Employer National Insurance Contributions: Charities
(2 days, 9 hours ago)
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Joe Robertson (Isle of Wight East) (Con)
I beg to move,
That this House has considered the impact of changes to employers’ National Insurance contributions on the charity sector.
The background to this debate is the October Budget presented by the Government, and in particular the rise in national insurance contributions for employers. The rate was raised to 15% and the threshold at which national insurance contributions apply was brought down from £9,100 to £5,000, bringing in some part-time workers who previously had not caused their employers to be subject to national insurance contributions. Much has been said about the impact of the rise on the economy, but less has been said about the impact on charities.
Charities deliver almost £17 billion-worth of public services a year. Public services and civil society could not operate without charities. There is a tendency to overlook the important work they do. Particularly at the level of local government, charities are responsible through contracting for the delivery of a lot of the services that local governments are required to deliver.
Sarah Dyke (Glastonbury and Somerton) (LD)
I thank the hon. Member for securing this important debate. The Balsam Centre is a charity in Wincanton in my constituency that delivers some of the vital services that the hon. Member talks about, including maternal mental health support and youth counselling. The NI changes mean that it will have to find an extra £40,000 for its salary costs next year, cancel any pay increases and operate at a reduced capacity from April. Its work relieves pressure on the NHS and on local government, so does the hon. Member agree that the Government must rethink the national insurance changes?
Joe Robertson
I of course agree with the hon. Member that the Government must rethink the changes. I will go on to use examples from my own constituency, and I thank her for doing so with hers.
Joe Robertson
I will make a little progress and then I will be happy to give way.
The National Council for Voluntary Organisations estimates that the overall cost of the money taken from charities and transferred into the Treasury will be £1.4 billion. That is money being taken from charitable sources and transferred into the Treasury. Sarah Elliott, the chief executive of the National Council for Voluntary Organisations, said:
“This is the biggest shock to the sector since pandemic. Charities already juggling rising demand, escalating costs, and the falling funding cannot absorb an additional £1.4 billion in costs without drastic service cuts...This additional cost, for which there is no headroom in budgets to cover, will be devastating.”
Jim Shannon
I commend the hon. Member for securing this debate. In Northern Ireland, the effect on charities will range from £5,000 per year to £200,000 per year. The costs are extreme and incredibly worrying. Does the hon. Member agree that charities are the backbone of many local communities across the UK, as he said earlier in his speech, and that as such they deserve even more support? Does he feel, as I feel on behalf of charities in my constituency, that the change could ultimately be the straw that breaks the camel’s back, and that charities could well disappear?
Joe Robertson
I agree with both those points. Charities tell us that the change will be the straw that breaks the camel’s back for many. I know that because, immediately before entering Parliament, I worked for a nursing charity supporting dementia carers.
The Government know the pressure created by the national insurance contribution rise. They exempted the NHS because they knew the impact it would have on healthcare, but they ignored or failed to understand the contribution that charities make to health and social care.
Wendy Morton (Aldridge-Brownhills) (Con)
I commend my hon. Friend for securing this debate. The Midlands Air Ambulance Charity, which serves my constituents, receives no Government funding whatsoever for its daily missions. It does not burden the NHS financially, yet it adds immense value to the healthcare sector. Does my hon. Friend agree that it is time the Treasury considered giving organisations and charities such as air ambulances the same exemption they are giving to NHS trusts, hospital trusts and NHS bodies?
Joe Robertson
I agree. Ultimately, the Government should exempt all charities from national insurance contribution rises. Another possibility, which would be much less beneficial, would be to target the exemption at health and social care provider charities, without which the NHS could not function, but I ask the Minister to expand the exemption to all charities, not just those in health and social care.
Sir Roger Gale (Herne Bay and Sandwich) (Con)
Shooting Star and Demelza House are two children’s cancer hospice charities that make a significant contribution to the national health service. Is it not absolutely ludicrous that money given for charitable purposes should effectively be siphoned off to the Treasury instead of being used to provide the support to children and their families for which it is intended?
Joe Robertson
I agree: of course it is ludicrous. This is charitable money—most of it is charitable donations—that is given to charities to provide valuable work, and the Treasury is taking it and putting it into the Government’s coffers. Some of these charities, such as those in my right hon. Friend’s constituency, are small charities doing valuable work and are the least able to afford to give money over to the national Government. It is therefore unsurprising that 7,000 charities have signed an open letter to the Chancellor. This is about not just the increase in national insurance contributions but the timing of it and the combination of factors.
Joe Robertson
I will make a little progress and then come back to the hon. Gentleman.
Most charities are suffering as they try to raise charitable funds, yet the Government have decided to take some of those charitable funds for themselves. For charities that support older people, such as Age UK, the simultaneous impact of the withdrawal of winter fuel payments has meant that more people are using their services, and at the same time the Government are taking money off them.
Several hon. Members rose—
Joe Robertson
I give way to my right hon. Friend the Member for Beverley and Holderness (Graham Stuart).
Graham Stuart (Beverley and Holderness) (Con)
I congratulate my hon. Friend on securing this important debate. We can see from the attendance on one side of the Chamber how important charities are to Opposition parties of all sorts. We are united in opposing the change, not least because those who are the most vulnerable, such as users of Citizens Advice, are likely to see services cut. There is an £88,000 impact just on the Citizens Advice service in Hull and East Riding. Does my hon. Friend agree that the Minister needs to go back to her colleagues and change direction? No one voted for a Labour Government to attack charities and the most vulnerable.
