As the Minister described, the Bill provides for the Government’s commitment, as set out in their manifesto, to a tax lock: a commitment to not increase the rates of VAT, income tax or national insurance in the next Parliament. The Bill provides for the national insurance element of that pledge. Such a measure has to remain separate from the Finance Bill currently going through Parliament, because statutory provisions regarding national insurance contributions cannot be included in the annual Finance Bill.
As we have heard, the Bill prevents any increase in the current rates of class 1 national insurance contributions paid by employees and employers for the duration of the 2015-20 Parliament. It also provides that the upper earnings limit cannot exceed the higher rate threshold, which is to say that the upper earnings limit cannot exceed the sum of the personal allowance and the basic rate limit.
Responding to the tax lock announcement during the election campaign, many people wondered why such a commitment etched into the statute book would even be necessary. If Ministers—indeed, the Prime Minister—commit to not raising income tax, national insurance contributions or VAT in the run-up to an election, surely such a commitment should be taken at face value? Apparently not in the case of Conservatives, who perhaps felt that the low levels of trust in their pledges were such that they would have to go much further. No wonder, when we consider that the Prime Minister made a similar commitment in 2010 not to raise VAT, only then to raise it to 20% after entering Downing Street.