less everyone has a legal gender status of either male or female. The Bill does not change that, and it would not be an appropriate legislative vehicle in which to seek to do so. However, the Bill, by enabling same-sex couples to marry, will ensure that in future there will be no bar to an intersex person, or a person who identifies as non-gender, marrying anyone whom they choose. The effect of the Bill will be that people will be able to get married, and remain married, regardless of their legal gender. The issue raised by this amendment goes well beyond marriage. Having a gender in addition to male and female, or not recognising gender at all, would change a fundamental aspect of our law. Such a change would need to be considered carefully, in order to understand the implications for the many aspects of law which are based on gender differences.
I thank the noble Lord for the opportunity to discuss this important issue. I appreciate his statement that this is simply a probing amendment and I am grateful to him for addressing the concerns of those individuals who feel that they do not have a gender. However, I hope he will be prepared to withdraw his amendment.
Lord Tunnicliffe
My Lords, I thank the Minister for her understanding response. It is the first time, I think, that a Minister of the Crown has recognised this group in this House. That is an important first step in discussing this issue and addressing the needs of this group of people. I thank her for the sympathetic approach. My understanding is that, through various changes in the environment, this is actually a growing problem and it is an issue that will have to be addressed over time. However, I wholly accept the point that the Minister is making. This is a very complex issue and it will need very careful consideration and a very sensitive approach from all those involved in the debate. I am happy to assure the Minister that we do not intend to take this matter further forward in this Bill, and I beg leave to withdraw the amendment.