Lords Chamber

Tuesday 25th February 2025

(began 2 weeks, 2 days ago)

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14:39
None Portrait Introduction(s): Baroness Longfield CBE and Baroness Nichols of Selby OBE
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Charles Charles III, Charles III, by Charles III, by the Charles III, by the grace Charles III, by the grace of Charles III, by the grace of God of the United Kingdom of Great Britain and Northern Ireland and of our other realms and territories King, Head of the Commonwealth, Defender of the Faith, to all Lords Spiritual and Temporal and all other our subjects whatsoever to whom Know ye that we of our especial grace, certain knowledge and mere motion, in pursuance of the Life Peerages Act 1958 and of all other powers in that behalf us enabling do, by these presence advance, create and prefer our trusty and Anne Anne Elizabeth Officer Officer of Officer of our Officer of our most Officer of our most excellent Officer of our most excellent order of the British Empire.

To the state, degree, style, dignity, title and And for us, our heirs and successors, do appoint, give and grant the said name, state, degree, style, dignity, title and honour of Baronness Longfield. To have and to hold for life. Willing and by these presence granting, for us, our heirs and successors that may have, hold and possess a seat, place and voice in the Parliaments and Public Assemblies and Councils of us, our heirs and successors, within our United Kingdom, amongst the Barons. And also that may enjoy and use all the rights, privileges, preeminences, immunities and advantages to the degree of a Baron, duly and of right belonging, which Barons of our United Kingdom have heretofore used and enjoyed or as heretofore used and enjoyed or as they do at present use and enjoy.

In witness whereof we have caused these our letters to be made patent, our letters to be made patent, our letters to be made patent, On the 31st day of January. In the third year of our reign. By warrant

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under the King's sign-manual. I do swear by Almighty God that I will be faithful and bear true allegiance be faithful and bear true allegiance to His Majesty King Charles, his heirs and successors, according to

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Charles Charles III, Charles III, by Charles III, by the Charles III, by the grace Charles III, by the grace of Charles III, by the grace of God of the United Kingdom of Great Britain and Northern Ireland and of our other realms and territories our other realms and territories King, Head of the Commonwealth, Defender of the Faith, to all Lords Spiritual and Temporal and all other our subjects whatsoever to whom these present shall come, greeting. these present shall come, greeting.

Know ye that we of our especial grace, certain knowledge and mere motion, in pursuance of the Life Peerages Act 1958 and of all other powers in that behalf us enabling do, by these presence advance, create and prefer our trusty and Wendy Wendy Ruth Wendy Ruth Nichols. Officer Officer of Officer of our Officer of our most Officer of our most excellent Officer of our most excellent order of the British Empire. To the state, degree, style, dignity, title and honour of Baronness Nichols of Selby.

And for us, our heirs and successors, do appoint, give and grant the said name, state, degree, style, dignity, title and honour of Baronness. To have and to hold for life. Willing and by these presence granting, for us, our heirs and successors that may have, hold and possess a seat, place and voice in the Parliaments and Public Assemblies and Councils of us, our heirs and successors, within our United Kingdom, amongst the Barons. And also that may enjoy and use all the rights, privileges, and enjoyed or as they do at present use and enjoy.

In witness whereof we have caused these our letters to be made patent, witness ourself at Westminster. In the third year of our reign. By warrant under the

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Are, Baroness Nichols of Selby,

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Are, Baroness Nichols of Selby, do swear by Almighty God that I will be faithful and are truly in students to His Majesty King students to His Majesty King Charles, his heirs and successors

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First First Oral
14:49
None Portrait Oral questions: implementation of the Single Trade Window as set out in the 2025 UK Border Strategy Lord Kirkhope of Harrogate (Conservative)
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First Oral Question. I beg leave to ask the question standing in my name on the Order
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None Portrait Oral questions: Commemorating the 200th anniversary of the Stockton and Darlington Railway Viscount Stansgate (Labour)
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Second Oral Question. standing in my name on the Order Paper. And I declare a lifelong interest in railways.
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None Portrait Oral questions: Consulting the Committee on Climate Change before taking decisions on airport expansion Earl Russell (Liberal Democrat)
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Third Oral Question. Paper.
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None Portrait Oral questions: Reports that Rwandan troops are supporting the M23 group in the Democratic Republic of Congo Lord Harries of Pentregarth (Crossbench)
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for Northern Ireland but also other places in Scotland, in order to make that economy grow as well as mainland Britain's economy. Fourth Oral Question.
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None Portrait Urgent Question Repeat: Plant Oxford site
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content". The contents have it. Question on an answer to an urgent
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15:45
Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath, Minister of State (Department for Energy Security and Net Zero) (Labour)
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The Mr Mann inserts the new clause after clause 6 which requires the Secretary of State to point an independent person to carry out reviews of Great British Energy 's effectiveness. Throughout the passage of the bill government has made clear we are committed to ensuring that Great British Energy is subject to appropriate accountability and reporting requirements. In particular we set out on the face of the bill that Great British Energy's annual report and accounts, we publish and lay before Parliament, the annual report will be subject to external audit and the control and auditor general will be appointed as the external...

