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Oral Answers to Questions
(1 day, 8 hours ago)
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Lillian Jones (Kilmarnock and Loudoun) (Lab)
Nick Smith (Blaenau Gwent and Rhymney) (Lab)
Graeme Downie (Dunfermline and Dollar) (Lab)
Jacob Collier (Burton and Uttoxeter) (Lab)
Josh Simons (Makerfield) (Lab)
The Secretary of State for Energy Security and Net Zero (Ed Miliband)
In the Budget, the Government decided to transfer the mineworkers’ pension scheme investment reserve to members of the scheme. At the end of last month, the first increase in payments was made to over 100,000 ex-miners and their families. That has meant an extra 32% rise in people’s pensions each month—an average of £29 per week. The overturning of that historic injustice demonstrates the difference made by a Labour Government.
Lillian Jones
I thank the Secretary of State for that reply and for his attentive engagement on the issue. I understand that British coal staff superannuation scheme trustees wrote to the Department last month with reform proposals. I urge the Secretary of State to meet them as soon as possible to rectify the long-standing injustice, especially given the increasing age and declining health of the beneficiaries.
Ed Miliband
I should say that the praise all goes to the Minister for Industry, my hon. Friend the Member for Croydon West (Sarah Jones), for the progress that has been made. She is in sole charge of the issue. I know that she has been engaging with the trustees of the BCSSS; indeed, I believe she met them yesterday. She knows the point my hon. Friend the Member for Kilmarnock and Loudoun (Lillian Jones) is making about that scheme.
Nick Smith
In Blaenau Gwent and Rhymney, 1,600 miners received the biggest number of increased payments from the mineworkers’ pension scheme in Wales. All of my uncles on my mum’s side were miners. Dessie Winter, who is alive and well, will benefit from the MPS changes, but my uncles Georgie and Jackie were pit supervisors who paid into the separate National Coal Board staff pension scheme. They have sadly passed, but their colleagues deserve fairness. Since 1994, the Government have received £3.1 billion from the BCSSS. Will the Secretary of State say if he will look again at the staff side’s surplus payments to benefit our pensioners?
Ed Miliband
My hon. Friend makes his point with customary eloquence. I know from personal experience that there were people who were waiting for the injustice to be remedied but unfortunately died before that happened. He refers to part of the issue raised by the Business, Energy and Industrial Strategy Committee, as it then was, about 50:50 surplus sharing. I know my hon. Friend the Minister for Industry is looking at that.
Graeme Downie
Correcting the injustice in the mineworkers’ pension scheme has made an incredible difference to the former miners in my constituency of Dunfermline and Dollar after so many years. At the weekend, I met representatives from the BCSSS in Fife, including the men and women who are particularly affected by that scheme and the women who worked in the canteens and other areas, who feel that they have been left behind by the changes to the MPS. Will the Secretary of State meet campaigners in Fife and across Scotland regarding this issue, and will he ensure that he makes progress as quickly as possible to correct the injustice that those people have suffered as well?
Ed Miliband
I know from my constituency that there is a strong feeling about the BCSSS. That is why my hon. Friend the Minister for Industry has moved at speed to meet the trustees. The schemes are not exactly the same in some of their arrangements, but my hon. Friend the Member for Dunfermline and (Graeme Downie) is right to say that there is certainly a read-across from some of the injustices in the MPS, and I know that the Minister for Industry is looking at that.
Jacob Collier
As a Collier, I welcome the Government’s announcement on the mineworkers’ pension scheme. However, as the Secretary of State has heard, the BCSSS members, including my constituent Mitch Wainwright, have raised concerns about unequal treatment, given the similarities between the schemes. What steps are the Secretary of State and the Minister taking to ensure that those former British Coal employees are treated as equitably as those in the MPS?
Ed Miliband
My hon. Friend is right about the read-across and the sense that the injustice that has been remedied in the MPS needs to be remedied in the BCSSS. There is also a real need for speed. That is why my hon. Friend the Minister for Industry is on the case, as she was so brilliantly on the MPS, delivering in less than five months the justice that the Conservative Government never delivered in 14 years.
Josh Simons
In my constituency of Makerfield, more than 500 people stand to benefit from changes introduced by this Government to the mineworkers’ pension scheme. For years, those people and their families stood by and watched as the Conservative Government stole their pensions and disrespected their work. I want us to celebrate our industrial past and those who made this nation wealthy and powered our industrial revolution. Does the Secretary of State agree that we need to do more to remember the legacy of mining as well as to drive up the living standards of those on the mineworkers’ pension scheme?
Ed Miliband
My hon. Friend is right. I think I am right in saying—my hon Friend the Minister for Industry and I have had a discussion about this—that almost every constituency—
Ed Miliband
Every constituency has members of the MPS who are benefiting from this. I hope the Conservative party welcomes a Labour Government acting on this injustice—there is not much sign of that, though. My hon. Friend the Member for Makerfield (Josh Simons) makes the point about commemorating the work of miners, which is something that I feel strongly about and that we will pursue.
James Wild (North West Norfolk) (Con)
I am sure that any of my constituents who stand to benefit from this increase will welcome it, but how many members of the mineworkers’ pension scheme will be losing out on winter fuel payments worth up to £300 due to the decisions that this Government have taken?
Ed Miliband
This is actually to do with the disastrous economic legacy that was left by the Conservative party. The truth is that, even in tough times, the Labour Government are showing with their decisions on the MPS how we can make our society more just.
Lisa Smart (Hazel Grove) (LD)
One of the questions I was most frequently asked when I was the trustee of one of the larger local authority pension schemes was what more the fund could do to tackle climate change, particularly in relation to investing in fossil fuel companies. Will the Secretary of State update the House on the conversations that he has been having with the Pensions Minister to ensure that pension funds do their bit to help get us to net zero?
Ed Miliband
That is an excellent question, Mr Speaker. I will write to the hon. Lady with a good answer.
Calum Miller (Bicester and Woodstock) (LD)
I was pleased to see the Secretary of State saying last week that those who host clean energy infrastructure should benefit from it. When landowners and developers in my constituency are cashing in on building new solar, my constituents in Bicester and Woodstock think that it is only fair that benefits are shared. Will the Secretary of State tell me whether he will follow the model of other Governments in setting a mandatory—
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
I should declare an interest in that many of my relatives across south Wales are former miners. In the autumn Budget, the Government quite rightly made the decision to end the pension injustice for miners who were part of the mineworkers’ pension scheme, but they did not do the same for the 40,000 miners who were part of the British coal staff superannuation scheme, including 151 former miners in my own constituency. Will the Government guarantee that these men and women get the pension they deserve and explain why they will have to wait longer for justice than many of their former colleagues?
Ed Miliband
The hon. Member and I both have constituency interests in this matter, and he is right to say that. None the less, I say gently to him that no action was taken on this for a very, very long time—indeed, since privatisation. This Government took action in the Budget in less than five months. That is the difference. I have made it absolutely clear that my hon. Friend the Minister for Industry is now turning her excellent attention to the BCSSS.
Mr Speaker
I am not sure whether there are many coalmines in Strangford, but come on then—I call Jim Shannon.
Jim Shannon
May I welcome what the Government and the Minister are doing on this matter? This good scheme takes care of an injustice from some 30 years ago. There are those in Northern Ireland who worked in the mines, and their families are still concerned about this issue. Can we have a timescale for the completion of the work on the British coal staff superannuation scheme, which some of them would have qualified for?
Ed Miliband
I thank the hon. Gentleman for his question. I am glad that he, too—like everyone else in this House, according to my hon. Friend the Minister for Industry—has constituents who will be benefiting from this work. The best I can say to him on this issue, which has now been rightly raised a number of times, is that the Minister for Industry will have heard the calls made with real urgency, which I think we all recognise, and will act accordingly.
Olly Glover (Didcot and Wantage) (LD)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
Community energy will play a pivotal role in our mission for clean power. Last week, we published the clean power action plan, which contained more information about how we will meet this world-leading mission, and the report confirmed that community energy will play an important role, particularly through Great British Energy.
Olly Glover
Renewable energy schemes on community buildings in my Oxfordshire constituency of Didcot and Wantage, supported by the Low Carbon Hub in Oxford, have mostly benefited building owners up to now. Would the Minister support more flexibility in local energy systems and allow local energy trading to get more support for renewable energy schemes in our communities, so that more local people can directly benefit?
Michael Shanks
The hon. Gentleman makes an incredibly important point about how local community groups can benefit from not just hosting the community energy, but from being able to sell locally. We have had a number of conversations on this topic already. I most recently met the community energy contact group, which does a lot of work to look at what regulations there might be, and we are happy to look at any proposals that come forward. We want to see a revolution in community energy right across the country so that more communities can benefit.
Mr Toby Perkins (Chesterfield) (Lab)
Under the previous Government, we had an energy market that worked for nobody. It was bad for consumers, and we also saw many energy companies go out of business as the Government lost any grip on the industry. Does my hon. Friend agree that with the greater stability we have under this new Labour Government, there are opportunities for community energy coming forward as part of the recovery of our whole energy infrastructure?
Michael Shanks
It will not surprise the House that I agree wholeheartedly with my hon. Friend, who, as always, makes an incredibly important point. He is right that stability is key, but so too is this Government’s commitment to invest in community energy. We have committed to upwards of 8 GW of energy from community sources over the course of this Parliament up to 2030. That commitment ensures not just that we have an energy mix where communities benefit, but that they benefit from the economic and social advantages of owning the energy they produce.
Sarah Dyke (Glastonbury and Somerton) (LD)
Community energy schemes provide a great opportunity for local communities to take ownership of clean energy production. In Glastonbury and Somerton, we have seen the benefits as Avalon Community Energy projects around Glastonbury are projected to save 1,000 tonnes of carbon per year. How will the Minister support community energy schemes and ensure that they play a fair and full role in creating clean energy?
Michael Shanks
The hon. Member has raised community energy on a number of occasions in this place, and I know she is a champion of it. She is right to highlight the examples of where community energy can make a huge difference. One of the key areas we want to drive forward is the local power plan, which will be delivered by Great British Energy. Unfortunately, her party did not in the end support the creation of Great British Energy, but I hope they will change that position and see the huge advantages of investing through Great British Energy in schemes like the one she mentioned, but also of helping to build capacity in community groups so that they are capable of driving those projects forward.
Brian Leishman (Alloa and Grangemouth) (Lab)
I declare the interest that I am a Unite the union member.
Communities all across Scotland rely on the Grangemouth refinery for their energy. As closure looms, Unite has given the Government a plan that will save jobs, help hit sustainable aviation fuel targets and build new green industries for the future. It is not too late to save those jobs and achieve the just transition that my community desperately needs. Will the Secretary of State agree that the plan has great potential and agree to meet Unite to see what the Government can do to achieve a truly just transition for the refinery workers and keep Scotland’s only refinery working?
Michael Shanks
As my hon. Friend knows, we have met Unite on a number of occasions over the past few months since Petroineos made the disappointing decision to follow through on its closure plans for the Grangemouth refinery. It is important that we look at every possible option, and we have done.
It is also important that the Government are clear that we want to see a long-term sustainable future for the refinery site. That is why we invested in Project Willow, which at the moment is coming up with credible investable propositions for the site. We want to protect the workers and do whatever we can to ensure a just transition at Grangemouth and for industry right across the country, but those options need to be long-term and sustainable so that we do not drive workers back into this process again a few years down the line. We are committed to ensuring that we invest in long-term sustainable propositions for the site, and of course we will meet anyone and discuss any propositions to help make that happen.
Pippa Heylings (South Cambridgeshire) (LD)
It is so good to hear the Minister affirm the need to bring the public onside, as well as private sector investment, to achieve the transformation towards green power and net zero. The Liberal Democrats support Great British Energy if community energy is at the centre of the Great British Energy Bill. Our colleagues in the Lords are debating amendments relating to direct participation in and benefit from community energy. Will the Minister agree to those proposals if they come to this House?
Michael Shanks
In the spirit of Christmas, I thank the hon. Lady for all the engagement and discussions we have had—[Interruption.] The Conservative Front Benchers groan, but I have joy for their party at Christmas as well. We are absolutely committed to community energy, which was in our manifesto. At every stage of the Bill, we have committed to community energy being right at the heart of what Great British Energy will do. If their lordships make any amendments in their consideration of the Bill, we will of course consider those amendments when the Bill comes back to this place. However, I say gently to the hon. Lady that her party did not support Great British Energy, so it cannot now claim credit for the things that Great British Energy will deliver.
Robbie Moore (Keighley and Ilkley) (Con)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
We have made clear, through the clean power action plan that we announced last week, that where communities host clean energy infrastructure, we will ensure that they benefit from it. There are many options in that area, including community funds and direct support for households, and we are exploring all those options to ensure that communities can benefit from the clean power mission.
Robbie Moore
There is a proposal to build 65 wind turbines on protected peatland in the neighbouring Calderdale council area, which I am staunchly against. To make matters worse, if the development is approved, my constituents will not benefit from any community benefit scheme, despite being on the periphery of the proposed location. How will the Secretary of State ensure that my constituents get their fair share of any community benefit scheme should the proposal be approved?
Michael Shanks
I cannot comment on the specific details of the case. However, I would like to know more about why the hon. Gentleman’s community might not benefit, because the aim is for all communities affected by hosting infrastructure to benefit in different ways. We are looking at the options—be they money off bills, or the community benefit funds that exist at the moment—as we work through the answers to the consultation launched by the previous Government. However, we are clear that if communities host infrastructure that is nationally important and benefits the whole country, they should benefit from doing so.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
Community benefits come in many different forms—in my constituency, Ørsted has contributed £1 million towards Horizon Youth Zone, and RWE is supporting Projekt Renewable, which is a box park learning zone—but the most wide-reaching benefit is to people’s pockets. Schemes such as the Octopus fan club bring down people’s bills when the use of renewables is at its highest. How can other energy retailers deliver similar savings for consumers?
Michael Shanks
My hon. Friend asks an extremely important question. All communities should benefit from the transformation that we want to make to the energy system. Part of the answer is improving how we use smart systems right across the energy system, so that people have much more consumer-led flexibility in their options—we are moving forward with that. In the clean power action plan that we published last week, we committed to doing much more to give people the power to take advantage of some of the opportunities she mentions.
Joy Morrissey (Beaconsfield) (Con)
Community engagement and funding are important. With large-scale solar farms planned for agricultural land, does the Secretary of State think that there are any circumstances in which local communities might know better than him?
Michael Shanks
Communities are, and will always be, able to speak about the plans for their local area, and to contribute to consultations and planning applications—we will not change anything about that. However, it is important to say that nationally important infrastructure will need to be built somewhere if we are to have the clean power future and energy security that everybody in this country needs. I gently say to the hon. Lady that, even in the most extreme statistics, less than 1% of land in this country would be used to build for solar. Either the Conservatives are in favour of keeping us on the rollercoaster of volatile fossil fuels, or they are in favour of building clean power. Her party used to be in favour of net zero, but now it seems to be running away from it at speed.
Amanda Hack (North West Leicestershire) (Lab)
David Pinto-Duschinsky (Hendon) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)
We are getting on with delivering our warm homes plan. We are set to upgrade up to 300,000 homes next year. We are introducing new standards in the private rented sector and the social rented sector that will lift 1 million people out of fuel poverty, and we are making it easier for people to install heat pumps by removing planning restrictions, expanding our boiler upgrade scheme so that more people can get a discount and boosting the heat pump industry.
Amanda Hack
Modelling suggests that one in four residents in North West Leicestershire is in fuel poverty. Does the Minister understand the frustration many constituents will feel that, despite being in one of the wealthiest countries in the world, fuel poverty has become so commonplace? Will she write to me with an outline of the elements in the warm homes plan that will focus on delivery for those in fuel poverty?
Miatta Fahnbulleh
I share the frustration of my hon. Friend’s constituents. The scale of fuel poverty in this country is a shameful legacy of the last Government’s 14 years of failure. It is a legacy that we are determined to turn around through our warm homes plan and our winter support package, and we will do everything we can to make sure that cold, draughty homes are a thing of the past.
David Pinto-Duschinsky
The last Government left us far too reliant on foreign dictators for our energy needs. I congratulate this Government on their focus on ending that dependence and making us energy independent. What steps is my hon. Friend taking to reduce bills for residents in my constituency and to further ensure that Britain remains genuinely energy independent?
Miatta Fahnbulleh
My hon. Friend is completely right. Too many people cannot afford their energy bills—[Interruption.] That is your legacy. That is why we are running to deliver clean energy by 2030 and rolling out our warm homes plan, so that we can upgrade millions of homes to make them warmer and cheaper to run.
Harriet Cross (Gordon and Buchan) (Con)
The Secretary of State, the Minister for Energy and the Minister for Consumers have all said in this House that the National Energy System Operator’s report shows that the Government’s 2030 target will lower energy bills. However, the report itself explicitly says that it does not do so, and the chief executive officer of the NESO told the Energy Security and Net Zero Select Committee last week that it “did not set out” to determine “what bills are for consumers.” Will the Minister explain those inconsistencies and take the opportunity to correct the record?
Miatta Fahnbulleh
I suggest that the hon. Lady actually reads the report. On page 77, the NESO sets out in black and white the system costs of a clean power system, and then what it calls
“Bill components resulting from clean power pathways”
and “Other bill changes”. The total impact in 2030 is to reduce electricity costs by £10 per megawatt-hour. Of course, as the NESO says, it is for the Government to make the policy choices to reduce energy bills—which we will—but it is absolutely clear that our clean power plan will reduce system costs.
Ellie Chowns (North Herefordshire) (Green)
Citizens Advice has found that more than a third of private tenants could not afford to heat their house to a comfortable temperature last winter, and in research published a month ago, it found that 80% of private landlords have no plans to invest in the energy efficiency of their properties in the next five years. Can the Minister explain what the Government will do to support and incentivise private landlords to drive up minimum energy efficiency standards in their properties, and when they will do it, so that tenants can stay warm all year round?
Miatta Fahnbulleh
We know that the quality of too many of our homes in the private rented sector is not high enough. That is why we are moving forward to introduce minimum energy efficiency standards, so that we can raise those standards, lifting 1 million people out of fuel poverty. We are running in order to get that done.
Pippa Heylings (South Cambridgeshire) (LD)
After the Conservative Government’s failure to tackle insulation, fuel poverty is on the rise. In my constituency, almost 20% of households with young family members—those between five and 10 years—are fuel poor, living in cold, damp houses and choosing between eating and heating. While we await the warm homes plan that will deal with upgrading current housing stock, will the Minister meet the Minister for Housing and Planning to ensure that all future homes will come forward with an energy rating that is a minimum of C or higher, but not beyond 2025 for the future homes standard?
Miatta Fahnbulleh
We are working very closely with Housing, Communities and Local Government Ministers to deal with the future homes standard. We recognise that the fact we are building homes that are not up to the standard is a problem, and we are getting on with fixing it.
Mr Alex Barros-Curtis (Cardiff West) (Lab)
Perran Moon (Camborne and Redruth) (Lab)
The Secretary of State for Energy Security and Net Zero (Ed Miliband)
Last Friday, we published our landmark clean power action plan, which sets out the route towards our world-leading 2030 clean power mission, including wholesale reform of the grid and planning to make it happen. This is the route to getting off the rollercoaster of fossil fuel markets and delivering energy security, lower bills and good jobs for the British people, as well as tackling the climate crisis.
Mr Barros-Curtis
I thank the Secretary of State for that answer. Given Wales’s tradition and history of fuelling the UK’s energy needs, can the Secretary of State tell us what his plans are to put Wales at the heart of our energy security and net zero agenda?
Ed Miliband
My hon. Friend asks a really important question. The whole clean power plan is about benefiting all four nations of the United Kingdom, including Wales, and we work closely with the Welsh Government on these issues. Before this Labour Government came to office, they were actually trailblazers on how we could have publicly owned generation, and that is one of the things that we and GB Energy are working with them on.
Perran Moon
Meur ras, ha myttin da, Mr Speaker. We have seen the terrible consequences for households of fossil fuel energy insecurity, and we cannot allow this to happen with the transition to renewables. However, to achieve our net zero goals, we will have to see a massive increase in demand for critical minerals such as tin and lithium, much of the supply and processing of which will be dominated by economically bad actors. Will the Minister meet me to discuss how the Government will be mitigating this clear and present danger?
Ed Miliband
I very much enjoyed my trip to my hon. Friend’s constituency before the general election. He is an incredibly powerful advocate for the way his area can source some of the critical minerals we need, including lithium, and he is right about this. The concentration of supply chains, including critical minerals, has taken a generation to arrive, but we must unwind it, and it is one of the many things we are working on as a Government.
Greg Smith (Mid Buckinghamshire) (Con)
Small modular reactors are less land intensive, are very efficient and would get us to clean energy very quickly if the Government were to get on and actually support some orders. As land is in scarce supply, when will the Government get on board with nuclear, instead of shackling themselves to the inefficient, land-destroying, countryside beauty-destroying and inefficient solar.
Ed Miliband
I can tell the hon. Gentleman that we support the SMR programme, and we are driving it forward through Great British Nuclear. I am afraid he is making a terrible mistake, which is that we need all of these clean technologies at our disposal—we need nuclear, we need renewables, we need carbon capture and storage—and the difference is that this Government are getting on with it. We have delivered more in five months than the last Government did in 14 years.
Llinos Medi (Ynys Môn) (PC)
Despite lifting the onshore wind ban in England, the clean power action plan shows that, by 2030, 8,600 MW of onshore wind will be needed in England and Wales, 5,000 MW of which will be mainly in Wales, with bits in England. Can the Secretary of State outline exactly how Wales will be benefiting from this huge ramp up in onshore wind, rather than the benefits being extracted out of Wales?
Ed Miliband
I have to say to the hon. Lady that I do not see it that way. The reality is that the country is totally vulnerable to the rollercoaster of the fossil fuel markets. We do not need to look into a crystal ball; we just need to look at the record: we saw the worst cost of living crisis in generations. So long as we are exposed in this way, people in Wales and across the country are vulnerable. That is why clean power is so important, and the Opposition should get on and support it.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
In the clean power 2030 document published last week, the Government state that they are
“progressing the post-2030 generation interventions, with final decisions on Sizewell C and the Great British Nuclear-led Small Modular Reactor programme”,
but no date is specified for the final investment decision on Sizewell, no date is specified for completion of the down-selection SMR process, there is no indication of a route to market for advanced modular or other technologies, and there is no mention of Wylfa at all. So is it any wonder that the nuclear industry holds a suspicion that this Government are not serious about nuclear, that the damascene conversion to nuclear power professed by the Secretary of State is a false one and that, for the Government, it is renewables at any cost and the exclusion of everything else?
Ed Miliband
I find the hon. Gentleman quite extraordinary, and not in a good way. The last Government left not only a generalised absolute mess in the public finances, but lots of the programmes that he is talking about were not even funded. The difference with this Government and my right hon. Friend the Chancellor is that she put the money for Sizewell in the Budget. That is something the Conservatives simply do not understand. [Interruption.] You get the point.
Andrew Bowie
It was us in government who bought the Wylfa and Oldbury sites from Hitachi last year, giving much-needed certainty to the workforce and local communities on both sites. It was on 22 May that we announced that Wylfa was our preferred location for a third gigawatt-scale reactor, again giving a boost to that community and the wider industry. I have three questions. Is it still the Government’s intention to reach 24 GW of nuclear power by 2050? Does the Secretary of State acknowledge that that is impossible without another gigawatt-scale reactor? If a third gigawatt-scale reaction is planned, will it be built at Wylfa and, if not, what is the future for the Wylfa site?
Ed Miliband
The hon. Gentleman’s story about Wylfa says it all. He says his Government had this great plan for Wylfa, but they had no money behind it.
Ed Miliband
Yes, but the hon. Gentleman does not say how the power station will be funded. The truth is that this is elementary economics. If things are announced, they need to be able to be funded, and the Conservatives need to learn that lesson.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Lorraine Beavers (Blackpool North and Fleetwood) (Lab)
Euan Stainbank (Falkirk) (Lab)
The Minister of State, Department for Energy Security and Net Zero (Sarah Jones)
The national wealth fund is delivering a key manifesto commitment to set up a Government-backed investor—in some ways like the sovereign wealth funds we see in other countries—that will support the UK’s industrial strategy and economic growth. It will play a central role in our clean power mission by creating jobs in rapidly growing green industries. My role sits across the Department for Business and Trade, where I work on industrial strategy, and this Department, where I work on industrial decarbonisation, so I have a unique vantage point to see the benefits of the national wealth fund and all the opportunities it will bring.
Jayne Kirkham
As the Minister knows, I am concerned about kick-starting floating offshore wind in the Celtic sea. The infrastructure and supply chain need building out quickly, but in a co-ordinated way, and the previous Government’s floating offshore wind manufacturing investment scheme was not enough to do that. Will the Minister please confirm that she is working with the wealth fund on a strategy and then speedy investment in ports such as Falmouth and the local supply chain, so that they are ready to take on the challenge of floating offshore wind?
Sarah Jones
My hon. Friend is a great champion for her area, and we have talked about the opportunities of Falmouth and the surrounding areas previously, and I am sure we will do so again. For too long, our coastal areas have lacked the jobs and opportunities they deserve, and we are determined to change that. Through the national wealth fund we will invest in our ports, and Great British Energy will look to crowd in private sector funding to emerging technologies such as floating offshore wind. We are developing our strategies and working as fast as we can.
Lorraine Beavers
I welcome the Government’s publication of the “Clean Power 2030 Action Plan” last week. It will mark a transformative shift towards clean energy that will bring good jobs and industry to the whole country. The plan proposes the use of the national wealth fund to explore nascent renewable generation projects. The Minister will know of the potential for tidal range on the west coast. What steps is the Department taking to explore that potential? Will she meet me to discuss the potential for tidal range projects in my constituency?
Sarah Jones
I would love to hear more, as I am sure would the Minister for Energy, my hon. Friend the Member for Rutherglen (Michael Shanks). We are committed to all forms of renewable energy if they are economical, which is why we ringfenced tidal in the latest contracts for difference auction, which resulted in six tidal projects being successful, securing up to 28 MW. We continue to look at what more we can do to support this more nascent technology, including the role that GB Energy can play in the future.
Euan Stainbank
The Government’s quick action when they took office to commission Project Willow is welcome, but confirmation of the decision by Petroineos to close the Grangemouth refinery next year has caused further concern and uncertainty throughout the workforce in the central belt. With the sustainable aviation fuel mandate starting in 2025 requiring 10% of jet fuel to be SAF by 2030, what consideration has the Minister given to using the role of the national wealth fund to support the rapid conversion of Grangemouth into a sustainable aviation fuel facility?
Sarah Jones
I appreciate the uncertainty faced by people in my hon. Friend’s constituency. We have Project Willow and the plan for the site’s future. A joint committee, which I co-chair, has just been set up with the Department for Transport looking at sustainable aviation fuel and other options to fund and support that, to ensure that we have that emerging industry.
Mr Gregory Campbell (East Londonderry) (DUP)
The fund’s title is the national wealth fund. Will the Minister outline what she intends to do to ensure that industries across the nation of the United Kingdom will benefit from it?
Sarah Jones
The national wealth fund makes decisions on what it funds and what it does not, but our plan is for the whole country. For too long, this country has been held back in every corner, and the national wealth fund is a really important part of the future growth of this country in Northern Ireland and everywhere else.
Tim Farron (Westmorland and Lonsdale) (LD)
Does the Minister agree that it is something of a tragedy that the UK, which is surrounded by the highest tidal range on planet Earth after Canada, uses so little of that for tidal and marine energy? She may agree that the reason is that while the lifetime cost of such schemes is as cheap as chips, the up-front costs are expensive. Could the national wealth fund ensure that we can build things—for example, in Morecambe Bay—that will generate secure renewable energy for all our lifetimes?
Sarah Jones
The hon. Gentleman puts his finger on the problem. That is what vehicles such as the national wealth fund and GB Energy are looking to resolve. We are of course open to it, and we will do what we can.
Dr Roz Savage (South Cotswolds) (LD)
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
We know that nature-based solutions have a key role to play in climate mitigation and keeping to 1.5°C at home and abroad. I have met the Minister for Nature, my hon. Friend the Member for Coventry East (Mary Creagh), and the Government have appointed two special representatives for climate and for nature, who will be working closely together too.
Dr Savage
The climate and nature crises are now recognised as inextricably interlinked—we cannot resolve the climate crisis without addressing the nature crisis—but that is not recognised in current legislation. Will the Minister meet me to discuss my Climate and Nature Bill and its potential to achieve the Government’s stated goal of integrating UK climate and biodiversity policy?
Kerry McCarthy
We are not convinced that the Bill is necessary as a well-developed legislative framework with legally binding targets is already in place, including, of course, the Climate Change Act 2008 and the carbon budgets. However, I appreciate the action on both climate and nature and the hon. Member’s commitment to both. I believe that our offices are already trying to find a date for us to meet.
Johanna Baxter
My constituency of Paisley and Renfrewshire South is home to the beautiful RSPB Lochwinnoch nature reserve. In addition to supporting our biodiversity, the reserve serves as a natural carbon sink. Globally, wetlands hold approximately 20% to 30% of the Earth’s soil carbon despite covering only 5% of the land surface. Will the Minister outline how the Department is integrating wetland and peatland restoration into its strategy for meeting the UK’s carbon capture and storage targets?
Kerry McCarthy
I am aware of the excellent work being carried out at Lochwinnoch. We know that protecting and restoring our peatlands is essential for tackling the climate crisis. We are committed to restoring approximately 280,000 hectares of peatland. We are also looking at innovative ways of getting funding into those nature-based solutions so that they can thrive.
Kenneth Stevenson (Airdrie and Shotts) (Lab)
Andrew Pakes (Peterborough) (Lab)
The Minister of State, Department for Energy Security and Net Zero (Sarah Jones)
Great British Energy will deliver well-paid jobs in industrial communities. It will own and invest in projects across the country, it will crowd in private investment, and it will develop those crucial supply chains that will make us more resilient as a country and deliver more jobs.
Kenneth Stevenson
I was delighted to see the Government’s commitment to reindustrialise our nation, creating thousands of jobs in the process. This is the difference that a Labour Government can make, cleaning up the mess of the Tories and putting this country back on track. My constituency of Airdrie and Shotts is at the heart of Scotland’s central belt. Once an industrial heartland, it is full of skills and potential waiting to be unlocked. Will the Minister work with me to ensure that the benefit of the significant job creation that the Government are undertaking will be felt in my constituency?
Sarah Jones
I will work with my hon. Friend on creating the jobs that we all want. It has been announced that Great British Energy will be located in Aberdeen, and there are two additional sites, one in Glasgow and one in Edinburgh. The national wealth fund has just announced a £20 million investment in XLCC, to support a world-leading factory in Hunterston producing cables. That will support 900 jobs. We have seen a £1.6 million investment by Sarens PSG to provide specialist equipment and skilled workers, and to set up a centre for excellence in Aberdeen. Those are the kinds of projects that we want across our communities, in his constituency and beyond.
Andrew Pakes
An important aspect of Great British Energy’s work will be ensuring industrial strength in all areas of the UK. Places such as Peterborough are well placed to develop high-skilled jobs and great opportunities in green hydrogen to support that transition, through the work of National Gas in Werrington and our new university campus, Anglia Ruskin University Peterborough. Does the Minister agree that the success of GB Energy will be the breadth of opportunities that it creates in places such as mine?
Sarah Jones
My hon. Friend is absolutely right. Green hydrogen is vital, not just for the decarbonisation of heavy industry but for aviation and maritime. It has the potential to create thousands of very highly skilled jobs in every region of the country. We have already confirmed support for 11 green hydrogen projects from Cumbria to Cornwall, and from Scotland to Kent. I look forward to saying more on our hydrogen journey soon.
Claire Coutinho (East Surrey) (Con)
The Labour party promised 650,000 jobs through Great British Energy, but the Secretary of State has endorsed a carbon tax of £147 in 2030—double the Department’s current forecast. It would be the highest carbon tax in the world, and devastating for British industry. Can the hon. Lady confirm how many British jobs would be lost as a result?
Sarah Jones
I do not recognise those figures at all. I would be interested to see where she got them from—perhaps from her Twitter threads, which contain things that we do not quite recognise. We inherited a mess in this country—no stability or economic growth, and stagnation. We are fixing the foundations and putting that right. We will create hundreds of thousands of jobs in the growing green sector of the future.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
The Secretary of State for Energy Security and Net Zero (Ed Miliband)
We are already seeing the benefits of our energy superpower mission and investment in jobs. Since the start of November, we have seen a £1 billion investment in Hull by Siemens Gamesa, supporting 1,300 jobs in blade manufacturing. Ørsted has announced £100 million of orders for UK firms, and we have reached financial close on the UK’s first carbon capture in Teesside. That is what it means to have a Government delivering jobs and investment for the British people.
Charlie Dewhirst
There appears to be inconsistency between what Ministers are saying about the report by the National Energy System Operator and what the CEO of NESO told the Energy Security and Net Zero Committee last week. Can the Secretary of State answer this clearly: does the NESO report forecast higher or lower energy bills under his policy?
Ed Miliband
I am very glad that the hon. Gentleman has asked that question, as the shadow Secretary of State has asked me about that. [Interruption.] I will answer the question. Page 77 of the NESO report says very clearly what happens to overall costs in the system: electricity costs are reduced by £10 per MWh. As NESO says, it is for Government to make policy choices that determine the precise impact on bills, but the report is clear that the system will be cheaper. It is completely logical to say that that will lead to a reduction in bills.
Michelle Welsh (Sherwood Forest) (Lab)
The Minister of State, Department for Energy Security and Net Zero (Sarah Jones)
I would be very happy to meet my hon. Friend and members of the scheme. I met the trustees of the scheme yesterday, and I have committed to talking to the Treasury about their proposals.
Claire Coutinho (East Surrey) (Con)
Labour’s policy on the North sea will cost the country £12 billion in tax receipts, which would be enough to cover the winter fuel payment for many, many years. Pensioners will be in the cold this winter, and this is a policy that no other major economy is pursuing. How can the Government possibly justify it?