Joe Robertson
I agree that the Minister needs to go back and do that. That is why I secured the debate.
The chief executive of Crisis said:
“Increasing employers’ National Insurance contributions will have a dreadful impact on charities at a time when we are seeing unprecedented demand for our services.”
Some 75% of charities are reducing or considering withdrawing from public service delivery. Who will pick up that shortfall? In the worst case, no one will pick up where charities withdraw, or the Government and the public sector will have to, and I am fairly sure it will cost them more than £1.4 billion to do so. I prefer to put my trust in charities with experience in what they do, rather than the Government having to put emergency measures in place because charities are forced to withdraw. Some 61% of them are likely to cut staff.
The Government’s stated aim is not backed by their tax policy in three areas in particular: in health and social care, which we have already spoken much about; in poverty and homelessness; and for vulnerable groups.
John Milne
On the hon. Member’s earlier point about Age UK, it estimates that just in my Horsham constituency it will cost £150,000 per year to cope with the changes and the extra charge. Age UK is not a business and cannot raise its prices; it can only cut its service. Does the hon. Member agree that when one in five pensioners are adjudged to be living in poverty, this is the wrong time for such a measure?
Joe Robertson
I agree with the hon. Member. Broadly speaking, Age UK operates as small charities in individual communities. Age UK in the Isle of Wight, where my constituency is, also faces paying tens of thousands of pounds. On a national scale, that might not seem like much money, but it makes a huge difference at the local level and leads inevitably either to service cuts or to staff cuts. I agree with the hon. Member that no good can come of it.
Alison Bennett (Mid Sussex) (LD)
I thank the hon. Member for securing this debate. On the point made by my hon. Friend the Member for Horsham (John Milne) about the additional costs hitting Age UK, in West Sussex and Brighton and Hove the change has had an astonishing impact which, combined with the increase in the real living wage, is going to double Age UK’s fundraising target for this year, which it cannot bear. Combined with the cost of the cuts to the winter fuel payment, that goes against the very sentiment of the Budget, which was to try to prioritise the NHS. More elderly people will be, and are presenting, in A&E. Does the hon. Member agree that the Government need to rethink?
Joe Robertson
I do agree. It looks like the Government do not understand that healthcare is delivered not only by the NHS, so when they chose to exempt the NHS from the damaging rises, they either did not understand or had disregard for all the other healthcare providers, without which the NHS could not function properly.
Joe Robertson
I will give some examples before I give way to my hon. Friend.
The change will cost Marie Curie almost £3 million a year, and it says that without further support critical services for the terminally ill may be scaled back. Hospices throughout the country will pay between £30 million and £50 million a year. For the Mountbatten hospice in my constituency it will cost £338,000—just for one hospice. Just before Christmas, the Government announced £100 million of investment in hospices over two years—so £50 million a year—which is merely giving back, broadly, what they have already taken. That money is targeted at capital spending, when hospices tell me their main pressure is revenue. Are the Government taking revenue from them and giving it back provided they spend it on capital? Clearly, they are not going to give money to all hospices, but they are going to take money from all hospices—that seems inevitable.
Helen Grant
I congratulate my hon. Friend on securing this important debate. The Heart of Kent hospice in my constituency does amazing work caring for families at a time of crisis, but the Government changes to NICs and the national living wage will cost the charity more than £200,000 per annum. Does my hon. Friend agree that the Government’s approach is undermining many hospices, damaging the vital services they provide, and ultimately putting more pressure on the NHS?
Joe Robertson
I agree. Putting pressure on other health providers and social care providers inevitably leads to pressure on the NHS. My hon. Friend hits the nail on the head in her comments and I thank her for them.
For Carers Trust the cost of this rise is £3 million—that is not its tax bill; that is just the bill from this rise in the Budget. For Stroke Association it is £2.1 million over two years, and for Teenage Cancer Trust it is £300,000. It is not just about health and social care charities, but charities tackling poverty and homelessness. The Labour Government say it is their aim, and it was in their manifesto that they would develop a new cross-party strategy
“to put Britain back on track to ending homelessness”.
What good is a strategy when it is stripping £60 million from charities trying to do what the Government want them to do? The homelessness charity Crisis says the rise will cost an additional £750,000 and—here is the point—with little or no time to prepare. That announcement was made just a few months before the effects will kick in, and Crisis says it is likely to lead to a reduction in frontline services.
I will mention a few other charities. The changes will cost Single Homeless Project £650,000. Rick Henderson, the CEO of Homeless Link, says—his words, not mine—that they are “desperately worried” about closures of homelessness services, leaving thousands without support, and that this NI increase
“could be the final nail in the coffin.”
Those are not my words, or the words of politicians, but the words of charity leaders up and down the United Kingdom.
The change affects charities supporting other vulnerable people, as well as charities supporting women and girls. Labour pledged in its manifesto to halve violence against women and girls, but chief executives of seven charities, including Victim Support and Rape Crisis, have warned the rise could result in their losing staff, closing waiting lists and ultimately closing the doors to some vulnerable victims of crime. That is the result of this Budget national insurance rise.