In line with the managing public money guidance. The accounting officer once appointed will be accountable to Parliament and the National Audit Office will have the right to review Great British Energy 's work and report their findings publicly and to the Public Accounts Committee. Having reflected on arguments made at report stage, in relation to independent reviews, sickly by the noble Lord Lord Fox, I'm bringing forward this amendment. It will require the Secretary of State to appoint an independent person to carry out a review of the effectiveness of Great British Energy including covering regard to the statement of strategic priorities with which Great British Energy must comply.

The review prepared by this independent person will be submitted to the Secretary of State who must ensure its published and laid before Parliament. The Secretary of State must share the report with the devolved governments at least 14 days before publication. The first review must be submitted to the Secretary of State within five years of the act coming into force. There will be further reviews at maximum of five year intervals. We think this sensibly balances additional accountability alongside the existing connections of review and reporting while stopped overburdening Great British Energy and ensuring it has the time and space to take long terms strategic decisions as an operationally independent company.

As we have debated extensively during the preceding stages of this bill. I would also like to repeat the insurance I gave to the noble Lord at report stage which relates to additionality and confirm this important principle for Great British Energy, particular in respect of its investment activity. As such expect these independent reviews will consider additionality as part of any assessment of Great British Energy's effectiveness, having regard to the statement of strategic priorities. This is in keeping with the commitment I gave at report stage.

I hope noble Lords will support the amendments. I beg to move.

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marshalled list. I rise ruefully to thank the noble Lord the Minister for tabling this amendment which introduces a
15:48
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (Crossbench)
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this amendment which introduces a Independent Review of great energy's effectiveness as he undertook to do at report stage. I'm most grateful to him for the constructive discussions we have had around this as the bill has moved through its stages and I would like to thank noble Lords who have added their support to this through the process. The amendment doesn't go quite as far as my amendment at report stage. Firstly as the noble Lord has alluded to it doesn't include mention of reporting on the extent to which GBE has succeeded in encouraging private investment.

The noble Lord was very clear at report stage about the importance of the additionality principle and that he therefore expected it will be covered by the independent review of effectiveness and he has just repeated the same again. Which gives me more than sufficient comfort on that question. Secondly, my original amendment proposed to review every three years and while I do think it would have been better to have the initial review before 2030, which is the government's deadline for achieving decarbonisation, and therefore there will be time to do something about it if things weren't going right, the five year interval that the amendment requires is a reasonable price.

I do have one question about this amendment. The amendment was changed at the last- minute to give the devolved government the opportunity to see the independent report 14 days prior to being laid before Parliament. I fully understand and agree that the devolved government should be given the report but I am not sure understand why they should get it in advance of the UK Parliament. I would be grateful if the noble Lord would explain his reasons. Frankly that's not a major issue and I'm very grateful to the noble Lord for tabling the amendment which I think will be a very significant improvement to the transparency and accountability regime that Great British Energy will be subject to and I urge noble Lords to support it.
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15:52
Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (Green Party)
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... Government amendment and ... Government amendment and welcomed the way in which the government has indeed listened to your Lordship's House in this bill and seen considerable improvements. One of those was the inclusion finally of community energy which is something your Lordship's House has been fighting for through to governments and several energy bills. There is a really important bills. There is a really important issue that arises right at this moment relating to community energy. While the amendment that the While the amendment that the government put down, will help community energy to grow in the medium to long-term, the sector faces an urgent short-term problem that the uncertainty of the community energy funds future.