Ed Miliband
These are more fantasy numbers from the right hon. Lady. The truth is that the North sea has lost a third of its employment in the past decade. The only future for the North sea is in what this Government are doing: investing in carbon capture and storage, in offshore wind and in hydrogen. That is the future.
Claire Coutinho
That is not my figure; it is a figure from industry—£12 billion in lost North sea tax receipts, in addition to £8 billion for an energy company that will not generate energy, and at least £200 billion for a 2030 target that we now know will not cut bills. Is it not true that pensioners will be sitting in the cold this winter to pick up the bill for this Secretary of State?
Ed Miliband
No. The case is that the Conservatives left us dependent on fossil fuels, which led to the worst cost of living crisis in living memory. The tragedy is that they are doubling down on their failed policy. The only answer for lower bills is clean, home-grown energy that we control.
Kevin Bonavia (Stevenage) (Lab)
Ed Miliband
My hon. Friend is absolutely right. Great British Energy—headquartered in Aberdeen—is already up and running. Our plans for Great British Energy will be rolled out in the new year. Those plans include working with local communities for solar on schools and hospitals, so that we can start cutting bills for public services and local communities.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Ed Miliband
The truth is that there is only one way to get bills down sustainably in this country, which is to drive towards clean energy. The Conservatives used to believe that, too; then, in September 2023, the former Prime Minister took them on an anti-net zero crusade, and it is only getting worse.
Sam Rushworth (Bishop Auckland) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)
We are rolling out our warm homes plan, which we want every household to benefit from, and we will ensure that we have the right solution for the right homes. I will work with my hon. Friend and with Members from across the House on solutions that every household can benefit from, to ensure that we have warmer homes that are cheaper to run.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
Ed Miliband
I will not answer the hon. Gentleman directly, but I will say that I am working with my colleagues across Government on this crucial issue. We will do everything we can to drive down Russia’s benefits from its oil and gas industry, because that is a crucial part of the war effort to help Ukraine.
Matt Turmaine (Watford) (Lab)
Ed Miliband
My hon. Friend is right about this. We must not have short memories here, because the truth is that the cost of living crisis that we saw after Russia’s invasion of Ukraine not only hit families and businesses across Britain, but continues to hit them today. That is why the drive for clean power is so important. Every solar panel we put up, every wind turbine we erect, and every piece of grid we build makes us more secure as a country.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
Ed Miliband
We will look at the scheme in the spending review. I believe that it is important not just to Scotland but to the whole UK, but I want to level with the hon. Gentleman and, indeed, the House: it requires significant financial resources. We found the resources for track 1 of carbon capture, usage and storage and we want to find the resources for track 2, but that, as I have said, will be part of the spending review.
Perran Moon (Camborne and Redruth) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
My hon. Friend is right to suggest that offshore wind, especially floating offshore wind, will play a critical role in our pathway to clean power. We will consider any option to ensure that we get many “test and demonstrate” projects through to delivery, and we will say more in coming weeks about what the next round of contracts for difference will look like.
Monica Harding (Esher and Walton) (LD)
More than 24,000 homes in my constituency have an energy performance certificate banding of D or worse, which means 50,000 tonnes of avoidable carbon dioxide emissions and higher energy bills for my constituents. However, the rate of insulation upgrades is too slow for us to meet the Government’s goal of universal band C ratings by 2035. Will the Minister commit herself with more urgency to an emergency home insulation programme with targeted support for those on low incomes?
Miatta Fahnbulleh
We recognise that not enough was done to upgrade homes over the last 15 years, which is why we are absolutely running at this. We will upgrade up to 300,000 homes this year, and we are putting in place our plan to drive up standards in the private rented sector, and to ensure that as many households as possible benefit from homes that are warmer and much, much cheaper to run.
Amanda Hack (North West Leicestershire) (Lab)
Michael Shanks
My hon. Friend makes an important point about rolling out charging infrastructure to all parts of the country, and we are working on that with colleagues in the Department for Transport. Local distribution networks in rural areas are incredibly important, and introducing greater access to the grid—including through Ofgem’s approval of £22 billion to improve distribution networks—will enable us to roll out EV infrastructure in rural areas throughout the country.
Richard Fuller (North Bedfordshire) (Con)
This weekend, 50 households in Cleat Hill were able to return home, nine weeks after the gas explosion there. That was thanks to the efforts of the local council and the local emergency services but not, I am afraid, to the actions of the Government. There has been a deafening silence on whether they will help the council with funding, and whether they will fund a scaling and scoping of the gas reservoir. I am extremely grateful to the Minister for meeting me, but will she chivvy her other Ministers along, so that we can get a reply?
Miatta Fahnbulleh
I thank the hon. Member for that meeting. We are working across Government to ensure that we can provide the support that the community requires after that tragic incident.
Tom Hayes (Bournemouth East) (Lab)
I recently visited the zero-emission boiler manufacturer Tepeo in Wokingham. Its owners were thrilled by the Government’s decision that heat batteries can qualify for the warm homes social housing fund wave 3, but expressed concern about whether they could scale up without the same subsidy support and VAT relief as heat pumps. Will the Minister meet me, and representatives of Thermal Storage UK, to discuss how we can support heat batteries, so that households can become more resilient?
Miatta Fahnbulleh
My hon. Friend is a great champion of our clean power mission, and I would be very happy to meet him and representatives of the sector.
Max Wilkinson (Cheltenham) (LD)
Seventy-five per cent of voters think that all new homes should come with solar panels on the roof as standard. Do the Government agree?
Ed Miliband
I am very sympathetic towards this issue, and we are in discussions with our colleagues across Government. Watch this space.
Andrew Cooper (Mid Cheshire) (Lab)
Cheshire is leading the way in CCUS, whether it is in hydrogen production, where it is providing the means of transition as a new industry is established, or in hard-to-abate sectors such as glass or cement production, where CCUS is a vital decarbonisation component. Our strategy is creating jobs, growing our skills base and unlocking a low-carbon future. Does the Minister agree that it will not be possible to get to net zero without CCUS?
Steve Barclay (North East Cambridgeshire) (Con)
The Grimsby to Walpole National Grid scheme will see pylons almost twice the height of the existing ones being placed across the flat landscape of the fens. Why does the Secretary of State think that the cost of chasing his unrealistic 2030 target should be disproportionately borne by rural communities?
Ed Miliband
I have great respect for the right hon. Gentleman. The truth is that we need to build the grid, regardless of whether the target is 2030 or 2035. This Government are being honest and open with people in saying that the grid needs to be built. If we do not build the grid, we will remain massively vulnerable as a country.
Bill Esterson (Sefton Central) (Lab)
Last year, the UK imported 43% of our energy. Does the Secretary of State agree that, as well as protecting bill payers from the volatility of international fossil fuel markets and giving us energy independence, we have the potential for economic benefits from exporting electricity and hydrogen through the clean power plan?
Ed Miliband
My hon. Friend is absolutely right about that. It is about energy independence for Britain, and about becoming a clean energy superpower that can export energy and benefit as a country. The opportunities are huge, which is why we are getting on with it.
Stephen Flynn (Aberdeen South) (SNP)
I think the Secretary of State is now arguing that energy bills will fall by £300 by 2030. A simple question: how much will they rise by before then?
Ed Miliband
I am disappointed in the right hon. Gentleman, but perhaps I should not be surprised. The truth is that there is only one future for Britain that reduces bills for good: a clean power mission. We can carry on being vulnerable, and we can carry on with fossil fuels, but we will be in the grip of petrostates and dictators. This Government are not willing to leave us exposed.
Ian Lavery (Blyth and Ashington) (Lab)
The Lynemouth biomass power station in my constituency has some very ambitious and exciting projects involving carbon capture and storage, but it is waiting for some major decisions by the Department. Will the Minister agree to meet me so that we can tackle these pressing outstanding issues?
Sarah Jones
I would be absolutely delighted to meet my hon. Friend; we can talk about data centres at the same time. Carbon capture is an incredibly important part of our future. We know that we have to have it in order to decarbonise some of our very hard-to-decarbonise industries, and I would be delighted to talk about the possible jobs that it could bring as well.
Claire Young (Thornbury and Yate) (LD)
Local further education colleges are actively pursuing the formation of a skills partnership to meet the opportunity and challenge of potential small modular reactor development in Oldbury in my constituency. Does the Minister welcome their proactive approach, and will she join me in meeting them to better understand the support that the further education sector needs to deliver this vital work?
Sarah Jones
I would be delighted to meet the hon. Member and talk about her plans.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
What assurances can the Minister give me that energy-intensive industries in Stoke-on-Trent, such as ceramics, will benefit from the investment coming from this Government and will not get left behind in our transition to net zero?
Sarah Jones
My hon. Friend makes a very good point. We were talking about this issue in the Tea Room only this morning, and I will meet the ceramics sector and him first thing in the new year to talk about some of the challenges it faces. We are absolutely committed to supporting the sector.
Carla Denyer (Bristol Central) (Green)
Thirteen oil and gas fields have been licensed for new drilling of dangerous fossil fuels but are still awaiting final approval. The Government paused those decisions while doing a consultation, but the consultation will not change the science: if we are to meet our climate targets, those fossil fuels must stay in the ground. Will the Secretary of State do the right thing by the poorest in our country, who are always at the sharpest end of climate action, and ensure that those licences will not be granted?
Ed Miliband
This is a Government with a world-leading position when it comes to oil and gas, and we will do the right thing for the environment and climate change and the right thing to ensure that there is a just transition in the North sea.
Grahame Morris (Easington) (Lab)
On behalf of my constituents, I want to thank the Secretary of State, the Minister of State, the Parliamentary Private Secretaries and the whole team for the excellent work that has been carried out to deliver justice on the mineworkers’ pensions. Can I urge them to act with alacrity in relation to the British Coal staff superannuation scheme, and may I invite the Minister to look at some of the energy pilots that are making use of mine water from abandoned mine workings?
Ed Miliband
I pay tribute to my hon. Friend, who has been a brilliant campaigner on this issue for a very long time. My hon. Friend the Minister of State will have heard what he said. This is the difference: this is a Labour Government delivering justice for mineworkers across our country and their families, which is all part of delivering our mission for the country.
Women’s State Pension Age Communication: PHSO Report
(1 day, 8 hours ago)
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The Secretary of State for Work and Pensions (Liz Kendall)
With permission, Mr Speaker, I would like to make a statement on the investigation by the Parliamentary and Health Service Ombudsman into the way that changes in the state pension age were communicated to women born in the 1950s.
The state pension is the foundation for a secure retirement. That is why this Government are committed to the pensions triple lock, which will increase the new state pension by more than £470 a year from this April and deliver an additional £31 billion of spending over the course of this Parliament, and it is why Governments of all colours have a responsibility to ensure that changes to the state pension age are properly communicated so that people can plan for their retirement.
Before I turn to the Government’s response to the ombudsman’s report, I want to be clear about what this report investigated, and what it did not. The report is not an investigation into the actual decision to increase the state pension age for women in 1995 or to accelerate that increase in 2011—a decision that the then Conservative Chancellor George Osborne said
“probably saved more money than anything else we’ve done”.
That comment understandably angered many women and sparked the original Women Against State Pension Inequality Campaign. The ombudsman is clear that policy decisions to increase the state pension age in 1995 and since were taken by Parliament and considered lawful by the courts. This investigation was about how changes in the state pension age were communicated by the Department for Work and Pensions, and the impact this may have had on the ability of women born in the 1950s to plan for their retirement.
I know that this is an issue of huge concern to many women that has spanned multiple Parliaments. Like so many other problems that we have inherited from the Conservatives, this is something that the previous Government should have dealt with. Instead, they kicked the can down the road and left us to pick up the pieces, but today we deal with it head-on. The Pensions Minister—the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wycombe (Emma Reynolds)—and I have given the ombudsman’s report serious consideration and looked in detail at the findings, and at information and advice provided by the Department that was not available to us before coming into Government.
The then ombudsman looked at six cases. He found that the Department provided adequate and accurate information on changes to the state pension age between 1995 and 2004, including through leaflets and pensions education campaigns and on its website. However, decisions made between 2005 and 2007 led to a 28-month delay in sending out letters to women born in the 1950s. The ombudsman says that these delays did not result in the women suffering direct financial loss but that they were maladministration.
We accept that the 28-month delay in sending out letters was maladministration, and on behalf of the Government, I apologise. This Government are determined to learn all the lessons from what went wrong, and I will say more about that in a moment. We also agree that the women suffered no direct financial loss because of the maladministration. However, we do not agree with the ombudsman’s approach to injustice or remedy, and I want to spell out why.
First, the report does not properly take into account research showing that there was actually considerable awareness that the state pension age was increasing. It references research from 2004 showing that 43% of women aged over 16 were aware of their state pension age, but it does not sufficiently recognise evidence from the same research that 73% of women aged 45 to 54—the very group that covers women born in the 1950s—were aware that the state pension age was increasing, or research from 2006 showing that 90% of women aged 45 to 54 were aware that the state pension age was increasing.
Secondly, the report says that if letters had been sent out earlier, it would have affected what women knew about the state pension age. However, we do not agree that sending letters earlier would have had the impact that the ombudsman says. Research given to the ombudsman shows that only around a quarter of people who are sent unsolicited letters actually remember receiving them or reading them, so we cannot accept that, in the great majority of cases, sending a letter earlier would have affected whether women knew that their state pension age was rising or increased their opportunity to make informed decisions.
These two facts—that most women knew the state pension age was increasing and that letters are not as significant as the ombudsman says—as well as other reasons, have informed our conclusion that there should be no scheme of financial compensation to 1950s-born women in response to the ombudsman’s report.
The ombudsman says that, as a matter of principle, redress and compensation should normally reflect individual impact. However, the report itself acknowledges that assessing the individual circumstances of 3.5 million women born in the 1950s would have a significant cost and administrative burden. It has taken the ombudsman nearly six years to investigate the circumstances of six sample complaints. For the DWP to set up a scheme and invite 3.5 million women to set out their detailed personal circumstances would take thousands of staff years to process.
Even if there were a scheme in which women could self-certify that they were not aware of changes to their state pension age and that they had suffered as a result, it would be impossible to verify the information provided. The alternative put forward in the report is a flat-rate compensation scheme at level 4 of the ombudsman’s scale of injustice. This would provide £1,000 to £2,950 per person, at a total cost of between £3.5 billion and £10.5 billion.
Given that the vast majority of women knew the state pension age was increasing, the Government do not believe that paying a flat rate to all women, at a cost of up to £10.5 billion, would be a fair or proportionate use of taxpayers’ money, not least when the previous Government failed to set aside a single penny for any compensation scheme and left us a £22 billion black hole in the public finances.
This has been an extremely difficult decision to take, but we believe it is the right course of action, and we are determined to learn all the lessons to ensure that this type of maladministration never happens again. First, we want to work with the ombudsman to develop a detailed action plan out of the report, so that every and all lessons are learned. Secondly, we are committed to setting clear and sufficient notice of any changes in the state pension age, so that people can properly plan for their retirement. Thirdly, I have tasked officials to develop a strategy for effective, timely and modern communication on the state pension that uses the most up-to-date methods, building on changes that have already been made, such as the online “check your state pension” service that gives a personal forecast of a person’s state pension, including when they can take it, because one size rarely fits all.
As I said, we have not taken this decision lightly, but we believe it is the right decision because the great majority of women knew the state pension age was increasing, because sending letters earlier would not have made a difference for most, and because the proposed compensation scheme is not fair or value for taxpayers’ money.
I know there are women born in the 1950s who want and deserve a better life. They have worked hard in paid jobs and in bringing up their families. Many are struggling financially with the cost of living and fewer savings to fall back on. They worry about their health and how their children and grandchildren will get on.
To those women I say: this Government will protect the pensions triple lock, so your state pension will increase by up to £1,900 a year by the end of this Parliament; we will drive down waiting lists, so you get the treatment you need, with an extra £22 billion of funding for the NHS this year and next; and we will deliver the jobs, homes and opportunities your families need to build a better life. I know that many 1950s-born women will be disappointed about this specific decision, but we believe it is the right decision and the fair decision. I commend this statement to the House.
Helen Whately (Faversham and Mid Kent) (Con)
I thank the Secretary of State for Work and Pensions for advance sight of her statement, and I thank the ombudsman and his team for their work on this important matter.
In March this year, the Parliamentary and Health Service Ombudsman published its final report into the way that changes to the state pension age were communicated to women born in the 1950s. The report took over five years to produce and reflects the complexity of the issue. It spans a 30-year period across different Governments, dating back to Parliament’s decision in 1995 for the state pension age for men and women to be equalised, in a long-overdue move towards gender equality.
As the chief executive of the ombudsman set out, the Department for Work and Pensions fully co-operated with the ombudsman through its investigation and provided thousands of pages of detailed evidence to support it. It is because we took the work of the ombudsman so seriously that it was right for the Government to fully and properly consider the findings, and we were committed to working with Parliament to provide an appropriate and swift response. However, as the House will know, the general election was called less than two months later. Given that it has taken Labour five months since the general election to provide its findings, I am sure the Secretary of State would agree that there was insufficient time to take a considered and fair decision between the publication of the report and the election.
I am glad that the Secretary of State has picked this issue up since coming into office and has brought her statement to the House today. I will be considering it in more detail in the days and weeks to come, as well as the basis on which she has reached her conclusion. I am sure that the Government’s statement today will be a huge disappointment to WASPI women, and I recognise the strength of feeling about the issue.
As a constituency MP, I have met WASPI women who live in Faversham and Mid Kent and heard their personal stories. No doubt campaigners will note the Government’s apology for the decisions made between 2005 and 2007 that led to a 28-month delay in sending out letters, which the ombudsman identified as “maladministration”. But let us be clear: the decision to provide no compensation is the Government’s decision, and they need to own it. I am not going to let them get away with saying that there is no compensation because of a fictional black hole in the public finances. The country’s financial position now is a result of their political choices. They should not try to dodge responsibility by suggesting to WASPI women that, if times were different, they might have come to a different conclusion. Government compensation should always be based on what is fair and just.
That brings me to some questions. Given the announcement that they will not be providing financial compensation, will the Government put forward any other non-financial form of remedy for the women affected? Will the Secretary of State be involving the WASPI campaigners in the action plan she has referred to and what is the timeline for that?
The Secretary of State claimed that pensioners are better off under Labour, but let us not forget that it was the Conservatives who introduced and protected the triple lock, which has seen the state pension increase by £3,700 since 2010, and there are now 200,000 fewer pensioners living in absolute poverty. Does the right hon. Lady know how many women affected by her decision are on pension credit?
Labour’s own impact assessment shows that its decision to scrap the winter fuel payment will see 5.2 million women lose out. How many of those hit by those cuts to the winter fuel payment are also affected by today’s announcement?
Finally, given that the Government have dismissed the recommendations of the Parliamentary and Health Service Ombudsman, will the Secretary of State set out what implications she sees for the future of the ombudsman?
Liz Kendall
I welcome the overall tone of the hon. Lady’s comments. I am glad that she is finally considering her party’s response to the ombudsman’s report, and I am sure that the whole House looks forward to its detailed response to the findings and recommendations, which were not provided when the Conservatives were in Government.
I am sorry that the hon. Lady still fails to take responsibility for the state of the public finances. We have taken full responsibility for that and have taken difficult decisions on the public finances. We have also taken this very difficult decision in response to the ombudsman’s report and have provided that to the House as quickly as we have been able, given the huge amount of information we have had to go through.
The hon. Lady asks about next steps. We have three clear things that we intend to do. We will produce a detailed action plan. We want to work with the ombudsman on that so that we can ensure that the delay, the maladministration and the 28-month delay in sending out notifications never happens again, and I am perfectly happy to consider working with the women to make sure we get that right. It is extremely important that, wherever possible, we provide personalised, tailored information. Pensions are a hugely complicated area, and we want people to be empowered with that information and knowledge. We have to do it in all sorts of different formats, because it is individual to the person, and we need to get that right in future.
The hon. Lady also mentioned pension credit and the winter fuel payment. I will say to her, as I did yesterday, that we have seen a 145% increase in the number of claims for pension credit since we launched our campaign. More than 42,000 more people are claiming pension credit now. We want to deal with yet another thing the Conservative Government left us with, which was 880,000 pensioners not getting the pension credit or the winter fuel payment they are entitled to.
These are difficult decisions. We are a responsible Government and we face up to our responsibilities. I look forward to Members on the Conservative Benches finally doing the same.
Gill German (Clwyd North) (Lab)
This is clearly not a decision that the Secretary of State has taken lightly, and an apology on behalf of the Department for Work and Pensions is long overdue, but let us make no mistake: the responsibility for this lies squarely with the Conservative party, which oversaw the maladministration and kicked the can down the road yet again, for us to clear up the mess. That must be put right. Can my right hon. Friend assure my constituents that a serious case like this will not occur again, and that this Government will continue to do everything we can to support pensioners going forward?
Liz Kendall
I can assure my hon. Friend’s constituents in Clwyd North that we want to learn all the lessons from the maladministration that we accept took place. We have to get people timely, effective and personal communication, and not just about their state pension age but about all aspects of pensions, so that they can properly plan for their retirement. The Pensions Minister and I will go through that with a fine-toothed comb to do everything possible to make sure it does not happen again.
Steve Darling (Torbay) (LD)
First, and for the record, the Liberal Democrats played a significant part in government in introducing the triple lock for our pensioners—it is important that people acknowledge that.
The Government’s decision is nothing short of a betrayal of WASPI women. I know that, as in my constituency of Torbay, across the United Kingdom there will be millions of women who are shocked and horrified at that decision. That the Government have inherited an awful state for our economy is no excuse. That the women are being hit by the mistakes of the Tories and that the Labour Government are now using that as a shield is utterly wrong-headed. Will the Secretary of State reflect on the decision?
The matter went to the ombudsman for its considered review, and the Liberal Democrats have long supported the ombudsman’s findings. I am shocked that the Government are taking a pick-and-mix approach to those findings, and we therefore ask the Secretary of State to seriously reconsider the decision.
Liz Kendall
I gently say to the hon. Gentleman, who I know was not in the House at the time, that the decision to accelerate the increase in the state pension age in 2011 was taken by the Conservative and Liberal Democrat coalition Government. It was that which angered and annoyed many women and led to the WASPI campaign. We accept that there was a 28-month delay in sending out letters and we apologise for that, but we do not agree with the ombudsman’s approach to injustice or remedy. We do not believe that the letters would have had an impact on most, as the ombudsman said, and when 90% of women knew that the state pension age was increasing, we cannot accept that that flat rate of payment of up to £10.5 billion would be a fair or appropriate use of taxpayers’ money. I know that will disappoint some women born in the 1950s, but we believe it is the right and fair decision.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I share the Secretary of State’s concern about the black hole that was left. This will have been a difficult decision for her to make and bring to the House today. However, I think about the many people across all our constituencies who have contacted us about the matter, including my constituent Valerie, who wrote to me and said:
“We simply cannot afford to wait any longer for justice given that more than 20,000 WASPI women have tragically died since the ombudsman’s findings were published more than 6 months ago.”
I know that Valerie and many others in my constituency will be very disappointed. The Secretary of State says that she accepts the maladministration. Does that not then mean accountability?
Liz Kendall
We do indeed take responsibility for the maladministration between 2004 and 2007 and a 28-month delay in sending the letters out. I want to reiterate to my hon. Friend and to the House that this is not a decision about the increase in the state pension age, which so many women were aggrieved about; it is about how that was communicated. We accept that those letters should have gone out earlier, but even if we had sent those, it would not have made a difference for most. When 90% of those 1950s-born women knew that the state pension age was increasing, we do not think that the proposed compensation scheme is fair or proportionate. That is why we have taken this extremely difficult decision.
Dame Caroline Dinenage (Gosport) (Con)
The Parliamentary and Health Service Ombudsman’s report says what many WASPI women across my constituency have been saying for years, which is that between 2005 and 2007 the DWP and the last Labour Government let them down. I am therefore grateful to the Secretary of State for her apology, but that will come as cold comfort to those who are in this situation in the face of no financial compensation. If I am right in what I hear, she says mitigation is too complicated and that it is someone else’s fault. That will be no comfort to those impacted. What conversations does the Secretary of State plan to have with the WASPI women to see what more support can be put in place for those most impacted?
Liz Kendall
I met the WASPI campaign in opposition when I was appointed shadow Work and Pensions Minister. The Minister for Pensions was the first of her kind to meet the WASPI campaign for eight years, and she is happy to meet them again. I say to the hon. Lady, who feels very deeply about the issue, that we will learn all the lessons from what went wrong with the delay in sending the letters out, but we do not agree that even if we had done that, they would have made the difference that the ombudsman claims. This is not about the matter being too complicated; we do not believe that, when 90% of women aged 45 to 54 knew the state pension age was increasing, a flat-rate compensation scheme costing up to £10.5 billion would be a fair or proportionate use of taxpayers’ money.
Rebecca Long Bailey (Salford) (Ind)
The all-party parliamentary group on state pension inequality has found that huge numbers of women have suffered significant financial hardship; many have even lost their homes. The Secretary of State must realise that her apology is welcome, but that it is not enough for them. Frankly, it is unprecedented for a Government to agree with the findings of an ombudsman on the one hand, but, on the other, to refuse to initiate redress when clear injustice has occurred. What will the Secretary of State say to reassure those women who have lost everything?
Liz Kendall
I understand the concerns that my hon. Friend raises, but I reiterate the findings from the ombudsman’s report that there was no direct financial loss. We agree that those letters should have been sent out earlier. We will learn all the lessons needed to put that right. I am more than happy to discuss precisely how we will do that with the all-party parliamentary group, so that that kind of maladministration of sending out letters never happens again.
John Milne (Horsham) (LD)
Last month, the word “WASPI” made it into the Collins English Dictionary, which is a credit to the campaigners behind it. Does the Secretary of State agree that she has gone through the ombudsman’s report with, to use her own words, a fine-toothed comb, in order to get the answer that she always wanted to find in the first place?
Liz Kendall
No, I do not agree with that. It was only when we got into government that we were able to see all the information and advice provided by the Department. I did not go into it in the way that the hon. Gentleman suggests; that is not correct. This report is not about the policy decision and women against state pension age increases. That decision was taken in 1995, agreed to by subsequent Parliaments and deemed lawful by the courts in 2020. The ombudsman’s report is not about the state pension age increases; it is about how they were communicated. I take responsibility for that and will make sure that we do everything possible to put it right.
Katie White (Leeds North West) (Lab)
This is undoubtedly a tough choice. It is welcome that the Government will seek to learn the lessons and develop a new strategy for clear and timely comms. Will the Secretary of State reassure the House not only that the strategy will be comprehensive, but that those with accessibility requirements are properly informed of any changes?
Liz Kendall
My hon. Friend raises an extremely important point, which is that a one-size-fits-all approach will not work—even if it ever did. We need to provide tailored information in an accessible way—in an easily understood and available format. We will work extremely closely with all the necessary groups to develop that information, and, crucially, give sufficient notice. The ombudsman’s report deals with the decisions made between 2004 and 2007, but what greatly concerned many women and led to the original WASPI campaign was the decision in 2011 to accelerate and bring forward increases in the state pension age. Therefore, that other commitment to give sufficient and timely notice so that people can properly plan for their retirement is extremely important.
Sir Julian Lewis (New Forest East) (Con)
The Secretary of State says in her statement: “Research given to the ombudsman shows only around a quarter of people who are sent unsolicited letters actually remember receiving and reading them.” I would like to know the terms of that research. Did it, for example, say on the envelope, “Important financial information affecting your pension”? If something like that were on an envelope, I think that there would be a very different response rate. Given that she is having trouble accepting that people look at serious letters that really affect them, perhaps the Chancellor could use some of her ability to get these messages across, as was so successful in the case of advising pensioners that they would be losing the winter fuel allowance.
Liz Kendall
I am happy to write to the right hon. Gentleman about this research and its findings, which are robust. I reflect on the fact that three of the sample cases that the ombudsman looked into had received a letter, but I am more than happy to provide him with the details of that research.
Brian Leishman (Alloa and Grangemouth) (Lab)
In the framing of my question to the Secretary of State, I first wish to say that I am appalled by this announcement. I have campaigned with WASPI women, as have many parliamentary colleagues, and this is an incredible let down for them. In my opinion, WASPI women certainly do not need words of disappointment and hollow statements. What they need is justice. Does the Secretary of State not agree with that?
Liz Kendall
I believe that this is a difficult decision, but the right and fair one. We accept that there has been maladministration. Once the Department had reached its decision, those letters should have been sent out. For the reasons that I have explained, we do not accept the ombudsman’s approach to injustice, remedy or compensation. We have to take difficult decisions in government, but this is about what I think is right and fair. I am happy to meet my hon. Friend to discuss the matter in more detail if he so wishes.
Wendy Chamberlain (North East Fife) (LD)
It is a gross understatement for the Secretary of State to say that 1950s women will be disappointed, especially given that this new Government are setting a precedent by ignoring an independent resolution process. I signpost constituents to the ombudsman on a regular basis; we all do. It is one of the ways that we hold the Government and Government bodies to account, and it is a core part of our democracy. Can the Secretary of State explain how we can have faith in that process if the Government choose to ignore the ombudsman’s findings? Given the fact that, as a constituent MP, the Secretary of State herself supported the WASPI campaign, can she advise whether the £22 billion black hole has had any consequence on her decision making?
Liz Kendall
We did campaign against the acceleration of changes to the state pension age brought forward by the Conservative-Liberal Democrat Government, but that is not what this decision is about. The decision on the state pension age has already been taken. I do value the ombudsman’s role; I refer many cases myself. We accept his findings on maladministration, but we do not accept his view on injustice. None the less, the ombudsman continues to have an important role to play for many constituency MPs, and I for one will continue to refer cases to the ombudsman, as I always have done.
Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)
The Government are right to have apologised to WASPI women today and my right hon. Friend is also right to have acknowledged the significant disappointment that will be felt. What is important is that this Labour Government are acting to boost pension pots across the country. Does the Secretary of State agree that it is important that, through the measures the Government are taking, we not only protect pension pots but actually enhance them, so that pensioners are better off?
Liz Kendall
The pension schemes Bill will do precisely that. One of the really important things that we want to do is to consolidate smaller pension pots, so that they deliver better value and better results for those in retirement. That is exactly what that Bill will do. We want to see the very best for pensioners and also the very best for UK plc, which is why our pensions reforms are so important. My hon. Friend the Minister responsible for pensions will be delivering on that in the months and years ahead.
Kirsty Blackman (Aberdeen North) (SNP)
Anas Sarwar said that, under his leadership, WASPI women will finally receive the justice they deserve. Is the justice they deserve being paid less than their male counterparts throughout their career? Is the justice they deserve being sacked or forced to resign from their jobs when they had children? Is the justice they deserve the removal of the winter fuel payment? Why are the Labour Government absolutely determined to take every opportunity to screw over 1950s-born women?
Liz Kendall
I am proud of the last Labour Government’s record on helping the lowest-paid women pensioners and of the improvements that we delivered. This is not about that issue; this is about the way that the state pension age was communicated. If the hon. Lady wants a different approach, the SNP Government in Scotland can provide that by using the £4.9 billion settlement—the biggest ever in the history of devolution—that we have provided.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
This will be a sad moment for the 4,000 women in Stoke-on-Trent Central who I have campaigned alongside for justice and a fair transition. I understand the Secretary of State’s need to balance the budget, given what was left by the previous Government, but is this a case of no compensation now because of the economic circumstances that we find ourselves in, or is it no compensation ever? If we find ourselves in the future in a much better economic state, will she consider re-addressing this issue and seeing what compensation might be available for the women who were affected?
Liz Kendall
We do not agree with the ombudsman’s approach to injustice or compensation. We do not believe that sending those letters earlier, even though we should have done, would have made the difference that the ombudsman claims. We do not believe that, given that 90% of 1950s-born women knew that the state pension age was increasing, a flat-rate compensation scheme costing up to £10.5 billion is a fair or appropriate use of taxpayers’ money. However, we will learn lessons from that maladministration to ensure that it never happens again.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Every single one of us in this House relies on the Parliamentary and Health Service Ombudsman to ensure that our constituents get redress. When the PHSO made a similar judgment against Equitable Life, the Government came forward with a compensation programme. Will the Secretary of State commit to having a binding vote in this House on the decision, so that the House can decide whether what the Government are proposing is justice for WASPI women? I certainly do not believe that it is.
Liz Kendall
I am sure the right hon. Gentleman could have encouraged his party to do a compensation scheme when he was in government. The reason the ombudsman actually referred the report to Parliament was because he did not believe the last Government when they were running the Department for Work and Pensions would deal with it properly. This Government take our responsibility seriously, and that is why we have come to Parliament today to make this difficult decision.
Chris Vince (Harlow) (Lab/Co-op)
A Conservative Member said to me this morning that being the Secretary of State for the DWP is probably the hardest job in Government, and I think today we can really see that. I pay tribute to the WASPI women in my constituency, and in particular Gina, who emails me regularly about this issue. What reassurances can the Secretary of State give WASPI women such as Gina that we will do everything we can to support them and to ensure that issues like this do not happen again?
Liz Kendall
As I said in my statement, I understand that many women born in the 1950s face a real struggle and, on this specific decision, they may well be disappointed, but our commitment to pensioners and to the pensions triple lock will deliver an extra £30 billion into the basic state pension over this Parliament. Our investment in the NHS, about which many 1950s-born women are desperately worried, of £22 billion this year and next, shows our commitment to the issues that matter to those women. As I say, they may be disappointed and, indeed, angry about the decision, but we believe that it is the fair and right decision. However, I would be more than happy to talk to my hon. Friend in further detail so that he can pass on comments from WASPI women in his constituency.
Rachel Gilmour (Tiverton and Minehead) (LD)
I speak on behalf of Helen from my home town of Bampton and the 5,500 WASPI women in my constituency. They are not disappointed; they are devastated, as am I because—mistakenly, as it turned out—I believed that this Labour Government, who were supported by millions of women across this country who rightly turned their backs on the Conservatives, had some probity and decency. Does the Secretary of State agree that it turns out that they have neither?