Sorcha Eastwood (Lagan Valley) (Alliance)
I thank the hon. Member for bringing forward this issue. I agree with him completely in so far as violence against women and girls in Northern Ireland is at crisis levels. It is one of the most dangerous places in Europe to be a woman, and we have women and girls who have lost their lives already this year to violence. Would the hon. Member agree that if the Government are serious—as I believe they are—about tackling violence against women and girls, surely this increase flies in the face of everything we are trying to achieve in terms of ending violence against women and girls?
Joe Robertson
I agree, and would like to share the hon. Member’s optimism that the Government do intend to make improvements in this area. This debate is a second chance for them to go away, then come back and provide relief to all charities, but particularly those that are operating in what might be called emergency services, because nobody else is doing what those charities are doing. Earlier today I spoke to a journalist who was involved in reporting the criminality and repulsive scandal in Rotherham. He said that when he went there, it was charities that were providing those emergency services—no one else was doing it—yet those are the groups that are having money taken off them in order to fund the Government.
Women’s Aid is a conglomerate representing 175 member organisations across England. It says that the national insurance contribution rises will effectively negate gift aid. The Government are giving a tax relief through gift aid and then taking it back through the Budget NIC rises.
Wendy Chamberlain (North East Fife) (LD)
I am grateful to the hon. Member for securing the debate. I think we can all suggest what the Government are going to say today, and they are not going to change their mind, so surely we should ensure that they do other things to support charities. Does the hon. Member agree that one thing the Government could do is to support my private Member’s Bill, the Gambling Act 2005 (Monetary Limits for Lotteries) Bill, which would remove the charity lotteries cap and allow charities to raise more money at no cost to the taxpayer?
Joe Robertson
I agree, although I am perhaps a little more optimistic than the hon. Member. The Government might not make the promise today, but they have an opportunity to go away and provide financial relief to all charities, even if they might not want to admit that in black and white. I congratulate the hon. Member on her Bill.
I am grateful to Members who have come to this debate to talk about their constituencies. In my constituency, the local charity Aspire is currently building, for the first time on the Isle of Wight, accommodation specifically for vulnerable women—and now the Government want £27,000 from it. Community Action does amazing things on the Isle of Wight, and provides a lot of contracted services for the Isle of Wight council; the Government want £45,000 from it. The employment allowance will offset £5,000 of that. The Government will tell us that is what they are giving back, but those are very small returns on the money they are taking.
I could say much more about other charities that operate in sports, the arts, live music and culture, but clearly there are time constraints. This debate is not just about charities in the sectors that I have talked about, although broadly speaking they are the ones doing things at the coalface that the public sector tends not to be able to do itself directly—otherwise, frankly, these charities would not exist.
Richard Foord (Honiton and Sidmouth) (LD)
The hon. Member was exactly right to draw particular attention to hospices, given that the House will shortly be debating the Terminally Ill Adults (End of Life) Bill. I have heard from constituents that if we are to introduce that Bill, they would like to see also proper investment in palliative care. Does he agree that that is another reason why national insurance needs to be prioritised for hospices?
Joe Robertson
I agree, and the hon. Member perfectly illustrates the point that the Government’s stated aims are not backed up by their tax decisions. If the Government want better palliative care—I hope that they do—they should not be taking money away from hospices, or from charities, such as Marie Curie, that operate end-of-life care. He makes that point well; I thank him for it.
Before finishing, I will again quote the interim CEO of Refuge. She has said that the violence against women and girls sector
“is already under immense financial pressure”,
and that not only did the Budget
“fail to include detail about how much funding has been set aside to tackle violence against women and girls, the Government’s plans to increase National Insurance contributions for employers could have dire repercussions for charities.”
My ask of the Government is to extend to charities the exemption that they have given the NHS and public bodies. It is not difficult; there is no lack of clarity about what a charity is. Nobody will wish to beat the Government for making a sensible decision for charities. There are some alternative options, but that is plainly the only ask that will really deal with the problem. The alternative options are to provide some other form of relief, but that relief should be felt by all charities. If the Government cannot go as far as to relieve all charities, they should target relief to specific sectors. We have heard in this debate about those sectors, such as those operating in poverty and homelessness, and in health and social care, and those tackling violence against women and girls. At the very least, they should do an impact assessment. No impact assessment has been carried out of the impact of this tax increase on the charity sector. That must be the most basic ask: there can be no good reason not to have an impact assessment. Finally, the Government must go back and rethink their whole approach to taxation on charities, to help to deliver—not hinder—their stated aims.
Valerie Vaz (in the Chair)
Hon. Members can see the time now and we have to take wind-ups from about 5.8 pm. A number of people have put their names down to speak, so could Members stand if they want to speak and then we can work out timings?
Several hon. Members rose—
Valerie Vaz (in the Chair)
I am reliably informed that each person will have one minute in which to speak; I am afraid that I will have to stop people after one minute. Obviously, this is the debate of the Member in charge and therefore he could take as long as he liked; he also took quite a few interventions.
Blake Stephenson (Mid Bedfordshire) (Con)
I will be really quick, Madam Chair.
I thank my hon. Friend the Member for Isle of Wight East (Joe Robertson) for securing such an important debate. I am absolutely astonished that so few Government Members have attended. It was not so long ago that they were community champions seeking election.