The fund began in 2024 and has been very successful and oversubscribed. More than 150,000 projects have been awarded grants and there are more than 100 projects ready to go, than 100 projects ready to go, eligible for funding that will not receive it. This is because the initial £10 million is expected to run out in May. This is the only substantive mechanism helping community energy to grow yet it has no future beyond this year. I make no apologies for representing community energy here, they asked me to stand up and say we have seen so many times in energy policy a boom bust cycle, a funding and defunding and funding again and defunding again and there's a short-term issue, the government has expressed its support for the long-term.

Can the noble Lord the Minister give me a clear statement and how the government will deal with uncertainty over the community energy fund future? And the noble Lord assure me it is going to be early action to deal with the enthusiasm that the fund has not been able to meet and clear instructions on the above in the statement of strategic priorities for Great British Energy as required by clause 5 of the bill?
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Lord Howell of Guildford Portrait Lord Howell of Guildford (Conservative)
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I find the amendment extremely interesting. I would like to make a point about the nature of these amendments and measures outside the actual bill we have been discussing. We are seeing here this grey area between what is strictly on government credit and what is in the private sector. Previous governments have been caught on this barbed wire for many years to modernise in the public sector and influences the government credit. I think we're going to see this middle model really contained in his amendments -- this model.

In many other areas as well. Because the government and all the demands upon them, to make fast changes in infrastructure and so on, and the private sectors want their money and somehow the two must be brought together. We try to do in the late '90s in the last century with the PFI. The private financial initiative. There were some lessons to be learnt from it. And similarly now I think we have got to find more otherwise the finance for these things will not be found, this applies particularly in the energy applies particularly in the energy sector.

The government can do it, can't do it, can't raise the money, the private sector doesn't want to take such risks. This is very interesting and I see the Minister has done his best and plunging into this, at the moment, still very grey area. We don't really know how to define accountability awarded his according to account. As to the amendment itself, I had to smart, I think we have had similar arrangements in the distant past for bodies that are now neither public nor private and this is an attempt to overcome the problems from the past.

It isn't very easy to evaluate the amendment to the bill, to appoint this independent person to review effectiveness if we are not quite sure what the word effectiveness means. It says of course turn to section 5, number one, the obligations to lay down certain criteria which apparently he hasn't done it, so we don't know what the criteria are so going to appear in six months time. It is easier to think of various criteria, dancing and organisation costs a lot of money but it has still done terribly well, I have got these criteria here which achieves other objectives.

Maybe there are criteria we can think of, opportunities for broader contributions from, like geopolitical objectives. All of these things of course rest and highly subjective judgements and not in a highly subjective but very far in the future as well. The analogy comes to mind, of goalposts on Wales. Goalposts are tending to move time to time and from year-to-year as to what the effectiveness has been achieved -- goalposts on wheels. I do have to put in a reservation that all these issues are matters of intense debate and all around the planet, some of the best minds are wrestling with what are the effective edges, huge investments which look terrific, don't unfortunately make money but nevertheless are committing to some part of the battle against climate violence.

And some limitation in a rising carbon dioxide and methane rising carbon dioxide and methane

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It would be good to have a broad set of criteria as soon as possible and to share it with Parliament so and to share it with Parliament so we can be asked to pass it and no what the basis will be and what the what the basis will be and what the polymath will be and it is asking quite a lot. I can see how the quite a lot. I can see how the amendment has been adding something to accountability but it is very to accountability but it is very vague indeed.

I hope there will be more effort by government to give us a clearer idea of what is really affected, how it will be judged, how much the market will be overwritten by the views of the town in five years time and whether it will work at all. at all.
16:01
Earl Russell Portrait Earl Russell (Liberal Democrat)
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My Lords, I rise briefly just first to speak to the amendment in Of the noble Lord Hunt and supported by Lord Fox. On these benches we are pleased to see continued progress has been made and this amendment has been brought forward. I think across the House there has been a unanimous voice that there needed to be more reviews of this bill and that it was important to have this amendment. So we are pleased to have it in place. Can I also echo the voices that have already been speaking in relation to the government's own amendment to the government's own amendment to the amendment and clause for that requires a copy of the review is sent to the devolved ministers of 14 days before it comes to Parliament.

My assumption is that it is put in their so the devolved authorities have a chance to comment on the review and there is a chance to come before Parliament but it would be useful if the Minister could confirm why that additional clause has been added and what the government thinking is on that. Again on the timeframe, we do welcome the fact the review is here. But we now have a sense where the government has included a review, but the review is happening in a tiny frame of five years with the first one completed at the important date of 2030.

