National Insurance Contributions Bill Consideration of Lords
amendments. Madam Deputy Speaker (Dame Rosie Winterton) I must draw
the House’s attention to the fact that financial privilege is
engaged by all of the Lords amendments 2, 4, 1, 3, 5, 6, 7, 8, 9,
10, 11 and 12. If any of the Lords amendments are agreed to, I will
cause the customary entry waiving Commons financial privilege to be
entered in the Journal. Clause 2 Freeport conditions 5.51
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National Insurance
Contributions Bill
Consideration of Lords amendments.
Madam Deputy Speaker ( )
I must draw the House’s attention to the fact that financial
privilege is engaged by all of the Lords amendments 2, 4, 1, 3,
5, 6, 7, 8, 9, 10, 11 and 12. If any of the Lords amendments are
agreed to, I will cause the customary entry waiving Commons
financial privilege to be entered in the Journal.
Clause 2
Freeport conditions
5.51 pm
The Financial Secretary to the Treasury ()
I beg to move, That this House disagrees with Lords amendment
2.
Madam Deputy Speaker
With this it will be convenient to discuss the following:
Lords amendment 4, and Government motion to disagree.
Lords amendments 1, 3 and 5 to 12.
I welcome this small but important Bill on its return to this
House and I am pleased to speak to it for the first time. I pay
tribute to my ministerial colleague, , for his work on
it in the other place, and to my right hon. Friend the Member for
Hereford and South Herefordshire (), who so capably led it when
it was first before the House.
There are 12 Lords amendments for our consideration today and I
will first address Lords amendments 2 and 4, which, as Madam
Deputy Speaker has highlighted, engage the financial privilege of
this House. The Government ask the House to reject them for the
reasons that I will set out. Lords amendment 2 is the first of
two amendments on which the other place voted to make changes to
the Bill. It adds an additional condition whereby freeport
national insurance contribution relief would be available only if
the freeport governance body maintained a public record of
beneficial ownership of businesses operating in the freeport tax
site.
The Government believe that the Lords amendment, which was made
by the other place, is unnecessary and should not be accepted.
Throughout the bidding prospectus and subsequent business case
processes, prospective freeports were required to set out how
they will manage the risk of illicit activity. Those plans were
scrutinised by officials in the Border Force, Her Majesty’s
Revenue and Customs, the National Crime Agency and others.
Additionally, the freeports bidding prospectus set out that each
freeport must agree a governance structure with the Government.
While each port can design its own governance structure to meet
the local needs of the port, it must meet the criteria set out by
the Government in the freeports bidding guidance. That means that
the Government already require each freeport governance body to
undertake reasonable efforts to verify the beneficial ownership
of businesses operating within the freeport tax site and to make
that information available to HMRC, law enforcement agencies and
other relevant public bodies. It is therefore a condition of
being granted freeport status that there is an appropriate level
of oversight.
That is a proportionate approach, which means that the local area
and law enforcement can take effective measures to ensure the
security and propriety of operations within the freeport. The
difference between the amendment and the existing requirement on
freeport governance bodies is simply a requirement for the
freeport governance body to make its record of beneficial
ownership available to the general public, as well as to law
enforcement.
Given the nature of the information, we do not think it would be
appropriate for the freeport governance body to release this
information publicly. This is because the freeport governance
board is a third party, and therefore does not have the locus to
release such information about a business to the public. The
second reason is that such a requirement would also partially
duplicate the People with Significant Control register at
Companies House where there is already an onus on the company
itself to provide information.
However, hon. Members will also be aware that, as a Government,
we are bringing in a number of measures to ensure that we have
transparency. Last week, the Prime Minister announced the
Economic Crime (Transparency and Enforcement) Bill to further
crack down on dirty money and maintain the UK’s position as a
world leader in corporate transparency, and we have heard much of
that in this House today. That Bill will introduce a register of
overseas entities beneficial ownership of UK property to crack
down on foreign criminals using UK property to launder money. It
will reform our unexplained wealth orders regime to help target
more corrupt elites and it will strengthen the Treasury’s ability
to take action against sanction breaches.
We will also publish details of the planned fundamental reform of
Companies House, which is designed to clamp down on money
laundering and illicit finance. Once the register of overseas
entities is implemented, it will be the first of its kind in the
world. That is good news for the UK, enhancing our strong
reputation as an honest and trusted place in which to do
business. I hope that, with these assurances, this House will
reject Lords amendment 2.