In Mid Bedfordshire, our charities do absolutely fantastic work to help keep our area the special place that it is. In particular, I will talk about The Greensand Trust. I was pleased to visit the trust recently. It does some absolutely fantastic work in the community and in supporting environmental improvements within Mid Bedfordshire. However, I was deeply concerned to hear about the impact that this Government’s job tax will have on the trust. There will be £100,000 extra on its staffing costs next year. With no efficiencies that it can find and no extra income that it can raise, that means that next year the trust will have to cut staff to make ends meet, which means a reduced service for everyone, and a huge loss to our local environment and our green spaces—
Valerie Vaz (in the Chair)
Order. I am really sorry, but I have to stop you. Could Members bob each time, in between speeches, so that we can get a clearer idea of how many Members wish to speak?
Abtisam Mohamed (Sheffield Central) (Lab)
It is a pleasure to serve under you, Chair, and I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing today’s debate.
As the former chief executive of a community regeneration organisation, I speak from direct experience of working with charities on the ground. Although it is nice that today the Conservatives care about charities, that was not the case previously. The cuts started right at the beginning of the Conservatives’ time in office, with their “big society” policy, which in my experience was just an underhand means of implementing cuts. I know that because, like many organisations, the charity that I worked for spent year after year managing cuts after cuts. Vital local community services were forced to close or to reduce in size.
I welcome the Government’s commitment to resetting the relationship with the third sector and to rebuilding a new partnership through the civil society covenant. I am also pleased that the Government’s policy statement on local government finances will provide a multi-year financial settlement and adjust the funding formula to local Government to rebalance funding where it is most needed. These measures will be welcomed by charities.
However, I am concerned about the impact of the national insurance increase on organisations—
Marie Goldman (Chelmsford) (LD)
I thank the hon. Member for Isle of Wight East (Joe Robertson) for bringing this really important topic to this place. It is a pleasure to serve under you today, Ms Vaz.
We are very short of time, so I will just highlight a couple of facts about charities that serve my constituency of Chelmsford. We have Farleigh hospice, which does what its name suggests. It does incredible work, but it has to fundraise most of its money, and it will need to cover an extra £250,000 in addition to the current deficit budget that it is operating under. That equates to the cost of five registered nurses or the direct running costs of its children’s bereavement service. I wonder which one the Government would prefer it to cut.
I could go on about loads of different charities. However, I have just 20 seconds left, so I will just say that I am so incredibly disappointed by the Government about this policy, because they must have known the impact that it was going to have on the charity sector, and to choose to ignore the sector and to implement the policy without any compensation and without talking to the sector first is just disgraceful. And I really want to know what the Government are going to do to—
Patrick Hurley (Southport) (Lab)
It is a pleasure to serve under your chairship, Ms Vaz, and I thank the hon. Member for Isle of Wight East (Joe Robertson) for securing this debate.
Prior to the election, the Labour party made a promise to the British people not to put up taxes on working people and I am proud that they have not put up taxes on working people. However, everybody in this country has known for years that the state was failing on its own terms. Prior to the election, I spent a year as my party’s candidate and I canvassed every single street in my Southport constituency; I know pretty much every dodgy garden gate and letterbox in the whole town. The one complaint I heard over and over and over again was that nothing works properly in this country any more. The reason why nothing works properly in this country any more is the economic legacy of the Conservative party. GP appointments, train journeys, street lights, social care—none of it works. We had to do something to put this country’s economic policy on an even keel, and this is what we had to do. [Interruption.] I will take no lectures from anybody over there who opposes it.
Shockat Adam (Leicester South) (Ind)
It is a pleasure to serve under your chairmanship, Ms Vaz. I thank the hon. Member for Isle of Wight East (Joe Robertson) for bringing this important debate to Westminster Hall. I will be a little more generous and say that this situation was an unintended consequence of the Budget, because it is unravelling very quickly. However, as the hon. Member for Strangford (Jim Shannon) said, the charity sector could cease to exist.
Jasmine House, which provides support for women who have been victims of sexual violence and are having to wait five to six years for a court appearance, has a two-year waiting list. Last year, when I spoke to the charity, it was intending to expand. Now it is going to more or less shut down because it just does not have the money. It will cost too much to continue operating.
Another charity, which is close to my professional career, is Vista. It is 170 years old and provides support for partially sighted and blind individuals in the city of Leicester. The changes will cost Vista an extra £25,000 a year. It is calling for an exemption for social care providers and charitable organisations, or for ringfenced funds to be provided to local governments to cover the cost in full.
Jack Rankin (Windsor) (Con)
Now, as we are debating here, senior members of the Thames Valley Air Ambulance are working out how to cover the £130,000 extra bill for the jobs tax next year. The charity, an outstanding resource for Berkshire, Oxfordshire and Buckinghamshire, works exclusively for the NHS and saves it many times over what the jobs tax will raise. Thames hospice in my constituency will have an extra £300,000 bill; once we add in the effect of the minimum wage and matching the nursing settlement, it will have to find well over £0.5 million next year just to stand still.
The Government say that they want to help the NHS, but their Budget is doing the opposite. Why are they doing this? Is it an accidental oversight or a misunderstanding of how the sector works? I call on them to rethink their approach and fix this.
Mr Lee Dillon (Newbury) (LD)
It is a pleasure to serve under your chairship, Ms Vaz. I thank the hon. Member for Isle of Wight East (Joe Robertson) for securing the debate. A reference was made to the unintended consequences of the Government’s decision, but actually they are not unintended consequences; there was a dereliction of duty because the Government did not do the impact assessments that they should have done to understand what they would do to our charity sector.