I asked the Minister that if the government recognises the need for a review, why not make it on a more regular basis? It does seem to me a timeframe of three four years would be more useful for this clause to have the effect the government intended. Just now turning beyond the amendment to what I want to say at the end of third reading, we have consistently supported the government in the objectives of this bill and done well we believe GB Energy will help secure energy independence and reduce reliance on volatile international gas markets which have proved costly for UK bill payers and our economic prosperity.

The last government spent some 40 billion subsidising bill payers and that money provided no long-term benefit to the overall energy security. Just this week the energy and climate intelligence unit published a report that since the anniversary of the invasion of Ukraine, since 2021, 140 billion has been spent by the UK on the international gas markets. The equivalent of £1300 per person in the country. Again this has brought no long-term benefits. We have the third best wind resources in the world.

So it is great to see finally these are properly being developed to bring long-term energy security and reduce costs for energy bill payers. The CBI reported this week the green economy added 80 billion in Gross Value Added to the UK economy last year. It grew at a rate of 10%. Three times faster than the Having said all that, in relation to the bill, we always felt it was a bit too short. And it lacks the content needed. That has caused some challenges in terms of scrutinising.

Having said that, we welcome the amendments which have passed. We believe they add value and the bill leave this place in a stronger position than when it arrived. I'm grateful to the Minister and his team for including community energy on the face of the bill. This is an important amendment and will benefit communities and help with the energy transition. The community energy has been supported by MPs and Lords on all sides so this is a win for everybody.

I am grateful to the people who have provided support to all of us on these matters. We will continue to press the government as others have mentioned on the future of the Community Energy Fund. We also welcome the other amendments also welcome the other amendments tabled, on the strategic priorities, the amendment negotiated on sustainable development. Finally, if you will excuse me, one very last point. I wanted to say a couple of words on the words we use as parliamentarians and how we talk to each other on issues of climate change.

I deeply regret the end of the political consensus on climate change. My personal feeling is a relatively new pier in this House is while bits of the debate on this bill were excellent, there were too many moments when either points were repeated, purely party political points were made which did not improve or challenge the bill, filibustering took place, or we had numerous votes taking place very late at night. The public support action on climate change. Consistent polling says 70% support it.

The public also want to see reductions in energy bills. The public frankly do not much care how that happens. But that does require all of us to make progress. These matters are challenging enough to address with consensus and are made even more difficult when political hostility is added to the mix. My final point is we must all work better together so we can all achieve more. so we can all achieve more.
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Lord Offord of Garvel Portrait Lord Offord of Garvel (Conservative)
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My Lords, in concluding for His Majesty's opposition, I thank noble lords from across the House for their tenacity in scrutinising the bill. In particular Lords for their amendments. On my own benches I note the contributions of many noble friends who have done sterling work to temper a misguided piece of legislation which will not deliver cheaper energy for UK households or businesses. GB Energy is flawed because it exposes a conflict at the heart of this government between the stated priority of the Chancellor of economic growth on the one hand, and on the other the accelerated pursuit of net zero at any cost which the energy secretary has made an obsession.

While the scrap rages in Whitehall, there is only one loser. The public, it has been confirmed With £211 per household this year directly because of government policies and a far cry from the promise in the Labour manifesto of a reduction in energy bills by £300 per year, per household. A manifesto pledge the government refused to include in this legislation. As this bill made progress through this House and in the other place, the chasm between rhetoric and reality has indeed been exposed.

I believe in a decade we will look back and ask why we invented this cardboard cutout company. Despite scepticism, it would be churlish not to wish GB Energy a positive start. May I offer some start-up advice? With the £8 billion of borrowed money, the first order of business should be a feasibility study of all the energy sources available to us in the UK. If they do so, they will discover the dash for renewables at energy -- any price is folly.

Introducing excessive cost to energy bills to the point where industrial energy in the UK is five times more expensive than the US and seven times more than China. All the while we offshore jobs in the UK to China, adding to Chinese profits. Impoverishing our nation. The government are denying the facts. We are energy rich as a country. The hydrocarbon industry is the envy of the world in terms of compliance and It is irresponsible to refuse to even explore the opportunities onshore gas can bring while undertaking assessment of risk.