Tom Rutland (East Worthing and Shoreham) (Lab)
Many former Ministers and current shadow Ministers have made clear that they do not support a compensation scheme, so is this not just another example of this Labour Government having to take the difficult but necessary decisions that those Members ran away from?
Liz Kendall
It is true this was a long-running issue, spanning multiple Parliaments, that was delivered to the last Government, and we have dealt with it. We have dealt with it seriously, but also as quickly as we can. We take our responsibilities seriously. It is a difficult decision, but I believe it is the right and fair one.
Sammy Wilson (East Antrim) (DUP)
How long will we have this Government giving the excuse that they cannot do things because the last lot did not do them? Will the Secretary of State remember that she is now in government? When she was in opposition, she and other members of her party campaigned for WASPI women. The facts have not changed: administratively, mistakes were made and, financially, there is still an impact; and now the ombudsman has found in favour. She cannot hide behind saying that “We have no money”. We just had the Secretary of State for Energy Security and Net Zero in questions boasting that he is bunging billions of pounds to power companies, yet we cannot honour the commitments made to people who were wrongly treated in the pensions system.
Liz Kendall
I hate to disagree with the right hon. Gentleman, but I did not say it was only about there being no money. I said it was because we do not agree that if we had sent those letters earlier, it would have made the difference that he says, and because, when 90% of women aged 45 to 54 knew the state pension age was increasing, we do not believe a flat rate is pertinent. I say this to him: we do take the public finances seriously. We have to make difficult decisions, and we cannot spend more than we have. We will continue with that approach, but based on our values. We do not believe that what has been set out is the right or fair way forward. I have come to the House honestly to make that decision plain, but I would be happy to talk to him in more detail if he would like.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
The Secretary of State says the report is about the way this was communicated to those 1950s-born women and that earlier letters would not have made a difference, but they would have made a difference to individuals’ financial planning, their retirement dates, the notice they gave to their jobs, and the wider family arrangements and commitments they had made. There have undoubtedly been losses for those 1950s-born women. My hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) just gave the Government an opportunity to reconsider that at some point in the future. Is she sure that she will not take that offer?
Liz Kendall
I know my hon. Friend cares passionately about this issue and many other issues related to pensioners. I repeat what I said in my statement and, indeed, what the ombudsman said, which is there was no direct financial loss for the women. This is not about the increase in the state pension age; it is about how it was communicated. The research shows that only one in four people who get an unsolicited letter remember receiving or reading it, so sending those letters out earlier would not have made the difference. We cannot justify a flat-rate compensation scheme or, indeed, an individualised compensation scheme on that basis.
James Wild (North West Norfolk) (Con)
When the Secretary of State was in opposition, she said she was a “long-standing supporter” of WASPI women. Given that, what would she say to the WASPI women in my constituency, the 3,300 in her constituency and those across the country who will be disappointed at her rejection of any compensation, even if not at the level the ombudsman recommended?
Liz Kendall
My party opposed the Conservatives’ decision to accelerate increases in the state pension age, but that is not what the report is about. It is about how those changes were communicated and, at the risk of repeating myself, that is why we have taken this decision.
Lewis Atkinson (Sunderland Central) (Lab)
It is no small thing for a Secretary of State to stand up with the sincerity that my right hon. Friend has and to offer an apology on behalf of the Government and accept maladministration, and I know she takes that responsibility seriously. I understand her position regarding the 90% of women who knew the pension age was going to change, but among the 10% who did not realise, people made individual decisions about their financial circumstances. Will she say more about why she did not feel that it was possible to put an individualised compensation scheme in place for that 10%?
Liz Kendall
My hon. Friend asks a reasonable question. The difficulty is we estimate that going through 3.5 million women to find out which ones knew about their state pension age increasing and would have made different decisions on that basis would take 10 times the number of staff who administer the state pension for 12 million people, and many years. We do not think that is an affordable or possible programme. The ombudsman himself goes through that point, and that is why he proposes a flat rate, but I have already said why we think that is not justified when 90% of those women knew their state pension age was increasing.
Christine Jardine (Edinburgh West) (LD)
One of the very first constituents who came to me after I was elected in 2017 was Helen, whose decision on her financial future was taken just before she received the letter, which came late—so it did have an impact on her. It also had an impact on the thousands of WASPI women in my constituency who have contacted me over the past seven and a half years. How does the Secretary of State think that any pensioner in this country, regardless of the triple lock, which was the creation of the Liberal Democrats with the Conservatives, can have faith in a Government who have taken away their winter fuel allowance and now do not respect the injustice done to them in not compensating the WASPI women?
Liz Kendall
Our commitment to the pension triple lock, which will deliver an increase of £470 in the new state pension from this April and up to £1,900 extra over the course of this Parliament, backed by over £30 billion of investment, is a serious investment in pensioners. We believe that the basic state pension is the foundation for security in retirement. If the Liberal Democrats want to come up with a costed proposal to do what the ombudsman says, they are perfectly at liberty to do so, although we think that that is the wrong approach.
Alan Gemmell (Central Ayrshire) (Lab)
As my right hon. Friend has noted, many women will be disappointed by this decision—including women I have met in Central Ayrshire when campaigning, since I have been an MP, and at constituency surgeries as recently as Friday—even though they know that we are cleaning up 14 years of Tory mess, dither and delay and failure. Caring responsibilities often fall on women, and an awful lot of 1950s women have spoken about the financial, emotional and physical pressures that they face in caring for a loved one. Will my right hon. Friend set out how the Government plan to support carers over the coming months and years?
Liz Kendall
I have been a lifelong champion of family carers, which is why I have launched an independent review of the overpayment of carers allowance, led by Liz Sayce, and why the Government have introduced the biggest ever increase in the earnings threshold for carer’s allowance. That will make a huge difference in enabling those who look after the people they love to work at the same time. I understand that many women born in the 1950s will be disappointed, but, for all the reasons I have set out, we think this is the fair and right approach. However, we will learn lessons from the maladministration—the delay and the failure to send out letters for 28 months—to ensure that it never happens again.
Siân Berry (Brighton Pavilion) (Green)
This is a very harsh statement. It admits wrongdoing but offers a bitter dose of nothing to a generation of women who already faced prejudices and disadvantages in their careers and were caught out by Government decisions. If the Secretary of State will not reconsider her decision despite being urged to do so by Members on both sides of the House, what else will she do to ensure that those women can enjoy levels of security in retirement closer to equal those of their male counterparts?
Liz Kendall
The hon. Lady raises a valid point about the state pension itself and the difficulties for women who have taken time out to look after children. We took that seriously when we were last in government, and we still do now, because we want to ensure that there is proper equality for those women. The report and this decision are not about the acceleration in the increase to the state pension age, which was at the heart of why so many women felt angry about what happened. We will ensure that we give proper notice so that people can plan for their retirement, we will support women through the pension triple lock and all the investment that we are putting into the NHS, and we will ensure that equality for women is at the heart of our proposals for pensions.
Peter Swallow (Bracknell) (Lab)
WASPI women in my constituency will have listened to the statement with some difficulty, as I know my right hon. Friend has accepted, but they will also have heard her offer a heartfelt from the Dispatch Box, which is quite right. Will she assure them that the maladministration that underlined this case will never happen again, and that this injustice will not be repeated by this or any other Government?
Liz Kendall
I thank my hon. Friend for his question. It is most important, first, that in future people have proper notice of any changes to the state pension age so that they can properly plan for their retirement, which is not what happened in 2011 under the previous Government; secondly, that we ensure that people get effective, timely and personalised information about their state pension and, I would argue, about their second pensions; and thirdly, that we reach people in many different ways, not just by sending letters, precisely because we know that the great majority of people who get unsolicited letters do not remember getting them or reading some or any of them. That is why we must ensure that our communication strategy is much more personalised, timely and effective.
Alison Bennett (Mid Sussex) (LD)
At a time when public confidence in politicians is so low, has the Secretary of State made an assessment of whether overruling the ombudsman’s decision at a stroke will undermine trust in that process?
Liz Kendall
I hope that I have been direct, straightforward and honest about why we agree with the finding of maladministration but not with the approach in other areas. People will make their judgment, but I would just say that I believe in facing up to responsibilities, looking at the facts, going through the detail and putting forward a response that is fair and proportionate, and that is what I believe the Government have done today.
Chris McDonald (Stockton North) (Lab)
I thank the Secretary of State for her statement and for the apology of behalf of the Government. As she has acknowledged, many of the brave and courageous WASPI women in my constituency will feel bitterly disappointed by this decision. Does she agree that the cornerstone of pensioner finances is this Government’s commitment to the triple lock? That stands in stark contrast to the Conservative Government’s breaking of the triple lock in 2022, which cost many pensioners in my constituency hundreds of pounds a year.
Liz Kendall
My hon. Friend states the fact that the Conservatives broke the triple lock two years ago. Indeed, their shadow Chancellor says that it is unsustainable. I am sure that his constituents will hear those comments loud and clear.
Llinos Medi (Ynys Môn) (PC)
Today’s announcement is a huge blow to 1950s-born women affected by state pension changes, who have campaigned tirelessly for justice and accountability, including on the maladministration that the Secretary of State has admitted took place. She promised jobs, homes and opportunities in her statement, but given that one affected woman dies every 13 minutes, can she explain exactly how that will benefit 1950s-born retired women?
Liz Kendall
I know that a number of women expected to be able to retire earlier than they could, but the decision to increase the state pension age has been taken. It was taken by Parliament, agreed by subsequent Parliaments, and deemed legal by the courts in 2020—that issue is settled. This is about the communication of it. As I say, we have accepted the finding of maladministration, but we do not accept the approach to injustice or compensation for all the reasons that I have set out. The Government are taking difficult decisions so that we can invest in the pension triple lock and the NHS, build homes, and get people the jobs that they need—many 1950s-born women are very concerned about those things, not just for themselves but for their families. On this specific issue, I know that many people will be disappointed and angry, but we believe that it is the right and fair decision for all the reasons that I have set out.
Mr Joshua Reynolds (Maidenhead) (LD)
WASPI women across the UK have been let down time and again, including by this statement. In the Budget, the Chancellor announced £20 billion of additional borrowing this year, and an average of £32 billion over the next five years. How does the Secretary of State expect WASPI women to believe that the Government cannot afford a single penny of compensation?
Liz Kendall
Given that sending out letters earlier, which we should have done, would not have made the difference that the ombudsman claims it would, and given that 90% of 1950s-born women knew that the state pension age was increasing, we do not believe that a compensation scheme costing up to £10.5 billion is a fair or proportionate use of taxpayers’ money.
Stephen Flynn (Aberdeen South) (SNP)
When it was politically convenient to do so, the Secretary of State chose to back and support WASPI women. Today, she chooses to betray them. The public voted for change, but instead they have been given more of the same—shame on you. If she is so confident in her position, why does she not let us all decide through a vote in this House?
Liz Kendall
I am sure that there could be a vote in the Scottish Parliament if the SNP Government decided to do that.
Vikki Slade (Mid Dorset and North Poole) (LD)
I am shocked and staggered that the Secretary of State has made this decision in the week before Christmas—“Bah humbug,” springs to mind. She has talked several times about making sure people get due notice in the future. Does the Secretary of State have plans to increase the pension age further?
Liz Kendall
No. What I am saying is that we have to be able to give people sufficient notice in future. That was at the heart of the problem with the former Conservative-Liberal Democrat coalition’s decision to accelerate the increase in the state pension age, which caused so much anger among many people. We campaigned against that, including in the 2019 election in which we proposed compensation, but we lost that election, and the courts have since ruled that that decision was legal. That is why the ombudsman’s report is not about that decision, but about how changes were communicated. We will learn all the lessons from that maladministration to make sure it does not happen in future.
Sorcha Eastwood (Lagan Valley) (Alliance)
I stand here today on behalf of my many constituents who will feel utterly betrayed by this decision. Just months ago, people were promised a fresh start—a new change. Does the Secretary of State agree that not only will my constituents feel short-changed, but this decision will further compound a lack of trust in politics?
Liz Kendall
We are delivering change, with £22 billion of extra investment in the NHS and a substantial rise in the minimum wage that will deliver a pay rise for 3 million of the lowest-paid workers, as well as the biggest ever increase in the earnings threshold for carer’s allowance to help family carers and a new flat repayment rate for universal credit to give an average of £420 per year to the poorest 1.2 million households. However, we also promised that we would be responsible with taxpayers’ money and take fair and appropriate decisions. I hear what the hon. Lady says about her constituents, but the ombudsman’s report is not about the increase in the state pension age for 1950s-born women. We will learn the lessons from the maladministration, but we do not agree with the ombudsman’s report to injustice or to remedy, which is why we have taken this decision.
Alex Brewer (North East Hampshire) (LD)
On the Secretary of State’s website is a picture of her holding a sign that reads,
“I will work with WASPI to identify and deliver a fair solution for all women affected”.
Does she think that today’s announcement is a fair solution?
Liz Kendall
May I say gently that I know what is on my website? We did campaign with WASPI women, including in 2017 and 2019, but we lost those elections. This decision is not about the increase in the state pension age, which was what that campaign was about—that decision has been taken—but about how that increase was communicated. I know that it will cause disappointment and anger among many 1950s-born women, but we do not believe that the ombudsman’s approach to injustice or remedy is right, which is why we have taken this decision.
Shockat Adam (Leicester South) (Ind)
In July, this country overwhelmingly voted for a change, but it is getting more of the same—more failure and more austerity. Nothing has changed apart from the excuses. It is no wonder that the Prime Minister’s approval rating has plummeted to minus 66%. Given that Labour has recently removed even more money from our pensioners’ pockets by taking away the winter fuel payment, will the Secretary of State please reconsider this betrayal and compensate the WASPI women, such as my constituents Ruth Smith and Rev. Elizabeth Maitland?
Liz Kendall
I am sure the hon. Gentleman supports an increase in the minimum wage that will deliver a £1,400-a-year pay increase for someone who is working full time on the minimum wage in Leicester. I am sure he agrees with the £22 billion additional investment in the NHS this year and next, and with a boost of £420 per year on average for people on universal credit in Leicester through the fair repayment rate. Those are the changes we are delivering, but on this issue, we do not believe the ombudsman’s approach on injustice or remedy is right. When 90% of 1950s-born women knew that the state pension age was increasing, we do not believe that giving flat-rate compensation is a fair or appropriate use of taxpayers’ money.
Tom Gordon (Harrogate and Knaresborough) (LD)
The constituents I represent include thousands of WASPI women who will be disappointed by today’s statement. A number of references have been made to the campaigning that the Secretary of State has done with WASPI women. Does she feel regret that she has led them up the garden path towards believing that they might get some compensation, and while she has apologised for the Government’s part in the maladministration, will she apologise directly to the WASPI women in her constituency?
Liz Kendall
We were campaigning against the increase in the state pension age, and we had all sorts of proposals in our 2019 manifesto. We lost that election, and the courts have since decided that the increase in the state pension age was legal, so this decision is not about that. All I would say to WASPI women in my constituency—I have no doubt that they will contact me—is that I believe this is the fair and right decision. We are committed to supporting the lives of 1950s-born women, but we do not believe that the ombudsman’s approach on injustice or remedy is the right way forward, which is why we have taken this decision.
Mr Gregory Campbell (East Londonderry) (DUP)
Many, many WASPI women will be appalled by the Secretary of State’s statement. When they look at today’s proceedings, would they be right in concluding that this Government were prepared to resolve the pensions of mineworkers, but not those of WASPI women?
Liz Kendall
We are prepared to take difficult decisions if we think that they are fair and right. That is why we have taken this approach to the issue of how the state pension age increase was communicated between 2004 and 2007. We agree with what the ombudsman says about maladministration, and I have set out our three action points: to make sure we have a clear and detailed action plan to learn all the lessons, to give people sufficient notice in future if their state pension age increases, and to have a detailed programme of communication about the state pension going forward. Those are firm actions to show that we have learned the lessons from this report.
Claire Young (Thornbury and Yate) (LD)
I am sure that the 69-year-old who contacted me explaining how she had missed out on being able to care for her dying mother due to needing to work longer would have welcomed a letter giving her enough notice to plan her finances to allow otherwise. What support can the Secretary of State offer WASPI women, who are still disproportionately taking on caring responsibilities?
Liz Kendall
The hon. Lady raises a really important point. As we get older, many of us are working while caring for our elderly loved ones or for children—sometimes both—and those family carers need support. I have already set out the action we have taken, including the biggest ever boost to the earnings threshold for carer’s allowance and a serious, independent review of carers’ overpayments, but we can and should be doing more to support family carers. I am very happy to meet the hon. Lady to talk through her ideas that she thinks would benefit her constituents, if she would like.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
I do not think I have ever seen quite so many glum faces on the Labour Benches, not for the two-child benefit cap or the winter fuel payment—this is beyond the pale. A handful of Labour Members have stood up and spoken their mind on this issue, and I commend them on that, but the Secretary of State has not answered the question of whether this House will be given a debate and a vote, which should happen in Government time. It is not just Scottish MPs who are asking for this; other MPs from other parties have done so. I urge the Secretary of State to reconsider.
Liz Kendall
Back Benchers can put forward proposals for debates, as can Opposition parties. If the main Opposition party wants to do so, it would be perfectly at liberty to do so.
Jess Brown-Fuller (Chichester) (LD)
I and my colleagues on the Liberal Democrat Benches thought that today’s statement might be an early Christmas present for the WASPI women in my constituency and across the country. All those women will now be understandably devastated, and will be asking the same question: if the ombudsman has ruled that they were to have financial redress because of the maladministration and the Government are willing to ignore that finding, what else are this Government willing to ignore?
Liz Kendall
We do not ignore the ombudsman; we just do not agree with the approach he takes to injustice or to remedy. We provided research that showed that only one in four people who receive an unsolicited letter remember getting it or reading it, so even if we had sent those letters out earlier—which, as we have said, we should have done—we do not believe it would have made the difference that the ombudsman claims. When 90% of women aged between 45 and 54 knew that the state pension age was increasing, we cannot justify a flat-rate compensation scheme of up to £10.5 billion. We do not believe that that is a fair or proportionate use of taxpayers’ money.
The ombudsman plays a really important role, and will continue to do so. I know that, as I have sent countless constituents to the ombudsman to try to get redress in the 14 years that I have been an MP. We continue to back their work and effort.
Robin Swann (South Antrim) (UUP)
The Secretary of State has repeated time and again what this statement is not about, but what it is about is this Government not listening to the WASPI women and this Government not listening to the Parliamentary and Health Service Ombudsman. In the Secretary of State’s statement, she said she will
“develop a detailed action plan out of the report”.
Considering that the report missed two thirds of this, especially the financial redress scheme, what action plan is she developing?
Liz Kendall
This is about how we make sure in such a situation that, once a Department has decided it needs to provide information and to send out letters, we actually do that, and do not have a 28-month delay. It is about asking what, in the 21st century, is the modern way to get personalised information and tailored advice to individuals about their state pension, their state pension age and, I would argue, all of their pensions. It is precisely about those issues, which matter so much, and dealing with the issues about the maladministration. If the hon. Member has any ideas about what more he thinks we should do on that issue, I am sure either I or my hon. Friend the Pensions Minister would be more than happy to meet him to hear his ideas.
Steff Aquarone (North Norfolk) (LD)
Maladministration is a serious charge. I know the Secretary of State has taken a 360° pummelling on this, but she has declined to say that she would have compensated women if the economy were stronger, and she said it would not have made any difference if the letters had been sent. Surely, however, the overall charge of maladministration applies to the broader fact that women born in the 1950s did not know about these changes. Does she therefore agree with me that the failure is about not the channel, but the message?
Liz Kendall
No, I do not, because the ombudsman used the research that was provided to him—he looked at those aged 16-plus and found that 43% of them knew what their state pension age was—but he did not adequately reflect the research on the specific group of women affected. I think that is an important consideration, as part of our overall decision, which is not based on money alone. In Government, we have to look at what is a fair and proportionate use of taxpayers’ money, which is one of the elements along with the others—the impact of letters, the fact that the great majority of women knew—that has informed our conclusion, which I have set out.
Jim Allister (North Antrim) (TUV)
Is not the appalling message from the Government today that maladministration pays? If, as here, we have nationwide maladministration and no consequences, what other conclusion could one reach? What is the point of an ombudsman if the Government can be the judge in their own cause and dispense with the findings? Surely, the whole purpose of finding maladministration is to ensure that the maladministrator pays.
Liz Kendall
I think it is the precise opposite. We accept what the ombudsman found about the maladministration, and we apologise and we will learn the lessons to put it right. However, if Parliament itself decides it wants to put the parliamentary ombudsman on a different footing, it can do so.
Brendan O’Hara (Argyll, Bute and South Lochaber) (SNP)
I say to the Secretary of State that this is neither fair nor right; this is a betrayal. Today, my thoughts are with the brave, dogged campaigners of WASPI Argyll and the Isles, particularly Ann Greer, who has worked so hard for so many years seeking justice. The Secretary of State said in her statement that the Government are choosing to do what they are doing because it would be a “significant cost” and an “administrative burden” to do the right thing. Does she not see that that is an incredibly lame excuse for denying natural justice to women who are asking for nothing more than to receive what is owed to them and to which they are entitled?
Liz Kendall
I would say that the ombudsman’s report itself says there would be a huge cost and administrative burden of going through 3.5 million women individually, but I am sure the hon. Member can read the ombudsman’s report and see that quote for himself. This is not about increases in the state pension age, which is what many of the women in the campaign have been very concerned about. It is about the communication, and for all the reasons I have set out, we have decided on this approach.
Jim Shannon (Strangford) (DUP)
It is with great sadness that I rise to ask a question, and I am very disappointed by the statement. As the right hon. Lady will know, I stood shoulder to shoulder with many Labour Members, including the Secretary of State, in calling on the Government to do the right thing by the WASPI women. However, here we stand, six months into the new Government, and these women are poorer than ever, given the removal of the fuel allowance. Pensioners are borrowing more and paying off less, and the statement implies that the Government will do nothing. Will the Secretary of State clarify exactly what has changed for Labour Members? Six months ago, they stood up for the pensioners. I say that with great respect; the right hon. Lady will know that I speak with respect in this House. After taking advice not relevant to the report’s findings, why will the Government suppress the rights of these women once again? More importantly, when can the 5,000 WASPI women in my constituency of Strangford expect their relief—not an apology, which will not heat their room by 1°? How sad it is that today, in this House, the ombudsman’s recommendations are being ignored, and right and justice have been denied.
Liz Kendall
I am grateful to the hon. Gentleman for the tone of his questions. As he knows, I have huge respect for him. While many 1950s-born women will be deeply disappointed by this specific decision, our commitment to the pensions triple lock, our investment in the NHS, our support for family carers through the carer’s allowance, and all the other things that we are doing to help people deal with the cost of living crisis—including getting family members into jobs, and then better jobs, and into better homes—means that, on the whole, we are delivering change. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wycombe (Emma Reynolds), who has responsibility for pensions, or I would be more than happy to meet the hon. Gentleman—that goes for many other Members—to go through this in more detail.
Points of Order
(1 day, 8 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
Mr Gregory Campbell (East Londonderry) (DUP)
On a point of order, Madam Deputy Speaker. Claimants of pension credit, which gives entitlement to the winter fuel allowance, have to apply by this weekend to qualify for this year’s winter fuel allowance. Has the Secretary of State for Work and Pensions indicated that she will come to the House today or tomorrow to make a statement about the urgent need for those on pension credit to apply—tens of thousands have not yet done so—if they are to avail themselves of what they appear to be denied?
Madam Deputy Speaker (Caroline Nokes)
I thank the hon. Member for giving notice of his point of order, which reiterates a point that came up yesterday in Work and Pensions oral questions—and, indeed, in the Chamber this afternoon. I am sure that all Members will play their part in ensuring that constituents are aware of the benefits, including pension tax credits, to which they are entitled. As far as the point of order goes, I confirm that there has been no request today from Department for Work and Pensions Ministers to make a statement on this issue.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
On a point of order, Madam Deputy Speaker. I am sorry for not giving you advance notice of this. The ombudsman of this House has been completely ignored, as was demonstrated by the statement. How can this House hold the Government to account and make sure that we hear the voice of every single Member on whether they are happy to see the ombudsman overruled in this callous manner?
Madam Deputy Speaker
I thank the right hon. Member for that point of order. He has put his point on the record, and he will be aware that the Secretary of State specifically responded to that point throughout the statement.
Bill Presented
Children’s Wellbeing and Schools Bill
Presentation and First Reading (Standing Order No. 57)
Secretary Bridget Phillipson, supported by the Prime Minister, Secretary Angela Rayner, Pat McFadden, Secretary Wes Streeting, Secretary Jonathan Reynolds, Secretary Liz Kendall, Catherine McKinnell, Jess Phillips and Sir Nicholas Dakin, presented a Bill to make provision about the safeguarding and welfare of children; about support for children in care or leaving care; about regulation of care workers; about regulation of establishments and agencies under Part 2 of the Care Standards Act 2000; about employment of children; about breakfast club provision and school uniform; about attendance of children at school; about regulation of independent educational institutions; about inspections of schools and colleges; about teacher misconduct; about Academies and teachers at Academies; repealing section 128 of the Education Act 2002; about school places and admissions; about establishing new schools; and for connected purposes.
Bill read the First time; to be read a Second time tomorrow and to be printed (Bill 151) with explanatory notes (Bill 151-EN).
Off-road Bikes (Police Powers)
(1 day, 8 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
Luke Akehurst (North Durham) (Lab)
I beg to move,
That leave be given to bring in a Bill to give police powers to enter a private dwelling for the purpose of seizing an off-road bike that has been driven in an anti-social way or without insurance; and for connected purposes.
Members across the House will be starkly aware of the menace of off-road bikes being driven in a dangerous and antisocial way, whether through parks, on pavements or in other public spaces, causing not just a nuisance, but in some cases damage and injury. I am introducing the Bill following conversations with local police in my constituency of North Durham. They have told me that there is a loophole in legislation around their power to seize these off-road vehicles. Off-road bikes include a range of vehicles, such as quad bikes and motorbikes. Electric motorbikes in particular have become increasingly popular throughout County Durham, especially in rural areas. I am sure, from talking to colleagues, that that is replicated in other parts of the country.
Last week, it was reported that crimes involving e-bikes and e-scooters have soared by more than 730% in the past five years. Durham constabulary uses officers on similar bikes to respond to reports, and uses drones to identify suspects. I pay tribute to them for taking those steps to track down the perpetrators of these crimes. Frustratingly, while the location of bikes being driven illegally may be known to the police, the bikes cannot always be seized. That is why I am introducing this Bill.
The Road Traffic Act 1988 allows the police to seize vehicles being driven without insurance. In many cases, vehicles being driven antisocially are not insured. More prevalent forms of road-related antisocial behaviour can be dealt with under the Police Reform Act 2002, which creates the offence of vehicles being used in a manner that causes alarm, distress or annoyance. The Act also gives police the power to seize vehicles used in that way. Under both Acts, the police can seize vehicles from any premises that they have reasonable grounds for believing the vehicle to be on, but not from private dwellings, except for garages, other structures or land belonging to a dwelling.
The Bill I am introducing would amend the Road Traffic Act to remove the prohibition on the police seizing from a private dwelling a vehicle that has been driven without insurance. The Bill would also amend the 2002 Act to remove the prohibition on the police seizing from a private dwelling a vehicle that has been driven dangerously or in a way that
“is causing, or is likely to cause, alarm, distress or annoyance to members of the public”.
I recognise that the right to enter premises, particularly a private dwelling, is an intrusive power, and it must be subject to rigorous legal safeguards and used proportionately, but while finding the right balance will be challenging, I do not believe that the problem is insurmountable. My predecessor and I have had many constituents raise this issue, and Members from all parts of the House have also had the issue repeatedly raised by constituents. It is repeatedly raised with me on doorsteps across North Durham, and I know it will be familiar to colleagues across the House.
Tackling antisocial behaviour was a key pledge in this Government’s manifesto at the general election, and I know that the Government take it seriously. I welcome the fact that they intend to legislate, through the upcoming crime and policing Bill, to give police the powers that they need to quickly destroy off-road bikes that are seized, but I hope that consideration will be given to making it easier for the police to seize those vehicles in the first place, which is what this private Member’s Bill seeks to do.
The illegal, dangerous and antisocial use of off-road bikes has been intimidating local people for far too long, and we must give the police the powers that they need to properly tackle it.
Question put and agreed to.
Ordered,
That Luke Akehurst, Shaun Davies, Graeme Downie, Michelle Welsh, Yuan Yang, Adam Jogee, Dave Robertson, Jo Platt, Jodie Gosling, Will Stone, Dr Allison Gardner and Antonia Bance present the Bill.
Luke Akehurst accordingly presented the Bill.
Bill read the First time; to be read a Second time on 7 March 2025, and to be printed (Bill 151).
National Insurance Contributions (Secondary Class 1 Contributions) Bill
(1 day, 8 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
17:55 - divided: - Ayes: 100 / Noes: 351 - Question accordingly negatived.
18:09 - The Committee divided: - Ayes: 206 / Noes: 353 - Question accordingly negatived.
18:22 - The Committee divided: - Ayes: 196 / Noes: 352 - Question accordingly negatived.
18:37 - The Committee divided: - Ayes: 195 / Noes: 353 - Question accordingly negatived.
18:54 - The House divided: - Ayes: 354 / Noes: 202 - Question accordingly agreed to.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
I remind Members that in Committee they should not address the Chair as Madam Deputy Speaker. Please use our names when addressing the Chair. “Madam Chair”, “Chair” and “Madam Chairman” are also acceptable.
Clause 1
Rate of secondary Class 1 contributions
Pippa Heylings (South Cambridgeshire) (LD)
I beg to move amendment 1, page 1, line 2, at beginning insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, before paragraph (a) insert—
“(za) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”
(A2) After section 9(1A) of that Act insert—
“(1B) A “specified employer” means—
(a) a person providing a care home service or a domiciliary support service who is regulated under—
(i) Part 1 of the Health and Social Care Act 2008,
(ii) Part 1 of the Regulation and Inspection of Social Care (Wales) Act 2016, or
(iii) Part 5 of the Public Services Reform (Scotland) Act 2010,
(b) a person contracted to provide primary care under the provisions of—
(i) Part 4 of the National Health Service Act 2006,
(ii) Part 4 of the National Health Service (Wales) Act 2006, or
(iii) sections 17J to 17O of the National Health Service (Scotland) Act 1978,
(c) a person contracted to provide general dental services under the provisions of Part 2 of the National Health Service (General Dental Services) Regulations 1992,
(d) a person contracted to provide pharmacy services under the provisions of—
(i) Part 7 of the National Health Service Act 2006, or
(ii) Part 8 of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013, or
(e) a charitable provider of health and care, or
(f) a person providing hospice care whether in a hospice or elsewhere.
(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””
This amendment, together with Amendment 2 provides that care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care would continue to pay contributions at current rates.
The Second Deputy Chairman
With this it will be convenient to discuss the following:
Amendment 4, page 1, line 2, at beginning insert—
“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.
(A2) In section 9(1A) after paragraph (aa) insert—
“(ab) if section 9AA below applies to the earnings, the reduced secondary percentage;”
(A3) After section 9A insert—
“9AA Qualification for reduced secondary percentage
(1) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this section applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed—
(a) by a charity registered in the charity register or the Scottish charity register,
(b) by a voluntary organisation within the meaning of regulation 2 of the Housing Benefit Regulations 2006,
(c) to work in a GP practice,
(d) by a university, or
(e) by a college of further education.
(2) For the purposes of section 9(1A)(ab) above, the reduced secondary percentage is 13.8%.””
Amendment 7, page 1, line 2, at beginning insert—
“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.
(A2) In section 9(1A) before paragraph (a) insert—
“(za) if subsection (1B) below applies, the healthcare and small charities secondary percentage;”
(A3) After section 9(1A) insert—
“(1B) This section applies where the earner is employed to work—
(a) in any of the following settings—
(i) a GP surgery,
(ii) an optometry or dispensing optician practice,
(iii) a dental surgery,
(iv) a pharmacy,
(v) a residential care setting, or
(b) for a registered charity employing 50 people or fewer.
(1C) For the purposes of subsection (1A)(za) the healthcare and small charities secondary percentage is 13.8%.””
Amendment 13, page 1, line 2, at beginning insert—
“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.
(A2) In section 9(1A) before paragraph (a) insert—
‘(za) if sub section (1B) below applies to the earnings, the specified sector secondary percentage;’
(A3) After section 9(1A) insert—
‘(1B) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this subsection applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed in any of the following specified sectors—
(a) adult social care,
(b) hospices,
(c) primary care,
(d) nurseries registered in the Early Years Register maintained by the Office of Standards in Education, Children’s Services and Skills, or
(e) a charity registered in the charity register or the Scottish charity register.
(1C) For the purposes of this Act above, the specified sector secondary percentage is 13.8%.’”
This amendment would provide that adult social care, hospice, primary care, nurseries and charities would continue to pay contributions at current rates.
Amendment 19, page 1, line 2, at beginning insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, before paragraph (a) insert—
“(za) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”
(A2) After section 9(1A) of that Act insert—
“(1B) A “specified employer” means—
(a) a provider of education or childcare to children under five years of age—
(i) registered in England in the early years register maintained by the Office for Standards in Education, Children’s Services and Skills,
(ii) registered in Wales with Care Inspectorate Wales, or
(iii) registered in Scotland with the Scottish Care Inspectorate; or
(b) a university.
(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””
This amendment provides that Early Years Settings and Universities would continue to pay contributions at current rates.
Amendment 20, page 1, line 2, at beginning insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—
“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”
(A2) After section 9(1A) of that Act insert—
“(1B) A “specified employer” means—
(a) a registered charity, or
(b) a housing association.
(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””
This amendment provides that charities and housing associations would continue to pay contributions at current rates.
Amendment 23, page 1, line 2, at beginning insert—
“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.