I recently visited West Berkshire Mencap in my constituency of Newbury. As a result of the financial pressures, the organisation will need to find an additional £163,000 to cover national insurance contributions, and its agency costs are projected to rise by approximately 12%. I also recently met Rachel Peters, the chief executive of Volunteer Centre West Berkshire, which last year provided advice and support to 403 individuals on volunteering. She expressed grave concern about the impact that the changes will have in Newbury, with staffing costs alone projected to rise by 18%. Overall within the charities that she represents, an additional £387,000 will need to be found in the next financial year, with hardly any time to plan.
Peter Fortune (Bromley and Biggin Hill) (Con)
I thank my hon. Friend the Member for Isle of Wight East (Joe Robertson) for bringing forward the debate.
I want to speak about the impact that the jobs tax will have on my community. One excellent charity working in my constituency of Bromley and Biggin Hill is South East London Mind. It faces a £190,000 increase in its tax bill, which is the equivalent of hiring five mental health advisers who could support 1,000 people a year. However, instead of working hard fundraising or reworking NHS contracts to expand, staff will be working to pay tax, and in all likelihood to do less. That is not a unique case. Another fantastic charity working in Bromley and Biggin Hill is Aurora Nexus, which employs 240 people right across London, supporting people with autism and learning disabilities. It faces a £194,000 tax grab.
Every Member present will know of a local charity that Labour’s jobs tax will hit hard. This is a poor policy, and quite frankly an attack on the most vulnerable in our society.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
It is a pleasure to serve under your chairmanship again, Ms Vaz. I thank the hon. Member for Isle of Wight East (Joe Robertson) for securing this important debate and for his excellent contribution.
If the Labour Government thought that the national insurance controversy would die away as we moved into 2025, I am afraid they will be very disappointed. They have offered Scotland an additional £300 million to meet the additional costs, but the Scottish Government estimate that the actual cost is in the region of £750 million. This past week, 48 organisations from across civic Scotland have joined with First Minister John Swinney and president of the Convention of Scottish Local Authorities Shona Morrison to call on the Chancellor to cover the additional costs and to ensure that that is extended to the full range of organisations delivering public services. They are all facing a huge rise in their costs. According to the Scottish Government, the UK Government did not even bother to consult with them on this change. How is this change contributing to growth? It is reducing services for vital support at a dark time in people’s lives.
Vikki Slade (Mid Dorset and North Poole) (LD)
It is a pleasure to serve under your chairmanship, Ms Vaz. There are 328 charities in my constituency of Mid Dorset and North Poole, including Safe Partnership, which is run out of Wareham. It installs safe rooms and secures properties for people who have been victims of domestic abuse. Not one of those people has to pay for that service; it is paid for by councils that of course are not going to be funding the additional cost of those commissioned services. In Bournemouth, Christchurch and Poole alone, the cost of the additional employers NICs for the commissioned services in children’s and adult care is £5.5 million. Becky, who runs Windward Day Services in my constituency, said:
“The feeling in adult social care is bleak. The people we support do not deserve to…be the ones who receive lower quality…services through…no fault of their own.”
Mark Powell is chief executive of Diverse Abilities Plus, and the charity is to celebrate its 70th birthday this year. Phyllis Edwards, who founded it, wanted to protect children with disabilities, but Mark is concerned that it will not make its 70th birthday.
Victoria Collins (Harpenden and Berkhamsted) (LD)
It is a pleasure to serve under your chairmanship, Ms Vaz, and I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this debate. The Government’s proposed changes pose a severe threat to vital charities at the heart of our communities. Again and again, we have heard that. Age UK in Hertfordshire has calculated that the rises will impose an additional cost of £85,000 per annum and, when combined with unexpected increases in operational costs, they have pushed its total cost increases close to £250,000.
Higher national insurance contributions mean increased costs, reduced capacity to hire and retain staff, and ultimately fewer resources to deliver the services our communities rely on. The wonderful team at the Hospice of Saint Francis in Berkhamsted shared with me the heartbreaking experience of having to turn away people from their health and wellbeing service, their nursing support and their at-home support.
The situation will only get worse. Time and again, charities have spoken to me about how the Government’s snap decision undervalues their essential work, such as supporting covid-19 vaccine roll-out, picking up the pieces after the winter fuel allowance was cut and filling the gaps left by the last Conservative Government. With our NHS and public service in crisis, I urge the Government to reconsider these national insurance rises for charities.
Edward Morello (West Dorset) (LD)
I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this debate. I want to highlight the impact of the national insurance rise on just two West Dorset charities. Weldmar Hospicecare already subsidises 60% of its NHS-commissioned care through fundraising. It will have to raise an additional £600,000 next year. Julia’s House, which provides end-of-life care to sick children, gets just 8% of its income from state funding. It will have to raise nearly £250,000 next year as a result of these changes. Charities such as Weldmar and Julia’s House play a critical role in alleviating pressure on the NHS. They provide care in the community, reduce avoidable hospital admissions and support families in their darkest hours. Their work aligns with the Government’s priorities of shifting care out of hospitals into community settings, yet this policy actively undermines their abilities to do so. Weldmar and Julia embody selflessness and service. By exempting hospices from national insurance rises, we can protect their critical work and ensure they continue to provide comfort.
Tom Gordon (Harrogate and Knaresborough) (LD)
I thank the hon. Member for Isle of Wight East (Joe Robertson) for bringing this debate forward. I want to mention two charities that I have interacted with in my constituency of Harrogate and Knaresborough. The first provides support to unpaid carers, who are now facing £90,000 in additional employer national insurance contributions. That will completely pull the rug out from underneath them and have a massive impact on people providing those services to their loved ones.
