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National Insurance Contributions Increase
08 March 2022
Lead MP
Rachel Reeves
Debate Type
General Debate
Tags
NHSSocial CareEconomyTaxationClimateEnergyBusiness & Trade
Other Contributors: 39
At a Glance
Rachel Reeves raised concerns about national insurance contributions increase in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Opened the debate
Ms. Reeves moves that the House calls on the Government to cancel its planned increase in National Insurance Contributions, which she argues will cost families an average of £500 per year from April 2022. She highlights worsening economic conditions including high inflation rates and rising costs, criticising the Conservative government for failing to address these issues despite promises made during the previous election campaign. Ms. Reeves also emphasises that the increase is unjustly targeting working people and small businesses while oil and gas producers continue to profit.
Rachel Reeves
Lab
Leeds West and Pudsey
Ms. Reeves argues against the national insurance tax hike, citing rising inflation rates, increased energy costs, and growing economic instability as reasons for its inappropriateness at this time. She emphasises that the Government's own forecasts indicate that their policies will exacerbate inflation, while independent research shows that sectors reliant on jobs such as hospitality and retail will be disproportionately affected. Ms. Reeves also points out that the Chancellor’s tax rise contradicts manifesto commitments made by his party.
Tim Farron
Lib Dem
Westmorland and Lonsdale
Mr. Farron supports Ms. Reeves, highlighting how the national insurance hike will negatively impact families already struggling due to rising costs, particularly those relying on carers for support in communities with above-average elderly populations.
Mr. Edwards agrees with Ms. Reeves and warns that some measures introduced by the government to alleviate cost of living pressures may inadvertently worsen inflationary trends due to rising energy prices, suggesting these interventions are not well-timed or effective in addressing current needs.
Christine Jardine
Lib Dem
Edinburgh West
Ms. Jardine concurs with Ms. Reeves' concerns and accuses the government of gambling taxpayers’ money by assuming future price stability, instead of focusing on those who have profited from recent energy crises to relieve burden for affected populations.
Mr. Heald questions the feasibility of using a one-year tax to address long-term costs and suggests that such measures could be misleading, emphasising potential financial implications beyond immediate relief.
Rachel Reeves
Lab
Leeds West and Pudsey
Yesterday, we saw a whole new meaning to burning through money as billions of unusable PPE were being burned. This waste has made taxpayers' money go up in flames, and they are concerned about the cost of dodgy contracts, fraud and waste. The Government's approach to social care will not prevent people from selling their homes to pay for it, nor improve care today or add any minutes of support. NHS waiting lists will rise even further over the next two years. The national insurance tax rise is wrong at this time because family finances are stretched while inflation, energy bills and wages have skyrocketed.
Simon Clarke
Con
Newton Abbot
Clarke detailed the Government's £20 billion package to support families with higher energy costs, including direct payments and tax relief measures. He also defended the health and social care levy as a responsible way to fund significant investment in healthcare and social care, emphasising its progressive nature and benefits for lower earners.
Christine Jardine
Lib Dem
Edinburgh West
Jardine questioned whether the Government's measures are adequate given the current situation, suggesting they may be perceived as too little, too late by constituents.
Justin Madders
Lab
Ellesmere Port and Bromborough
Madders inquired about the impact of fuel duty freezes on VAT receipts from rising fuel costs. He highlighted concerns over increased petrol prices affecting Treasury revenues despite government actions.
Baker acknowledged the significant expenditure during the global health crisis and suggested that gaining more revenue for the Treasury is a necessary financial decision given the unsustainable situation.
Called for Members to focus on the length of their contributions due to time constraints caused by a subsequent event.
Asserted that the UK is experiencing its worst cost-of-living crisis in memory and criticised the Government's increase in national insurance contributions, citing broken manifesto promises.
Challenged Richard Thomson's argument by pointing out that rising costs are a global phenomenon and highlighted that Treasury analysis shows most households will be better off due to government decisions.
Interjected to correct the misinformation spread by Richard Thomson regarding national insurance contributions, stating that over 6 million earners will not contribute towards the cost increase.
Jerome Mayhew
Con
Broadland and Fakenham
Defended the government's economic response to COVID-19 and argued for using national insurance contributions to address the NHS backlog and adult social care issues. He dismissed borrowing or cutting other areas of spending as alternatives, instead endorsing the current taxation plan.
Clive Betts
Lab
Sheffield South East
Questioned how the government's funding would assist those excluded from social care provisions due to their living costs.
Grahame Morris
Lab
Easington
Challenged Jerome Mayhew regarding wasteful spending on PPE, suggesting it could be a way to recover funds lost to inefficiency.