(A2) In section 9(1A) after paragraph (aa) insert—
“(ab) if section 9AA below applies to the earnings, the veterans secondary percentage;”
(A3) After section 9A insert—
“9AA Veterans secondary percentage
(1) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this section applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is a veteran.
(2) For the purposes of section 9(1A)(a) above, the veterans secondary percentage is 13.8%.
(3) For the purposes of this section, a “veteran” means a former member of any of His Majesty’s forces.””
This amendment would exempt veterans' salaries from NICs changes.
Amendment 10, page 1, line 3, at end insert—
“(1A) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.
(1B) In section 9(1A) after paragraph (aa) insert—
“(ab) where the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”
(1C) After section 9(1A) insert—
“(1B) A “specified employer” means—
(a) a person providing a care home service or domiciliary support service regulated under the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003, or
(b) a person providing primary medical services through contractual arrangements with a Health and Social Services Board,
(c) a person providing general dental services under Part 2 of the General Dental Services (Northern Ireland) Regulations 1993,
(d) a person providing pharmaceutical services under Part 2 of the Pharmaceutical Services Regulations (Northern Ireland) 1997,
(e) a provider of health and care registered as a charity by the Charity Commission for Northern Ireland,
(f) a person providing hospice care whether in a hospice or elsewhere,
(g) a voluntary or community organisation, and
(h) a provider of childcare registered in the Family Support NI Register.
(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.”
(1D) After subsection (3) insert—
“(4) The Secretary of State must by regulations define a voluntary or community organisation for the purposes of subsection (1B)(g).””
This amendment aims to provide that in Northern Ireland care homes, domiciliary care providers, GP and dental surgeries, pharmacists, health and care charities, hospice care providers, voluntary or community organisations and childcare providers would remain subject to the current secondary Class 1 contribution rate, not the increased rate proposed in the Bill.
Amendment 16, in clause 1, page 1, line 3, at end insert—
“(1A) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.
(1B) In section 9(1A) before paragraph (a) insert—
“(za) if sub section (1B) below applies to the earnings, the specified sector secondary percentage;”
(1C) After section 9(1A) insert—
“(1B) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this subsection applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed in any of the following specified sectors—
(a) adult social care,
(b) hospices,
(c) primary care,
(d) nurseries registered with Family Support NI, or
(e) a registered charity in Northern Ireland.
(1C) For the purposes of this Act above, the specified sector secondary percentage is 13.8%.””
This amendment would provide that adult social care, hospice, primary care, nurseries and charities in Northern Ireland would continue to pay contributions at current rates.
Clause stand part.
Amendment 2, in clause 2, page 1, line 12, leave out “£96” and insert—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £175, and
(ii) in all other cases, £96.”
This amendment, and Amendment 3, exempts care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care from the changes to the threshold.
Amendment 5, page 1, line 12, leave out “£96” and insert—
“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £175, and
(ii) in all other cases, £96.”
Amendment 8, page 1, line 12, leave out “£96” and insert—
“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £175, and
(ii) in all other cases, £96.”
Amendment 11, page 1, line 12, leave out “£96” and insert—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £175, and
(ii) in all other cases, £96.”
This amendment provides that the employers listed in Amendment 10 would be subject to the existing secondary threshold for secondary Class 1 contributions, not the lower threshold proposed in the Bill.
Amendment 14, page 1, line 12, leave out “£96” and insert—
“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £175, and
(ii) in all other cases, £96.”
This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities from changes to the threshold.
Amendment 17, page 1, line 12, leave out “£96” and insert—
“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £175, and
(ii) in all other cases, £96.”
This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities in Northern Ireland from changes to the threshold.
Amendment 24, page 1, line 12, leave out “£96” and insert—
“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £175, and
(ii) in all other cases, £96.”
See Amendment 23.
Amendment 3, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992 or section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and
(ii) in all other cases £5,000.””
This amendment is linked to Amendments 1 and 2.
Amendment 6, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £9,100, and
(ii) in all other cases £5,000.””
Amendment 9, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £9,100, and
(ii) in all other cases £5,000.””
Amendment 12, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and
(ii) in all other cases £5,000.””
This amendment makes provision for the monthly and annual thresholds in line with Amendment 11.
Amendment 15, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) in respect of an earner under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £9,100, and
(ii) in all other cases £5,000.””
This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities from changes to the threshold.
Amendment 18, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £758, and
(ii) in all other cases, £417”, and
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) in respect of an earner under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and
(ii) in all other cases £5,000.””
This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities in Northern Ireland from changes to the threshold.
Amendment 25, page 1, line 14, leave out paragraphs (a) and (b) and insert—
“(a) in sub-paragraph (a), for “£758” substitute—
“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £758, and
(ii) in all other cases, £417”, and”
(b) in sub-paragraph (b), for “£9,100” substitute—
“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £9,100, and
(ii) in all other cases £5,000.””
See Amendment 23.
Clause 2 stand part.
Clauses 3 and 4 stand part.
New clause 1—Review of the impact of the Act—
“The Chancellor of the Exchequer must, within a year of this Act being passed, publish an assessment of the impact of the changes introduced by this Act on—
(a) rates of employment,
(b) real wages,
(c) inflation, and
(d) real household disposable income.”
New clause 2—Review of effect on SMEs, hospitality, tourism and seasonal workers—
“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a review of the impact of the measures contained in this Act.
(2) The review must consider in particular—
(a) the impact of those measures on the finances and staffing of small and medium sized businesses;
(b) the impact of those measures on the finances and staffing of small and medium sized businesses in the hospitality and tourism sector;
(c) the impact of those measures on sectors who rely on seasonal workers.
(3) In this section, “small and medium sized businesses” means any business which has an average headcount of staff of less than 250 in the tax year 2023-24.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on SMEs, Hospitality, Tourism and Seasonal workers and on the sectors relying on seasonal workers.
New clause 3—Review of effect of employer NIC threshold—
“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a review of the impact of the measures contained in this Act on part-time workers.
(2) The review must consider in particular the effect of the threshold set by section 2 of this Act on part-time workers—
(a) earning £5,000 - £9,000, or
(b) working under 16 hours per week.”
This new clause would require the Government to produce a report into the impact of the employer NIC threshold on part-time staff, especially those who are lower paid or working less than 16 hours a week.
New clause 4—Employment allowance: review of exception on childcare service providers—
“(1) The Chancellor of the Exchequer must conduct a review of how the exception from the employment allowance under section 2 of the National Insurance Contributions Act 2014 (“the 2014 Act”) affects providers of childcare services.
(2) The review must consider the likely impact on providers of childcare services were section 2 of the 2014 Act to be amended to enable such providers to qualify for the allowance.
(3) A report setting out the findings of the review must be published and laid before both Houses of Parliament within six months of this Act being passed.”
Pippa Heylings
These hikes in employer national insurance contributions are not just numbers on a spreadsheet, but will have real and damaging consequences and will strike at the heart of small and medium-sized businesses, which are the backbone of our economy. In my constituency in South Cambridgeshire, we have one of the highest densities of small and medium-sized enterprises, principally in the biotech and life sciences sector, which is a growth area for our economy. It is critical that we get this right, and I have heard from the sector that it is troubled by this legislation.
More worryingly, the consequences will extend to our social and healthcare sectors, which are already under immense strain. GP surgeries and care homes across the UK are at risk of being severely impacted. Those are essential frontline services, which are essential to supporting the NHS and to fulfilling this Government’s mission of moving from treatment to prevention, and from hospital to community.
How can we expect to tackle the backlog in routine operations, and how can we deal with the winter waiting lists at accident and emergency, and with so much pain and anguish, if the primary care providers that form the foundation of our healthcare system are being undermined by this tax increase?
Carla Denyer (Bristol Central) (Green)
I thank the hon. Member for allowing me to speak briefly. She references primary care. I have heard from five different GP surgeries in my constituency, who have written to me to warn that the national insurance increase will directly undermine patient care, when GP practices are already under severe financial strain due to years of neglect. Does she agree that the Government’s process of addressing national insurance costs via GP contract negotiations is just too slow? It could go on until spring, but practices are making staffing decisions right now.
Pippa Heylings
I agree. What the hon. Member says is critical, and I will come on to the situation with our GPs. The Lib Dems continue to highlight the point that to fix the NHS, we have to fix the social care crisis. Freeing up hospital beds requires us to fix the social care sector. According to research, 60% of the UK’s care home beds are provided by private companies, which are on the brink of bankruptcy and are being tipped over the edge thanks to these changes and rises in employers’ national insurance contributions. We do not understand how that can align with the plans of the Chancellor and the Health Secretary to alleviate pressure on hospitals and ensure effective healthcare delivery.
Dr Luke Evans (Hinckley and Bosworth) (Con)
The hon. Member has hit the nail on the head. The Labour Government say that they want to deal with this situation, and that they effectively protected secondary care, but the NI applies to GPs at the front end and care homes at the back end. That means that it will be the hospitals who hold the responsibility—the acute places that we need to keep clear if we are to help the backlog move through. Without getting an answer now, we risk recruitment decisions being kept on hold over the next three or four months and cutbacks being made. Does the hon. Member agree that, on top of the difficulties of an already hard winter, that will cripple the NHS?
Pippa Heylings
I agree with the hon. Member. I will give one example: the Arthur Rank hospice, which serves all of Cambridgeshire. I had a tour there and saw the work being done by its dedicated professionals. I was informed by its senior leadership that these hikes in national insurance contributions for employers will be the equivalent of £230,000 in additional payroll costs on top of the fundraising that it already has to do. That is money that it does not have. We know from the debate on assisted dying, assisted suicide and the terminally ill how critical palliative care and end-of-life care is. That is one hospice that will struggle severely to deal with these charges.
Hon. Members have spoken about the GP crisis. According to the British Medical Association, 1,387 GP practices have closed since 2015 and the NHS has lost the equivalent of 1,333 full-time, fully qualified GPs. Each GP is responsible for an average of 2,294 patients, and about 3 million people have been directly affected in the last decade by shrinking GP numbers. At a time when we desperately need more GPs, we are introducing a tax that risks driving even more practices out of business. It is not just me saying that; I am sure that hon. Members across the House will have heard from GPs in their constituencies.
In my constituency of South Cambridgeshire, I have heard from the Harston, Comberton, Queen Edith, Eversden and Melbourn practices. I have spoken in particular to Dr Gee of Harston surgery, who has told me that his practice with 7,600 patients faces a £20,000 bill from April just to maintain its current services—just to stand still.
Dave Doogan (Angus and Perthshire Glens) (SNP)
The hon. Lady is making a tremendously informed speech and demonstrating a level of understanding of primary care and the care sector that we could only dream of from the Government. Is it her concern that many charities, voluntary sector organisations and GP surgeries are already operating on the thinnest margins of financial sustainability and that this measure will torpedo the very organisations that protect our communities from absolute chaos? Secondary care cannot do it alone; it is upheld by primary care and the care sector. Is she as concerned as many other hon. Members that this will cause absolute chaos?
Pippa Heylings
I agree with the hon. Member. I know that the Government are in conversation with GPs, but GPs are writing to us saying that they are seriously concerned.
The GP in Harston said:
“GPs cannot raise prices or operate at a loss.”
They have not had clarification or confirmation from the Government about how funding that is to be given to others in the public sector will be available to them. Just at the critical time when GPs are coming to their annual spending reviews and budgeting, the Government are bringing them this uncertainty. GPs do not feel that they are getting the right messaging or any kind of clarity that will save people’s jobs.
Robin Swann (South Antrim) (UUP)
I thank the hon. Member for giving way; she has been generous with her time. Does she realise that this is not just a problem in England, Scotland and Wales? It is a significant problem in Northern Ireland, where we have already seen a high number of GP practices returning their contracts. At this time when the solution was meant to be to move to multidisciplinary teams, the increase in national insurance contributions for GPs as employers is putting additional stress on their contracts, given the amount of money they are receiving from central Government. In Northern Ireland, 75% of our domiciliary care and home care is provided by private suppliers, and this additional cost will be added to them as well.
Pippa Heylings
I agree with the hon. Member. In my constituency of South Cambridgeshire, we had the tragic situation of four much-loved, much-respected family doctors handing back their contracts. It happened at East Barnwell surgery, to the distress of those GPs and all their patients. That is because of the contract, and due to failures by the previous Conservative Government to understand in the GP funding formula what deprivation as well as age demographics mean in that contract. On top of that, the hikes in employer national insurance contributions have driven them over the edge.
Sir Edward Leigh (Gainsborough) (Con)
We had this great debate on assisted dying where every single person who spoke said it was essential that we improve palliative care. I wonder whether we could form a consensus in this Committee. One compromise that the Government could make is to take hospices out of this tax. That would be so popular, achieve so much and ensure that our elderly and frail people were properly looked after. I give that one compromise to the Government.
Pippa Heylings
I thank the right hon. Member. As I mentioned, Arthur Rank hospice in my constituency is one such hospice that should definitely have that compromise. Not only that; we have to look at the whole primary care sector—both GPs and independent care homes—because that is what will winter-proof our NHS. We cannot fix the NHS without fixing social care.
The national insurance increases are not just unwise; they are unthinkable. We are in a time of healthcare crisis when people are already struggling to secure appointments. Despite the Government’s assurances, these tax rises will inevitably affect ordinary people. They will particularly hurt those desperately trying to access their local GP and crucial appointments.
We cannot and will not fix the NHS by driving its primary care providers into the ground. I urge the Government to engage with our GPs, reconsider and provide immediate reassurance to GP practices, hospices and care homes that they will be protected them from these changes. Without those frontline services, the NHS stands no chance of coming off life support.
Joe Morris (Hexham) (Lab)
I rise to speak about the need for the Bill and the continued assault by the Conservative party on public trust and the public finances. When I go out in my constituency, I speak to people who are appreciative of the “bin fire”—that is the term that one of my constituents used—facing Treasury colleagues when we assumed office. Money for projects and half-baked plans was used more to launder the Conservative party’s reputation than to improve our public services.
When someone comes into office and finds out that the job is not as had been advertised and that the previous person in post set fire to the office, they have to do things differently. They have to begin to rebuild trust with the people they serve and to have honest conversations with the public. That is what the Government are determined to doing. [Interruption.] Opposition Members can chunter as much as they like, but they know that they gambled with public trust and undermined every aspect of themselves and the institutions of the British state. That is not just a failure on their part but a failure on the part of everyone in their party and everyone who knocked on doors. Ultimately, they were judged harshly by the British public for that.
The Bill is necessary to repair the public finances and rebuild public trust. We did not want to do this. We had to maintain our manifesto promise not to see tax rises for working people, but we must ensure that the country that we hand on is in a significantly better state than the country we inherited. That is the Government’s task.
Dr Luke Evans
I am enjoying the hon. Member’s exposition of his thinking on this matter. Will he set out how this works for national insurance contributions, which is what we are talking about? Those on the frontline—the likes of GPs and care homes—are private, but they are commissioned only by the NHS. Is he aware of where the funding will come from? Will it come from the £22.6 billion? That would make sense, but if so, the Government need to clarify where that money is going. Part of the problem is that it does not add up for the Government to say that they want to support the NHS yet tax those very people—the doctors, the hospices and the care homes—to fund it. Will he elaborate on how that will work?
Joe Morris
I was not sure if the hon. Member would take interventions during that. Ultimately, we need to support the NHS, our care homes and our GPs. It is very rich of the Conservative party to lecture us on supporting GPs and care homes. I have been out speaking to GPs in rural communities, who have been consistently undermined by the Conservatives’ failure to appreciate the challenges facing the modern countryside. I have been out speaking to care homes; I spoke to the Charlotte Straker care home, which looked after my grandmother, to hear its concerns. I have had those meetings, as is my duty as a constituency MP. Ultimately, perhaps if more of the hon. Gentleman’s Conservative colleagues had done the diligent thing as constituency MPs, there would be more of them on the Opposition Benches.
Dave Doogan
The hon. Member is very kind to give way. Twice in the past couple of minutes, he has used the word “ultimately”—“Ultimately we will have to do this, and ultimately we will have to do that.” It is “actually” that he should be saying. You actually have to make sure that there is funding, not ultimately—that can wait for another day. Actually is what will happen as soon as this legislation comes to pass—you will be in an absolute quagmire.
Joe Morris
I thank the hon. Gentleman for his guidance on the correct form of words to use. The reason that I used the term “ultimately” is that it is the fundamental goal of Government to improve the lives of our constituents. That is why I choose to use the form of words that I am using, and why I am focused on the eventual outcome for my constituents. As I said, we did not want to inherit the country in the circumstances that we did. That is fault of the Conservative party, its record and the inheritance it left. We need to bear in mind the context, because that shapes everything and how we go about this.
Graham Stuart (Beverley and Holderness) (Con)
Further to the question from my hon. Friend the Member for Hinckley and Bosworth (Dr Evans), we hear the hon. Gentleman’s critique of the previous Government, but we are trying to understand how imposing these costs on GPs at one end of the service and hospices at the other will remotely help the NHS and, more importantly, the people who rely on it. We would like him to explain that, not just slag us off, however much he might enjoy doing so.
Joe Morris
I have never turned down an opportunity to slag off the Opposition. I am always happy to do so.
The ultimate reason that the Budget was necessary was to raise the extra money to invest into the NHS. The extra infrastructure investment will support our rural communities, our rural GPs and our care homes. That is the fundamental point of the Budget. It is a reset moment to properly support our public sector once more, which the Conservative party failed to do, as the right hon. Gentleman well knows. We need to restore faith in our NHS and our small businesses that were so badly let down. I have spoken to many across my constituency who share my optimism about this Government and who are convinced of the need for that investment. [Interruption.] Opposition Members can chunter all they like, but it is true. Ultimately, those businesses know that we need to invest in the state in order to drive up standards and confidence and provide the stability that the country so desperately needs.
Wera Hobhouse (Bath) (LD)
The hon. Gentleman mentions public trust; we all understand how important it is to restore that, but how can that happen if the very things needed to support the public and restore trust—our hospices and the charitable sector—are being hit by this Government’s measures?
Joe Morris
As the hon. Lady well knows, when one inherits a difficult context, one has to take decisions that one did not want to take. The public understand that the NICs rise was important and was needed because of the circumstances that we inherited and to repair the black hole that we found in the public finances. Spending the national overdraft three times and not telling anyone about it is what has fundamentally undermined public trust.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
Listening to Members speaking to the amendments has caused me to reflect on the challenges at the heart of this debate. Does my hon. Friend agree that the amendments that are trying to unpick a holistic approach to fixing the foundations of our public finances entirely miss the point, first of the challenge that this Government face in re-establishing confidence in public finances, and secondly of our approach to long-term investment in public services that are so desperately needed? I believe that all the amendments—
The Second Deputy Chairman
Order. The hon. Lady has every opportunity to contribute to this debate if she so wishes. Interventions are getting longer and longer; they must be shorter.
Joe Morris
My hon. Friend eloquently makes the point that I have been trying to make when I have tripped over my words.
I am extremely proud that the Government are committed to achieving economic stability, being frank with the public about the choices that we face and not simply taking the easy options. We need to implement these tough measures in order to resolve the previous Government’s disastrous economic mismanagement and to restore our foundations. I will finish by saying that traditionally, as far as I am aware, it is poor form for the arsonist to criticise the actions of the fire brigade.
Gareth Davies (Grantham and Bourne) (Con)
I rise to speak, on behalf of the official Opposition, to amendments 13 to 18 and new clause 1, which stand in my name.
First, it is important to remember the context of the situation we find ourselves in today. Throughout the election, the Chancellor and the Prime Minister promised the British people that they would not raise taxes on working people. They committed specifically to not raising national insurance, but here we are in Committee debating a national insurance tax on working people worth some £25 billion. Each and every Government Member made specific promises to their constituents on national insurance, which they have now broken. We have it here in black and white.
Clause 1 raises the rate of secondary class national insurance from 13.8% to 15%. To compound the impact, clause 2 drastically cuts the secondary threshold from £9,100 to £5,000. This two-pronged attack on business means that while clause 1 squeezes more from businesses, clause 2 simultaneously pushes more businesses into the taxman’s grasp. Taken together, based on data from His Majesty’s Revenue and Customs, a staggering 940,000 employers are set to lose out in net terms from the Bill. The Office for Budget Responsibility has made it clear that each one will be hit by an average of £26,000 in additional tax.
On Second Reading we heard the same old script from the Government and their Back Benchers. Time and again we hear that the Bill will hurt only the largest businesses, but that is not correct. Most high street hair salons would not say that they are a big business with mounds of profit to give away to the Exchequer, no matter how much hair mousse this Prime Minister buys from them. A village family butcher surely would not regard themselves as profiteering fat cats. Community pharmacies providing vital services to residents young and old surely cannot be put in the same category as a large multinational pharmaceuticals company. Yet they are.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The hon. Gentleman is making an eloquent argument against increasing the employer’s part of national insurance contributions. Yet he himself voted for the health and social care levy, which was an increase of greater proportion on both employees and employers. I have just checked Hansard—he made none of the arguments that he progresses today when his Government were putting that through. Why has his mind been changed now that he is in opposition?
Gareth Davies
I find it difficult that the Labour party says that we are irresponsible with public finances, yet when we faced a once-in-a-century pandemic and spent £400 billion or £500 billion to support residents, business and families in Stoke and across the country, we decided that we needed to pay that money back and did not want debt to keep on rising. Yes, we made difficult decisions in the face of a global pandemic. There is no global pandemic today. This is a political choice, and that is the difference.
Dr Scott Arthur (Edinburgh South West) (Lab)
The hon. Gentleman is very kind in giving way again so quickly. The point has been made about the billions of pounds that were spent during the pandemic. Can he outline how much of that money went to Tory party mates and donors through dodgy contracts?
Gareth Davies
The hon. Gentleman was not here at that time, but those of us who were in Parliament then faced an incredibly challenging time in very difficult circumstances. Billions of pounds went to support businesses in his constituency; if he has a conversation with the average business that benefited from the furlough scheme, I am sure he will correct the record.
The problem is that socialists fundamentally do not understand or care what it means to have an idea, to take a risk or to work hard day in, day out to make a business a reality. That is the problem. They think it is all so easy—that profits just flow in. They think it will all be all right, because Government can step in and take us much tax as they want. That is not the case. If Government Members talk to the average business in their constituencies, they will find this out; if they set up a business, they will see it for themselves.
Perhaps most worrying of all, not only do the Government not understand the private sector, but they have completely overlooked the different ways in which the public sector provides for our communities, as my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) set out. Whether healthcare, childcare or the charity sector, organisation after organisation has warned Ministers that this tax rise will impact the services they provide. That may not have been intended, but the Government have yet to act. That is why we have tabled amendments 13 to 15 and 16 to 18, which seek to protect certain key sectors from both parts of this tax in Great Britain and Northern Ireland respectively.
Dr Luke Evans
My hon. Friend has hit the nail on the head, and the Treasury really needs to answer this question. Did it knowingly implement these tax rises on these industries, which would be a travesty in itself, or did it do so by mistake because it does not understand these issues? If that is the case, will the Government look to rectify the matter so that hospices, GPs and childcare providers are protected?
Gareth Davies
I could not have put it better myself. These amendments highlight the fact that Labour’s attempt to paint this tax rise as a necessity for public services is nothing but plain politics; Labour has always intended to do this, and now it is hiding behind public services to justify it.
Those working on the frontline of healthcare in and alongside the NHS will be deeply impacted. The Institute of General Practice Management estimates that the tax bill of each GP surgery will increase by £20,000 a year, likely resulting in a reduced number of appointments. The Nuffield Trust has said that providers in the adult social care sector will face a £940 million increase, dwarfing the social care support announced in the Budget. Community Pharmacy England says that community pharmacists will be hit by an additional £50 million each year, inevitably causing pharmacies to close and services to deteriorate. Hospice UK warns that £30 million will be added to the bill for 200 hospices across the country, which will lead to greater pressure on NHS palliative services.
Sir Edward Leigh
My hon. Friend is a fellow Lincolnshire MP. In Lincoln we have St Barnabas hospice, a greatly loved local institution where most people would want to spend their final days. We also have the Lincolnshire air ambulance, and we have GPs all over our huge county who are struggling. Can he explain how it is in the public interest to attack these people?
Gareth Davies
My right hon. Friend—a Lincolnshire colleague and Father of the House—puts it perfectly. Labour says that it supports public services and that those services are apparently being trashed, so why on earth would the Government then go and tax them? Why add to their cost base, which they have very clearly said will reduce services across every constituency? Labour Members will all walk through the Lobby tonight and add to the cost burden of those services. It does not make sense. Charities have also signalled the alarm, with more than 7,000 writing to the Chancellor to warn of the £1.4 billion hit that they will face next year.
Graham Stuart
Does my hon. Friend agree that Labour Back Benchers need to speak to their Ministers? As my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) suggested, the Government cannot have meant to do this deliberately. They could accept our amendments today or move some of the funds for the NHS—the £22 billion or £25 billion, whatever it is—across to this, because the NHS depends on social care and other services. At the moment, the Government risk turning something that could be a triumph for them into a disaster, both for the NHS and, more importantly, for patients and those most in need.
Gareth Davies
Once again, my right hon. Friend makes a valid point. As I have said already, I am not sure that this was intended. I do not think the Government understand what these measures will do to our communities, to the sectors I have outlined and to the businesses that I will speak about in a minute. The Minister will have to address my right hon. Friend’s point. What will the Government do to mitigate the damage of the Bill on the communities and organisations that I have highlighted?
A sector I have not yet highlighted is childcare, without which millions of parents across the country could not go to work—including, by the way, many in this House. The Bill will contribute an average of £47,000 in additional costs per nursery next year, according to the National Day Nurseries Association. The previous Government did so much to extend childcare to more families, boosting workforce participation and economic growth, but this tax hike will pull us back from that progress. That is not what people voted for. There is no mandate for this harm. I urge the Government to think again.
Ideally, all employers would be made exempt, which is why the Conservatives voted against the Bill. At this time of year, people should be reflecting on another year gone by all too soon and looking to the new year with hope, ambition and optimism, but so many employers will now enter 2025 with fear. Many will be thinking again about that planned expansion or the investment in new equipment or premises. Worse, some will be thinking about who they need to let go—never mind awarding the pay rises in the spring they once hoped to give.
Dr Luke Evans
My hon. Friend is an astute man, and he has picked up on something that I fear. According to S&P Global’s purchasing managers’ index, this has been the third consecutive month of job losses; December has seen the highest number since 2021, in the pandemic. It has said:
“Barring the pandemic, the survey has not seen job losses on this scale since the global financial crisis in 2009.”
That is a direct impact of the choices in the Budget and this NIC increase. Does my hon. Friend agree that this is something the Government really need to think about?
Gareth Davies
I agree completely with my hon. Friend, who has once again made a very astute intervention. It marries very clearly with what we have seen in business confidence. He mentioned the record since the pandemic. Business confidence has tanked to low levels that we have not seen since the economy had to be shut down during the pandemic. A survey by the CBI, which makes for stark reading, says that 62% of businesses have said that they will have to reduce recruitment, while 48% have said that they will be reducing existing staff levels. That is all because this Bill will impact them in ways they never imagined and were never told about. Whether businesses freeze or cut jobs, or, as the Chartered Institute of Taxation has warned, shift employees to a self-employed basis, or, even worse, offshore workers to overseas destinations, the potential impact on employment should absolutely worry us all.
That is why we have tabled new clause 1, which would require the Chancellor to publish an assessment of the impact of this tax rise on the employment rate within a year of the passage of the Act. It is not controversial; it just seeks clarification and an assessment.
Kit Malthouse (North West Hampshire) (Con)
This impact assessment is extremely important, not least because at a macro level—given that the UK is essentially a services-based economy in which human capital is the most expensive fixed cost, effectively—there is no way to escape this tax. Unlike corporation tax, which is levied on profits, this tax is levied whether a business is making a profit or not; businesses that have been marginal but struggling may well be forced into a loss, and may therefore choose to close down. It therefore has to be essential that we look backwards, if this tax goes ahead, and ask what the impact has been from a services point of view.
Gareth Davies
That was a classic case of how to make an intervention, because it added to the debate. I had not mentioned that point, but my right hon. Friend is absolutely right. The impact on employers, who will pay the tax whether they are profitable or not, is absolutely right. That is, again, not something I think the Government have fully appreciated.
Yuan Yang (Earley and Woodley) (Lab)
Today I stand proud to welcome the Budget, which takes long-term fiscal planning seriously. I welcome a Government who will take us away from the course the previous Government steered, away from austerity, and away from the chaos and confusion of the past few Budgets.
First, I want to make a brief point about tax simplification and the confusion across the Chamber in this debate and in the many amendments. The way to reform a tax system is not to argue for various exemptions, reliefs and get-out clauses for different subsectors, but to have a consistent approach to collecting tax applied across the whole economy and then to fund those sectors of the economy, such as healthcare, transport and so on, which we should be funding. That is the approach the Budget has taken. Many Members of successive previous Governments have said that we need to simplify our tax system. I suggest that asking for dozens of small amendments to a Bill is not a way to achieve that aim. As my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) pointed out, that is not the way to run any tax system, not even on local government level.
Dr Luke Evans
I am very grateful. The hon. Lady makes a fantastic point about wanting to set out the tax base. The difficulty is that the Government are also spending on the NHS. Fundamentally, GPs are private contractors to the NHS. Care providers are private contractors. Therefore, the Government have to make a choice: are they going to exempt them or will those private contractors have to pay? At the moment, the Government have done neither thing. That is the fundamental argument we are having on these amendments in trying to protect those contractors, because the Government have not made a choice. They have said that at some point there may be some payments along the way. That is the concern on the Opposition Benches. What is her answer to that?
Yuan Yang
I thank the hon. Member for his intervention and for highlighting the perilous state of GPs in my constituency of Earley and Woodley after 14 years of the previous Government stripping away the NHS. I am very confident in the announcements made by my right hon. Friend the Secretary of State for Health, which he has made several times in this Chamber, to take all funding decisions in the round. I very much look forward to seeing the quality of GPs improve. I also highlight the funding already announced for increasing the number of practitioners in GP surgeries. I expect to welcome them in my constituency, as well as across the UK.
I return to my point about long-term fiscal planning. The hon. Member for Hinckley and Bosworth (Dr Evans) made the point that we need to make choices. Over and over again on the doorstep I have been told that public services are broken, that crime too often goes unpunished on our high streets, and that mortgage rates, which have shot up wildly over the past few years, are too much of a burden on everyday families. All that creates uncertainty and it is that economic uncertainty that hurts businesses. That is why I welcome, for the first time in many years, a credible Budget that addresses the fundamental problems facing our society. Yes, we have to understand the current fiscal situation in the context of the bad decisions that were made before us. We all know about the tax giveaway mini-Budget under Liz Trust and the perilous effects it had on gilts, pension funds and, of course, mortgages, for which we are all now paying the price.
Yuan Yang
I will give way in a moment.
I add to that the bad decisions made in the previous two Budgets under the right hon. Member for Godalming and Ash (Jeremy Hunt). Those decisions were not credible. It was not credible, on the March 2024 OBR forecast, that the next Government would do anything about schools, special educational needs and disabilities or the NHS. Those were not credible promises made in the last two Budgets. Those giveaways were made by Governments without a plan; Governments who literally cut and ran by calling an early summer election so they would not have to face the consequences of their bad fiscal choices. They left us with a bill to pay and this Government are now making that possible in a considered way.
Graham Stuart
I am extremely grateful to the hon. Lady. She rightly highlights interest rates and mortgage payments. Was she disappointed when the OBR’s assessment of the Budget suggested that interest rates were going to stay higher for longer as a result of these measures? I invite her to discuss the topic under discussion today, rather than the past Conservative Government. We can have debates on that, but what we are trying to drill into today are the actions of this Government and their real-world impact on those who can least afford it.
Yuan Yang
I thank the right hon. Gentleman for his point. I always welcome conversations with the OBR, whose representatives came before the Treasury Committee only a few weeks ago. In that Committee discussion, we had a full debate on its forecasts. It found that the long-term infrastructure and capital spending in the Budget, which is made possible by the different tax announcements the Government have set out, means that the economy will, in the long run, be 1.5% larger. I would add that the forecasts in the OBR’s assessment of the Budget have not yet taken into account all the various details of the measures that will be announced in the forthcoming months. I expect those forecasts to improve.
To return to the bill that the Government are now paying, we need to build back our economy and public services. That task requires at least a decade of national renewal. That is why in the Budget we set out credible long-term funding commitments and plans for where the money comes from.
On small businesses, I recently spent Small Business Saturday out and about visiting local employers across my constituency of Earley and Woodley. I agree very much that those small businesses are the backbone of our local economy; they bring character and jobs to our high streets. One such shop I visited is called UnderTwoK, a shopfront on Wokingham Road. I asked the owner, Mark, what the Government could do to help small businesses like his. He said:
“keep going with the focus on economic stability and clean energy. That’ll bring more people our way.”
Small businesses know that the Government are on their side. They know that, because the Chancellor increased the employment allowance from £5,000 to £10,500, ensuring that the rise in employers’ national insurance contributions will not hit the smallest businesses. Those employing four members of staff on the minimum wage will not be hit by the measure. That means that 865,000 employers will not pay any NICs at all next year and over 1 million will pay the same or less than they did previously. The changes have been very much welcomed by the Federation of Small Businesses.
The top concern I heard about from those retail businesses is not about NICs, but about shoplifting and crime on our high streets, which all too often goes unpunished. The funds raised in the Budget allow us to employ over 13,000 additional neighbourhood police officers, police community support officers and special constables by 2029. They will also fund 1,200 new police officers. Introducing the specific offence of assaulting a shop worker and attaching prison time to that offence is backed up by the commitment to put £2.3 billion towards prison builds over the next two years. That is an example of how we are helping small businesses: not just by talking the talk, but by walking the walk fiscally.
Yuan Yang
I have taken two interventions, which was the number I set for myself, and we do like sticking to numbers on the Government Benches.