And indeed the fact that this government continues to tilt towards shutting down offshore wind and gas surely it is an affront to the many thousands of skilled workers in Aberdeen and the north of Scotland. Surely they deserve better than this? Both parties agree that nuclear is efficient and clean but should be accelerated. Cut the red tape and unleash home-grown energy sources and not be afraid to learn from other countries such as the Koreans who have rolled out energy quicker and at a lower cost.

If GB Energy does a feasibility study they will realise the facts and then they should pivot net zero accordingly to ensure our transition to clean energy is fair and affordable to UK households and industry. For the sake of the country, we can only sake of the country, we can only hope they do so. Finally, I believe it is important to state unequivocally that my own party must reflect on the last 14 years of government in energy policy. The verdict of the electorate in July was clear and resounding.

Many noble lords are aware that an error does not become a mistake until one refuses to correct it. I encouraged the current government to heed these wise words.
16:11
Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath, Minister of State (Department for Energy Security and Net Zero) (Labour)
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Well, my Lords, we were debating my amendment. We seem to have done this bill do now pass speeches as well. If noble Lord will allow, I will do both in my response. Can I first of all thank noble lords for their general welcome to my amendment? I think it is a satisfactory outcome to our debate at committee and report. My Lords, in relation to the question asked by the noble lords about the devolution the noble lords about the devolution aspect, I think actually the noble Lord Russell put his finger on it.

The fact is it seems perfectly appropriate that the devolved government should get a copy before publication, because that then allows them to have sight of any findings which might be relevant and on which they may have to answer on the day of publication. No slight is intended to Parliament in relation to that. I just think it is the normal business of government and a courtesy. That is why we withdrew the original amendment and replaced it with the revised one in the light of representations made to us by the devolved governments.

In relation to the timings of the review, noble the timings of the review, noble Lord will know we had in mind at first the UK investment which I think has a seven year review period. The noble Lord proposed three years. In the end we compromised. I think that is not unreasonable. Great British Energy must be allowed some time to set itself up and get itself into working order. Then my Lords, at an appropriate point we will have a review. It is worth making the point that GB does not stop working in A deadline we have given for clean power.

We expect GB to go on for many years to come. Therefore I think it is obviously going to be a judgement but we think five years is not an unreasonable time. My Lords, can I say to the noble Lord Naseby, I agree about the potential for small modular reactors. We have a system being run at the moment and I hope that we can come to some important decisions over the next few weeks and months. But he is absolutely right to mention them. I share his view about the potential of hydrogen.

We do not disagree at all with the noble Lord on that. As far as community energy is far as community energy is concerned, this was raised at report stage. I don't think there is anything more I can say at the moment. Clearly we recognise the important role community groups can play. Our intention as Great British Energy is to build on existing support by partnering with and providing funding and support to local and Combined Authorities and community energy groups to roll out renewable energy projects and develop up to 8 W of clean power.

I'm afraid I cannot give any more detail at the moment. But clearly I understand and take note of what noble lords have said about companies that are concerned. I do take this seriously. I will make sure this is considered. We will set out further details in due course. On the issues raised by Baroness Lady McIntosh about sustainability, let me make it clear that the independent review is on the effectiveness of GB delivering its mission. So it will cover all aspects of the work of Great British Energy.

It will not be solely focused on financing as she feared. Let me give an example. One important role is to clear the way to allow developers to come in and that would be an important part of the review. In addition, I have already said to the noble Lord Fox that there will be an important part with additionality. Clearly the amendment that I brought at report stage in relation to GB having to keep under review the impact of activities on the achievement of sustainable development, clearly that means that will be part of any review undertaken by the independent Detailed discussions on what is a rather short bill.

I know Lord Bill Russell thinks it could have been longer. And I say my department always hoped to bring forward other legislation as time allows, and subject to the usual discussions in government. And no doubt we hope to make progress on that. As far as the sort of statement made by the noble Lord is concerned, and it's interesting the point he made about his parties stewardship over policies over 40 years. I've a much regret that they seem to be backing away from the consensus we had in relation to the crucial importance of responding to climate change -- I very much regret.

I would say in relation to prices, yes of course. Rise in prices is a matter of concern to all of us. But we believe that the only weight to ensure that we have long-term energy security, the only way to wean ourselves off the international gas market and the volatility that has brought, is to move as quickly as we can towards clean power and net zero. I would say to the noble Lord, or nuclear, he knows that I totally agree about the importance of nuclear but his party did not open one single nuclear-power station during their stewardship.