Lords amendment 4 is the second amendment on which the other
place voted to make changes to the Bill. It provides the Treasury
with the power to amend the eligibility period attached to
zero-rate relief for armed forces veterans. The Government
believe that this amendment made by the other place is not
necessary and should not be accepted. I will explain to this
House why that is the case. The Government have considered this
measure in detail and consulted extensively on the relief. It
included a policy consultation that ran from July to October 2020
and a technical consultation that ran from January to March 2021.
A significant number of respondents agreed that the relief is a
positive step forward towards supporting the recruitment of
veterans and could help break down the barriers and negative
perceptions surrounding veterans.
After considering the responses, we felt that a 12-month
qualifying period struck the right balance between supporting
veterans as they transitioned to civilian life and wider
taxpayers’ interests. Members should also be aware that employer
representatives, such as the Federation of Small Businesses,
welcomed the 12-month relief when it was announced. This policy
provides employers in the 2021-22 tax year with up to £5,500 of
relief. It is also one part of the Government’s broader strategy
to support veterans.
The Government recently published the veterans’ strategy action
plan for 2022 to2024. That contains more than 60 policy
commitments worth more than £70 million in a diverse range of
areas, reflecting the varied streams of Government support on
offer.
Furthermore, at the 2021 Budget and spending review, £10 million
was provided to support mental health via charities provisions
and £5 million to the health innovation fund, providing
cutting-edge treatment for veterans. In August 2021, £2.7 million
was provided to strengthen veteran health support further,
including facilitating the expansion of Op Courage, and a further
£5 million was provided in September 2021 for those struggling
after the Afghanistan withdrawal. The Bill already contains other
levers to increase the generosity of this relief, if needed, such
as increasing the threshold that employers of veterans start
paying NICs and extending the overall period of the relief. These
proposed additional powers are therefore not necessary. With
these reassurances, I hope that the House will reject Lords
amendment 4.
The remaining 10 Lords amendments were tabled by the Government
and I hope that this House will support them. Lords amendments 1,
3 and 5 to 9 legislate for the threshold at which employers that
qualify for these reliefs start to pay NICs. The amendments set
the threshold for the 2022-23 tax year for freeport employers and
for the 2021-22 and 2022-23 tax year for the employers of
veterans. These thresholds have been set at £25,000 per annum for
freeport employers and £50,270 for employers of veterans. Both
those figures have been publicly communicated during the Bill’s
passage. These thresholds are normally set through regulations,
but due to the timing of this Bill they are being set in primary
legislation.
6.00pm
Lords amendments 10, 11 and 12 relate to changes the Government
are proposing in response to the Delegated Powers and Regulatory
Reform Committee’s report on the Bill. These Government
amendments, tabled in the other place, provide for additional
parliamentary scrutiny over certain powers in the Bill. Our
approach here demonstrates the seriousness we place on those
recommendations and the Government’s commitment to act upon them.
Lords amendment 10 ensures that regulations to specify future
self-isolation support schemes that would be exempt from
self-employment NICs under clause 10 must be subject to the
negative procedure. Originally, these regulations were subject to
no procedure. Lords amendments 11 and 12 provide for regulations
under clause 3(1) and 6(6) to be subject to the draft affirmative
procedure. Regulations may be made under these powers to extend
the end date of the freeport and veterans’ relief. These powers
were previously subject to the negative procedure. So I hope that
hon. Members will agree with the position I have set out
today.
(Ealing North) (Lab/Co-op)
I thank the Minister for setting out the reasoning behind the
Government’s amendments in the other place. Although we support
many of the measures in this Bill, we cannot ignore the fact that
we are discussing the Government’s plans for specific relief from
NICs just one month before they raise national insurance for
workers and businesses across the board. That is the crucial
context for the Lords amendments we are being asked to
consider.
Five weeks from today, a typical full-time worker will see their
annual tax bill rise by £274. That will be the direct result of
the Government’s decision to raise NI. It is the worst possible
tax rise, at the worst possible time. We argued it was wrong last
September, when the Government pushed this tax rise through
Parliament. Since then, energy bills have begun to soar, making
our case even stronger. Now, as we stand alongside the Ukrainian
people, we know that that conflict will impact people here, with
further price rises for petrol, energy and food. The
Conservatives must think again. The impact of their NI hike is
getting worse and worse. The Chancellor should finally do the
right thing and scrap April’s tax rise on businesses and working
people.
As we said when this Bill was being debated in the Commons last
year, we support the intention behind many of its measures.