I am proud that the Labour Government are asking the wealthiest individuals and largest businesses to pay a little more, so we can rebuild the foundations of our broken economy. That means: more money into the NHS, with £25 billion in NHS funding over the next two years, which is sorely needed in my constituency and across the country; and £7 billion for education in the next financial year, including £1 billion for SEND. Those are the kinds of decisions that would not be possible under the March 2024 forecast. Opposition Members may look at the OBR assessment of that forecast if they are in any doubt about that. Those decisions would not be possible if the Government were not taking important and serious decisions. That is why I stand, very happily, to support the Budget that we set out.
Aphra Brandreth (Chester South and Eddisbury) (Con)
Let me begin by drawing attention to my entry in the Register of Members’ Financial Interests.
I support the amendment tabled by my hon. Friend the Member for Grantham and Bourne (Gareth Davies). Increasing employers’ national insurance contributions will be hugely detrimental not only to businesses, but to employees in my constituency. I have been contacted by many local businesses which have expressed disappointment about the Chancellor’s breaking of her manifesto promise not to raise national insurance contributions, anger that it has been done without a full realisation of the consequences for the wider economy, and fear that they may not be able to weather the impact of this decision. I want to take a few moments to share with the Committee some examples of organisations in my constituency that have reached out to me to explain why these amendments are so necessary.
Bradley Barns is a family-run nursery school in Malpas which provides full day care and early years education for nearly 80 families from the local community and surrounding areas. Access to quality childcare provision is vital for the many parents and carers who need to balance jobs with family life. Of course, Bradley Barns hugely values all its employees, and is keen to be the best employer it can be. It currently employs 24 staff whose skills, time and care are vital to children during their formative years. However, while the impact of the Bill might force some businesses to lose staff, in the nursery sector, where the child-to-staff ratio is so critical—indeed, it is a legal requirement—Bradley Barns cannot do that, and nor would it want to. Matt and Vicky, who run Bradley Barns, tell me that as a direct result of this policy, they will now need to find an additional £2,600 every year for each person whom they employ.
The Government made clear in their manifesto that they would not tax working people, so who exactly does the Chancellor think will be paying for her decision? It will be working people in Chester South and Eddisbury and across the country, and at many nursery schools like Bradley Barns they will be left with no option but to increase fees. For some families, the increase will not be affordable: that is the harsh reality of the Government’s choice.
I also want to highlight, as others have, the impact on the many hospices that provide vital support and care for people at the most vulnerable time in their lives. I recently visited St Luke’s Hospice and the Hospice of the Good Shepherd, two of the wonderful hospices caring for individuals and families throughout my constituency, and met their leaders and staff. We know about the funding challenges that such hospices already face. They rely on the good will and generosity of so many people who donate. This ill thought-through Bill will add substantially to their costs, and none of us wants to see them forced to cut services or reduce the level of care that they provide. I sincerely hope that hospices, and the people for whom they care so brilliantly, do not pay the price of this policy, and that the compromise suggested by my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) is considered.
So many business have contacted me to share their concerns about the detrimental impact of this decision. It will be felt by community pharmacies, by GPs who may be forced to compromise on the care they provide for their patients because they are not eligible for employment allowance, by care providers and by nurseries.
Mr Adnan Hussain (Blackburn) (Ind)
The hon. Member has mentioned GPs. Blackburn has one of the highest numbers of patients per GP in the UK. Not enough appointments are available, which places a huge strain on the Royal Blackburn Teaching Hospital, and only last week the hospital was put on red alert. Does the hon. Member agree that increasing national insurance contributions will mean fewer GP appointments in Blackburn, that the hospital—which is already in a dire state—will be in an even worse position, and that the situation will get out of control?
Aphra Brandreth
That is an important point. These are the unintended consequences that must be considered, and this is why we really must consider the amendment. The impact of the Bill will be felt throughout the economy: it poses the risk of higher inflation, and it will mean fewer employment opportunities. This decision affects businesses both small and large, it affects our local and national economy, and it affects employees who will not enjoy a pay rise or, worse still, will potentially lose their jobs.
Daisy Cooper
Part-time workers, especially in the hospitality sector, will be very badly affected. Before these changes a person could work 14 hours a week without incurring employers’ national insurance contributions, but that has now been reduced to eight hours, which will be very disruptive to weekend shifts in particular. Does the hon. Lady agree that that is an especially negative consequence of the changes?
Aphra Brandreth
That is another important point, about yet another group who will be badly impacted by these ill thought-through changes. I urge the Government to think again, and to back these very necessary amendments.
Chris Curtis (Milton Keynes North) (Lab)
I support the measures in the Budget. Given the speech that we heard from the shadow Minister, before we get into the policy I want to pause and acknowledge the extraordinary contribution of small businesses in my constituency and throughout the country. Every single day, countless individuals take on the challenge of building and running these vital organisations. The task is not always easy, but it is a labour of love, involving long hours, personal sacrifice and financial risk. These businesses are the heartbeat of our communities and the backbone of the British economy, and we all owe them our deepest gratitude. I have had the privilege of working for small businesses and witnessing at first hand the dedication that it takes. Members of my family have run small businesses, so I know how personal it is. It is not just a job; it is a way of life, and a commitment to local community. We must celebrate and support the work of those businesses at every turn.
Since becoming an MP, I have made it a priority to listen to small business owners. Their stories, their challenges and their hopes drive, and will continue to drive, my work in this Chamber, and let make it clear that this Government stand firmly behind them and will continue to do so. That is why I am proud that the Chancellor has agreed to raise the employment allowance to £10,500, a move that ensures that the smallest half of businesses will see either no increase or a reduction in their national insurance bills. It is a lifeline for the businesses that need it the most—and let us dispel the myths we have heard from Opposition Members: 75% of the funds raised from this policy will come from the largest 2% of businesses. But my plea to every single member of the Government is this: please keep engaging and listening to small businesses, because they continue to need our support.
I am sorry, but I will not take any lessons from the Conservatives on supporting small businesses when they have spent 14 years making their lives miserable. When their Government came to power I was working in the kitchen of a small business, the Dolphin pub in Newport Pagnell High Street; admittedly there was a bit of nepotism there, as my uncle Trev was the landlord. Back then the high street was alive, but today it tells a very different story. Many buildings are shuttered, pubs have closed, and a number of our small businesses have been lost. Under the last Tory Government, 10 pubs closed every single week—including, I have just read, many in the shadow Minister’s constituency. In 2022 alone, 345,000 small businesses shut their doors. Members can walk up and down any high street in the country today and observe the toll. This Government are determined to turn the tide.
Too many shelves are empty after being raided by out-of-control shoplifters. The revenue raised through the national insurance changes means that the country can afford our manifesto commitment to 13,000 more police officers and staff who can crack down on the shoplifters who are affecting many small businesses—and, as an aside, we will reverse the outrageous Conservative decision not to pursue shoplifters for thefts of goods worth less than £200. Too many businesses, including some that survived world wars and a global pandemic, were put at risk by the spiralling costs and interest rates caused by the Liz Truss mini-Budget. The revenue raised from this Budget will close down the £22 billion pound black hole that the Conservatives left to us, so we will not see a repeat of those disastrous events.
Too many small companies saw their energy bills skyrocket because of the disastrous energy policies of the last Government. We are setting up Great British Energy, a publicly owned energy company that will invest in clean energy here in the UK and end our reliance on foreign oil and gas.
Too many small businesses are being crippled by staff shortages, often because workers are stuck on NHS waiting lists for months. Because of the NICs changes, we can afford to put a record amount of investment into our NHS to get those waiting lists down.
Daisy Cooper
Does the hon. Member agree that because the previous Government gutted public health and primary care, there is now a crisis in the NHS? Although it is right that the Government want to move care away from hospitals and back into the community, does he understand the concern of some of us on this side of the House that the move to increase national insurance contributions on GPs, dentists and pharmacists will actually undermine that drive?
Chris Curtis
I thank the hon. Lady for her contribution. I refer her back to the comments made by my hon. Friend the Member for Earley and Woodley (Yuan Yang). Our tax system has got even more complicated, particularly after the last 14 years, and we do not want to see the level of complexity, which costs businesses and organisations, continue to spiral out of control. It is important that we make these changes in a simple way, but extra money is going into our NHS and will be flowing through the system. At the moment, the Department of Health and Social Care is looking at how to make sure that the extra funding is spent as effectively and efficiently as possible. I look forward to hearing soon from the Health Secretary about how that money will benefit all elements of our national health service, but I do not think that that is a reason to add extra complexity to an already complex tax system.
We do not want to raise taxes, and I appreciate that decisions like this are never easy—[Interruption.] The Conservatives laugh, but they raised taxes to record levels, broke our public services and left us with a £22.6 billion black hole. The reality is that they left us with no choice. Our goal is to lay the foundations for a thriving, resilient economy, where businesses can grow, communities can prosper and future generations can thrive.
What we have heard from the Opposition today is a repeat of what got us into this mess time and again. Liz Truss promised unfunded tax cuts and crashed the economy. The last Tory leader promised unfunded tax cuts and left a £22 billion black hole. The Tory party is promising unfunded tax cuts again, and will not say where the money is going to come from. That is what got us into this mess, and it is ludicrous to think that it will get us out of it. However, the mess that the Conservatives got this country into is about more than basic arithmetic; it was a complete failure to achieve any economic growth.
If growth in the UK had simply matched the OECD average, workers would have £5,000 more in their pay packets and the Treasury would have £50 billion more in tax revenues, without having to raise a single penny in tax. Just imagine how much better families would feel with that money in their pockets. We would not need to raise any taxes today if we had the extra tax revenue that was stolen from us by the Conservatives’ failure. Instead, they trapped us in a cycle of low growth, low productivity and low investment. That is the grim legacy of a Government who failed to create conditions for businesses to thrive. From a chaotic planning system to a revolving door of four Chancellors in five years, they have sown uncertainty at every single turn. Let us not forget the economic self-harm of Brexit, which was executed without a clear plan.
The Budget, including the NICs changes—
Dr Luke Evans
On a point of order, Ms Nokes. We are debating the National Insurance Contributions (Secondary Class 1 Contributions) Bill, in which I am not sure that Brexit is mentioned. I look to your leadership to decide whether the hon. Gentleman is in order.
The Second Deputy Chairman
I thank the hon. Member for his point of order. He will be aware that it is important that Members stay in order. The hon. Member for Milton Keynes North (Chris Curtis) has given some context in his speech, but he might be reminded of the need to stick to national insurance contributions.
Chris Curtis
Thank you, Ms Nokes. I am happy to count the number of times I have mentioned national insurance in my speech, but I can guarantee Conservative Members that it has been quite frequent. I will mention it again in the following sentence.
The Budget, including the NICs changes, makes hard decisions to fix the foundations of our economy. We will work tirelessly to bring about the economic growth that the previous Government failed to achieve, so that we do not have to make such hard decisions in the future. It is only by doing so and not engaging in the fantasy economics of the Conservative party that we can break free from the cycle of failure, support businesses of all sizes and create a brighter future for our country.
Sorcha Eastwood (Lagan Valley) (Alliance)
I am proud to have tabled several amendments to the Bill to support people in Northern Ireland and, indeed, the organisations that lobbied me to do so. Amendments 10, 11 and 12 seek to protect Northern Ireland’s healthcare, social care, childcare, hospices, and community and voluntary sectors from the impacts of the proposed rise in employer’s national insurance contributions. Those sectors provide vital services in Lagan Valley and right across Northern Ireland, yet they are being asked to bear a disproportionate burden without the ability to mitigate the costs.
Let me begin by recognising the importance of sustainable funding for public services. My party welcomed many aspects of the Chancellor’s inaugural Budget, including changes to fiscal rules, NHS investment, and the unpausing of city and growth deals. However, we are deeply concerned about the consequences of the national insurance increase for critical sectors in Northern Ireland that are already operating under immense financial strain.
During the last five years, community and voluntary groups have played a critical role, from supporting our communities during the covid-19 pandemic to responding to the ongoing cost of living crisis. However, despite their vital contributions, they are once again treated as peripheral when it comes to matters of funding and taxation. In Northern Ireland, our higher public sector dependency and chronic underfunding mean that such groups in our region are uniquely vulnerable to the rise in NI. Indeed, the recent Executive monitoring round in October made it clear that the Barnett consequential remains inadequate to cover departmental overcommitments.
Community and voluntary organisations are not an optional extra. They are currently a cornerstone of public service delivery, often co-designing and implementing essential programmes in partnership with Government. However, when financial pressures mount, they are frequently left to shoulder an unfair burden. The national insurance hike risks further entrenching that inequity. Such organisations should not be regarded as expendable. They must be exempt from the increase, which is precisely what my amendments seek to achieve.
Northern Ireland’s hospices are overwhelmingly reliant on private donations, and Members from across the House have referred to the Westminster Hall debate that we had only a few weeks ago. Regardless of their opinion on the subject, everyone recognised the importance of hospices, yet the proposed NI rise will see some of their doors close. That is the reality of what we are facing today. As for trying to get a GP appointment, good luck—not just in Lagan Valley and Northern Ireland, but right across the UK—as general practice is struggling to meet the many demands that are put on it.
Today I want to highlight the unique circumstances that we in Northern Ireland face. The challenges are not abstract; they are real, tangible and deeply felt by my constituents. It should come as no surprise to Members present that Northern Ireland’s health waiting lists are some of the longest in Europe, and far exceed those in the rest of the UK. Despite being the bedrock of our healthcare system and being under immense financial strain in Northern Ireland, providers such as GPs, dentists and pharmacists are currently not exempt from the rise in NI, even though they are already struggling under immense cost pressures. Capacity reductions in primary care are simply not an option for Northern Ireland. Dental practices, particularly those providing NHS services, which are in high demand, have seen operating costs surge by 30% to 40% since 2019.
With Department of Health funding failing to keep pace, many practices are unable to provide affordable care to patients. Indeed, anecdotal and evidential data shows that, in some areas of deprivation, young children are presenting with extreme tooth issues and have nowhere to go. In a joint statement earlier this month, Community Pharmacy NI, the British Medical Association NI, the British Dental Association NI and Optometry NI said:
“Medical, pharmacy, dental and optometry providers are the front door to the health service for families across Northern Ireland and vital for the transformation of care here. Yet these services are under extreme financial pressure, resulting in the closure of general practices.”
Indeed, the hon. Member for South Antrim (Robin Swann) mentioned that many GPs are being forced to hand back contracts. The statement continues:
“Without adequate protection from these UK Government policy changes, the precarious position of Family Practitioner Services in Northern Ireland will deteriorate further. It is now an urgent imperative for the UK Government to protect primary care or risk the collapse of these vital services in communities across Northern Ireland.”
I turn to the voluntary and community sectors. The voluntary sector employs over 55,000 staff in Northern Ireland and delivers essential services, often on behalf of Government. New research from the Northern Ireland Council for Voluntary Action has revealed the devastating impact this NIC increase will have on the sector. A recent NICVA survey of 68 organisations found that 76% expect major financial impacts, with additional costs of between £5,000 and £200,000 annually. One social care provider anticipates annual increases of up to £500,000. Many organisations predict inevitable redundancies, particularly in core administrative roles.
Dr Jeevun Sandher (Loughborough) (Lab)
This Labour Government will invest to rebuild our broken nation. Investment in our future will be paid for by tax revenue, and today we are debating the largest revenue-raising policy in our Budget. I am proud that revenue will be raised from the largest businesses to fund the homes, jobs and skills that we need to create a good, affordable life for us all. For those of us in our nation who cannot afford a decent life, the picture has become increasingly bleak: non-graduates and the young are locked out of the opportunities that previous generations had, and there are not enough homes, good jobs or skills.
We are raising the money for investment in homes, jobs and skills from those who are most able to afford it. We are raising £23 billion—investment that every business, family and young person will benefit from—and 75% of the revenue is from the largest 2% of businesses. We are raising that money while protecting the smallest businesses by increasing the employment allowance; the Federation of Small Businesses has said that that is a huge help as we bring in this revenue raiser. Half of all businesses will pay the same or less, and a quarter of a million will see their tax bill fall.
Graham Stuart
The hon. Gentleman is most gracious for giving way. He is also a highly distinguished economist. He has talked about this record tax-raising element. What will the net value of the £23 billion or £26 billion be, after we have looked at behaviour change, reduction in corporation tax receipts and compensation of the public sector? How much of that will come into the Government coffers?
Dr Sandher
I thank the right hon. Member for his incredibly kind words. For me, this is actually rather simple. I follow the Office for Budget Responsibility forecast, which goes through the Treasury policy costing and gets signed off. Those are the numbers I look at, and that is the money that will come in.
We are raising the money, as set out in those forecasts, in a fair way to invest in our future prosperity. We are using that money to build the homes that we need. In the mid-1990s, it took a young person around three years to save for a deposit. Now it is over 14 years, and in London it is nearly 30. That is why nearly half of young people are living at home with their parents, and why we are investing the tax revenue from the measures that we are discussing in the affordable homes programme. That means more homes for young people.
We are also using this money to create good jobs. The idea that someone could leave school and get a decent wage left our nation long ago. There are low-paid and insecure service jobs for some, but many are unable to get a job at all. Today, around 15% of young people are not in education, employment or training. Our warm homes plan, which will upgrade 300,000 homes, will also create tens of thousands of good jobs.
Sammy Wilson (East Antrim) (DUP)
Analysis shows that this measure will hit the low paid and the young hardest. It will not help young people to get all the things that the hon. Gentleman describes, because they are the group who will find things most difficult as a result of it.
Dr Sandher
The young and the lowest paid work in the smallest businesses. Some analysis, including that from the Institute for Fiscal Studies, does not include these measures, and does not have matched employer-employee datasets. Indeed, Paul Johnson admitted as much when he came before the Treasury Committee.
Dr Luke Evans
I am grateful to my fellow Leicestershire MP for giving way. One of the ways that we can judge the market is by looking at vacancies. James Reed, who runs the Reed recruitment agency, has seen a 13% drop in advertisements on the company’s website. He has sounded the alarm that that could be a sign of recession, and that is the implication of what we are voting on today. How will the measure support young people if there are no jobs out there for them?
Dr Sandher
I direct the hon. Gentleman to today’s labour market statistics. Employment is still high; unemployment is about the same as it was; and I think inactivity is falling. In the official statistics, the picture looks good.
More broadly, vacancies are not the measure that we want to look at. Instead, we want to look at the number of people in jobs. The revenue that we are raising today will be invested in actions that directly create those good jobs. The warm homes plan will upgrade 300,000 homes, which is tens of thousands of good jobs. The expansion of early years childcare is tens of thousands of good jobs. Businesses need to know that they have the healthy workforce that they need, and more people who are available to work. This is a Budget for growth and for jobs.
Dave Doogan
The hon. Gentleman talks about the expansion of early years childcare, but that will not be of much use if nurseries shut down because they cannot pay their national insurance. Does he understand that dynamic?
Dr Sandher
I absolutely understand the benefits of early years childcare, which is why we are so proud that it is a key part of this Government’s opportunity mission and is one of our milestones. We know that money invested today will pay dividends in the future. Labour Members we are absolutely committed to expanding and investing in early years childcare.
More broadly, this measure is also about investing in our young people. One in three young people is experiencing mental health problems, and one in 20 is too sick to work. That number is only rising. There has been a threefold increase in health problems that make it too difficult to do day-to-day activities. This generation of mine is without hope and without health. For those who have been struck down by hopelessness, and who are now too sick to work, our “Get Britain Working” programme, combining health, skills and employment support, is rebuilding confidence. It is helping people into good jobs, and is restoring dignity, purpose and sense of community to every person and place in our nation.
This Bill speaks to our governing philosophy, which is that those with the broadest shoulders should carry the heaviest load. As we have seen, we are changing our nation and rebuilding hope in our communities, our country, and indeed our democracy. We are building a country that gets better, rather than worse; where every person can get a good job; where every person can afford a decent home; and where every person can get the skills that they need, so that we can all live once again in a country where working hard means a decent life. That is what we are investing in, and that is why we are proud to raise revenue through the measure that we are debating today.
Blake Stephenson (Mid Bedfordshire) (Con)
I rise to support the amendments and new clause 1 in the name of my hon. Friend the Member for Grantham and Bourne (Gareth Davies). If this Government’s goal was to fix the foundations, I am afraid the result has been subsidence. Business confidence has plummeted, and two thirds of firms think that Labour’s Budget, including the NI increase, will damage investment.
An economy grows on the back of hard-working people investing, taking risks and employing local people in constituencies like mine of Mid Bedfordshire. How does the Labour party reward those people for their hard work? It raises their taxes, it makes it harder for them to employ people, and it reduces the amount they take home at the end of the month. It justifies that by telling them that they are not really working people.
Conservatives understand that growth is created from the hard work of entrepreneurs up and down our country, driving our economy forward. Across the country, millions of people want stronger economic growth. That is what they voted for, but they now have a low-growth, high-tax, job-cutting Labour Government. They were promised change, but they did not expect that change to be to Labour’s manifesto commitment not to increase national insurance. That change hikes the cost of employing someone by £800, reduces the number of jobs in the economy, reduces the wages of working people and increases prices in shops.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
It is extraordinary to follow Opposition Members, with their short-sightedness and, frankly, short memory of the damage they have done to this country. Indeed, it is the very definition of chutzpah. I have been in this place for 14 years, and I watched what happened unfold in my constituency and across the country. That is how we got to this Bill today. New MPs may wish to rewrite history, but many of us can give testimony to the damage the Conservatives did.
This country should be grateful that we now have a Chancellor who is facing up to the fantasy public finances that we inherited from the previous Government, and who is trying to rebuild this nation. We finally have a framework for improving our rail services. Anybody thinking about getting on a train this Christmas knows how far we have to go. The damage lies at the door of the previous Conservative Government.
This Government are devolving meaningful powers to local government and generating clean electricity, which are just two things that the previous Government could not even understand, let alone get a grip of. We are certainly developing a better approach to our infrastructure.
In their final years in office, the Conservatives passed tax cuts that the country could not afford. There may have been genuine shocks around the world, but we can see the damage the Conservatives did, and we can see that they chose to compound it with bad choices. They did not just break Britain; they slashed it and burned it to the ground. That means this Government’s first year in office is a salvage operation. The previous Government’s decision to prioritise fake tax cuts over sustained investment in our public infrastructure has cost us all dearly.
Those who are sceptical of what I am saying should stand in an A&E and see the trolleys in the corridors, as 7.9 million people still wait for operations. They should talk to the schools with reinforced autoclaved aerated concrete, to the councils barely clinging on to provide social care, and to the police who just do not exist on our streets.
Graham Stuart
As the hon. Lady knows, 4 million jobs were created under the last Conservative Government. She has just talked movingly about patients stuck on trolleys in corridors. Could she explain to the Committee how the Labour Government’s policies in England will differ from the policies of the Labour Government in Wales, which has far worse outcomes and worse waiting lists than anywhere in England.
Ms Creasy
I will tell the right hon. Gentleman what this Government are going to do differently: they will make a difference to all our constituents by getting waiting lists down with the money provided to invest in our NHS. The previous Government were all vandals, and we have seen the damage they have done.
The challenge before us in the Bill is to ensure this Government do not make the same mistakes, but instead address head-on the need to build the necessary foundations. To deal with the expectations of the public—our constituents—we need to talk more openly about the fact that having better services requires better funding through taxation. The broken Britain we now see will not fix itself with a bit of time. Worse, the public cannot be distracted from the problems they see by being given someone else to blame—trans people, refugees, immigrants, women or foreigners generally. That is a fantasy the British public did not buy at the last election, and they should not be promised it again. They know we have a difficult road ahead and difficult choices to make, but they will back those choices if they can see there is a reason to do so.
Above all, the British public understand that this country needs investment and growth. I am chair of the Labour Movement for Europe and I think there needs to be discussion about our future relationship with Europe, but that is for another time. We also need infrastructure, which is why I have proposed new clause 4. Infrastructure is not just about roads and rail, but about the services people need every day to be able to get to work and to manage their commitments, including childcare.
As somebody who spent 14 years urging the previous Government to invest in childcare, I will brook no lectures from the Opposition now they have had a damascene conversion to the idea that it matters. Childcare is economic infrastructure. [Interruption.] The right hon. Member for Beverley and Holderness (Graham Stuart) is chuntering from a sedentary position, but time and again he voted against proposals to make childcare a matter of economic infrastructure.
New clause 4 is about how best we invest in our people to be able to grow our economy. As we make tough choices, it is important we do so in a way that means our productivity improves, which means looking out for parents as well as potholes. We are in the middle of the biggest expansion of childcare this country has ever seen, to try to get to a point where every parent can access 30 hours of free childcare for all under-fives. Under the last Government, some parents were paying more for childcare than for their rent or their mortgage. The previous Government repeatedly failed to invest, and then they made promises that they knew they could never keep, pushing up demand without increasing supply. We must not make the same mistakes.
It is vital for our economy to make childcare more accessible and affordable, and we know we have a way to go. In rural areas, there are 31% fewer childcare places compared with inner cities and town centres. The most deprived communities have 32% fewer places per child, compared with affluent areas. Of the poorest fifth of parents with young children, only a third use formal childcare, compared with 73% of the highest earning households. The previous Government reinforced that inequality, rather than addressing it in their childcare policies. That is why in my constituency there are still three children chasing every single childcare place.
Dr Luke Evans
The hon. Lady has always been an advocate for childcare. One way the previous Government tried to address the issue was to try to stop the cliff edge for childcare by looking at households rather than individual parents. In the last Budget, the Government were looking at the proposal to consider households as one unit. Does that mean the hon. Lady has changed her mind and would support that mechanism being looked at again? It would solve a lot of the problems caused by, for example, a single parent having to pay for childcare because they are exempt, whereas a household containing a couple who earn under £45,000 are not eligible.
Ms Creasy
Let me reach the hand of co-operation across the House to the hon. Gentleman, if he wants to finally work on what would be a genuinely affordable and accessible childcare system in this country. However, I will temper his enthusiasm, because his party made things worse. Under the previous Government, there was a 50% reduction in childcare place. We saw nurseries closing time and again because of the changes his Government made. We are starting from a foundation where the places simply do not exist. For the places that are there, too often it is those who can well afford childcare who are taking them.
If we are to get to a position where we have the childcare places we need, so that every child can get the best start in life in this country, we need to invest. We need to ensure that we save what is there and encourage those nurseries that can expand to do so. If we do that, we will reap the rewards, both in the Exchequer and in society. That is why early years provision matters to the future of this country.
Research by the Education Policy Institute shows that 40% of the disadvantage gap at the age of 16 has already emerged by the age of five. Equally, investment in early years means we could save £16 billion a year later, according to the London School of Economics. It also means we will get more money, because more people—mothers, fathers and carers—can make the choice to work and pay tax.
Daisy Cooper
The hon. Lady is making a compelling case about the need to invest to save. When we invest upstream in our public services, that often saves money for the taxpayer further down the line. Does she agree with the Liberal Democrats that that could be equally applied to investing in GPs, dentists and pharmacists to relieve pressure on the NHS?
Ms Creasy
I have worked with the hon. Lady on various issues, and I hope she will give me the latitude to expand my argument and set out my proposals, which we could move forward on together as a House. I do not doubt her sincerity, but I also recognise the fiscal destruction of the previous Government that we need to deal with, which means we need to tell the British public the truth about what needs to happen. Making unfunded promises is as bad as not promising to act.
Parent surveys show that a real difference is made when 30 hours of childcare is offered. That amount of childcare enables families to make choices about getting back into work. If we want to get to 30 hours by September next year, we need 60,000 additional childcare places and 29,000 extra members of staff. If we do not have fundamental root and branch reform of how we fund the provision of childcare, that will cost about £72 million extra a year on hiring staff alone. That is the challenge we face if we want to get this right.
I know how hard the Minister is working to get the economy growing again. I know he is going to hear pleas from every single sector about the impact of the national insurance changes; nobody should be under any illusion that they are not difficult changes. I make a plea for the childcare sector because I believe that in the end, it will pay for itself. If we are able to get more people back to work, especially mums, who all too often end up bearing the burden of childcare, we will be able to raise more taxes and there will be more investment as a result.
That is particularly true of the childcare sector because it is a people-intensive industry. Staffing costs make up 75% of a nursery’s running costs, compared with 30% for the average restaurant. Because the previous Government systemically failed to invest in childcare, the majority of childcare has been provided by the private sector. Some 85% of places are delivered outside the state sector. There is little flexibility on numbers in the sector, because ratios—the number of people looking after little people—matter. These are not businesses with small numbers of staff; an average nursery has 14 members of staff, which means the additional costs will be about £36,000 to £39,000 a year. Around £14,000 of that will be national insurance.
Many Members agree that we need to invest in that childcare and will be pleased to see this Government trying to address the balance. The damage done under the previous Government meant that 83% of nursery providers said the funding they received did not cover their costs. That is why closures increased by 50% in the last couple of years. This Government have already increased the funding for our nurseries, but while that takes account of increases in wages costs, it does not take account of the increases in national insurance.
I tabled new clause 4, which is about having a review of one element of all that, to ensure that we do not cut off our nose to spite our face when trying to get more people into work. We recognise that extra national insurance costs may have consequences, be they recruitment freezes, reduced staff training or even closures, at a time when we want the sector to expand. Indeed, the majority of nurseries have staff vacancies, so they need extra people already.
Dave Doogan
The hon. Lady is making a compelling case of logic as it applies to early years provision, and I do not think anybody in this place could argue with the logic she advances. Is it not so robust, however, that it also applies to primary care, hospices and charities, if it applies to nurseries?
Ms Creasy
I hope the hon. Gentleman recognises that I am talking about a specific function of the way in which the childcare sector operates and the fact that it generates public Exchequer funding when we get people back into work. My argument here is that we invest to save. This is specifically about childcare. I am sure the hon. Member has read new clause 4 in depth, by the look on his face.
Ms Creasy
He will therefore understand why I suggest that we as a Parliament could look at how we address those issues. Right now, the sector is concerned. I do not think that is a surprise to anyone. It may be a damascene conversion for the Conservative party to suddenly care about it, but there is a concern across the sector about not going backwards.
Clause 3 will increase the employment allowance from £5,000 to £10,500 and will reduce the current £100,000 threshold. It might be perceived that for some small businesses, particularly in the childcare sector, that would be a potential way forward in reducing some of the impact of the changes so those businesses can continue to expand. However, the challenge is right now, with the majority of childcare providers not qualifying for the employment allowance because of the way in which the sector operates and because it has been ignored, dismissed and derided by previous Governments. The majority of positions are produced in the private sector. That means they do not qualify.
There is perhaps an unintended irony in all that, however, which is that investing in more childcare, as we are doing, means that many of those small businesses will not be eligible for the employment allowance. As it is about companies that receive less than 50% of their income from public funding, while many childcare providers were originally in that position before money started going into them, the irony is that many fewer will be in that position in the coming years as a result, meaning that they will be denied the opportunity.
Childcare provision in educational settings will be able to benefit, so it is not a total denial. That means that if we are looking to expand childcare, in the current environment and without looking at how we can make that an equal opportunity for all childcare providers, that will have to be done through the state sector, which means having to find nurseries that can be provided in spare classrooms or childcare settings within an educational setting. That accounts for a small amount of the structures in place at the moment, and there is a risk that we will not see the investment in expansion because expansion in previous times has come through the private sector.
My concern, if I am frank, is that this is a perfect storm of our own making. With the best intentions of investing money from the Budget in childcare, we may inadvertently make it harder to expand childcare. That is why we need a review, because it is not clearcut that that will be the outcome, which is why I have tabled new clause 4. I also urge Ministers to look at business rates, which currently add around £21,000 to the average nursery. We found support in the Budget for those in retail and hospitality. We could look again at the childcare sector on the same basis.
Above all, we need to raise those questions and ask how we can ensure that we do not see a curtailment of childcare in this country, because the reality is that fees will then go up, making it even harder for parents to use it. That is what the Pregnant Then Screwed surveys are showing us: 90% of parents who have a place are terrified that costs will go up in the coming year, and 60% say that if that happened they would reduce their hours or leave work altogether.
This is a tough time, this is a tough Budget, and there are tough decisions to be made. We are not shying away from that and I am proud to be a member of a political party in government that is getting a grip of this country’s needs. However, I am also determined, as I am sure is everybody on the Back Benches, to make sure that we do that in the best way possible. If the Minister will not accept new clause 4, I hope he can tell us what work the Treasury is doing to ensure that childcare as a form of economic infrastructure can grow and support this country as it recovers from the last 14 years of Conservative Government.
We know that all those who will be affected—in the choice to work, to stay in work and to stay open and run a nursery—are literally the ones who have been paying the price of having a Conservative Government. We do not wish to make them pay all over again. The Conservatives broke Britain. We now need to be honest about the work and the investment that it will take to repair it.
Helen Maguire (Epsom and Ewell) (LD)
I am greatly concerned about the consequences of this Bill. There are consequences for businesses, for employees and for essential primary care providers in my constituency and across the country. The Bill represents an unfair jobs tax that risks harming the livelihoods of countless individuals and the viability of small businesses at a time when they are already grappling with a multitude of challenges.
I wish to begin by highlighting the impact that this legislation will have on community pharmacies, which are at the frontline of healthcare in our local areas. The owner of Horton Pharmacy and Travel Clinic in Epsom has expressed grave concerns about the financial burden that this increase in employer national insurance contributions will impose. He told me:
“We are estimating that it’s going to cost an extra £12,000 a year. It’s very distressing and making it harder to keep our doors open and help reduce the burden on other parts of the NHS.”
Community pharmacies such as Horton Pharmacy play a critical role in alleviating pressure on our overstretched NHS by providing accessible healthcare and advice, yet the Bill threatens their financial viability, which in turn risks leaving constituents without the local care they rely on, thus increasing the burden on the NHS.
Dr Luke Evans
Is the hon. Lady aware that the National Pharmacy Association has agreed to collective action for the first time in its history, directly as a result of this Government’s Budget? Does she have any comment on that?
Helen Maguire
Yes, I am aware of that and I agree that it is a good way forward.