Secondly, Harrogate is home to one of the two police treatment centres in the UK. They help to rehabilitate police who have been injured in the course of their duties, and we know that every pound spent saves the taxpayer £3.80 in rehabilitation and mental health and wellbeing provision. Obviously, the impact of NICs on them is going to be huge—£160,000 of employer NICs will be passed on to them. It is really clear that, although the Government are hoping to raise some tax in the process, the additional costs are going to end up costing them a lot more in the long run. They need to rethink this.
Valerie Vaz (in the Chair)
I think we can squeeze one more Back-Bench speaker in. I call Clive Jones.
Clive Jones (Wokingham) (LD)
It is a pleasure to serve under your chairmanship, Ms Vaz. I thank the hon. Member for Isle of Wight East (Joe Robertson) for securing the debate. A number of charities in my constituency of Wokingham, including The Cowshed, First Days and Citizens Advice, have been really disadvantaged by these national insurance charges, one of them by up to £16,000 a year. The Government could have been bold by taxing banks, online gambling and social media giants to raise more money.
Can the Minister answer this simple question? Is she content with putting bankers’ bonuses first instead of debt advisers and support for people facing evictions, homelessness and genuine need?
Valerie Vaz (in the Chair)
I thank hon. Members. Everyone who wanted to speak has done. I now call the Liberal Democrat spokesperson, Daisy Cooper.
Daisy Cooper (St Albans) (LD)
It is a pleasure to serve under your chairship, Ms Vaz. I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this important debate. I believe I have up to five minutes to make some remarks, which feels positively luxurious in the context of the canter we have just had. I will kick back as I think about what to say.
I have been struck by the examples colleagues have given. We have heard a number of charities named from different constituencies: Age UK branches, charities that support survivors of domestic violence, those supporting women and children, ambulances, Mencap, Mind, physical rehabilitation and various volunteer and advice centres. But the one type of charity that has been mentioned more than any other has been hospices. Almost every hon. Member who spoke or made an intervention referred to a hospice in their area. That should surely send a strong message to the Government about the amount of cross-party support in this House for the hospice sector, and why we want to see more from the Government in that regard.
As the MP for St Albans, I have heard, as others have, about charities in my area. One hospice, Rennie Grove, says that the changes will potentially increase costs by around £250,000. A doctor working in palliative care in another hospice that serves my constituents says that the decision not to exempt hospices is “nothing short of devastating.” A trustee from a local mental health charity says that the cuts that need to be made may result in an increase in demand for NHS services. National Age UK has also said that this will put an intolerable strain on its organisation.
We know the Government have a terrible inheritance from the previous Government, but different choices could have been made. The Government say that the national insurance hike will result in additional tax revenue of around £25 billion per year, but the Office for Budget Responsibility clearly states that, after allowing for behaviour changes in response to the tax, such as reducing pay, and once public sector employers are compensated, it will only raise revenue closer to £10 billion.
Instead of raising national insurance contributions on small businesses, health and care providers and charities, the Government could have raised that same amount of money through much fairer tax changes. For example, the Liberal Democrats have proposed reversing the Conservative cuts handed to the big banks; increasing the digital services tax to 6%; doubling the rate of remote gaming duty paid by online gambling companies; and introducing a fairer reform of capital gains tax, so that the 0.1% of ultra-wealthy individuals would pay their fair share, while keeping things the same or cutting tax for other capital gains tax payers. Those other choices could have been made.
Like other hon. Members in this debate, I urge the Government to think again about what they can do to restrict the impact on our charity sector. The national insurance contribution rise is unnecessary when alternative tax-raising avenues are available, as I have just set out. It is self-defeating, because in many cases it will put more pressure on the NHS, and it is fundamentally unfair. It will hit charities that are supporting some of the most vulnerable in our society. Those charities are the glue that hold our societies together and, unfortunately, we are going to see their services slashed.
Valerie Vaz (in the Chair)
Order. We are expecting a vote but I will call the Opposition spokesperson, Saqib Bhatti.
Saqib Bhatti (Meriden and Solihull East) (Con)
It is a pleasure to serve under your chairmanship, Ms Vaz. I congratulate my hon. Friend the Member for Isle of Wight East (Joe Robertson) on securing this important debate. He made an impassioned speech, and may I be the first to say on record that I think he will have a long and fruitful career in this House? I hope I have not just given him the kiss of death. As my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, the strength of feeling on this issue is demonstrated by the turnout for this debate. I thank every Member who has contributed.
Charities play a huge part in our lives, providing critical support to individuals who face poverty, illness and injustice. One of my many privileges as the Member of Parliament for Meriden and Solihull East is to have many fantastic charities in the local area. It is always inspiring to meet the volunteers who do so much to support people, year in, year out, wherever those volunteers come from.
In my constituency, I have the Colebridge Trust, which strives to get more people into work, improve health and tackle the effects of loneliness. I have the Lily Mae Foundation, which was set up to help support parents who suffer the unimaginable trauma of baby loss—I had the privilege of jumping out of a plane for it not so long ago. I also have the fantastic Lily’s Tea Parlour in Chelmsley Wood, which helps struggling people by offering warm food, drink and a safe space.
