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Rob Marris: It sounds like the Tory party.

Mr. Prisk: It sounds very much like the Labour party.

The danger is that, unlike the results of a visit to MFI, we cannot take Labour's bad laws back if we do not like the end result. Therefore, can the Paymaster General explain the scope of the secondary legislation? Which parts of the Bill will it refer to? How will it affect both taxpayers and national insurance payers? What consultation with those affected is she planning? When does she expect it to be published?

I turn to the specific elements in the Bill. Clauses 5 and 6 seek to align the respective administration of income tax and national insurance. As such, while welcome, that part of the Bill is long overdue. As the Paymaster General mentioned, that part follows the 1998 Budget and the accompanying Taylor report, when the Government denounced the dual systems of income tax and national insurance. Ministers cited those as being unduly onerous for the 1 million or so employers who had to run them simultaneously. Indeed, the then Secretary of State for Social Security, the right hon. Member for Edinburgh, Central (Mr. Darling), told the House that

"they have to cope with two separate sets of rules. Moreover, if they have questions, they have to deal with two separate Departments. Those starting out on their own—perhaps starting up their own business or in other self-employment—also have to deal with separate Departments on tax and on national insurance. I therefore believe that the case for change is overwhelming."—[Official Report, 8 February 1999; Vol. 325, c. 37.]

Nearly five years later, the job is still not complete. Indeed, the Institute of Chartered Accountants in England and Wales bemoaned the Government's failure to act after even three years. In a statement, the tax faculty of the institute said that the stated merger benefits had not been achieved and that performance of the merged national insurance contribution office had in that time deteriorated. The faculty went on to highlight a string of problems. The claim forms had become more, not less, complicated. Employers would ring a dedicated helpline, only to get no reply; and if they did get a reply, they found that many expert personnel had left the service and they could not get the advice that they needed.

Peter Bickley, technical manager of the institute, said at the time that the handling of national insurance contribution matters appeared if anything to be getting

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worse, with a knock-on effect on the burdens placed on business and those who paid national insurance contributions. He said that it was essential that steps were taken to ensure that the merger achieved its objectives and reduced burdens; otherwise, there was a danger that the merger would fail to deliver the promised benefits. That was in 2002. Since then, of course, similar incompetence has emerged in the dismal handling of the new tax credits, for which the Paymaster General is also responsible. Therefore, can she tell the House whether performance standards are better now than they were before the merger, as was promised by the Chancellor? Has the burden of compliance gone up or down since then? Can she explain why it has taken another two years, following the statement by the institute, to bring these measures before us today? Was the delay a huge mistake or—worse—deliberate?

Some people will say that this part of the Bill applies to just 4 per cent. of the national insurance fund. That is true but for tens of thousands of self-employed people it represents 100 per cent. of their contributions. In other words, for many people the five-year failure to clear up the rules is a real financial headache.

I appreciate, perhaps more than most, that the Paymaster General is no friend of the self-employed. After all, it was she who imposed crude and ill-judged measures such as IR35 and the recent reinterpretation of section 660A of the Income and Corporation Taxes Act 1988. Indeed, we are told that she is now planning to clamp down on thousands—who knows, millions—more owner-managed businesses under paragraph 5.91 of the pre-Budget report, yet, just like the five-year delay on national insurance, there is to be no consultation, and no information to enable firms to plan ahead. Why will she not listen to small businesses on that matter?

This Government, and this Minister in particular, treat the self-employed as second-class citizens. It is a woeful record, based largely on ignorance, and her actions show the Chancellor's words on enterprise to be just empty rhetoric.

I turn to clauses 1 to 4 relating to securities or share-based earnings. That part of the Bill is a direct consequence of the Chancellor's decision to impose an additional 1 per cent. national insurance charge on employees' earnings over the upper earnings limit. There were many things wrong with the Chancellor's decision to hike up national insurance last spring. It will, for example, act as a serious drag on the competitiveness of our economy, as it is in effect a tax on jobs.

Dawn Primarolo: I should like to give the hon. Gentleman an opportunity to correct himself. The changes on share-based provisions in the Bill have absolutely nothing—zero—to do with the 1 per cent. and everything to do with representations made to the Government by employers about the options they required in order to simplify the operation, a point that his Government, in 18 years, never addressed.

Mr. Prisk: The Paymaster General admitted that she had not quite read her explanatory notes when she replied to an intervention from the hon. Member for Wolverhampton, South-West (Rob Marris). It is her own explanatory notes that highlight the fact that we

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have a 1 per cent. surcharge on earnings over the upper earnings limit and that is what has triggered this decision, so she cannot try to get out of it that easily.

Mr. David Ruffley (Bury St. Edmunds) (Con): Just for the record and in support of my hon. Friend, the Paymaster General might like to turn to page 11 of the Inland Revenue's regulatory impact assessment. Paragraph 2 states:

"The introduction of the 1 per cent. NICS charge on employees' primary NICS liability above the upper earnings limit could have an unintended impact on employers' ability to recover from an employee the primary NICS arising on non-cash payments of earnings",

proving my hon. Friend's point absolutely 100 per cent.

Mr. Prisk: Naturally, I am grateful to my hon. Friend, not least for reinforcing the point being made. It is no good the Paymaster General's saying, "It is nothing to do with us," when the Government's own documents show that this is a consequence—unintended, but a consequence nevertheless—of such action.

Dawn Primarolo: Unfortunately, the hon. Gentleman has misunderstood. I do not dispute what the hon. Member for Bury St. Edmunds (Mr. Ruffley) said, but the point was that this was an issue regardless of whether or not there was a 1 per cent. additional liability. The provision was triggered not by the 1 per cent., but by a previous consideration.

If the hon. Member for Hertford and Stortford (Mr. Prisk) wants to make a point about the additional 1 per cent., he is of course entitled to do so. But he should be very careful not to mislead the House; otherwise, he will need to explain whether he believes that, before the 1 per cent. was added, there was no problem and no simplification of NICs was necessary. Does he believe that—yes or no?

Mr. Prisk: The phrase, "unintended consequence" means something that is a result of someone else's actions. That is what the Paymaster General's own documents say, and that is the truth of the matter.

Rob Marris: I caution the hon. Gentleman against selectively quoting, be it consciously or unconsciously, from the explanatory notes. Paragraph 12 says:

"Most employees who receive security-based remuneration earned above the"

upper earnings limit, which is £30,000. We should note the reference to "most" employees, not all. There are companies that have share-based options for people who earn considerably less. This legislation will deal with the difficulties that those lower-earning employees would experience. The hon. Gentleman should take note of the use of the word "most".

Mr. Prisk: Unfortunately, the hon. Gentleman is reading the wrong document. I do not know whether he has had a chance to read the regulatory impact assessment, but that is the document that we are referring to, and it uses the phrase "unintended

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consequence". That is the line that the Government have put out. We have quoted it, and I am more than happy to do so again. [Interruption.] Well, it is in the Government's own document; if it is untrue, perhaps the Paymaster General will now correct it.

Mr. Peter Atkinson (Hexham) (Con): If the hon. Member for Wolverhampton, South-West (Rob Marris) had continued to quote from the explanatory memorandum, he would have discovered that it does indeed mention the 1 per cent. figure. It states:

"Most employees who receive security-based remuneration earned above the UEL and the employer did not have to pay primary contributions on their behalf. From 2003 onwards there is a 1 per cent. primary Class 1 contribution".

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