Gerald Jones
Lab
Merthyr Tydfil and Aberdare
The hon. Member criticised the government for breaking their election promises on national insurance contributions and highlighted the detrimental impact of the proposed rise in NI contributions amid a cost-of-living crisis. He pointed to analysis showing that 2.5 million working households will be adversely affected by this increase, alongside cuts to universal credit, with many families already struggling under rising food, petrol, rent costs and soon-to-be-increasing energy bills.
Mr. Browne acknowledged the cost-of-living crisis but argued that raising £12 billion needed for NHS funding through national insurance would be more equitable than VAT or income tax, as it is paid by both employees and employers and is progressive. He criticised Labour's proposal to cut NI contributions as a 'tax cut' that would starve the NHS of much-needed funding, describing their stance as opportunistic and economically illiterate.
Justin Madders
Lab
Ellesmere Port and Bromborough
I place on record my dismay that the Government have chosen to hit working people and businesses with a national insurance rise at the worst possible time—when one in six working households cannot make ends meet, according to the Institute for Public Policy Research; when the number of jobs that pay below the national minimum wage and the living wage is still more than two and a half times higher than at pre-pandemic levels; when inflation is forecast to reach 7.25% next month, the highest level since August 1991. We already have the highest level of inflation for three decades, but I am afraid that everything we know about the implications of Ukraine tells us that it will only get higher in the next few months.
We have spent £450 billion, an eye-watering amount, on safeguarding the jobs and livelihoods of millions and millions of people—working-class, everyday people whose jobs have been saved. As a consequence, we are now in £2.2 trillion or so of debt. I find it staggering that the Opposition think that we can just amble out the other side of a global pandemic and everything will be normal. It simply cannot be, and we must and should be honest about it. The health and social care levy is needed. We have heard all the statistics that show why: to repair the backlog in elective surgery and repair the social care system that we need in this country.
Kirsty Blackman
SNP
Aberdeen North
The speaker addresses the cost of living crisis faced by younger people, highlighting issues such as high inflation rates and increased energy bills. She criticises the government's decision to increase national insurance taxes at a time when families are struggling financially. Blackman also mentions Scotland's higher spending on NHS per head compared to England and calls for better choices in government spending, suggesting that immigration could bring positive benefits to public finances.
Clive Betts
Lab
Sheffield South East
Betts discusses the regressive nature of the proposed national insurance increase to fund social care. He points out several caveats not addressed by the government, such as excluding young people and those on high private pensions from paying the levy. Betts argues that this form of taxation disproportionately affects lower-income families and does not provide sufficient funding for local councils to cover growing social care needs. He also suggests alternative methods like revaluation of council tax bands to ensure fairness in the tax system.
Ben Lake
PC
Ceredigion Preseli
Supports the cancellation of the planned national insurance increase due to the current cost of living crisis. Emphasises that rural areas like Ceredigion are particularly affected by rising energy and fuel prices, with nearly a fifth of households not connected to the gas grid. Urges the Government to consider the impact on businesses and proposes targeted relief measures such as reforming the rural fuel duty scheme.
Salford
Critiques the planned National Insurance Contributions rise, stating it is disproportionately loaded onto younger and lower-paid workers. Highlights that inflation, council tax increases, and energy price hikes are worsening household finances. Urges for a reversal of the decision to increase NICs contributions, advocating instead for VAT reduction on household energy bills, a windfall tax on oil and gas companies, expansion of warm home discount schemes, increased universal credit payments, public sector pay raises, and recognition of the need for public ownership in addressing energy security.
Drew Hendry
SNP
Inverness N & Strathspey
The hon. Member for Inverness N & Strathspey (Drew Hendry) pointed out the disproportionate effect of the national insurance increase on young people and the lowest-paid, emphasising that it will also affect businesses by around £3,000 per year on average according to the Federation of Small Businesses. He highlighted inflation rates reaching 8% for basic foodstuffs, with items like margarine up 45%, and rice increasing by 344%. Hendry called for the national insurance hike to be scrapped and advocated for measures such as reversing the universal credit cut, adopting a real living wage, and scrapping policies like the bedroom tax.
Grahame Morris
Lab
Easington
The hon. Member for Easington (Grahame Morris) discussed the worsening cost of living crisis affecting his constituents in Easington, noting that many have been experiencing hardship for over a decade due to Tory policies leading to food bank usage and increased poverty. He stated that an average worker's income will be cut by more than £250 per year because of the national insurance hike, which is politically driven rather than addressing actual economic needs. Morris criticised the disproportionate impact of council tax on low-income households versus high-value properties, using Easington as an example where 75% of homes are in band A and paying significantly less compared to a Russian oligarch's home in Kensington.