Alongside the great local charities in my constituency, like many Members, I also have Age UK and Marie Curie. My hon. Friend the Member for Isle of Wight East made the case for the challenges that they face and will be facing as a result of this Budget. Supported by an army of volunteers, these organisations are enormously important features of our high streets, towns and our society.
On a national level, the UK is one of the most generous nations for charitable giving. Our charities are a huge source of pride for people in this country, and Members across the House must always continue to come to Parliament to do all they can to stand up for the UK’s charitable sector.
The country’s charitable spirit can be seen by the fact that the British public donated an estimated £13.9 billion to charity in the last year. In our communities, local people gather regularly to take part in charity bake sales and sports fixtures and watch performances where ticket costs are donated to local charities. In some respects, some of the nation’s favourite cultural pastimes are deeply intertwined with supporting our charities, and there is no doubt that these charities bring all of us together.
But in spite of that, our charities are under threat. I have been contacted by a number of charities about the impact of this Budget. Local mental health charity Birmingham Mind told me that
“the rise, combined with current financial pressures, presents serious challenges for charities like ours”.
The brain injury charity Headway contacted me estimating that the proposed changes will push up its costs by tens of thousands of pounds, forcing it to “reduce services” and potentially putting employees at
“risk of redundancy or reduced days”.
Birmingham-based Services for Education, run by its formidable chief executive, Sharon Bell, wrote to me to say that
“the impact of national insurance changes will hit”
it “hardest—unfairly so.” She paints a very concerning picture about how the charity will be forced to limit the fantastic services it offers because of this unprecedented cost.
When the Chancellor delivered her Budget of broken promises, she did exactly what she promised during the election that she would not do: she significantly raised employer national insurance. What is even more concerning is the devastating effect that this has had on the charity sector. Just a day after the Budget, more than 7,000 charities came together to sign an open letter co-ordinated by the National Council for Voluntary Organisations, warning that the sector’s increased national insurance costs would amount to £1.4 billion a year. They all called on the Chancellor to either exempt or reimburse charities for these additional costs.
Let me tell the Minister that the impact is already being felt, and it is dire. Over Christmas, the chief executives of five domestic abuse charities made it clear that increased national insurance would force them to cut services, run down reserves and even make redundancies. This will have a catastrophic impact on the safety of vulnerable women and girls. Has the Minister had discussions with the Minister for Women and Equalities about the possible impact on women in this country? Has she spoken to the Chancellor? And where is the impact assessment?
More than 110 chief executives of homelessness charities in England have warned that these changes could cost the sector between £50 million and £60 million. Can the Minister give cast-iron assurances that homeless people will not lose vital support, especially over this cold and wet winter, because of the unprecedented rise in NI contributions?
The Opposition voted to exempt charities from the additional costs of NI increases. I regret that a staggering 348 Labour Members voted against that amendment, which will have a far-reaching impact on charities that provide essential services. Will the Minister give certainty that the Chancellor’s job tax will not have a negative impact on charities? And can she be certain that the Chancellor will not be coming back for more?
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
It is a pleasure to serve under your chairship, Ms Vaz. I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this debate, and I thank Members from across the House for their contributions. As the Minister for Civil Society, I have seen at first hand the huge contribution that charities and voluntary groups make to our country; and as the MP for Barnsley South, by working directly with local groups, I have seen the impact that they have in my area.
As part of the autumn Budget, the Government took a number of difficult decisions on tax, welfare and spending to fix the public finances, fund public services and restore economic stability. In an open letter to the voluntary sector on this issue, the Chancellor stated that raising the rate of employer national insurance contributions was one of the most difficult decisions in the Budget. I will address the specific point around the change to national insurance alongside some of the questions and issues raised in the debate, before discussing the wider support that the Government provide to the sector.
The Government recognise the need to protect the smallest businesses and charities, which is why we have more than doubled the employment allowance, from £5,000 to £10,500. That means that more than half of employers, including charities with NI liabilities, will either gain or see no change next year. In addition, we are expanding the eligibility of the employment allowance by removing the £100,000 eligibility threshold to simplify and reform employer NI, so that all eligible employers now benefit. Almost all charities are eligible for the employment allowance, as outlined in the HMT guidance. The changes will mean that a small to medium-sized charity could employ up to four full-time workers on the national living wage and pay no employer NI, to give one example.
Graham Stuart
Does the Minister agree that if it turns out that it will cost the NHS more to bring in the changes than it will gain, as colleagues from across the House fear, then it would be worth reviewing them? I know that she is not personally responsible for the initiative.
Stephanie Peacock
As the right hon. Gentleman makes clear, I am not personally responsible for the specific policy, but I will reflect his point to the Treasury.
Employers, including charities, will still continue to benefit from employer NI reliefs, including for hiring those under 21 and apprentices under 25 where eligible. I am aware, however, of the concerns of the voluntary, community and social enterprise sector about the impact that the changes will have on their organisations. I acknowledge that the last few years have been difficult for voluntary and community sector organisations, many of which have seen a rise in demand for their services while dealing with increased financial pressures. After the last 14 years, where the state at every level has been cut back, more demand has been placed on charities. Indeed, my local authority saw some of the worst cuts in the country, despite being one of the areas of greatest need, so I completely appreciate the role that charities have played during that time.
The simple reality is that the situation cannot be reversed overnight. To grow our economy and our country, tough decisions have to be taken, and I appreciate that that is difficult.