However, throughout its passage, we and our colleagues in the
other place have raised important questions with Ministers about
some of the approaches the Government have decided to take. With
that in mind, I turn to Lords amendments 2 and 4, which were
successful in the other place and which we will be supporting
here today. Lords amendment 2 seeks to add one further condition
to those that already exist in the Bill for freeports. When it
was introduced, this Bill included the conditions under which
employers in a freeport could benefit from a zero rate of
secondary class 1 NICs. This amendment adds one further condition
to freeport employers’ relief. It would make sure this relief is
available only if the freeport maintains a public record of the
beneficial ownership of businesses operating within it. We,
alongside right hon. and hon. Members from across the House, have
long argued for transparency over the ownership of UK assets. In
recent days, that has come to a head, with the Government finally
admitting and accepting the urgent importance of establishing a
public register of the overseas owners of UK property. Yesterday,
when the Business Secretary made a statement to the House on
“Corporate Transparency and Economic Crime”, no one could deny
the damage caused by the Government’s failing to prioritise
transparency of the overseas ownership of UK interests. As my
hon. Friend the Member for Feltham and Heston () told the House yesterday,
although we clearly support the Government’s introducing a
register of overseas owners of UK property, we are clear
that:
“The UK would have been in a much stronger position to act with
speed and our national security would have been better protected
if the register had already been up and running.”—[Official
Report, 28 February 2022; Vol. 709, c. 736.]
As my hon. Friend went on to say yesterday, we hope lessons will
be learned for the future. The Government have a chance today to
prove that they have learned those lessons. Let us avoid their
pressing ahead today without that transparency condition, only to
return to the matter in a rush at a later date when the
opportunity for greatest impact may already have been missed.
That is why we will support Lords amendment 2, and I urge
Government Ministers and hon. Members on all sides to do
likewise.
I turn now to Lords amendment 4, which was also successful in the
other place and which we will support today. The Government’s
Bill introduces a zero rate of national insurance contributions
for employers of armed forces veterans for the period of one year
beginning with the earner’s first day of civilian employment
after leaving the armed forces. We believe it is crucial to
ensure that all veterans get the support they need as they seek
civilian employment.
Lords amendment 4 enables the Treasury to change the period of
support offered if it is found to support employment. We believe
it is a simple measure, giving the Government flexibility to
adjust the operation of the relief if doing so might improve
veterans’ ability to find long-term employment.
As the Financial Secretary may know, when the Bill was debated in
the Commons last year we raised questions about the time period
for which the relief would be available. When I discussed this
Bill with her predecessor, the right hon. Member for Hereford and
South Herefordshire (), I asked him to explain in
greater detail why the Government had chosen a period of one year
for veterans’ employers. In response, he said that one year was
appropriate because,
“the goal is to support a very specific process of
transition”.
When we pressed him further on the importance of helping to
maintain long-term employment, he acknowledged:
“If it were the case that veterans still had a serious problem of
finding secure and stable employment, of course that would be a
matter that the Government would wish to reflect on and
consider.”
He assured me and several of my hon. Friends that he would,
“continue to reflect on this policy”,
and that those at the Treasury,
“already have in place processes of evaluation and
assessment.”––[Official Report, National Insurance Contributions
Public Bill Committee, 22 June 2021; c. 18-20.]
I am sure the right hon. and learned Member for South East
Cambridgeshire () will want to honour those
commitments made by her predecessor.
Through Lords amendment 4, we seek simply to give the Government
the power to change the period of relief, should their ongoing
analysis conclude it is in the best interests of veterans to do
so. On that basis, I urge the Financial Secretary and her
colleagues to reconsider the Government’s position. I hope that
Ministers and hon. Members on the Government Benches will see the
value that Lords amendments 2 and 4 add to this Bill and that,
even at this late stage, they might reconsider their position on
them.
I end by urging Ministers to ensure that next time we are in this
Chamber with national insurance on the Order Paper, it will be to
agree to cancel the tax rise coming next month. The Chancellor
has five weeks to do the right thing—five weeks to change his
mind and avoid hitting working people and businesses with the
worst possible tax rise at the worst possible time.
(Gordon) (SNP)
I rise to support Lords amendments 2 and 4, but I will deal first
with amendment 4.
As I said at earlier stages of this Bill, those who have
experience of serving within the armed forces bring tremendous
qualities to the workforce through both the skills they have
learned while in uniform and their breadth of life experience.
Despite our awareness of that and the best efforts of Governments
and the third sector, for too many of our ex-servicemen who are
leaving the services, the transition to civvy street is far more
difficult than it often needs to be.