Florence Eshalomi
Lab Co-op
Vauxhall and Camberwell Green
The proposed rise in national insurance will exacerbate the suffering of Vauxhall residents who are already struggling with high costs, including fuel poverty. More than 8,000 people in Vauxhall live in fuel poverty, unable to keep their homes warm without falling into poverty. The cost of living crisis is worsened by insecure tenancies and lack of affordable housing. She calls for the government to use its levers to ensure households stay afloat and cancel this rise.
We are facing the worst cost of living crisis in 30 years, disproportionately affecting those on low incomes. Median pay is at its lowest rate, real pay is falling, and social security payments have been cut by £20 in universal credit. The energy price cap has increased by 54%, adding to rising costs for food, rail fares, and council tax bills. Next month, national insurance contributions will rise further, increasing household costs by an average of £1,200 per year from April. Beth Winter argues that the Chancellor needs to increase Government spending in the Budget to boost investment and public services while shifting the burden to those who can afford it.
Mick Whitley
Lab
Birkenhead
Warns about the catastrophic impact of a planned increase in national insurance contributions on hard-working families and small businesses. Points out that while inflation, food costs, and energy prices are rising, the Chancellor plans to impose an additional tax burden on minimum wage earners, with landlords paying nothing more despite charging extortionate rents for poor-quality housing. Emphasises the Government's failure to protect working people from austerity measures over 12 years and predicts a worsening cost of living crisis post-April.
Kim Johnson
Lab
Liverpool Riverside
Critiques the Government's decision to increase national insurance contributions during a pandemic where billionaires' wealth has increased exponentially, while working people suffer from in-work poverty and food bank dependency. Cites Oxfam data suggesting that a wealth tax on the super-rich could fund essential services and alleviate the financial burden on the poor. Condemns the disparity between tax breaks for bankers and cuts to social security and pensions, highlighting the worsening cost of living crisis post-April due to energy price hikes.
Rachel Hopkins
Lab
Luton South and South Bedfordshire
Supports the motion to cancel a planned 1.25% rise in national insurance contributions, citing the financial strain on constituents from increased living costs and petrol prices. Raises concerns about profiteering in petrol pricing and expresses worry over future tax hikes exacerbating household financial difficulties. Argues that the proposed increase is regressive, disproportionately affecting middle-income earners compared to higher income brackets.
James Murray
Lab Co-op
Ealing North
He criticised the Government's decision to push through the national insurance hike in September without reconsidering its impact on people's ability to make ends meet, despite warnings from various sources. He also mentioned that the tax rise would cost an average family £500 a year and emphasised the need for those with broader shoulders to contribute more.
Lucy Frazer
Con
Broadland
As the Government's representative, Lucy Frazer defended the decision to introduce the health and social care levy. She argued that it was a necessary measure to address the backlog in the NHS and to reform long-overdue social care reforms. She stated that this would provide a record £13 billion annually for health and social care through a new 1.25% ring-fenced levy based on national insurance contributions.
Boris Johnson
Con
Uxbridge and South Ruislip
In response to President Zelensky's address, Boris Johnson praised the courage and leadership of Ukraine in defending their democracy against Russian aggression. He called for unity among nations to support Ukraine through military aid, sanctions, and economic pressure on Russia until Putin is defeated.
Keir Starmer
Lab
Holborn and St Pancras
Keir Starmer echoed the sentiments expressed by Boris Johnson but also emphasised Labour's commitment to unity at home and abroad in isolating the Putin regime. He advocated for tough sanctions, providing Ukraine with necessary arms, and offered support for Ukrainian refugees seeking sanctuary.
Ian Blackford
SNP
Ross, Skye and Lochaber
Ian Blackford saluted President Zelensky's leadership and urged the House to stand firmly behind Ukraine. He called for stronger sanctions on Russia and the provision of military aid to help Ukraine defend itself against invasion.
Edward Davey
Lib Dem
Kingston and Surbiton
We should strengthen our support for Ukraine with military aid and sanctions, recognising the bravery of President Zelensky and the Ukrainian people. It is right to grant President Zelensky an honorary knighthood.
Our response will be judged not by applause but by practical military support and humanitarian assistance for Ukraine, in line with President Zelensky's requests.
Government Response
Defended the Government's decision to introduce a health and social care levy, emphasising its necessity for addressing NHS backlogs and implementing long-overdue social care reforms. She stated that this would involve a new ring-fenced levy based on national insurance contributions.
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