Question to the Wales Office:

To ask the Secretary of State for Wales, what recent discussions he has had with Cabinet colleagues on the impact of the National Insurance contribution rise on (a) households and (b) employers in Newport West constituency.

I have regular discussions with my Cabinet colleagues on a range of issues, including National Insurance contributions (NICs).

The Government is committed to responsible management of the public finances. That is why the Government has taken the tough but responsible decision to increase taxes, introducing a UK-wide 1.25% Health and Social Care Levy based on NICs, in order to fund a significant increase in permanent spending on the NHS and social care. There is a significant Union dividend for Wales within this levy, meaning that Scotland, Wales and Northern Ireland will benefit by around 15% more than is generated from their residents, equivalent to around £300 million every year on average.

Regarding the impact on households; NICs is progressive, the Primary Threshold means that the lowest earners do not pay any NICs. The highest earning 15% will pay over half the revenues raised by the Levy and 6.1 million people earning less than the Primary Threshold (equivalent to £9,880 a year in 2022-23) will not pay the Levy.

Regarding the impact on businesses; while it is fair that businesses contribute, as they benefit from having a healthy workforce, big businesses will pay the most. 70% of the money raised from business will come from the biggest 1% of employers (those with at least 250 employees). Just under 40% of all employers with employer NICs/Levy liabilities (630,000 employers) are expected not to pay the Levy due to the Employment Allowance. The next 42% of businesses (675,000 employers) will face an average increase of £475 per year, less than 1% of their overall wage bill.