Having this exemption for national insurance contributions is
therefore a very positive step as far as we are concerned, making
it even more attractive to employers to hire those ex-service
personnel and to bring their skills and experience into the
workforce, helping to bring to fruition all the many economic and
social benefits that can come from that. In that regard, we are
attracted to Lords amendment 4 simply because it gives the
Treasury that power to extend the eligibility period attached to
the zero rate relief for armed forces personnel and veterans,
should that be deemed desirable. That seems to us to be a
perfectly reasonable addition to make to the Bill, giving the
Treasury a degree of flexibility on how to implement the measure
that would otherwise be lacking in the Bill as drafted.
On amendment 2, let me first place on record my satisfaction at
the agreement that has eventually been reached by the Scottish
Government and the UK Government over freeports, or green ports,
of which two will now be established in Scotland, with the
bidding process opening in spring this year and the first sites
opening, hopefully, in spring 2023. I will go a little bit off
piste here to say that that outcome was not always guaranteed,
and at times, in at least some of the public discussions, there
has been a bit more war-war than jaw-jaw, certainly on the part
of individual Conservative politicians rather than between
Ministers in Edinburgh and London. For example, the Scottish
Business Minister, , had to write six times to the
UK Government to even try to get green port discussions under way
in order to get them over the line. He said that the silence was
deafening. That is a pretty damning account that rather sits at
odds with the impression that we are often given from those on
the Treasury Bench as to how they would like to work
constructively with the Scottish Government.
The reason for holding out on the variation on the freeports
option was quite simple. We felt very strongly that given the
scale of the financial support that was on offer, it was vital to
ensure that wider policy objectives such as environmental
obligations, the commitment to net zero and fair play for those
employed within freeport sites, were met. While it is up to the
UK Government to decide how those objectives can be met in
England, applicants for green port status in Scotland will be
required to set out robust plans at the outset on how they plan
to contribute to Scotland’s just transition to a net zero economy
and how they will benefit the wider supply chain alongside
embedding fair working practices such as at least paying the real
living wage.
Freeports, it is fair to say, have had a somewhat mixed reception
abroad, particularly as regards the relationship that they are
perceived to have with criminality and tax evasion. While hardly
the “Grand Theft Auto”-style dystopia that they have sometimes
been portrayed as, the potential for criminality and
non-compliance with taxation, employment rights, health and
safety or environmental regulations and obligations is clear, as
is the potential for broader economic displacement.
That brings me to the nub of amendment 2. In recent weeks, we
have seen significantly increased demand from this House for
scrutiny and visibility of financial transactions that take place
in this country. We need to have that increased scrutiny over
those who spend and invest in the UK, and also over where their
money originates. It is very important when setting up freeports
that we are able to answer the age-old question, “cui bono?” That
is absolutely paramount. A requirement that the freeport
deliverance body should be able to make reasonable efforts to
verify who the beneficial owners of the business are and to
ensure that that information is accessible not just to the
relevant enforcement agencies but to the general public is the
minimum amount of due diligence that we should expect in exchange
for the status and the exemptions on offer.
I listened carefully to the Minister’s arguments about the
beneficial register that will be in place and her view that as a
third party under the local governance arrangements it would be
inappropriate to release that information. Respectfully, I
disagree with that. We all know how labyrinthine and byzantine
corporate structures can be. Irrespective of any requirement in
future legislation that may be coming into force, certainly on
freeports, my party firmly believes that we should have
transparency and accountability baked into the corporate
structure and public reporting at the outset. On that basis, both
Lords amendments have our support and we shall be voting
accordingly.
(Richmond Park) (LD)
I spoke on Second Reading and at other stages before the Bill
went to the Lords, but it is fair to say that I now stand in a
very different environment. Since the full-scale invasion of
Ukraine last week, so many aspects of our economy, our
international relations and our defence strategy have been cast
in a new light.
In that spirit, I rise to support Lords amendment 2, which was
introduced by my good friend and Richmond Park predecessor,
. In the past week, we have
had cause to look again not just at our defence spending and at
the importance of our international relationships, but most
importantly at how the UK— London in particular—has become a
haven for Russian money, at what it has done to us as a nation
and at how it has undermined our efforts to stand with the brave
people of Ukraine.
6.15pm
I very much welcome the Government’s plans to introduce their
economic crime Bill. I look forward to its progress through the
House in the coming weeks and welcome what it represents about
the Government’s attitude to addressing what has been a known
issue for many years; I am glad that we are now addressing it,
even if it is in response to the most tragic of circumstances in
Ukraine. However, it seems to me that if we are sincere about the
change in attitude that is now required, we should think again
about our new legislation’s provisions on money laundering. As
has been pointed out, not least by me and other hon. Members at
earlier stages of the Bill, one of the principal issues with
freeports is the risk of money laundering.