They fiddled around, decisions were delayed and it will be this government that ensures nuclear has a role to play in the future. I do think we have had what I can only describe as detailed scrutiny by your Lordship's House on this very short bill. I'm grateful to all noble Lords who have taken part and enabled us to tease out some of the important issues, of course noble Lord Russell, and I thank him for has constructive approach to the bill.

Too many other noble Lords, I resist amendment that have sought to add lists of items to be considered in this bill and I'm going to, on the usual government reason, that what you list you also exclude others. It's invidious to name names. I do want to just mention noble Lord Lord Vaux for his perseverance and assistance in ensuring GB has effective accountability. The noble Baroness Lady Hayman, because her diligence in ensuring climate and sustainable issues were fully considered, to noble Baroness Lady Noakes for her forensic scrutiny on the financial aspects of this bill.

As someone who was once a formidable director of finance in the NHS, I know only too well the skill and expertise she brings. Of course to the noble Lord Lord Alton for his continuing and hugely impressive work on human rights issues. But many other noble Lords have played significant parts in these debates. I thank them for a much indeed. Also grateful to my excellent build team, huge support for the wonderfully committed team to my own private office, and the whips office for the really remarkable way they underpin all our activities.

Can I just end by acknowledging the unsung heroes in the Public Bill Office, who do so much to make sure that the amendments we debate actually are

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coherent and actually take -- fit into that legislation. I beg to move. The question is that this amendment be agreed to. As many are of that opinion say, "Content", and of that opinion say, "Content", and of the contrary, "Not content". The

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contents have it. I beg to move this bill do now pass. The question is that this bill do

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The question is that this bill do now pass. As many are of that opinion say, "Content", and of the contrary, "Not content". The contents have it.
16:21
None Portrait Legislation: National Insurance Contributions (Secondary Class 1 Contributions) Bill - report stage
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Report of the national insurance contributions secondary Class 1 contributions secondary Class 1

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I I beg I beg to
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16:22
Baroness Barker Portrait Baroness Barker (Liberal Democrat)
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It may be a surprise that I stand up to take part in proceedings at this point, having not done, taken any pardonable so far. I do so because my noble friend Lord Scriven is unable to be here. Indeed my only involvement in the bill so far was to be the chair when it was in the early stages of its consideration in Grand Committee. I foot was forced to remain sedentary and say nothing. I was very good, I sat and listened to everybody else's contribution and that turned out to be excellent preparation for today's debate.

In which I seek to move amendment one and two talk, speak to the other consequential amendments in this area. As noble Lords who have taken part in previous and listened to great detail previous stages of the bill will know, the central issue that this bill, that the amendments to this bill are having to address is the sudden imposition of a rather blunt fiscal instrument in the form of a increase in national, not only national insurance attribution spot the rate at which they are paid.

And the effects that is going to have across the whole of the economy. These amendments address just one particular part of that wider problem. I should say at the outset, have to declare an interest, in my family we are reliant upon carers and we pay for those carers ourselves and we do so through a private agency. So it's an issue that is not only an academic one but a very personal one for me at the moment.

I should also say that there is, for your logic today, except manuscript amendment for which we thank the clerks for their consideration because although... Because what this is, this is a tax matter which is UK wide but it has an effect, the amendments which have been tabled so far, seek to mitigate in England and Northern Ireland. But noble Lords may well have been contacted by care providers in Scotland who will need similar provisions to enable them to cope with the problems.

The problem we are dealing with is that in the health and social care sector, the sudden imposition of these changes to national insurance, along with the increase is seen in the medical way have threatened the existence of large numbers of providers and are going to have a profound impact on budgets and we have a problem in that the health and social care sector is not solely a statutory one. Have numbers of different providers, many of whom are small but who are related to large statutory providers.

Unfortunately because of the swift nature of the imposition of this, rather dramatic change, we are having to come up with ways in which we can mitigate the damaging impact. And that means that we have had to resort, perhaps to measures that we would not otherwise have wanted to take. In seeking to create different classes of employees. Because the government has come forward with some of its public sector exemptions because it realises the effect this is likely to have.

But they will not apply. Those exemptions will not apply across the board and in particular they will not apply to the organisations which are set out in these amendments, like dentists, pharmacists, providers of care services. All of which are central to the government's other stated policy objective which is of improving health. And improving the health service and making it a community based and more preventative service, therefore and thereby driving down and from a health service which is the greatest problem are NHS is facing at the moment.

