Lords debates National Insurance Contributions Bill

15 March 2011

The National Insurance Contributions Bill completed its report stage in the House of Lords on Monday 14 March. Members of the Lords defeated an amendment that would have applied the national insurance contributions holiday for new business to all of the UK.

The Bill, which started in the House of Commons, increases the rates of national insurance contributions paid by employees, employers and the self-employed by 1 percent from 6 April 2011; and applies a regional national insurance contributions holiday for new businesses.Lord McKenzie of Luton introduced the amendment to Clause 4: Holiday for new businesses, which aims to encourage the creation of private sector jobs in regions most reliant on public sector employment. The amendment sought to remove the excluded regions – Greater London, the South East Region and the Eastern Region – from the Bill so that temporary break in the payment of national insurance contributions by employers in new business applied to all regions of the UK.

Explaining his amendment, Lord McKenzie said that having excluded regions complicated the construction of the legislation and the operation of the scheme, and ‘would discourage a clear understanding and therefore take-up of the scheme.’ There were ‘complexities for some types of businesses as to where the new business was principally carried on,’ he said. ‘Some of the 10 employees by whom the national insurance holiday could be enjoyed could be working in the excluded regions.’ Referring to Office for National Statistics figures, Lord McKenzie said that the ‘spread between the regions’ of ‘identifiable public sector employment was relatively narrow.’ To treat those areas ‘as though they are a completely distinct part of the economy with in no way the same reliance on public sector employment’ was flawed.

Members of the Lords voted against the amendment by 139 votes to 200, defeating the amendment by 61 votes.

Third reading – a final chance to amend the Bill – is scheduled to take place on Tuesday 22 March.

Further information

Report stage gives all Members of the Lords further opportunity to consider all amendments to a Bill.

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