Another business in my constituency, the Family Building Society, is also facing substantial repercussions. Last Friday I met its chief executive officer, Mark Bogard, who shared that this national insurance increase will cost him approximately £300,000 every year. He said:
“Even as a mutual building society, with no shareholders to generate returns for, we cannot simply swallow that cost. So, going forward, we will inevitably now employ five or six fewer people.”
Madam Chair, these are real-world examples of the damaging ripple effects of the Bill. It will hit not just businesses, but employees, with fewer jobs, lower wages and missed opportunities. This Government claim that they want to kickstart economic growth, but how can firms grow when they are forced to cut jobs instead of investing in their business. How can the economy thrive when ambition is replaced with survival? This Bill does not kickstart economic growth; it slams on the brakes.
Across the board, this Bill threatens sectors vital to our economy and to society. Social care providers, GPs and hospices, already at breaking point, will now face further financial strain. Most of these organisations do not qualify for the employment allowance, meaning that they are exposed to these increases.
The Liberal Democrats have called on the Government to exempt these essential providers from the tax rise, but those calls have been ignored. This decision will worsen the crises in our NHS and social care system, pushing more providers to the brink of bankruptcy.
Six in 10 care homes in the UK are operated by companies vulnerable to even mild economic shocks. How then can the Government justify imposing additional financial burdens on a sector already struggling to stay afloat? Let us be clear: the Government’s own analysis admits that nearly four times as many employers will lose out under this Bill as will benefit. For many employers, this will translate into an average annual tax increase of over £26,000. This is not just a jobs tax, but a growth tax, a productivity tax and, ultimately, an attack on people’s living standards.
This is a deeply inefficient way to raise funds, especially when fairer alternatives exist. The Liberal Democrats have proposed several measures that would raise revenue without harming jobs and growth. These include reversing Conservative tax cuts for big banks, increasing the digital services tax and introducing a fairer form of capital gains tax to ensure that ultra-wealthy people pay their fair share. These measures would protect small businesses, support families and safeguard essential services, while still addressing the country’s fiscal challenges.
The people of Epsom and Ewell deserve better. They deserve a Government who support, not stifle, innovation, enterprise and community spirit. They deserve a Government who listen to small businesses, healthcare providers and families who are already struggling under the weight of rising costs and stagnant wages. This Bill is not the solution to our economic challenges; it is a blunt instrument that will do more harm than good, jeopardising jobs, living standards and essential services. I urge the Government to reconsider this unfair and counterproductive measure and to work with us to develop a fairer, more sustainable approach to taxation that prioritises people and communities.
Gareth Snell
I wish to start by reflecting on something that the hon. Member for Grantham and Bourne (Gareth Davies) said in his opening speech. He talked about socialists thinking that taxes just flow in. Given that he was a member of a Government that raised taxes to their highest level in history, perhaps this season it is less secret Santa for him, and more secret socialist. Perhaps, if he is lucky, under his Christmas tree on 25 December he will find a red flag that he can fly. I jest, Madam Chair, but the point is that that Government agreed with tax and spend—they taxed; the trouble was what they chose to spend the money on.
That is the difference between this Government and the Government that came before: we have made clear commitments about what we will spend the money raised by this national insurance Bill on. We will make investments into the NHS and our public services, such as our schools and hospitals, and we will fix the railways. [Interruption.] The hon. Member for North Bedfordshire (Richard Fuller) chunters, but I cannot actually hear what he is saying. If he wishes to intervene, I will happily give way—no, I thought not.
The fact of the matter is that although this is not a decision that I would particularly have liked the new Government to make, having looked at the levers available to us and having made a political choice to protect the pay packets of individuals in work, this is a way of raising revenue.
Gareth Snell
I often think that we do not hear enough from the right hon. Gentleman, so on this one occasion I will give way.
Graham Stuart
Given the competition on the Labour Benches, the hon. Gentleman is one of the more honest and up-front Members in addressing some of the issues. Does he regret the exclusion of the various groups we have heard of today, from hospices to social care and childcare? Will he urge Ministers to look at whether they can create a more coherent and joined-up approach, so that the £22 billion—or whatever it is—going into the NHS actually works to improve the healthcare of the nation?
Gareth Snell
If the right hon. Gentleman hangs fire, he may be surprised by some of the things I will say as I try to progress my speech. Although, in that context, is it not laughable and ludicrous that some of the most important parts of our social care sector—our air ambulances and our hospices—are dependent upon charity; that they have to rattle tins in supermarkets, dependent on handouts and philanthropic grants on a non-reoccurring basis, just to continue the service they deliver? There is a much broader conversation that we have to have as a nation about how far general taxation should fund some of those programmes. The right hon. Gentleman rolls his eyes, but I would rather make a small contribution to ensure that hospices and air ambulances can run than to have to watch people sit in baths of beans to try to ensure that vulnerable people get the help and support they need when they need it. He may disagree with that, but we should discuss that broader point of how we fund some of those things and whether we consider them to be vital infrastructure to our health and care system.
Neil Duncan-Jordan (Poole) (Lab)
Does my hon. Friend accept that any fair taxation system should place the biggest burden on those with the broadest shoulders? That means taxing the wealthiest in this country, rather than hospices and the charitable sector.
Gareth Snell
Again, if my hon. Friend bears with me, I will get to that point, but I absolutely agree in principle that taxation in this country should fall on those most able to make that contribution. There is also a question about how we spend that money and use it in preventative services. Again, there is an argument to be had about how much of the money given to, for instance, the Staffordshire and Stoke-on-Trent integrated care board is spent on reactive services that treat people, as opposed to preventative services that keep people well in the first place. There is definitely a discussion to be had in our communities about whether the commissioning bodies that have the money are commissioning the preventative services necessary to reduce acute demand.
Last Friday I listened to the charities convened by Voluntary Action Stoke on Trent, and they themselves said that their biggest challenge before the national insurance increase was even mooted was the fact that they cannot get recurring funding year on year from health bodies, councils and the public sector. When they manage to get to the end of a project, they are told, “You’ve done that project. Come up with something new.” They are asked to redesign their service to chase a pot of money in order to deliver what essentially is the preventative service that stops the more acute services from facing greater demand. Again, we as a nation need to have a conversation—in part it is brought to a head by this Bill—about what role we see for charities in this and how we fund those services.
Daisy Cooper
For a long time we in this place have had debates about ensuring that the shift happens upstream in the sector, to support public health and primary care. Does the hon. Member accept that this measure will undermine the effort to put more investment upstream, and that it will force many charities to do even more fundraising to backfill the gap created by the national insurance contributions hike?
Gareth Snell
I absolutely agree. If the hon. Lady will bear with me, I will come to exactly that point later on.
My constituency is often in the top 50 for social and economic deprivation, and we are often wholly dependent on the charitable sector picking up people when they are at their lowest and most in need. Charities often do the really hard work in getting those individuals back to a place where they can even begin to access statutory support services, such are the demands placed on them by the services with which they are seeking to engage.
Let me take the example of supported housing. We talk quite rightly about giving people homes, but many of the people in Stoke-on-Trent who access the services that will be impacted by the national insurance contribution increases would not be able to live independently on their own in the months to come if it were not for supported housing. As the hon. Member for St Albans (Daisy Cooper) points out, that has a huge bearing on the acute cost at the presentation of final service.
Last Friday, Voluntary Action Stoke on Trent, an excellent organisation run by Lisa Healings and her team, convened a meeting of local charities and the three Members of Parliament for Stoke-on-Trent. Lisa helped me by compiling some of the specific impacts that the national insurance increase will have on charities and organisations in my community, and with the indulgence of the Committee, I will refer to some of them so that Members can hear the scale of the challenges that we face.
The first relates to the citizens advice bureau in Stoke-on-Trent, which does a phenomenal amount of work. It will see an increase of £150,000 to its national insurance contributions. Although it will be able to mitigate some of that impact, the change will just mean that people wait longer for help, or, perversely, that more people will enter MPs’ caseloads and visit our surgeries because the CAB often signposts to other agencies when it cannot meet demand.
The second largest impact I was told about is to the YMCA North Staffordshire, which will see its NI contributions rise by £101,000. That organisation routinely provides homes for young people who would ordinarily find themselves on the street, works with families to ensure that family units can stay together, supports community meal initiatives to bring together different Stoke-on-Trent communities, and does a lot of work on community cohesion, which is a particularly contentious issue in my city.
A smaller organisation, Savana, which I must declare is run by my ex-wife, although we are still on favourable terms—
Gareth Snell
No—I will give way in a second. Savana is the provider of the rape and sexual advice service in Stoke-on-Trent. It gets all its money from the Ministry of Justice; it is essentially running a Government service by virtue of contracts, yet it will now see an increase in its national insurance contributions of something between £16,500 and £17,000, which will reduce the number of people it can support with independent domestic violence advisers and independent sexual violence advocates. The other half of its money comes from the Home Office via the police and crime commissioner. Again, that is essentially public money providing a public service that just happens to be provided by a charity that is not covered by the rebate provided to other organisations.
Disability Solutions helps those who are entitled to additional support to access it. That charity brings millions of pounds a year into the city, which has a cumulative economic benefit, because the money brought in is spent on our high streets and in our local economy. The people it helps are not the wealthiest in my city; they quite often have very little in their pockets, and every penny that is given to them is spent in the local economy. They do not hoard it in a savings account, put it into the Cayman Islands or use it as a downpayment on a new car or furniture; they go out and buy food, shoes and school uniforms for their children, or they use it in one of the local entertainment venues.
North Staffs Mind faces an impact of £55,000. That organisation is specifically designed to help people with their mental health, which the Government have rightly identified as a huge inhibitor to economic growth, because if people cannot get their mental health sorted, they cannot get back into work. Another mental health organisation, Changes, wrote to me to say that these changes to national insurance would be unsustainable for them. Finally, the Dove Service is a bereavement counselling service that faces a cost of £2,000. All those organisations are filling a void in state provision in my city.
Simon Hoare (North Dorset) (Con)
In essence, the hon. Gentleman has described what we on the Conservative Benches would have called the big society some years ago. Does he share my concern, however, that that huge bank of volunteers who often prop up and form the supports for the organisations he has described are likely to drift away as their organisations come under pressure? Not only will there be a financial pressure, there will be a pressure on the resource of people who are volunteering, because they will just say, “If the Government are not prepared to help us this one little bit, why should we help?”
Gareth Snell
I actually do not agree with the hon. Gentleman’s assessment, because in my city of Stoke-on-Trent, when there is need, people arrive to offer help. It is one of the things that people often say; we are a friendly, welcoming people, and if someone is in need, we roll up our sleeves and get stuck in.
However, I agree that although dedicated volunteers are excellent, they are not a replacement for staff. In particular, they are not a replacement for the highly trained staff who provide very bespoke services, such as some of the ones I have mentioned. There are thousands of volunteers across Stoke-on-Trent, and I thank every single one of them for every moment of their time that they donate, but as the hon. Gentleman will know from his constituency, we sometimes talk about voluntary organisations as if they have no costs associated with staff, because they are entirely volunteer-run. I think everyone across this House would recognise that that is simply not the case; if it were not for the cadre of professionals who help co-ordinate those volunteers, things would fall apart.
Although I have set out the challenges faced in my city, I am not necessarily drawn to some of the proposed amendments that would set differential rates for charities or other organisations. That is not because I do not believe those organisations should not be protected from the national insurance increase that is coming, but if we are saying that they should have a differential rate, why should that rate not be zero? Why should we not just exempt them entirely? I am also not convinced that we would not see people seeking to reorganise their own businesses to try to claim charitable status and reduce their own liabilities. Fundamentally, I believe that paying tax is a patriotic duty—if someone should, then someone must.
There have been record levels of settlements for the NHS, and I accept the points that have been made about hospices and GPs. I sincerely hope that Staffordshire and Stoke-on-Trent ICB will make use of the better care fund, putting some additional money into that fund to pay for the social care that could help offset some of the national insurance increases that will make those jobs much more difficult. However, many of the organisations I have mentioned receive their operating budgets from Government, albeit passported through funds, a local council or another public body. They are essentially running Government services—they are running a public service on behalf of the Government. Is it not incumbent on us to make sure the services we ask them to provide are provided at the level we expect, and that we resource them efficiently? I would like to think that the difference between this Government and the previous one is that we value the work sufficiently that we will pay those organisations correctly and accordingly. If the Minister could address those points when he sums up, I would be most grateful.
Graham Stuart
It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Gareth Snell), who I am pleased to say honoured his words at the beginning of his speech, quite rightly. I think that is because he has been in this House for some time and knows the difference between legislative intent and legislative outcome. No one believes that the Minister on the Front Bench or other Ministers wilfully want to damage GPs and hospices —how could anyone reasonably want to do that? However, that is the effect of this Budget of broken promises overall, and of the particular measure on national insurance contributions that we are debating today.
No one has really explored where this measure came from, but the genesis of it was actually a desire, in the pre-election period, to reassure those with long memories who thought that Labour was not a party of growth. In trying to reassure the nation that Labour was on the side of business, it was saying, “Economic growth is mission No. 1, so if you are an entrepreneur, you can relax, because we are on your side.” The other big fear about Labour Governments over time is that they will come along and raise people’s taxes. Labour therefore came out with very specific pledges and oft-repeated promises again and again, saying that it would not raise an array of taxes, including of course national insurance contributions. That is why Paul Johnson, who is an independent commentator, said that he thought this measure was an absolutely clear breach of that pledge.
On coming into power, the Government said there was this £22 billion black hole, and Labour Members have mentioned it again today. I think the hon. Gentleman was notable in not doing so, because he knows there is no substance to it.
Graham Stuart
The hon. Gentleman can intervene to rectify that in a moment if he feels the need to do so for reasons of tribal loyalty. Again, the OBR said there was nothing in its calculations that supported or validated—I think the word used was that it did not “validate”—the so-called £22 billion black hole, but let me give way to him so that he can rectify that omission.
Gareth Snell
The phrase damned by faint praise springs to mind. To be clear, I think the analysis of the Treasury and the Chancellor of the state in which we found the public finances is absolutely accurate. I think the remedies we are taking, while unpalatable to some, are necessary. I just wish we were able to mitigate some of the worst aspects of them.
Graham Stuart
I thank the hon. Gentleman, and it is good of him to show that tribal loyalty. He did not criticise the OBR, but it said that it could not validate the so-called analysis. The £22 billion black hole does not exist, and it is quite clear from the OBR that that is true.
Let us, however, assume that the black hole is true: I think the Government are spending £1,270 billion this year, so let us assume that, in that £1,270 billion, this gargantuan black hole of £22 billion actually has veracity, while it does not. Having gone to the lengths of forcing even someone as up front and candid as the hon. Gentleman to feel obliged under tribal Labour rules to keep backing this measure, and having established the figure, one would think that the Government would want to come forward with a tax rise, if that is what they wanted to do all along. Alternatively, to give the Government credit, perhaps they came into office and found that things were much worse than was thought to be the case beforehand, in which case they would want to come up with a rational way of raising the funds with minimum possible damage.
I suggest it could be said to be a fib, but let us say there is a £22 billion black hole and they need to fill it. The Government should come forward with sensible tax plans. The Government have reneged on their pre-election promises, so why not renege on this one, and come forward with a sensible tax that does not particularly disincentivise those who are furthest from the jobs market? That is what the reduction in the NIC allowance to £5,000 does, and we know that it is particularly going to hurt people are struggling to get back into work, perhaps after a mental health episode, or perhaps because they are young and are struggling to get into the jobs market.
There may be worse taxes than the way this one will work out. I think £26 billion is the headline amount that will be raised and taken out the economy, but 76% of that in year 2 or 3—whichever it is—will come out of wages. By my rough arithmetic that means about £19 billion is going to come out of pay cheques, which is the very thing the Government were trying desperately to avoid doing. This measure will take £19 billion out of pay cheques, and because of the reduction in investment, the reduction in employment and the resulting reduction in profits, it will net only £16 billion.
Then the Government, having got that £16 billion, have decided to compensate the public sector, and we know about this because of the changes the OBR put out at the time of the election. It had to make a correction, because it had clearly been asked and told to allow another £800 million or £900 million for social care, recognising the issues that have been raised so powerfully by colleagues today. However, that was changed and removed, and it had to make an amendment to its response. By the time we have taken off the compensation as currently restricted to the public sector, which I think rises to about £5 billion, that takes the net receipts to £10 billion or £11 billion. That is a £26 billion hit to the economy, a reduction in investment, higher interest rates, lower growth, and £19 billion removed from working people’s pay packets—the people who Government Members believe they are on the side of—yet the measure nets only £10 billion or £11 billion to spend on public services. It is truly a ruinous approach to raising the money.
Mike Martin
The right hon. Gentleman talks about a more sensible tax strategy, and we all agree that the change to NICs is an extraordinarily bad idea, particularly given the hit to growth. Where would he raise that amount of tax from?
Graham Stuart
There are so many places where the Government have spent it. Having claimed this £22 billion black hole, they promptly agreed a £10 billion pay rise for their trade union backers. Train drivers on more than £60,000 a year are getting £10,000 pay rises while in talks about a four-day week. Those train drivers are not available for the holiday season, because they are so awash with that backdated pay increase that nobody wants to do any overtime. There are so many other areas. We have GB Energy to invest in renewable energy. I was the Energy Minister until April, and there was no shortage of investment available for renewables in this country. Before anyone points to last year’s failure to get offshore wind, that was because of the price window that we imposed. We did not want to overpay for it. There was no shortage of appetite, as was shown this year. One reason why we moved to an annual programme was precisely to ensure that we did not overpay, but could bring on all the renewables we wanted. There are so many areas where the Government could instead not spend the money that they have chosen to spend.
Fundamentally—we need this conversation, including in my party—one of the things that makes the Conservatives the most successful democratic political party in the history of the entire western world, I am proud to say, is that we believe in proper analysis and deferred gratification. We have to make sure that we have a growing private economy, because that is where wealth comes from. If we allow money to fructify in the hands of those who create wealth, it will duly come back to the Treasury with interest, as the Financial Secretary of Hong Kong said many years ago, in rather more pithy terms. The most important thing is to live within our means, and to recognise the importance of feeding the private sector economy, because it is only wealth from that sector that allows us to deliver the public services that we all want.
I support new clause 1. The hon. Member for Stoke-on-Trent Central made it clear that he has concerns about the Bill’s impact, and I hope that the Minister can acknowledge that impact. At the very least, we should look back and check that the impact is, as I hope it will be, more akin to the growth-producing, foundation-fixing, black hole-removing vision of the Government. However, if by any mischance the combined Opposition parties are right about the Bill’s disastrous impact on the most vulnerable, the people furthest from the labour market and the rest, we should find out the truth, and whether the Minister or his colleague the hon. Member for Stoke-on-Trent Central is correct.
I also support amendments 13 to 18. The NHS is the centrepiece of the tax-raising and spending elements of this Budget, and this rise in national insurance contributions will contribute £22 billion—or £20 billion; I hear different numbers at different times, but I will stick to £22 billion—to the NHS. There are a couple of ways to sort out the problems, because the system is entirely dependent on social care provision, the hospice system and ancillary services, including primary care—the things that make up the NHS. In my area, when an ambulance goes to Hull royal infirmary, it may take an hour to get the patient in. That is because patients in the hospital cannot be got out of their bed—even though they are ready to leave—and into social care provision. The Bill will make that worse. Perhaps funding can be vired over to social care. Through the amendments suggested by my hon. Friend the Member for Grantham and Bourne (Gareth Davies), we are probing the Government and the Minister, who is a decent, honourable man. We are asking them to look at the issue creatively and ensure that the misgivings of those such as the hon. Member for Stoke-on-Trent Central are listened to.
Daisy Cooper
It is music to my ears to hear a Conservative Member of Parliament finally recognise the connection between the NHS and social care. The right hon. Member will remember that former Prime Minister Boris Johnson stood on the steps of 10 Downing Street and promised to fix social care for good. Could he let us know why he did not?
Graham Stuart
The hon. Lady has not been in the House quite as long as I have. I was first elected in 2005, and in that Parliament I spent a lot of time—mostly in Westminster Hall, as I recall—in debates with then Labour Ministers talking about the importance of having a joined-up, coherent approach to the national health service and social care. It is clearly fiendishly difficult. The coalition Government, of which the hon. Lady’s party was a part, and the Conservatives kept working at it. We changed the name of the Department of Health to the Department of Health and Social Care precisely because of that. It is challenging, because social care is delivered through local authorities, but the opportunity is there. Before the Government get all that wiring and complexity fixed—we were working devotedly at that—they could vire funding over to the sector, or exempt from the Bill the sectors on which the NHS depends. Pouring money into the Hull royal infirmary while it is unable to unload the ambulances coming in, or get the healthier patients out, is a crazy approach. I am sure that the Minister recognises that.
I want to mention the impact on social care. Last Friday, I went to Merrywick Hall, a great example of a small, family-run, residential care home. Its 31 residents are not all elderly, but they all have learning disabilities. Some of them are elderly, making them doubly disadvantaged. The home charges a basic rate of just £699 a week to care for those people, and its staff are stretched. I met Katie, who runs the home, and her husband Carl, who oversees the finances, although the home is owned by another. It was quite clear that that they were not running a business in the way that I would recognise as a former businessman; they were running an institution that was absolutely committed to the welfare of the people in it. Between this jobs tax, which the Minister is foisting on us, and the national minimum wage increase, they have to find an extra £56,000 a year, which is equivalent to the care costs of 1.5 residents. That is the reality. That system and those places are vulnerable. If those places go, there will be a massive knock-on effect on the rest of the system.
I hope that hon. Members from across the House are less interested in the system—although it is our job to worry about it—and much more interested in the people. People cannot get much more vulnerable than the elderly who have learning difficulties.
Dr Luke Evans
When it comes to social care and GPs, there is a situation that has been described to me as Schrödinger’s care. Providers are seen by the state as being private, yet their services are commissioned solely by the NHS, which means that they are caught both dead and alive when it comes to NICs. This has happened either by design in the Treasury, or by accident. The answer from the Chancellor, the Prime Minister and the Health Secretary—I expect the Minister to say this—is that funding will be allocated in the usual way. The problem is that that will happen in April, four months away, while decisions are being made now. There are potential closures, and certainly redundancies, or decisions not to employ. How will that be addressed? Does my right hon. Friend agree that the Minister needs to address that, because these institutions are listening now, and need to know that answer?
Graham Stuart
I thank my hon. Friend, who is of course a doctor. In this and previous debates, such as Second Reading, it is good to encourage a discursive approach in the Chamber, if we are to be valuable. I hope that we will continue to gather in this Chamber, talking to each other and listening. No one would think less of the Government for making changes. I cannot speak for those on the Opposition Front Bench, but I would seek to give the Government some political cover if they found a way to ameliorate the impact of this measure on the system—and, more importantly, on the human beings on which the NHS relies.
In 2021, the then Leader of the Opposition, now Prime Minister, promised a plan
“to ensure that those with the broadest shoulders pay their fair share.”—[Official Report, 8 September 2021; Vol. 700, c. 295.]
Yet all the analysis available to Government Members shows that those with the least will pay the highest price for this measure. In my constituency, HICA, a large not-for-profit provider of social care homes and in-home care—a brilliant organisation that has had the same chief executive for the past five years—was finally getting a surplus to invest in its stock, some of which is almost as old as me, and to give its staff something above the national minimum wage. But following the changes in the Budget, it faces a bill of £3.5 million, more than offsetting any hope of a surplus, which it desperately needs in order to invest in its people and stock. The money will be taken away from that good social purpose in my local area, and instead will go into the Chancellor’s mythical black hole—for payment of additional sums almost greater than the total income of many pensioners, and for pay rises, for train drivers, so that they can pay their union fees; and so that Labour Members can carry on all too rarely mentioning in the Chamber their sponsorship by people who dictate so much of what they share with us—the hon. Member for Stoke-on-Trent Central aside.
Finally, it is interesting in these debates just how few of the more than 400 Labour Members—they can all cheer on the Government Benches at how many Labour MPs there are—want to come and defend these measures. The hon. Member for Hexham (Joe Morris) spoke bravely, but he looked a little world-weary. I think he has been going out and about in his constituency, so I am sure that he is hearing the same thing as me, but said a little more angrily, because he is responsible for it.
I appeal to those Members who are not here to seek change. The 2012 Budget by George Osborne, crudely and rudely called the omnishambles Budget, included a measure to bring in 20% VAT on static caravans. The Treasury civil servants love dusting these things off—they hate an anomaly more than anything. Those are the very caravans that ordinary working people use to holiday on the coast. I did not, alongside colleagues, run my campaign in the press; instead, I built up support from Conservative Members and coalition colleagues, who realised how damaging that measure would be for jobs in their area, the holiday opportunities of ordinary working people, and an industry that is 95% manufactured in the UK. People told me, “Change is impossible—this has been announced in a Budget. You cannot overturn a Budget measure.” You and I, Madam Chair, having been here some time, know that that is not true. Politics is a matter of arithmetic. If Labour Members can build enough support among colleagues on the Government Benches—they do not need to do it publicly, and they do not need to tell us about it—they have every chance of changing this. The Whips and Ministers start getting spooked when 15 Members turn up. If Labour Members can get 30 or 40, they can make a change. They should not feel powerless.
The Government could make changes. They could move £3 billion or £4 billion over to social care, hospices, GPs and the like. They could agree to our amendments. They could come up with some other solution. They have the power to do it. Stubbornness and perhaps a certain arrogance has crept in because of the size of their majority. Government Members, who go out to talk to their constituents more frequently than Ministers, will be in a great position to tell Ministers that up with this they will not put.
Daisy Cooper
The right hon. Gentleman is encouraging the Government to ameliorate their position. Does he agree that there is one very clear way of doing that today? Members on all Benches could vote for Liberal Democrat amendment 1, which excludes all GPs, dentists, hospices and charitable health and social care providers from this NICs increase.
Graham Stuart
Liberal Democrats did remarkably well at the election, pretty much on the back of sewage. Between water stunts and sewage, a record number of Liberal Democrats have been returned. I am pleased to say that the Conservative party remains His Majesty’s Opposition. Therefore, I urge the hon. Lady and her colleagues to support amendments 13 to 18, and new clause 1. She will find that exactly the same is achieved, but with the backing of His Majesty’s Opposition.
Chris Vince (Harlow) (Lab/Co-op)
I start by thanking the Exchequer Secretary to the Treasury for all his work on the Bill.
The burden of tax has fallen disproportionately on the shoulders of working people for too long. Families across the country and in my constituency, who are already battling the cost of living crisis, have been left to carry the weight, while larger businesses and the wealthiest have been let off far too lightly. That cannot continue. This Labour Government believe in a fairer tax system, where larger businesses and the richest pay a little more in tax to help fund our NHS and our public services, which working people rely on. That is the right and fair choice.
The Tory record on investment in our NHS is terrible. I can see that in my constituency. Although Princess Alexandra hospital was on the list of 40 new hospitals proposed by the previous Government, when we came to power it turned out that the money for it was not there. I thank the Secretary of State for Health and Social Care for allowing me to constantly follow him around the Palace and lobby him on that point.
The decision on employer national insurance is difficult, but it is the right choice. Waking up on 5 July, we knew that we would have to take these difficult decisions, but in the long run we really will see the difference. Being tough now can bring about real change in the future.
It has not gone unnoticed that the small businesses and charities that form the backbone of our local economy need to be protected and valued. Here are a few things the Labour Government are doing to achieve just that. We have increased the employment allowance to £10,500 and expanded it to all eligible employers. As a result, we will see two remarkable things: the OBR expects 250,000 employers to benefit from these changes and an additional 820,000 employers to see no change at all. We are seeking to strike a balance.
My hon. Friend the Member for Earley and Woodley (Yuan Yang) mentioned Small Business Saturday. I recently visited a wonderful local charity called Stort Valley Gifting, a brilliant local business that sources local produce and makes up hampers. I have to declare an interest at this point, because that is where I am doing my Christmas shopping this year, but I would add that my predecessor, Robert Halfon, did the same thing.
Labour also recognises the vital role played by public sector employees in our schools, hospitals and councils. That is why we have committed to providing support for additional employer NIC costs, ensuring that our public services remain resilient and well-resourced not just for today, but for future generations. We can protect working people while making the wealthiest contribute their fair share, so that we all contribute our fair share. Everyone from every walk of life is included as these decisions are being debated and made. We can choose to invest in our NHS and our public services; we can choose growth and fairness; we can choose to rebuild the future for generations to come, instead of the instability that has held our country back for too long. If we want the benefits of this Budget, we must make the hard decisions to get there.
Dave Doogan
I rise to speak to defend Scotland’s NHS, including our GPs, hospices, care homes and nurseries, from this Labour Government’s national insurance tax hike, as well as to protect the charity and higher education sectors. I am proud of the amendments the SNP has tabled to the Bill to protect these vital services from the increase in national insurance contributions put forward by the Government. The fears are genuine and escalating over the job cuts and service reductions that will be the inevitable and plain and simple consequence of this fiscal madness.
We in the SNP have consistently highlighted the brutal impact that Labour’s tax rises will have on GPs, charities, care homes and other sectors, with organisations warning that deep cuts will be made to the services they provide—vital services that are no less essential to communities and individuals than secondary care services just because they are received in the community or from a charity. That is why we have tabled amendments 4, 5, 6 and 26 in my name and the names of SNP colleagues.
On higher education, the University of Edinburgh was last month reported to have opened a redundancy process for staff as a result of Labour’s tax hike, and Universities Scotland is warning of a potential £45 million tax burden for Scottish universities. Yet again, we see key sectors of the Scottish economy hammered by a London Treasury out of touch, out of ideas and, if this goes through, demonstrably out of control. Higher education, agriculture, and oil and gas are all demonstrably larger elements of the Scottish economy than they are of the English or UK economy. This Government, with NICs and other specific tax increases or allowance removals, are hammering particularly important elements of the Scottish economy. As usual, what England wants Scotland gets.
The Labour Government’s national insurance increase will be a disaster for Scotland’s healthcare providers, voluntary organisations, nurseries, universities and colleges, but who on the Labour Benches has come along to speak up for those organisations in Scotland? Nobody. Not one Labour Scottish MP made a speech to protect Scotland’s interests. But Labour MPs from Scotland were there to nod through and vote through the cut to the winter fuel payment, freezing Scotland’s pensioners; Labour’s bedroom tax, entrenching poverty in Scotland; Labour’s two-child limit, punishing the poorest in Scotland; taxing Scotland’s oil and gas sector to the brink of extinction; attacking Scottish agriculture; and gouging Scotch whisky. They were all here to make sure that that happened and to speak to that, so I will leave the people of Scotland to draw their own conclusions about this particular lack of activity from Scottish Labour MPs.
Graham Stuart
I am grateful to the hon. Gentleman for giving way. When did the SNP do an about-turn on Scottish oil and gas? As far as I can tell, it seemed as opposed to its continuation as the Labour party is now in government.
Dave Doogan
I thank the right hon. Gentleman for his intervention. I refer him to Hansard from the previous Parliament. The comments I have just made are entirely consistent with the comments I made in the last parliamentary term.
With each day that passes, we learn more about the damage Labour’s Budget will inflict on household bills, businesses and charities, yet despite those warnings the Labour Government are determined not to listen and are ploughing ahead with this devastating proposal. The SNP will always stand up and protect Scottish jobs, Scottish services and Scotland’s people. That is reflected in John Swinney’s budget—a balanced budget in the interests of the people of Scotland and the businesses of Scotland. That is the SNP way. We have done it this year and we have done it in every one of the 17 previous years we have been in the Scottish Government.
Do the UK Government understand how commissioned services work? We have heard that quite a lot this afternoon and it is becoming increasingly clear that, at best, they have a sketchy understanding of why vital services are provided by non-statutory service providers. What is going to happen when this measure unwinds into the real economy is that charities, GP surgeries, hospices and other vital elements of healthcare provision will not have reserves. They are already operating at the very margins of financial sustainability, so when the sums do not add up, they will have two choices. They will approach the commissioning authority that has commissioned their services to ask for an uplift in their fees. The answer will be no, because the money is not there. Alternatively, they will withdraw their services or draw down their services. Either way, it will be enormously challenging and extremely damaging for some of the most vulnerable in our society.
Carla Lockhart (Upper Bann) (DUP)
The hon. Gentleman is making a powerful speech. The Labour party has said in the main that it is the right choice to increase NICs. Like Scotland, Northern Ireland’s health and social care will be hardest hit. The Northern Ireland children’s hospice estimates that half a million pounds will be needed to cope with the NICs increase. This is a hospice that provides care for the most vulnerable in our society: children with cancer and children with life-limiting conditions. Does he agree that the measure will see the end of these excellent services, which are much needed in our communities?
Dave Doogan
I agree entirely with the hon. Member. There is no road back from that. The difficulty that I implore the Government to pay attention to is that when the damage that will be inflicted by this measure is inflicted by this measure, they cannot just say, “Oops, we got that wrong. If you wouldn’t mind all coming back and start delivering these commissioned services, we’ll admit we got it wrong.” When it’s gone, it’s gone. It is not acceptable that the Government are playing fast and loose with the safety net that exists in our communities and our society to catch the most vulnerable people and prevent absolute chaos. That is exactly what the Government are doing.
However, the Government should not take the hon. Lady’s word for it, or mine. We can listen to people who are at the coalface. This is primary evidence from the Scottish Huntington’s Association:
“The entire charity sector is increasingly burdened by climbing costs, funding issues, recruitment and retention challenges and an increased demand for services.
All too many have had to close their doors, with more expected to follow. Additional burdens being imposed by government at this juncture”,
the association says, are deeply unhelpful.
“Coming just weeks after the prime minister announced a ‘new partnership that can harness civil society’s full potential’ this must surely be an unfortunate oversight, and one that simply cannot be allowed to stand given the scale of its implications for the not-for-profit sector and the many thousands of people who depend upon it in the absence of alternative statutory services.”
It is not just the association that takes that view. Turning Point Scotland has advised that this measure alone will add £1.1 million to its costs overnight, and it comes at a time of a pressured environment, when many of its services are already running at a deficit. That is true of the voluntary sector, but also of the nursery and college sectors.