Seamus Logan
The Minister mentioned a number of mitigations for charities, and she said that she thinks that virtually all charities will benefit from those, so where are the Government actually obtaining the resources to fill the hole in the public finances?
Stephanie Peacock
I did not catch all of that intervention, but I said that half of charities would either stay the same or gain from the changes. I am happy to discuss that with the hon. Member after the debate, or write to him if I have misunderstood his point.
I have met representatives from the sector to specifically discuss the NI changes on more than one occasion. They have put forward many of the same arguments and questions that hon. Members have today, and I have shared those in turn with the Treasury.
A number of specific causes and sectors have been raised during the debate, and I would like to address some of those in the time available. Individual Departments will continue to provide direct funding and support for specific causes and areas. As has been mentioned a number of times, most hospices are charitable, independent organisations. As announced by the Department of Health and Social Care, the sector is set to receive a £100 million boost, alongside a further £26 million for children and young people’s hospices. Clearly, that will help with financial pressures. That sits alongside some of the other actions taken by the Government, including an £880 million increase in the social care grant and an additional £233 million of funding on homelessness, to help prevent rises in the number of families in temporary accommodation and to prevent rough sleeping.
The Home Office is working to agree decisions on its wider budget in support of the ambition to halve violence against women and girls, and it will communicate that as soon as possible. To answer the point made by the Opposition spokesperson, the hon. Member for Meriden and Solihull East (Saqib Bhatti), I have a cross-Government meeting on violence against women tomorrow morning.
Sir Roger Gale
I am sorry to intrude on the Minister’s time. As I understand it, the extension of the children’s hospices grant will not meet the costs of national insurance for children’s hospices. Will she ask the Treasury to clarify that, and if necessary, discuss it with the executives of the children’s hospice movement?
Stephanie Peacock
I know the huge amount of work that children’s hospices do, and I have done a lot of work with Bluebell Wood children’s hospice in South Yorkshire. I will take away and reflect the right hon. Member’s points, and the relevant Department will write to him after the debate.
Patrick Hurley
The Conservative party has been very clear that it wants tax cuts, but less clear on what public services it would cut to pay for them. Perhaps the Minister might wish to reflect on that.
Stephanie Peacock
I appreciate that point. The bottom line is that we have been very clear that we want economic stability, and the money does have to come from somewhere—it is tax, borrowing or cuts. That is a very clear choice. Members will appreciate that many of the issues raised in this debate fall outside of my Department, but I will reflect the points made from across the House to the relevant Departments after the debate.
The Government will continue to support the sector in a number of other ways. Through the tax system, the Government also provide support to charities through a range of reliefs and exemptions, including reliefs for charitable giving. The tax reliefs available to charities are a vital element in supporting charitable causes across the UK, with more than £6 billion in charitable reliefs provided to charities, community sports clubs and their donors in 2023-24.
Stephanie Peacock
I have taken a number of interventions, so in the interests of time, I will make some progress.
The biggest individual reliefs provided are gift aid, at £1.6 billion, and business rates relief, at nearly £2.4 billion. My Department also supports the voluntary and community sector, particularly through the delivery of direct grant funding—delivering, among other things, the £26 million voluntary, community and social enterprise energy efficiency scheme, which helps organisations with capital energy efficiency measures. That is still under way, as is the social enterprise boost fund, which delivers grants and peer support for emerging social enterprises, and the Know Your Neighbourhood fund, which is focused on increasing volunteering and tackling loneliness.
Alongside that, the Department for Culture, Media and Sport sponsors the National Lottery Community Fund, which is the largest non-Government funder of voluntary and community organisations across the UK. During 2023-24, the National Lottery Community Fund made grant awards totalling over £900 million, 84% of which were under £10,000, with the majority supporting grassroots organisations.
My Department is also focused on developing other sources of funding support for the sector. That includes establishing a stronger, more ambitious partnership with the impact economy, such as by unlocking the multimillion-pound potential of the dormant assets scheme. This includes making charitable giving as easy and compelling as possible, building on the estimated £13.9 billion that the UK public donated to charity last year. My officials are also working to deliver the VCSE contract readiness programme to help to improve the capability of VCSE organisations when bidding for public contracts.
As we have heard from Members across the House, the voluntary and community sector plays an important role across all areas of public life, up and down the country. As the Minister for Civil Society, I have seen at first hand the work that charities and social enterprises do. Since being appointed, I have held a number of visits, meetings and roundtables with charities and voluntary organisations across the UK—from Leeds to Stoke, from Huntingdon to Brent. I am committed to continuing that engagement with charities and voluntary groups up and down the country, especially as we continue to develop a framework for the new civil society covenant, which will reset the relationship between civil society and Government.
We have heard a number of examples today of the brilliant work that charities and volunteers do. I thank them for their work and I thank hon. Members for their contributions today.
Joe Robertson
I thank the Minister for coming here to address the arguments that have been made, particularly as they were about a set of decisions that were not made by her personally or by her Department. I thank her for assuring Members in this debate that she will go back and make strong representations to her colleagues. There is probably no option other than to do so, given the strength of feeling she has heard today, particularly from Opposition Members. This is not her fault, butthere is no compelling argument that money had to be taken from charities to deliver the Government’s objectives. I urge her to say to the Chancellor, “Please give charities their money back. This is their money—give it back.”
Question put and agreed to.
Resolved,
That this House has considered the impact of changes to employers’ National Insurance contributions on the charity sector.