My Lords, the proposed new clause seeks to require HMRC to publish a post-implementation review of the employment allowance after one year. I would like to explain why this new clause is unnecessary.
The tax information and impact note already commits the Government to keep the scheme under review through ongoing communication with taxpayer groups affected by it. Moreover, in Committee in the Commons on 21 November last year, and on Report in the Commons on 10 December, the Exchequer Secretary agreed that the Government should publish information twice a year about the overall take-up of the employment allowance, including by geographical location. I am happy to repeat that commitment in the Moses Room today.
This amendment focuses on the number of jobs created by the employment allowance. However, while the employment allowance will clearly reduce the cost of taking on new staff for small businesses and charities, it will be up to those businesses and charities to decide how they use the resulting NICs savings. I remind the Committee of the comments made by the Institute of Fiscal Studies and by the Federation of Small Businesses at the evidence session in the House of Commons on 19 November last year, to the effect that it is impossible to get precise numbers. We cannot conduct the equivalent of a randomised trial with tax policy to determine the number of jobs created because of the allowance. As the IFS pointed out, there are a number of factors in the economy simultaneously influencing the number of jobs.
The Government have not set any target for the number of jobs we expect to be created, although survey evidence from the FSB suggests that 28% of small businesses will use the savings to employ additional staff. It would not, therefore, be possible to provide information about the number of jobs created as a direct result of this measure. Similarly with wage levels, the same research from the FSB suggests that 29% of small businesses would use the NICs savings to boost staff wages. However, it would be difficult precisely to quantify that effect, given that wage levels are subject to many different pressures, varying from business to business.
The new clause also requires an assessment of HMRC’s strategy to promote the employment allowance. HMRC has already been proactive in promoting the allowance, having spoken to various stakeholders—including representatives of software providers, charities and small and medium-sized enterprises—about the design and operation of the measure. There is continuing engagement between HMRC and those stakeholders on guidance for employers and publicity. As a result of these discussions, communications to raise awareness of the allowance will begin more widely in February and March this year to maximise impact in the crucial period running up to the introduction of the allowance in April, using a range of HMRC publications and products and the department’s national network of
local Working Together groups. As a result, we are confident that employers across the UK will be ready to claim the allowance in April. These efforts will continue after April to support take-up from companies that have not done so at that point.
With these reassurances, and in the light of the Government’s existing agreement to make information about take-up available twice yearly, I hope that the noble Lord will withdraw his amendment.