Pensions Bill

My Lords, I support the amendment of the noble Baroness, Lady Hollis, who looks slightly surprised, for many of the reasons that have been put forward, which I shall not repeat, but particularly on the ground of fairness. I think that the proposal is actually unambitious—it is the right proposal at this moment to provide a remedy. The idea that national insurance contributions are separate from other forms of taxation and that they go into a fund is a complete fiction. I spent about a year of my life chairing the Tax Reform Commission, and the relationship between tax and national insurance is almost incomprehensible. There are different periods over which national insurance applies and different starting rates. It all makes great difficulties for employers and the case for at least aligning the two systems is enormously strong. I suspect that the Minister will point to cost. If he is worried about cost, he can find additional revenue by simplifying the system. It will shift the burden on to some people but they tend to be pretty well to do. The Minister is shaking his head, but if he looks at the way in which national insurance bites, it falls on people with lower incomes. People who earn very big sums of money are not making a proportional contribution. That is because the Treasury maintains this fiction that national insurance is different from tax, that somehow it is a charge for a particular benefit. We all know that that is a fiction. Successive Governments have avoided confronting this fiction because if they provide the remedy, it looks as if they are putting up the burden of taxation. The Minister should be brave and accept the amendment. He should persuade the new Chancellor and the Prime Minister that there is an opportunity here to simplify the tax system and make it fairer and that, far from being revenue-neutral, it is possible to do what the noble Baroness suggests and increase the revenue available to the Exchequer. This is a legislative opportunity, and I hope that it will be taken.