It seems remiss not to use this opportunity to strengthen the
Bill’s provisions to provide greater transparency, which is key.
We can pass legislation to regulate freeports—I listened
carefully to what the Minister said she thought would be
sufficient controls to guard against money laundering—but what
will above all help our nation to deal with the dirty money
washing through our industries, our banking sector and all the
other parts of our economy is transparency.
I am afraid I do not think that the measures that the Minister
outlined are good enough. It is not enough for Companies House to
maintain a record; what is clearly required is transparency. We
need a publicly available register of the companies making use of
freeports. What is the source of their wealth? What are they
trading in? Who are the beneficial owners? Without that
information, it will be impossible to know who is operating in
the freeports and for what purpose.
Now is the time. Now is the opportunity to put provisions in
place not just to prevent money laundering in freeports, but to
send a clear message that as a nation we are cleaning up our act.
That would show that we have looked at the issue, have
acknowledged it as a problem and are not just clearing up the
current mess, but guarding against future abuses of our financial
system and against the use of our economy, our businesses and our
financial system for money laundering. That is why it is so
important to support Lords amendment 2 and oppose the
Government’s motion to disagree.
With the leave of the House, I will make a few comments in
response to hon. Members.
The hon. Member for Ealing North () mentioned tax rises and
national insurance contributions. The Government recognise the
impact that they will have on those to whom they are applied, but
it is vital that we tackle social care—we cannot avoid taking it
on. He will know, because we have debated them many times, the
measures that the Government are taking to ensure that those on
the lowest incomes get the protection that they need. For
example, we are increasing the national living wage and cutting
tax for low-income families in relation to universal credit.
This, however, is a debate about some other measures, and one of
the important measures that have been raised relates to
transparency. The hon. Member for Ealing North suggested that we
had been slow to act, while the hon. Member for Richmond Park
() rightly said that we should
pause and look again. Let me emphasise that we have not been slow
to act, in the sense that we were the first country in the G20 to
create a free, fully public beneficial ownership register, and on
that register we have 5.6 million names and more than 4.4 million
UK companies. We have not been slow to act, and we have looked
again, because we are introducing a register of beneficial owners
of overseas entities, we are introducing further powers in
relation to unexplained wealth orders, and we are introducing
further powers to sanction for the Office of Financial Sanctions
Implementation.
Moreover, today the Government are publishing a detailed White
Paper that will upgrade the powers in relation to Companies
House. For example, anyone setting up, running, owning or
controlling a company in the UK will need to verify their
identity with Companies House. Companies House will be given the
power to challenge information that appears dubious, and will be
empowered to inform security agencies of potential wrongdoing.
Company agents from overseas will no longer be able to create
companies in the UK. So we are taking measures now, and we have
reflected before taking those steps.
The hon. Member for Gordon () raised the issue of
veterans, and I too am proud that we are introducing measures to
make it easier to employ them. We have set out our reasons for
keeping the measure in relation to the 12-month period, and I
highlighted them in my opening speech, but, as Members will know,
we will review that policy in 2023. I am also pleased that, as
the hon. Member for Gordon said, the UK and Scottish Governments
announced the establishment of two freeports earlier this
month.
For those reasons, I hope that the House will agree with the
points that I have made.
Question put, That this House disagrees with Lords amendment
2.
[Division 202
The House divided:
Ayes
295
Noes
198
Question accordingly agreed to.
Held on 1 March 2022 at
6.22pm](/Commons/2022-03-01/division/038F37D1-41D7-48A1-B8FB-3B0EE13D167C/CommonsChamber?outputType=Names)
Lords amendment 2 disagreed to.
Clause 7
Veteran conditions
Motion made, and Question put, That this House disagrees with
Lords amendment 4.—(.)
[Division 203
The House divided:
Ayes
298
Noes
199
Question accordingly agreed to.
Held on 1 March 2022 at
6.36pm](/Commons/2022-03-01/division/2D08F4D3-635A-44C8-A8F1-4944096A7507/CommonsChamber?outputType=Names)
Lords amendments 1, 3 and 5 to 12 agreed to, with Commons
financial privileges waived in respect of Lords amendments 1, 3
and 5 to 12.
Ordered, That a Committee be appointed to draw up Reasons to be
assigned to the Lords for disagreeing to their amendments 2 and
4;
That , , , , , and be members of the
Committee;
That be the Chair of the
Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.—(.)
Question agreed to.
Committee to withdraw immediately; reasons to be reported and
communicated to the Lords.
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