On healthcare, I wonder whether the Government understand the concept of whole-system costs. As I and many Members have said, when charities fold, as many of them will, the services that they were providing will no longer be there. Who will then provide that care? It will be the provider of last resort, secondary care. People will present themselves at hospitals, where there will be no room. It will be chaotic, but in a purely Treasury and fiscal sense, it will be an extremely expensive form of chaos, for which the Government, through the whole-system paradigm, will need to pick up the costs. I am not certain that the Minister has been properly briefed by his Treasury officials on what the risk assessment actually says about the human and financial costs of the change when this heads south. This is what happens when the Chancellor treats the real economy as her own personal political piggy-bank. It will not be possible to fix this once it has been broken.
I have some sympathy for the Minister in one respect. We have heard, and I will not repeat, the headline figure—the gross quantum that the Government expect to generate by lowering the threshold and increasing the rates of employer national insurance. By the time everyone who is in a position to adjust their business and employment characteristics to accommodate it has done so, by the time the Government have compensated elements of the public sector and by the time the economy has contracted to accommodate that, we are already down from £25-something billion to £10 billion-odd. That is a lot of pain to accept to gain £10 billion.
If the Government were to exclude or make provision for hospices, nurseries, the voluntary sector more generally and universities, that £10 billion would be reduced to an embarrassingly small figure, so they are stuck between a rock and a hard place. I nevertheless encourage them to have the courage of their convictions and put the interests of the people of these islands first, rather than the political expediency of careering headlong towards a cliff edge that is as plain as the nose on the end of your face and jumping over it anyway in order to save face—because the Government will not save face. There is no escape from the corner they have painted themselves into. They can either U-turn and incur the political costs, which I would recommend, given that they have just come through the door—they should be at the height of their political powers, but if this is the height of their political powers, goodness me!—or they can carry on regardless, and pick up the pieces of all the chaos that will be wreaked across the sector.
This incompetence, for it is incompetence, did not start when the Government walked through the doors of Nos. 10 and 11 Downing Street. It started back in the election campaign, when they proscribed the use of the single biggest lever in the Treasury’s toolkit to get additional funding. They said that they would not increase income tax on ordinary working people, although with these measures they will take away financial opportunities and, actually, people’s money through payroll changes anyway. It is smoke and mirrors. However, by painting themselves into that corner on income tax, they have created a situation in which they have to make the most damaging tax intervention possible, which is entirely contrary to their stated ambition of generating growth.
Quite a lot of Labour Members have said, “It’s all very well listening to the Opposition, but what would you do?” I will give them two really easy things that the Government could have done. If they had mirrored the income tax thresholds that the Scottish Government have introduced, they would have generated £19 billion. That would not have had a single impediment on the real economy, would not have choked off growth and would not have put primary care on the precipice. They could have done that. Or, if they had thought that they could get by on less than £19 billion—they will have to, because they will raise less than £10 billion from this measure—they could have just reversed the previous Government’s two cuts to employee’s national insurance. Judging by the arithmetic in this place, the Conservatives did not exactly get a brilliant political return on cutting employee’s national insurance twice in two quarters of one financial year. The Government could have reversed those cuts, which would have netted £10 billion—roughly where they are now, on aggregate—but no, they did not want to do that and they refuse to do so.
John Slinger (Rugby) (Lab)
The crux of today’s debate is an interplay between our objectives and missions as a new Government and our inheritance from the previous Government. It is about the choices we have taken to achieve our objectives while mitigating and navigating the dire inheritance we received.
First, our objectives were clearly stated to the British people in our manifesto in July:
“to begin the work of national renewal. A rebuilding of our country, so that it once again serves the interests of working people.”
Secondly, the previous Administration bequeathed us the following: the highest tax burden on working people since the second world war; an economy built on weak foundations, with little or no industrial strategy, low productivity, low investment and low strategic visions; public services on their knees, having been cut to the core; staff undervalued and underpaid, but overburdened due to the previous Government’s failure; and after the cuts and chaos came that cut-and-run election, with unfunded spending commitments and, yes, a £22 billion black hole.
I turn to the choice that we face. The people resoundingly rejected a return to the chaos and cuts of the previous Administration. We rejected making further cuts to services when the people who voted in the election need those services so desperately. We rejected insulting people by increasing taxes on their pay packets after those dark, high-tax Tory days. We rejected increasing borrowing; we are keeping it under control with our stability rule in order to bring the current Budget into balance, so we will not borrow to fund day-to-day spending.
Therefore, we have had to take difficult choices. Some groups will have to contribute more, which is never popular. We are asking employers, not employees, to contribute more, but we fully recognise the need to protect the smallest businesses and charities. We have more than doubled the employment allowance to £10,500 and expanded it to all eligible employers, including charities. The OBR expects 250,000 employers to gain and an additional 820,000 to see no change.
The change that we are debating today should be seen in the context of the overall Budget—a Budget of huge, long-term investment in our economy; setting the right environment for better jobs, more opportunities for businesses, stronger public services and a more confident, optimistic future, particularly for our young people.
The last Government were very good at some things: kicking the can down the road, finding carpets and sweeping things underneath them, and making promises while dressed in the emperor’s new clothes. This Opposition are good at crying crocodile tears about the changes we are making, and wanting to have their cake and eat it. They seem to want all the benefits, but they do not want to say how they would pay for them. That is not this Government’s approach.
What is being proposed today is reasonable and proportionate; it is necessary, given our objectives and the inheritance we received; and it is part of a transformational Budget that will put the economy, our public services and our country on a proper footing, for a fairer and more prosperous future for the people of our country.
Shockat Adam (Leicester South) (Ind)
I refer the Committee to my entry in the Register of Members’ Financial Interests as an optometrist. I will speak to amendment 7, which stands in my name, which calls for GP surgeries, pharmacists, the often forgotten profession of optometrists and other health professionals to be excluded from the national insurance rise, along with charities with fewer than 50 employees.
We have seen the over-strain and burden on our GP services being taken over fantastically by the Pharmacy First programme. However, the National Pharmacy Association has voted for action, which could include reducing opening hours, in response to the increased costs that will be caused by the national insurance hike. This hike is going to cost each pharmacy business an estimated £12,000, which is absolutely unattainable for many of the pharmacists I speak to.
My constituency of Leicester South has the second-highest ratio of patients to GPs, with 3,260 patients to a single GP. This already overburdened service is going to be hit even further with this rise in national insurance, with the Royal College of General Practitioners warning in November that the national insurance hike risked GP practices making redundancies or even closures. Nearly 450 GP practices have already closed or merged since 2018, according to a survey by the GPs’ journal Pulse. This is simply an untenable state for the national health service and healthcare workers.
Pharmacists, dentists and optometrists employ their professional staff. Many people I have spoken to are now going to have to remove employment and bring in locums. I would like to ask the Minister whether any impact assessment has been made on the loss of earnings for employed staff if locum staff are brought in. Primary care services are the bedrock of the NHS and many are already on a financial tightrope due to years of austerity. The national insurance hike will see many community GPs, pharmacists and optical health facilities reduce services or completely close down.
Clive Jones (Wokingham) (LD)
GPs such as those in the Twyford surgery in my constituency have made it clear that the increase in employer national insurance contributions will impact their budgets. They urgently need clarity to determine what they can provide for my constituents and whether they will be forced to make redundancies. Does the hon. Member agree that the Government need to provide certainty on whether GPs will receive funding for national insurance increases, and not abandon them, as they were abandoned by the previous Government?
Shockat Adam
I totally agree with the hon. Member that GP services are already on their knees, and this is going to further increase their despondency. It will give them no confidence whatsoever.
A second issue relates to our charities. I do not think there will be a single Member in this House who has not posed in front of a charity for a photo for their social media or for the work that they do. In my short time in this profession I have seen that this country is virtually run by charities, but every single year they have to jump through fire hoops just to make ends meet. They have to prove their worth and look for funding every year, living virtually hand to mouth. This will be the final nail in the coffin for many charities that are doing vital work for our communities.
There are so many that I could mention, but I will mention just one. Jasmine House is a charity in my constituency that provides vital support for women who have been victims of sexual violence. We already know the dire state of the judicial system, with women who have been raped having to wait up to five years or sometimes seven years for justice. This home, which provides much-needed psychological and emotional support, already has a two-year waiting list. This rise in national insurance will completely destroy this charity and many more like it across the country, which is why I urge the Government to rethink this disastrous policy and accept my amendment.
Jim Dickson (Dartford) (Lab)
It is a pleasure to speak once more on this critically important Bill, after an excellent debate on Second Reading several weeks ago. I do not wish to rehearse the entire debate on these national insurance changes, but I will raise a few points about the Bill and why it is necessary.
As we have discussed at some length, this Government inherited public finances that were in a parlous state and public services that were not delivering what residents in Dartford and across the UK need. Yet, from their contributions today and on Second Reading, I do not think that Conservative Members have really accepted that legacy. In the five stages of grief, they are still in denial.
When the previous Government left office—it is painful to repeat these statistics—NHS waiting lists were at 7.6 million, with 300,000 people waiting longer than a year for treatment. Those waiting lists were already growing before the pandemic, with the number of people referred but waiting for treatment doubling between 2010 and 2019.
On crime and community safety, neighbourhood policing was decimated and PCSO numbers were halved, and the number of arrests has halved since 2010, including sharp drops for theft. Perhaps most concerningly, we face a real crisis in our prisons. The National Audit Office recently confirmed:
“The current crisis in the prison estate is a consequence of”—
the previous Government’s—
“failure to align criminal justice policies with funding for the prison estate, leading to reactive solutions which represent poor value for money.”
That is as close as the National Audit Office ever gets to saying, “You wasted money.”
The previous Government also spent a whopping £715 million on their Rwanda gimmick over two years, in exchange for a sum total of four voluntary departures. That is the legacy of the Conservative party, yet Conservative Members still refuse to acknowledge their mistakes. They vote against every measure, including the national insurance changes to raise crucial funding to fix the problems they left behind, without ever saying which investments in public services they would scrap.
In a long and, at times, entertaining speech, the right hon. Member for Beverley and Holderness (Graham Stuart) rehearsed the greatest hits of the previous Government, in which the omnishambles Budget seemed to feature very strongly, but his speech was fatally holed below the waterline by his inability to answer one simple question from the hon. Member for Tunbridge Wells (Mike Martin): “What would you do instead?” We heard a lot of flannel about train drivers, but that was basically it.
Graham Stuart
I talked about the need for fiscal discipline, one element of which is taking at least £12 billion of savings out of the benefits system, because we cannot continue with more and more of us out of work and out of the workforce. Most importantly, I also said that we have to grow the economy first, because that is the only way to sustain it. This Budget had the opposite effect, as the OBR has laid out.
The First Deputy Chairman of Ways and Means (Judith Cummins)
Order. I remind Members that this debate in Committee is about national insurance contributions.
Jim Dickson
I thank the right hon. Member for Beverley and Holderness for his comments. He praised the Conservative party as the most successful party in western democracy because it always takes a pragmatic and hard-headed view of matters such as the public finances, but I am afraid that he has just revealed why it is no longer in government. None of what he said added up. The £12 billion of welfare savings that we were repeatedly promised when he was in government were never realised, and none of what his party has proposed since makes those numbers any more likely to be achieved.
This week, The Guardian reported on a poll by the University of Bristol of 5,000 voters—a large sample—that found that fewer than a quarter of respondents thought that the changes to tax announced at the Budget were “not necessary”. Nearly 50% of people polled thought the changes were “necessary”. So the British people, showing admirable common sense, understand the steps that need to be taken to address our country’s problems.
Based on that polling, the kindest thing to say about the Conservative party is that it is out of touch. Indeed, we learned this week that the Leader of the Opposition is apparently toying with the idea of flat tax, which would be a big gift to the already wealthy. According to estimates from the Tax Policy Associates, such a change would mean average earners would pay £1,200 a year more and those earning above £200,000 would pay £30,000 a year less.
The First Deputy Chairman
Order. The hon. Gentleman is making an interesting speech, but I remind hon. Members that in order to be in scope for the debate, the majority of their remarks need to address the issue in front of us, which is national insurance contributions.
Jim Dickson
Thank you for your advice, Madam Chair.
In closing, in raising national insurance, the Labour Government are taking the tough choices to fix our public finances. As I said at Second Reading, the Bill is a crucial part of our plan to fix the foundations of this country. It provides a major part of the funding needed to fix our public services after 14 years of decline under the previous Government.
Jim Allister (North Antrim) (TUV)
When we talk about national insurance, it is easy to forget that it is only part of the tax burden placed upon employers. However, within the matrix of tax, the reach of national insurance that has been delivered by the change is truly shocking, particularly because of the reduction of the threshold to £5,000. I suspect that will mean that there is not a single person who does a part-time job whose employer will not now be paying 15% national insurance. Before we even come to the viability of the business they work for, that makes the viability of that job questionable.
To reduce the threshold by that amount is the most punitive part of the measure. It is not even tempered, as it could have been, by a phased reduction, so rather than paying 15%, someone could pay a lower amount, such as 5%, if the threshold was reduced to £5,000. The measure is excessively punitive and will hit many small businesses in everyone’s constituency, including mine.
I think of small businesses throughout North Antrim. They employ six, seven, eight or 10 people, and may stretch to take on an extra worker, but they will not be stretching like that any more. They will be stretching the other way, because the consequence of the measure is putting them over the edge in terms of what is affordable. I am talking not just about small businesses but about a vast swathe of a critical sector that keeps our society in operation. Our community and voluntary sector will be among those most cruelly affected and particularly those who are often doing the job of Government, delivering services in our community. They will bear it unabated, without any assistance such as the assistance that the public sector will have.
I was interested to receive and to read the report from the Northern Ireland Council for Voluntary Action, which is clear that whereas public sector organisations will have their budgets on this aspect reimbursed, voluntary and community sector organisations will not have the same protection. They will have to absorb the budget increase. Yet, as I have said, many of those in the voluntary and community sector deliver services on behalf of Government. The public sector therefore gets matters ameliorated, but those that deliver services for Government in the voluntary and community sector will not. That will have an effect not just on those organisations, but on the services they deliver and, therefore, on all our constituents to whom those services are delivered. When we ally 15% on national insurance with the increase in the living wage, we have a double whammy. The two together are the very thing that will produce a negative outcome.
The hospitality sector in my constituency, as a sector that already runs on relatively small margins and employs a lot of part-time people who will now fall within the ambit of employers’ national insurance, has drawn attention to the fact that the increase, along with the living wage increase, will impose a huge burden. Indeed, the sector’s organisation has suggested that the living wage and national insurance increases will add £2,500 a year for every employee. What business, in current circumstances, can simply shrug that off and carry on unaffected? There will be very few, indeed.
The consequences will be substantial and will affect many small businesses, be it the butcher on our high street, our community services provided by voluntary organisations, our doctors or our dentists. The latter are already under huge pressure and many are giving up national health service provision. Why? It is because they cannot make ends meet. Then, Government come along and put this burden upon them.
I therefore say to the Government that, yes, they have the numbers that mean they can close their ears to all of this. They can impose this if that is their will, but in imposing it they will do irreparable damage to those who they say they care about. This is a wake-up moment. If the Government truly care about ordinary people, whose jobs will be lost and who will be affected by this measure, and about ordinary businesses, which are not rolling in riches but making ends meet, they need to find a way to readdress this issue and to bring back some viability, going forward, for those businesses.
John Grady (Glasgow East) (Lab)
Like many on the Government Benches, I have spent many years of my career in business—in my case, as a lawyer. I have worked with some of the largest companies investing in the United Kingdom and some of the smallest companies in the country, such as charities, third sector organisations and others. What they value most of all is economic stability. What they do not value is huge increases in interest rates overnight and rampant inflation.
I understand how important it is to investors to ensure that the public finances are managed in a prudent way, which embraces and faces up to the realities. That is the foundation of the Budget and of our approach to the difficult decisions the Chancellor of the Exchequer has taken on national insurance contributions. A number of the parties on the Opposition Benches, and the Conservatives in particular, criticise, but they broke Britain’s economy and we are left to clean up their mess. There is nothing clever or great about promising that hospital after hospital will be built and not having the funds to cover that. That is the politics of the Santa Claus letter.
The Budget of my right hon. Friend, the Chancellor of the Exchequer, delivers on our commitments to the electorate. It puts an end to non-dom tax status and gets rid of a VAT exemption on private school fees to fund state schools, such as those in Glasgow. The national insurance contributions are an important part of that financial package. The Budget delivers a fairer, more sustainable tax system. Under the previous Government, the tax burden was placed mainly on the shoulders of working people. We heard from the hon. Member for Angus and Perthshire Glens (Dave Doogan), who represents a beautiful constituency, that that is precisely what SNP members are fans of—increasing income tax and national insurance on working people. We have seen that in Scotland time and again. The tax burden that working people face is absolutely enormous. If a person works in Newcastle and wants to move to Edinburgh, they will have to pay more tax to work in the NHS in Edinburgh. If that is supporting Scotland, who knows? We are delivering on our promise not to raise taxes on working people.
John Grady
I wish to make some progress if I may; I have been waiting a long time to speak.
Our plans will not see additional taxes coming out of a worker’s payslip. We are supporting small businesses by doubling the employment allowance before companies and charities have to pay national insurance, which will protect hundreds of thousands of employers from paying any national insurance at all.
According to the OBR, changes to the employment allowance will see 250,000 employers across the UK gaining from these changes, while an additional 820,000 or so will see no change. This means that around half of all businesses that are liable for national insurance will pay the same or less than they were previously, while, set against that, many businesses and charities in Scotland and Glasgow will be protected against the increase. This strikes a fair balance.
As a Scottish MP, I must turn to Scotland. The context of this national insurance rise is that around one in six Scots is on an NHS waiting list. On a Friday evening a few weeks ago, I was contacted by a constituent whose wife of 40 years was in hospital. He was petrified and devastated because there was no bed available for his wife after she had suffered a stroke. That is the context of this national insurance rise. It is correct to raise taxes to invest in our health service, and that is the beginning and the end of it. In Glasgow, this year, 172 teaching posts have been removed. That is the context of this national insurance rise.
Our Budget delivered the largest settlement for the Scottish Government in the history of devolution—£4.9 billion of additional funding and further funding to cover the national insurance rise over the next two years. This is a UK Government delivering for Scotland and giving the SNP the tools to clean up its mess. The changes to national insurance are critical to this additional funding, which will benefit the people, charities and businesses of Glasgow and Scotland.
Despite this extra funding, the SNP repeatedly criticises our Budget and our management of the public finances. This is—as some say of Christmas dinner—somewhat rich coming from the Scottish National party. After almost 18 years of the SNP Government in Holyrood, public finances are in a catastrophic mess. Let me provide a simple example: the replacement Arran ferries are hundreds of millions of pounds over budget and years late, making lives miserable for people trying to get from Arran and damaging the tourist industry. It would be unwise to choose Rod Stewart’s song “We are Sailing” for the SNP Christmas karaoke, because no one is sailing under the Scottish Government’s appalling management of the economy.
The SNP has criticised our choices. This Government have not been in power for even six months. The Tories were in power for 14 years and the SNP have been in power for 17 and a half years. On any view, the criticism of our Budget after nearly six months defies logic, but that defiance of logic does not end there. The Conservatives criticise our choices, but they do not say what they would do instead. They may have a shopping list of additional spending commitments, but they simply do not explain how they will tax or fundraise those spending commitments. This is not serious.
We are having to make difficult decisions. The Government are asking employers to contribute more. That will enable investment in public services, which is good for employers. We are being straightforward about the choices regarding the public finances, spending, tax and national insurance. I say to Opposition Members that cakeism is for Christmas. It is not an approach for serious Government or serious Opposition. The job of a serious Government is to make serious choices to progress the country—choices that will allow us to invest in our public services.
Joe Robertson (Isle of Wight East) (Con)
The Government knew that if they raised national insurance contributions in the Budget, it would be devastating for health and social care. That is why they exempted the NHS; they knew that it would be put under acute pressure by the Budget. They did not exempt some of the key partners that deliver health and social care in this country, that they will rely on to move people out of acute care and into community care, and that they will rely on to achieve prevention rather than cure—all things that the Secretary of State for Health and Social Care says he wants to do. They will rely on GPs, pharmacies, hospices and social care, yet the national insurance contributions fall on them.
Hospices will pay £260 million. According to Community Pharmacy England, pharmacists will pay £50 million. Social care will pay £2.4 billion. All that money will move across to the NHS, which is largely slanted towards acute provision. That runs completely counter to what the Health Secretary said he wants to do. His answer to those GPs, pharmacists and hospices who are deeply concerned is, “We will deal with this in due course.” “Due course” means “We have absolutely no idea and no plan at all.” He and, indeed, Treasury spokespeople say that they will deal with hospices in the usual contracting way.
The contracts of hospices like Mountbatten just outside my constituency on the Isle of Wight are with the integrated care board. They do not have a contract with Government, the Department of Health and Social Care or an NHS employer. Under those contracts, there is no clause for uplift of salary, or for recovering the increased cost of national insurance contributions. Saying, “We will deal with it in the usual way through contracting” shows either a complete lack of understanding of how hospice services contract with the public sector, or a complete indifference, disregard and, frankly, contempt.
As for other sectors of the economy, national insurance increases hit those who employ people—sectors that rely on larger workforces, such as hospitality and tourism, which my constituency on the Isle of Wight is heavily reliant on. This is a tax on working people, because it disincentivises employing working people, and even the OBR says that 60% of the impact will likely be felt by those on lower wages. It also says that growth will peak next year at 2%—in fact, that is the Treasury’s own figure—and then it will fall away for the rest of the decade. This is not a growth Budget. As for those working in hospitality and tourism, many of whom are seasonal or part-time workers, they will be brought into the national insurance tax regime for the first time.
Brilliant businesses in my constituency, such as the Yarbridge Inn in Brading, the Spyglass Inn in Ventnor, and all the independent hotels in Sandown, Shanklin and elsewhere, will be squeezed further, right at the time when they are trying to recover from covid, and when our tourism and hospitality sectors are competing with cheaper, overseas holidays. The sector is already heavily taxed compared with hospitality and tourism elsewhere in Europe. This is an unpatriotic tax, because it disincentivises the visitor economy and tourism in Britain.
I urge the Government to go back and look again at providing relief to hospitality and tourism, as well as to health and social care. As my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, there is no shame in the Government recognising their mistakes in both sectors, and coming up with genuine relief for health and social care and for tourism and hospitality.
Dan Tomlinson (Chipping Barnet) (Lab)
I very much welcome the chance to speak in this debate on an important topic. I am sure that Members on both sides of the House will be glad to know that this is the first speech of mine that is not subject to a time limit, so I can speak for as long as humanly possible on the intricacies and joys of national insurance contributions, and I hope to stay on the topic at hand.
Not having a time limit also gives me the chance to make a great parliamentary speech on this important topic. We all know what good speeches look like; they are not a simple list of points reeled off in order, but may include great rhetorical flourishes, the use of the English language at its finest, and nuanced arguments. But, Madam Chair, I will make six simple points, in list form, in favour of the national insurance changes before us. I have missed my opportunity, but maybe I will make such a speech in future.
These changes are incredibly important. I urge Opposition Members to vote with the Government against the amendments, so that we can get the changes that we need for our country. The first reason that I think the changes are important and sensible is that they will mean that the Labour Government stick to the pledge we made in the election campaign not to increase taxes on working people. It is important that we rebuild trust in our politics, which has fallen to a record low. I know that this is contested in the House, but Labour is clear that these specific changes protect working people’s payslips and mean that we do not have to make the changes that others have suggested for income tax and value added tax. Trust in our politics is very important.
The second reason I encourage Members to vote with the Government tonight is that the changes provide vital funding for our public services. I am not too sure whether Conservative Members—I would be interested to hear from them—support the additional funding for public services. I said this in the previous debate on the Bill, so I am a bit like a broken record, but if they do support additional funding, would they raise it through additional borrowing or different tax rises?
Dan Tomlinson
Before I have even heard the hon. Member’s request to intervene, I happily give way.
Joe Robertson
I can offer the hon. Member a solution for growing the tax base: grow the economy. That is by far the best way of increasing the tax take. This Budget does not grow the economy—that is the problem.
Dan Tomlinson
I will come to growth, which is the sixth point on my very exciting list, but I will just say that this Budget will see growth increase in the short term and stay broadly unchanged over the forecast period, and the OBR says that the increased public sector investment that we are making will lead to a small but significant increase in growth in the long run. I wholeheartedly agree with the hon. Member that we need economic growth in this country.
It is important that we provide the revenue to fund our public services. I will not repeat the convincing and powerful arguments made by Labour Members about the broken nature of our public services. In Chipping Barnet, policing is really struggling, and 100,000 people in the Royal Free London NHS foundation trust area are waiting to be seen by our local hospital. We need to provide funding in a sustainable way.
The third point on my exciting list of reasons to vote with the Government tonight is that these changes provide stability. We all know that we need economic stability—it is the foundation of the economic growth that the hon. Member for Isle of Wight East (Joe Robertson) just made an important intervention on. I believe that the Chancellor and the Treasury team made the right decision, even though it was difficult, to raise revenues to fund our public services and put our public finances on an even keel once again. This change means that over the coming years, we will get to a place where, for the first time in a very long time, day-to-day spending will be matched by the tax revenues that are coming in. I think all Members of the House will agree that that is important, but I know that Labour Members prioritise that stability, which has been lacking for too long.
Fourthly, these changes cut taxes for the smallest businesses—a quarter of a million businesses, as my hon. Friend the Member for Glasgow East (John Grady) made clear. Again, I am interested to know whether Opposition Members support or oppose the cut in taxes for the smallest businesses that this Budget provides.
Fifthly, we have prioritised sound public finances, which is a big change from recent years. The mini-Budget that was passed by Liz Truss contributed to pushing up interest rates in our economy, making things more difficult for families in my constituency and across the country. It also added not £6 billion, or even £16 billion, but £60 billion to Government borrowing costs each year—Members can see those numbers in the Office for Budget Responsibility’s report. That and other failures to manage our public finances over the past 14 years have driven up our public debt from £1 trillion, as it was in 2010, to £2.8 trillion, which I believe was the latest estimate from the Office for National Statistics. If we support additional spending on our public services, it is vital that we also make the right decision to raise revenue that will cover that increase in public spending, so that we can have the sound public finances that the public want from this Government.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
Can the hon. Member explain why his Government are choosing to raise taxes on GPs’ surgeries, which did not crash the economy or the public finances, rather than opting to raise the revenue from the big banks, as the Liberal Democrats suggest?
Dan Tomlinson
We have made changes to a whole range of taxes in the Budget, and it is important to note that the scale of revenue that the Liberal Democrat party is talking about would not cover the additional funding that we are providing—£20 billion for our health services and additional funding for a whole range of public services. I understand that in the coming weeks, the Health Secretary will come forward with more details on many of the vital services that Members have mentioned today. I must put on record that I very much enjoyed meeting GPs in my constituency over recent weeks. They raised a whole range of issues with me, including the big challenges they have faced over the past 14 years in getting the support and funding that they need. I hope and trust that in the coming weeks and months, this Government will put that right.
I am sure that the hon. Member for Isle of Wight East will enjoy my final point. My sixth reason for voting for this Bill, rather than for the mistaken and erroneous amendments that have been tabled, is that the changes we have put forward in this Budget, including on national insurance, will pave the way for higher growth and higher living standards. As in all good speeches, this last point brings together some of the other points made—so this may not have been just a boring list. Through ensuring economic stability and funding our public services properly, we will make sure that people get the health services that they need, so that they are not struggling with ill health that drives them to economic inactivity and pushes them away from the jobs market. We will make sure that people feel secure on their streets, and that businesses feel safe, rather than struggling with shoplifting, which has become all too rife. Those are the changes that this Budget and the measures in this Bill provide.
Lincoln Jopp
I am grateful to the hon. Member for giving way, particularly on the subject of growth. He, like me, is an avid reader of the Labour party manifesto, so he knows that sustained economic growth is the first mission of this Government. I think we all agree on the point that sustained economic growth is a really good thing, so could he simply tell us whether he thinks these national insurance changes are pro-growth or anti-growth? It is a very simple question.
Dan Tomlinson
I thank the hon. Member kindly for his intervention. I am not sure whether all Members know this, but the Labour party chair has appointed me as the growth mission champion, so I am very much in favour of economic growth. We can see the impact of the changes in the round at the Budget, leading to higher growth in the short term and further growth in the long run, which is very important.
Without the changes in this Bill and in the Budget as a whole, we will not be able to turn the page on the low growth we have experienced as a country over the last 14 years. Productivity growth since the financial crisis has been at just 0.2%, which is why we had the longest squeeze on wages since Napoleon was making his way around Europe on the Conservative party’s watch. We need to turn that around and make sure that we provide the foundation of stability, fund our public services and, yes, support some of the very smallest businesses with these changes, so that we can get the economic growth that Members on all sides, including growth champions, would very much like to see in the years ahead.
James MacCleary (Lewes) (LD)
I have to start by disappointing the hon. Member for Chipping Barnet (Dan Tomlinson), in that I rise to support the amendments tabled by my hon. Friend the Member for St Albans (Daisy Cooper). I will speak about my deep concerns about the proposed national insurance changes because of the real-world impact they will have businesses, GP surgeries, community organisations and vital care services in my constituency of Lewes. While I recognise the fiscal pressures, which have been mentioned by a lot of Members, I ask that we fully consider how these changes will affect those working tirelessly to keep our communities vibrant, secure and healthy.
GP surgeries are the frontline of the NHS. A local GP practice in my constituency has been in touch with me just today to describe its shock at discovering that it will be paying at least £60,000 more a year under these changes. GP practices provide vital healthcare services to our local population and in doing so are under ever-increasing pressures. Yet under the new proposals, GP practices are treated as if they are private businesses capable of absorbing significant cost increases. The reality is, of course, quite different. Every additional £1 spent on national insurance is £1 that is not spent on patient care, staffing or critical medical equipment. For practices already operating under immense strain, this extra burden could be the tipping point that pushes them towards unsustainable financial territory. When cutbacks occur, it is our communities that will lose vital healthcare access, and the NHS, which is already stretched, will be left struggling even more.
We must also acknowledge that our social care providers, including hospices such as St Peter and St James hospice, which looks after my constituents so well—I visited it recently—are caught between rising wages, fixed local authority fees and higher national insurance. They cannot pass on these costs without threatening their very viability. If care providers close or scale back, the most vulnerable in our community will suffer, and so will our healthcare system as hospital stays lengthen and A&E attendances rise. In other words, it will drive up costs for the NHS, making the system less efficient and less humane. It is particularly galling that NHS employers are set to be compensated for the changes while there is no equivalent commitment for the social care sector. Separating social care reform from NHS support will not only hurt vulnerable people today, but make it impossible to achieve strategic priorities for the health service tomorrow.
We must also consider community organisations. Take the Sussex Community Development Association in my constituency. It is a local organisation that reinvests every penny of surplus into essential services such as youth work, emergency food provision and childcare for deprived communities in my constituency. It is already contending with increased wage costs, and it now faces an estimated additional £70,000 per year due to the national insurance rise. Because of its size, it does not qualify for allowances that might soften the blow. This facility was invested in to deliver Sure Start services under a previous Labour Government, and it is now considering cuts to essential services thanks to this one. It now faces a desperate scramble for funding at a time when its services have never been more crucial.
The rise, coupled with the increases to the national living wage and the minimum wage, will hit the early education and childcare sector particularly hard. As chair of the all-party parliamentary group for childcare and early education, I must make the Committee aware of how dire the situation is. An average nursery will face additional staffing costs of nearly £40,000 a year due to the increases. That is because staffing costs account for 75% of nurseries’ running costs, compared with just 30% for the average restaurant. If Government funding rates do not cover the gap, parents will face higher fees, potentially leaving them to reduce their working hours or to leave the workforce altogether.
The situation is exacerbated by the fact that private nurseries delivering Government-funded hours may not be eligible for employment allowance. That means that they may not receive the intended financial support from the Government. The sector is already facing recruitment challenges, with 29,000 new staff needed by September 2025 to deliver the promised 30 hours of funded childcare. The national insurance changes could lead to recruitment freezes, reduced staff training and even nursery closures. That is the precise opposite of what this Government claim they want to see for working parents and carers. That would have a detrimental effect on families and the economy, hindering economic growth, and it could seriously impact the Government’s commendable aim of having half a million more children hitting early learning goals by 2030.
Finally, let us not forget that even successful local businesses are feeling the strain. Rathfinny, a renowned Sussex wine producer in my constituency that has invested in our local economy and environment, faces a significantly higher national insurance bill. It may be forced to slow its growth, reduce investment or even curb local employment opportunities, undermining the prosperity that benefits us all. This Government talk about economic growth, as Government Members have done today, but this tax increase will inhibit the ability of many British businesses to expand and flourish.
If introduced without nuance, these national insurance changes risk delivering a series of damaging shocks to my community and places across the country. I urge the Government and the Minister to reconsider, to review the thresholds, to consider exemptions for sectors that cannot pass on costs and to ensure that our GP practices, childcare providers, community organisations and valued local employers are not left shouldering burdens they cannot bear. I implore the Government to recognise the unintended consequences and to commit to measures that will preserve local jobs, sustain our community services and uphold the quality of care we offer our vulnerable citizens. I hope that the Government will do more to ensure that this tax increase does not harm the very communities and services we have pledged to serve and protect.
David Chadwick
The Liberal Democrats agree that the country’s finances are in a mess thanks to the previous Conservative Government. However, we do not agree that increasing national insurance is the way to address the problem, as doing so will undermine efforts to improve public services across the United Kingdom. For example, last month Care Forum Wales issued a stark warning that the rise in national insurance could cause a collapse in the social care system in Wales, creating a £150 million funding gap. Social care in Wales is already on its knees. Over the past four years, 40 Welsh care homes have closed. If yet more are forced out of business due to increased costs, we will have even fewer social care spaces available. We know that the scenes of ambulances left queueing for hours outside our hospitals are the result of them being unable to discharge patients due to shortcomings in social care.
It is not just care homes that are affected, but primary care too. Our GPs, dentists and pharmacies will suffer from this tax rise. A local GP practice in my constituency told me that it will have to cut one day of practice nurse time and one day of GP time from April 2025. That is a direct result of the projected £30,000 increase in its national insurance bill, alongside an overall lack of funding for GPs. A second surgery is projected to have an increase in its NI bill greater than £100,000 in April 2025. Both are clear that without an exemption for health and social care providers, the NHS in Wales could face collapse. It already has the worst outcomes of any nation across the United Kingdom.
Charities and local authorities will suffer too from this decision. In my constituency, the chief executive officer of Powys Association of Voluntary Organisations has stated that the national insurance increase will
“place considerable financial pressure on voluntary sector organisations, many of whom are crucial partners in delivering essential services.”
That is the reality of the decision taken by the Government to use such a blunt tool to try to fix the nation’s finances. Many of my constituents are asking why Labour has chosen to go after the small businesses, charities, and health and social care providers rather than target the big banks, the oil and gas giants, or the social media giants. I urge the Government to reconsider their decision to raise income in this manner and to make exemptions for the health and social care sectors as well as for charities.
Sammy Wilson
The outcome of the debate is of course inevitable: we know that when we go through the Lobby, we will be smashed by the overwhelming strength on the Government side, not because their arguments are strong but because of the parliamentary arithmetic. I suspect that even the hon. Member for Walthamstow (Ms Creasy), who indicated in her speech that this measure will hit especially labour-intensive services that employ low-paid people and are vital to the smooth running of the economy, will walk through the Lobby with the Government. Some people might say, “Is that not just the politics of despair?” It is important that the arguments made are at least challenged, despite the fact that, because of the parliamentary arithmetic, it may not come to anything.
I do not actually have a political point to score here, because the DUP will never be the alternative Government in this place—though the country is the worse for it. I therefore hope that all the predictions made here today and by independent bodies that have looked at the impact of the Budget are wrong. I hope that we do not find that small employers have to go out of business, that recruitment goes down, that the real wages of those who are employed—especially at the lower end of the wage spectrum—are cut, and that the services that are so vital to the health service are impacted on. I hope that all those things do not happen. I hope that economic growth is not impacted by it, but all the economic evidence, the economic logic and the forecasts made indicate that the arguments made against this measure by Opposition Members are correct.
Dan Tomlinson
My understanding is that the Office for Budget Responsibility says that growth will be higher in the short term, broadly unchanged over five years and higher in the long term.
Sammy Wilson
We have seen over the last five months that growth has already been impacted. Of course, the OBR has indicated that in two and three years’ time, growth will be impacted negatively as well. I do not think that one can hide behind those arguments. As I said, I hope that I am wrong, but I suspect that all the economic logic on the impact of this measure and what we are already hearing from employers indicate that that is not the case.
Jim Shannon (Strangford) (DUP)
The reality is that those who own businesses in my constituency tell me that they will have to look at reducing wages and reducing numbers. Because of the Government’s policy, those working in doctors’ surgeries will have to look at a reduction in numbers as well. Whether Government Members like it or not, this measure will impact on small and medium-sized businesses and on GP surgeries. That is the reality. The Government are to blame for a recession—there really is talk about it. If a recession comes, the Labour party will be responsible.
Sammy Wilson
I thank my hon. Friend for his short speech to back up the points I have been making.
Let me look at some of the arguments presented today. The first is that the Bill will help to fix the NHS. I will not go into the arguments already made, but Members have made it clear that the NHS depends on primary services and, once people have gone through hospital, being able to discharge them into the community. The businesses that provide those services will be impacted by these tax changes. I am sure that there is not a Member here who does not already see that hospital beds are being blocked because there is insufficient capacity. People go into hospital and get mended but still need some respite before they go home, but the NHS cannot find places for them. If that is true now, then the situation will be even worse once these tax increases impact those businesses.
A&E is inundated with people who cannot get GP appointments. If the Government hit GPs, as has been outlined eloquently today, those services will be blocked and not available. Where do people go? They go to A&E. The Bill is meant to help the NHS, yet all the evidence from the people who support it and are part of the supply line say otherwise.
The Minister previously indicated that the people whose services are commissioned from the NHS can renegotiate those services and the payments for them. The very fact that the NHS is in difficulty and is having to be exempt from these national insurance changes is an indication that when they go with the bowl, they will be told that the cupboard is bare and no support will be given.
The second argument made today is that we need these changes to restore trust in politics, even though it was promised that working people would not be impacted. When evidence was given to the Treasury Committee, what did the representative from the Institute for Fiscal Studies say? They said that these changes will affect every working person. We cannot hide behind the argument that it is being done for the good of trust in politics. In fact, it will undermine trust in politics.
Another argument that was made is that we have no choice. The Government already made choices, even before this Budget. They chose to spend money even when they knew there was a black hole. They were spending the money that they want to raise from these national insurance contributions on wage increases, quangos and other things. Recently, they will not even tell us how much they are spending. The Energy Secretary went to COP and came back and told us of a £300 billion bill coming down the road for our sin of industrialising in the past, and he will not tell us how much we will have to pay. We gave away the Chagos islands, and we are going to pay for that but it is secret.
Adam Jogee (Newcastle-under-Lyme) (Lab)
I am enjoying listening to the right hon. Member. He is an esteemed former Finance Minister in the Northern Ireland Executive, so I defer to his experience. He is setting out his opposition to the measures in the Bill. Now that he has referenced the black hole, can he tell us what he would do to address the legacy of the previous Government?
The Chairman of Ways and Means (Ms Nusrat Ghani)
Order. I, too, enjoy listening to the right hon. Gentleman, but it would really help if he could continue to speak to the Bill at hand, and not make broader comments.
Sammy Wilson
The mentality is that with these national insurance increases we are imposing more taxes on small businesses and on all the sectors I have spoken about. I would ask the hon. Gentleman what spending decreases could have been looked at—have any productivity impositions been put on the public sector, for example? That should be the answer, rather than asking, “Who should we tax to pay for the black hole?” Instead, we should be asking how we can reduce and reprioritise the things that we do; looking at some of the things the Government do at present that they do not need to do, or that they could do better, or that they could save money on.
I listened with bemusement to the hon. Member for Dartford (Jim Dickson), who was relieved by a survey in The Guardian in which more than 50% of those surveyed were quite happy with this tax. If there are so many Guardian readers happy to pay more taxes, I am sure the Scottish National party would love them all to move to Scotland, because it might solve some of the problems they have. These are the kinds of strained arguments that we have had from Government Members.
They know the impacts the Bill will have. I am sure they are having the same conversations with their constituents as I have had with the people who have spoken to me in my constituency office—the small businesses, those in the hospitality industry, the GPs and those in the care sector and the charitable sector, who have come to me and told me the impact it will have on their organisation. I do not believe we can run away from this, despite what will happen when we vote later today.
I do not share the optimism of the right hon. Member for Beverley and Holderness (Graham Stuart) that somehow little cabals will form on the Government Benches—that they will all start whispering, and maybe 10 of them will go to see the Chief Whip, and then next week it will be 20, and then, by the time there are 50 of them going to see the Chief Whip, this will all change. I do not share that optimism. What I do hope, however, is that the predictions that have been made about the Bill will finally resonate with the Chancellor, and we will see a change in policy.
Carla Lockhart
In my constituency and that of my right hon. Friend, agrifood manufacturing is a big business base and a big sector. As he will know, many agrifood businesses are saying that these changes will increase their bill by £50,000, £60,000 or £100,000. On top of the death tax for family farms, that will absolutely decimate our agrifood sector. I urge the Government to pull back from this measure; otherwise, we will see the cornerstone of our economy destroyed.
Sammy Wilson
Of course, agrifood is another sector that I had not mentioned, along with hospitality, food processing, all the charitable sectors and some that are supporting the health industry—all are affected by it; they cannot escape it. I believe the impact will be far worse than what the Government are hoping for. Of course, as a result of the side effects of this measure, the revenue that is hoped for might not even be obtained.
Adam Jogee
For accuracy, I want to point out to the right hon. Gentleman that I am far more likely to be seen reading the Antrim Guardian than The Guardian.
Sammy Wilson
I am pleased to hear it. I certainly do not read The Guardian, and I certainly do not share the view, held by some of its readers, that we should pay more taxes.
In closing, the Government have a huge responsibility to tax wisely and to spend wisely, and I do not think they have got that equation right. In fact, they are spending recklessly in many areas, and taxing recklessly as well. That will impact on their long-term objectives, but it will also impact on the lives of our constituents day to day.
The Chairman
I know that colleagues read about how we manage the Chamber, so they will know that I cannot put speaking limits on individuals contributing in Committee of the whole House. However, if the last two Members speak for around five minutes each, the Minister will have time to respond before we have to conclude business, so please be mindful of that.
Robin Swann (South Antrim) (UUP)
I will shorten my speech on your guidance, Ms Ghani. I encourage all Members of the House to follow the example of the hon. Member for Newcastle-under-Lyme (Adam Jogee) and sign up to the Antrim Guardian—a very good local publication from my constituency that carries good articles.
I rise to come back to the topic of the debate, employers’ national insurance contributions, because we have covered many subjects this afternoon. I support the amendments that look to alleviate the punishing implementation of, and increases to, employers’ NICs, especially for our family health service and social care providers. Unlike other speakers on the Opposition Benches who have looked to blame the Government for the increases, I do not think the Government are to blame. I think this is more about the Treasury than the whole Government.
I want to pick up on a point raised, I think, by the hon. Member for Isle of Wight East (Joe Robertson). I have a lot of respect and sympathy for the Secretary of State for Health and Social Care, the right hon. Member for Ilford North (Wes Streeting). When he announced his 10-year plan for the national health service, there were three main platforms: to move from analogue to digital, to move from sickness to prevention, and to move from hospital to community. The increases to NICs for community-based health providers will put many of those services at risk and under pressure. This is where there is a disconnect between what the Government are trying to do and what they are actually going to do and achieve. I think that was the point described by the right hon. Member for Beverley and Holderness (Graham Stuart). If we put the additional charges on our GPs, community pharmacies, opticians, domiciliary care providers and social care providers, that will come back, in a circular route, in how we fund our health service.
On the specifics for Northern Ireland, we are looking to transform and modernise a health service that has been largely underfunded and under pressure for quite a number of years, and trying to exist on single-year budgets since 2016. We are doing that by introducing multidisciplinary teams, where a general practice has a psychologist and a social worker all within its practice. General practices are asking for that to be extended across Northern Ireland, but the increase in ENICs will increase wage bills and pressures on the pharmacies and general practices that have already taken that step.
The right hon. Member for Beverley and Holderness also made a point about the introduction of social care within the health service. We already have that in Northern Ireland, and 75% of the provision is done by the private sector. One thing this House needs to address, especially those on the Labour Benches, is that when we talk about private provision, they are not organisations making massive amounts of money. In my constituency they are often family-run social care practices that look after two or three homes. Nearly all nursing and residential care homes are privately owned too.
Josh Fenton-Glynn (Calder Valley) (Lab)
The hon. Gentleman makes an important point about the problems in the social care market. However—this is a point I have made before—a lot of that is owing to the fact that nothing has been done since Andrew Dilnot’s report in 2011. Perhaps the hon. Gentleman could point to where he has spoken out about that in the past.
Robin Swann
When I was Minister of Health in Northern Ireland—for four years—I looked to the Dilnot report, and I tried to introduce parts of it there because of the differential that exists: in our system, health and social care services are the overall responsibility of the Department of Health. I know what point the hon. Member may have been trying to make, but I think he failed to make it directly in that intervention. The impact of not only the Dilnot recommendations but the introduction of employers’ national insurance contributions on those services would actually run counter to anything that Dilnot was recommending, because he was talking about a funded, integral part of domiciliary care as part of the health service, which we already have, but that would put pressure on our health services at the moment.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. May I ask the hon. Gentleman to keep his contribution to just a few minutes, so that the Minister has time to respond to all the Back Benchers?
Iqbal Mohamed
Everyone in my constituency, and indeed in the whole country, knows that the last Tory Government decimated public services after 14 years of austerity, mismanagement, negligence and a sole focus on the rich, at the expense and neglect of the poor working class and the public sector. I sympathise with the new Government, and I will try to provide constructive support.
I wholeheartedly welcome the Government’s announcements in the Budget of increased investment in education, the NHS, infrastructure projects and other public services, but, like many other people in the House and throughout the country, I do not agree with the approach taken to the funding of those investments. Members on both sides of the Committee have indicated today that failing to protect key sectors and services such as general practices, care homes, pharmacies, childcare providers and third sector providers may have been an oversight or a mistake on the Government’s part, but I am not so sure. On the basis of the Government’s other blanket policies on abolishing the winter fuel allowance, imposing VAT on all private schools including low-fee and charitable schools and removing business rates relief from all private schools and charities without any announcement of safeguarding or compensatory measures to protect these services and sectors, it appears to have been a deliberate, or negligent, decision.
It is clear that the Government inherited a dire state of affairs that requires huge investment, which must be paid for in a responsible way. I am sorry to say that the way that has been chosen by this new Labour Government is not the right one. Viable and progressive alternatives are available to the Government to raise finances for the necessary investment rather than inflicting the increase in national insurance contributions on the impacted bodies. Let me suggest a couple of easy measures that would support the Government’s investment. One possible solution is the imposition of a 2% wealth tax on assets over £10 million, which would raise the amount predicted to be raised by national insurance contributions; another is the closing of corporation tax loopholes that allow corporations to save billions and to offshore profits.
The Exchequer Secretary to the Treasury (James Murray)
I am conscious that I have only a few moments to speak. I will not go through the four clauses of the Bill, as I take it that everyone will have read it already. I will instead go directly to the amendments that have been tabled, ahead of potential votes in a few moments.
I will address the amendments tabled by the hon. Members for St Albans (Daisy Cooper), for Angus and Perthshire Glens (Dave Doogan), for Leicester South (Shockat Adam), for Grantham and Bourne (Gareth Davies), and for Lagan Valley (Sorcha Eastwood). These amendments seek to exclude certain sectors, including healthcare providers, educational settings and charities, from the new rate and threshold for employer national insurance. As hon. Members know, the changes in the Bill before us represent one of the difficult but necessary decisions that the Government have had to take to fix the foundations of our economy and our public finances.
James Murray
I cannot give way. I have given way to the hon. Gentleman many times in recent weeks, but I have about four minutes in which to address everyone’s comments.
As hon. Members have set out, we recognise that the changes we are making today will have an impact on employers. Making these changes was a tough decision that we did not take lightly, but we are also clear that the revenue raised from the measures in this Bill and others in the Budget will play a critical role in both restoring economic stability and getting the NHS back on its feet. As a result of the measures in this Bill and the wider Budget measures, the NHS will receive an extra £22.6 billion over two years to deliver 40,000 extra elective appointments a week.
The Government will provide support for Departments and other public sector employers on additional employer national insurance costs, including central Government, public corporations and local government. Independent contractors, including primary care providers, social care providers, charities such as hospices and nurseries will not be supported with the costs. That is the same as was the case with the changes to employer national insurance rates under the previous Government’s plans for the health and social care levy.
Primary care providers—general practice, dentistry, pharmacy and eye care—are important independent contractors that provide nearly £20 billion-worth of NHS services. Every year, the Government consults each sector about what services they provide, and about the money to which they are entitled in return under their contract. As in previous years, the issue we are debating today will be dealt with as part of that process in the round. The Department of Health and Social Care will confirm funding for general practice, dentistry and pharmacy for 2025-26 as part of the usual contract process later in the financial year, including through consultation with sectors.
I turn to adult social care. The Government have provided a real-terms increase in core local government spending power of around 3.2% for 2025-26, including at least £680 million of new grant funding for social care. The funding can be used to address the range of pressures facing the adult social care sector; again, they will be considered in the round.
Some hon. Members have tabled amendments to exclude charities from the new national insurance rate and threshold. However, it is important to recognise that charities can benefit from employment allowance, which this Bill has more than doubled from £5,000 to £10,500. That will benefit charities of all sizes, particularly the smallest. The Government also provide wider support for charities, including hospices, via a tax regime. This tax regime is among the most generous in the world, with tax reliefs for charities and their donors that are worth just over £6 billion for the year to April 2024.
I recognise that some hon. Members have shown an interest in the impact of this Bill on childcare settings, as highlighted in the amendments tabled by the hon. Members for St Albans, for Grantham and Bourne, and for Lagan Valley, and in the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy). Early years providers have a crucial role to play in driving economic growth and breaking down barriers to opportunity. We are committed to making childcare more affordable and accessible, which is why the Government committed in our manifesto to deliver the expansion of Government-funded childcare for working parents, and to open 3,000 new or expanded nurseries, by upgrading space in primary schools to support the expansion of the sector. Despite the very challenging circumstances that the Government inherited, the Chancellor announced in her Budget in October significant increases to the funding that early years providers are paid to deliver Government-funded childcare places. This means that the total funding will rise to over £8 billion in 2025-26.
New clause 4, tabled by my hon. Friend the Member for Walthamstow, specifically refers to the eligibility criteria for employment allowance. I can assure her that they have not changed, except for the removal of the £100,000 threshold, which will mean that more organisations are able to access employment allowance. The eligibility of a particular organisation will depend on the make-up of an individual business’s work, which can be determined following detailed guidance from His Majesty’s Revenue and Customs. While every organisation will need to check its eligibility for the employment allowance, it is likely that many childcare providers will be able to access it.
Finally, I will turn to the amendments to exclude universities from the new rate and thresholds for employer national insurance. We greatly value UK higher education in creating opportunity, being an engine for growth in our economy and supporting local communities. The Budget provided £6.1 billion of support for core research and confirmed the Government’s commitment to the lifelong learning entitlement. The Secretary of State for Education has confirmed that the maximum fees in the academic year 2025-26 will rise, for the first time since 2017, from £9,250 to £9,535. This was a difficult decision, which demonstrates that the Government are serious about the need to put our world-leading higher education sector on a secure footing. I would like to continue, Madam Chair, but I should stop now—
James Murray
I beg to move, That the Bill be now read the Third time.
The Bill seeks to put into law one of the toughest decisions we made at the Budget in October. As I set out in earlier stages of the Bill, we recognise that there will be impacts on employers as a result of the changes, with employers facing difficult decisions. It will implement a difficult but necessary decision that, along with others, is critical to raising the revenue needed to fix the public finances, get public services back on their feet and restore economic stability.
The Bill before us has three measures: first, an increase to the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%; secondly, a decrease in the secondary threshold for employers from £9,100 to £5,000 per year from 6 April 2025; and thirdly, changes to the employment allowance to support small businesses. The measure will protect small businesses and charities by more than doubling the employment allowance from £5,000 to £10,500 pounds a year from April 2025. In addition, the £100,000 eligibility threshold will be removed.
Through the measures in the Bill and others in the Budget, the Government are taking the difficult but necessary decisions to fix the foundations of our economy. If hon. Members in other parties choose to vote against the Bill, the British people will see that they are voting to ignore the fiscal mess that we inherited. They are voting to cut investment in the NHS and to increase borrowing for day-to-day spending.
Finally, I reiterate my thanks to hon. Members who have participated in the debate, and I extend my thanks to all the officials for their support. I commend the Bill to the House.
Mel Stride (Central Devon) (Con)
This is not a Bill, but a Shakespearean tragedy. It is the “Hamlet” of our age. While the Labour party was tipping the poison into the ears of the electorate, it was assuring them in its manifesto that it would do nothing with national insurance. Look what it has done. This will hit inflation—all forecasts show it higher every year than it would have been under us back in the spring. Mortgages will be higher, living standards will be lower, wages will be driven further down and there will be a £770 reduction in the standard of living by October 2029, according to the Joseph Rowntree Foundation. We will see 50,000 jobs destroyed, particularly among our younger people. We will see growth impacted—lower across the forecast period than it would have been under ourselves back in the spring.
This is a far cry from our record when we left office, with employment at near record highs, unemployment at near record lows, the fastest growing economy in the G7 and real wages growing in every month for 13 consecutive months. We brought inflation down from over 11% in October 2022 to exactly the target of 2% on election day. The Bill is a calamity for businesses up and down our country. We are the party that understands that we only get good public services with a strong economy and strong businesses. The Labour party is consigning people up and down this country, plunging them into the tepid bath of managed decline over which it has presided.
Question put, That the Bill be now read the Third time.
Business without Debate
Delegated Legislation
Madam Deputy Speaker (Ms Nusrat Ghani)
With the leave of the House, I will put motions 3 to 5 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Professional Qualifications
That the draft Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) (Extension to Switzerland etc.) Regulations 2024, which were laid before this House on 4 November, be approved.
International Development
That the draft Asian Development Bank (Thirteenth Replenishment of the Asian Development Fund) Order 2024, which was laid before this House on 4 November, be approved.
That the draft Inter-American Investment Corporation (Further Payments to Capital Stock) Order 2024, which was laid before this House on 4 November, be approved.—(Vicky Foxcroft.)
Question agreed to.
Public Accounts Commission
Ordered,
That Sharon Hodgson be discharged as a member of the Public Accounts Commission, and that Phil Brickell, John Glen, Tom Hayes, Sarah Olney, Chris Vince and Michelle Welsh be appointed as members of the Public Accounts Commission under section 2(2)(c) of the National Audit Act 1983.—(Lucy Powell.)
BBC Charter Review
(1 day, 8 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Gregory Campbell (East Londonderry) (DUP)
The outcome of the BBC charter review has been awaited for a considerable time. Let me begin by quoting a sentence that has been quoted on many previous occasions:
“The Mission of the BBC is to act in the public interest, serving all audiences through the provision of impartial, high-quality and distinctive output and services which inform, educate and entertain.”
As someone said in a different context many years ago, that would be a very good idea.
Jim Shannon (Strangford) (DUP)
I will not detain the House too long, but as my hon. Friend will know, many of our constituents who are put off by BBC bias—but who watch, for example, the BBC Parliament channel, and are probably watching it at this moment—are astounded that they will now pay £174.50 for the privilege of, in the words of one of my constituents, watching biased news reporting and social justice tracking programmes, when all they really want to do is hear the news and watch a programme on farming. The BBC—what are they?
Mr Campbell
Given that my hon. Friend is a master of both taking and making interventions, I agree with his comment.
The previous Government made a statement in April, which was just six or seven months ago. It explained that the purpose of the charter review was:
“To take stock, at the Charter’s half-way point, and evaluate the effectiveness of the BBC’s governance and regulation.”
The statement continued:
“The role of public service broadcasting and a free press has never been more significant than it is today. We are all living in an era of fake news”—
the Government were certainly right about that—
“where social media creates echo chambers of opinion, presents individual experience as established fact and mis and disinformation go unchallenged.”
That sets the context for the mid-term review.
I will move on to the comments made by the director general of the BBC, who has repeatedly said that he wants to see greater accountability from the organisation. I agree with him that the BBC should be more accountable; hopefully, the new manifestation of the charter will explain and expand on that. For example, we have had over a number of years what the BBC calls the “on-screen talent”. They have only recently had to declare their BBC salaries publicly; I and others campaigned for that over many years. Many people said it would never be done, but thankfully it was. Now we see, year on year, the top presenters all having their BBC salaries declared. So they should, because we the public pay those salaries, and ought to know what they are.
There is another point that the charter review should take account of. A small number of presenters have their BBC salaries declared, but some of them have private companies, which get commissioned to make programmes that appear on the BBC. We are not allowed to know what the proceeds of those commissioned programmes are, so it could be the case that some on-screen talent get, for example, £300,000 or even over £400,000 a year. They are paid directly by the BBC for their appearances on the BBC, but because they have a private company that gets commissioned to make programmes, they get additional sums of money. We do not know whether that is a substantial five-figure sum, or even a substantial six-figure sum. The director general says that he wants to see greater accountability, and we want to see the sums. Hopefully, the charter review can address that.
Gavin Robinson (Belfast East) (DUP)
My hon. Friend mentions information that should be shared, and accountability. What about transparency in commissioning? He has raised this issue on a number of occasions over the years. Is he satisfied that there is transparency in the commissioning process? Is there opportunity and fairness in the process, or is there a greater opportunity to inject transparency through the charter review?
Mr Campbell
My right hon. Friend is absolutely correct: there is a lack of transparency. I and others have raised the issue of presenters who do their BBC work and so know what kinds of programmes the BBC is looking for. They have an inside track, because they have a private company that is advantageously placed to get a contract. The BBC has been very dilatory in opening up about what that means, how it is reviewed and how the organisation is made accountable. There is a significant lack of transparency.
I turn to the issue of the BBC using licence payers’ money in an accountable and transparent way. We had a recent example just last month, when we had a general election in the Irish Republic. I understand that there is a read-across for Northern Ireland from the outcome of that general election, but the BBC in Northern Ireland already has two full-time reporters based in Dublin, who one would assume were well placed to cover the Irish general election over the three-week period. However, in addition to those two full-time Republic of Ireland-based reporters, the BBC dispatched its Northern Ireland political editor from Belfast, a BBC correspondent from Belfast, a reporter for BBC Newsline from Belfast and a senior journalist from BBC Radio Foyle. All were dispatched to Dublin in addition to the two personnel that the BBC already had in Dublin, to cover the general election in the Irish Republic. We are not allowed to know the cost of that coverage of the Irish Republic election, but hopefully the charter review can look at expenditure accountability.
The other issue I want to raise is the recent phenomenon known as BBC Verify. Danny Cohen, a former director of BBC television, has said:
“BBC Verify claims to represent a new gold standard in BBC reporting, but the frequency with which it has had to correct stories does not suggest that it is meeting these lofty aims”.
If a former director of BBC television, describing a very recent phenomenon that was supposedly set up to establish the BBC as the overseer of the verification of other news outlets, is saying that it does not really live up to its description, something has to be done to ensure that it does so. If there is going to be verification, it must stand up to close scrutiny.
I would hope that the Minister, whom I thank for being in her place, will take this opportunity to respond to the points that have been made. I fully understand that the BBC, in terms of its output and its day-to-day transmission, is a separate body over which no one in Parliament should have any say, and we accept that that is the case, but accountability, transparency and the lack of impartiality that is often displayed in BBC output must be covered by the review of the charter. I hope we can hear something productive from the mid-term review, and I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
I am pleased to respond to this debate, and I congratulate the hon. Member for East Londonderry (Mr Campbell) on securing it. The debate is a good opportunity to discuss the upcoming charter review, which we intend to launch next year. He has raised a number of important areas related to the BBC, which I will respond to, but I would first like to make a few broad points about the contribution that the BBC makes to the UK.
The BBC supports our democracy, brings our communities together and helps to shape and define our nation through telling stories about the lives of people in all parts of the UK. It also plays an important role in providing trusted news as the UK’s most trusted news brand, reaching around 95% of UK adults each month. It is one of Britain’s biggest cultural exports and an important soft power asset, with the BBC World Service providing essential, trustworthy news through 42 language services to millions of people across the globe. That is a topic I was pleased to discuss today while giving evidence to the joint sitting of the Culture, Media and Sport Committee, the Foreign Affairs Committee and the International Development Committee. Indeed, I see one of the Committee members in the Chamber right now.
The BBC has provided some of our most memorable moments across television, representing stories from every part of the UK. It acts as a linchpin in the UK’s flourishing creative economy, investing in the skills, training and creativity that drive growth across all regions of the UK. Last year, it contributed £4.9 billion to the UK economy and supported over 50,000 jobs, with more than half of this impact outside London, and it invests more in original British content than anyone else.
I shall move on to some of the points the hon. Member raised. I note his view on increasing the accountability of the BBC as part of the charter review, and it is important that we get this area right. The charter review will explore BBC accountability, particularly in terms of ensuring that the BBC is accountable to those who fund it: the British people. As a public service broadcaster that is hugely important to public life, the BBC must be responsive to its audience. The BBC has a duty to deliver impartial and accurate news coverage and content under the charter, which specifically sets out that it must observe high standards of openness and seek to maximise transparency and accountability.
Since 2017, Ofcom has regulated the BBC and has taken action to make sure that it is held to account. Ofcom is required to prepare and publish an operating framework for the BBC, which must contain provisions to secure the effective regulation of the BBC’s activities.
Under the BBC’s new operating licence, introduced last year, the BBC is required to report more comprehensively on its performance and its plans for services. The Government welcome Ofcom’s recent report into the BBC’s performance in 2023-24 and note its findings, including where Ofcom has identified areas of improvement for the BBC. It is for Ofcom, as the BBC’s independent regulator, to monitor the BBC’s progress in these areas. The charter also includes provision for the National Audit Office to examine the economy, efficiency and effectiveness with which the BBC uses its resources in discharging its functions.
The hon. Gentleman spoke about commissioning. A key principle of the BBC’s success is its editorial and operational independence, which must be upheld. That is why decisions on commissioning and programming are for the BBC board, not for the Government. Being operationally and editorially independent, BBC commissioning is rightly a matter for the BBC. It is not within the Government’s scope to intervene in day-to-day commissioning decisions, but the charter requires the BBC to open up content production to allow non-BBC producers to compete for BBC projects. By the end of the current charter in 2027, 100% of BBC television and 60% of BBC radio will be fully open to competition to support a diverse range of stories and views on the BBC.
Mr Gregory Campbell
The Minister talks about the BBC needing to open up contracts to non-BBC personnel. Does she accept that this needs to be seen to be done on an equitable and fair basis, so that people beyond the reach of the BBC, as well as internals, have an equal opportunity to bid for contracts?
Stephanie Peacock
Yes, I do accept that, and it is something we can look at as part of the charter review. Of course, Ofcom, as the BBC’s independent regulator, holds the BBC to account on its performance and its commissioning practices, and on the market impact of those.
The hon. Gentleman mentioned BBC pay, which I appreciate is a matter of debate and controversy. The royal charter requires the BBC, as he rightly said, to publish the salary details of all BBC staff and talent paid over £178,000. Salary disclosures of this kind were made for the first time as part of the 2016-17 annual report. The salaries of BBC staff are also a matter for the BBC and the individuals themselves, not for Government. However, the charter review will look again at the transparency of this issue.
Jim Shannon
In my intervention on my hon. Friend the Member for East Londonderry (Mr Campbell), I referred to impartiality and BBC bias. Many of my constituents feel that the BBC is not impartial. Under the charter, is it possible for people to express such concerns, and for those concerns to be investigated?
Stephanie Peacock
Of course, and there is a complaints procedure right now. A complaint goes to the BBC first, and it can then be escalated. If the hon. Gentleman’s constituents are not happy, they can then go to Ofcom. As part of the charter review, it is absolutely right that all members of the public can have their say. We will be launching a public consultation so that his constituents, and indeed people across the country, can have their say, because we want the BBC to represent the people it serves.
Next year, the Government will launch a charter review with the aim of addressing some of the challenges we are discussing today and delivering a renewed charter by the end of 2027 that will support the BBC not just to survive but to thrive long into the future. This will be the ninth charter review in the BBC’s history. It will be an opportunity to consider what the BBC is for, how it delivers for audiences and how it should be funded, governed and regulated against a rapidly changing media environment. The charter review will also look to uphold the BBC’s independence and ensure that it maintains the public’s trust.
Charter review is a well-established process, and our next step will be to publish the terms of reference next year, setting out the objectives we wish to achieve. We will ensure that we take all relevant views into account as part of the review. With that in mind, next summer we will also launch a public consultation, as part of which we will encourage everyone to share evidence. We need to have a truly national conversation and ensure that the BBC is reflective of the people it serves, wherever they come from and whatever their background. Once we have consulted widely, considered the views of stakeholders and assessed the evidence, we will outline our policy direction for the next BBC charter in a White Paper in 2026.
There will also be an opportunity to place a draft charter before both Houses before the current charter expires in 2027. The devolved Governments will be a key part of the conversation and I look forward to visiting Northern Ireland in the coming months. I have met the Northern Ireland Minister for Communities online, and I welcome further conversations with my devolved counterparts.
As we address vital issues about the future of the BBC, we must ensure that there is a sustainable funding model that is fair to those who pay for it. We will consider that area as part of the upcoming charter review. The media landscape has changed radically since the current charter was introduced in 2017, and the BBC faces key challenges to its sustainability. We cannot ignore the fact that the challenges to the funding model in its current form are increasing, and we are fully committed to retaining the licence fee for the rest of this charter period. However, for the BBC to succeed, it must have sustainable funding to allow it to adapt and thrive in a changing media landscape.
We are clear that what the BBC does and what it can achieve are inextricably tied to how it is funded, and those issues should be considered together. The charter review will be an important part of making sure that the BBC is supported to do that. The Government are keeping an open mind about the best solutions. As my Department’s work progresses, we will be working closely with the BBC and engaging with other broadcasters, stakeholders across the creative industries and the British public to inform our thinking.
While audience trends are changing, there are still millions of households that continue to rely on digital terrestrial television, also known as Freeview. I am glad to say that the continuity of the technology has been secured in legislation until at least 2034. The need to maintain traditional broadcasting platforms, at the same time as there is a shift to online viewing, is resulting in more choice for audiences, but it is creating financial pressures for our broadcasters, including the BBC.
Our project on the future of TV distribution will explore those issues. We will analyse how people receive their television programmes now, and through the next decade. It will help us to ensure the continuity of a sustainable TV ecosystem and the best outcome for audiences. As part of the project, I am glad to be chairing a new stakeholder forum on the future of TV distribution, allowing me to hear from TV stakeholders, including the BBC, infrastructure providers and groups that represent the interests of audiences. I will, of course, raise the issue of TV distribution when I next meet my counterparts in the devolved Governments.
The charter review provides us with an exciting opportunity to engage the widest possible range of voices on the future of the BBC. The Government are committed to having a truly national conversation as part of the charter review. It will be an honest, supportive and respectful debate that can give the public confidence in their BBC. We will provide more details on what that looks like and how stakeholders can contribute their views in due course, when we launch the review next year. The hon. Member for East Londonderry has contributed to that national conversation today, and for that I thank him.
Question put and agreed to.