It's because the Bill as it stands doesn't do that, indeed it cuts across those other policy objectives that we have been full to take these measures that would perhaps help noble Lords if I were to explain, that in any, in typical local authority, 87% of their budget spend is now on social care. And that's an expenditure which is not if capital heavy, it is labour heavy and labour-intensive. Not are they organisations, unlike perhaps some of their private sector counterparts, who can suddenly adjust and vary the income streams, to dramatic extent that will enable them to mitigate rapidly, or absorb the effects of the imposition of this policy.

So listened very carefully, and the committee stage of the bill, and I listened to all of the arguments that were put towards us and we went away and redrafted out members in order to take on board as many of those criticisms we can. We have extended the remit of these amendments as far as we possibly can to include private sector providers of NHS services, and I agree it is not the, that is not the exact equivalence between the private-sector and public sector which many people would want but it is within the scope of this measure, I think a significant step forward.

We have tried to... We have done that, not least because one of the consequences, perhaps unintended, is that it is, the proposals as they stand at the moment, I going to proportionately affect those local authorities who for various reasons have sought to outsource much of the provision, because if their provision is outsourced, then they are going to be hit and are going to have no mitigation against this change in national insurance. And it is, I think, I sat and thought about this the other night, you can have a situation realistic situation, with to local authorities that afforded the same demographic profile and challenges, and they could be in a completely different position in terms of their budget, solely because of the imposition of this measure.

We have been quite clear on these benches. We have said we do understand that is the need to increase funding and not least to increase funding for health and social care. We believe there are other ways in which that can be done, like closing capital gain loopholes, by doing things like taxing online gambling, tax and share buybacks. There are a number of different ways in which that can be done that would not, none of those would have the direct counter effect on policy, of changing and moving our National Health Service away from a very inefficient organisation which doesn't at the moment have a system which works towards greater productivity and towards promoting health and driving Follow those reasons we are proposing the set of amendments today and I hope that Lords will see

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a reason to support them. Does the Baroness want to move

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Does the Baroness want to move the amendment? Speak to make. Post informed the House that if amendments and one is agreed, I am amendments and one is agreed, I am unable to call amendment six, seven, or nine, by way of pre-emption. Amendment proposed, in clause 1,
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Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Conservative)
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Amendment proposed, in clause 1, page 1, line 1, at end, insert the words as printed in the marshalled List. The question is that this amendment be agreed to?

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I would like to take this opportunity to support the sentiment opportunity to support the sentiment behind those, the noble Lady,, the noble Lady Baroness Kramer in moving noble Lady Baroness Kramer in moving amendment, in particular nine 9A. As a member of the dispensing Doctors a member of the dispensing Doctors Association, I wonder, if and when he comes to respond to this group of amendments I can clarify the position. I noticed that an amendment at 9A, dispensing.

That is art not actually referred to. But in effect they probably employ more staff, then other GPs, other pharmacies, or other organisations, committed in the current list. Itemised in clause, an amendment at 98. The reason for that is -- 9A. In addition to dispensing, regular dispensing doctors, they also perform a very profoundly important role in rural areas, where there is no community pharmacy. Their patients have nowhere else to go, but the dispensing doctor, normally intervenes to dispense in those rare circumstances.

I have to say, the reason I'm so familiar with dispensing doctors is my late father and my now retired brother are both also dispensing doctors. Because they are quite large employers, in this regard, collectively, is the noble Lord minded to look favourably on reimbursing them for the additional costs that they will incur, through the increase of National Insurance Contributions. Either through that very helpful amendment moved by the netball, Baroness Barker, but by adding a dispensing doctors there. Or would you look at some other avenue to ensure that the costs, incurred, by dispensing doctors will be met.

I'm sure the noble Lord is probably aware, pharmacies and dispensing doctors currently are not being fully reimbursed, for the cost of medicines that they are either dispensing, or prescribing. So they in or in an acutely difficult position, caused by the government's announcements, one of National Insurance Contributions, in the last budget. I would ask him to answer those points, in addition to those raised by Baroness Barker.
16:34
Lord Hope of Craighead Portrait Lord Hope of Craighead (Crossbench)
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I would like to... I would like to support the amendments in this group, which seek to mitigate the effect that the measures in this bill will have on charities that provide a social care. Particular attention needs to be paid to those that provide services in areas where the primary responsibility lies on the public sector. I understand that about 1/3 of the social care staff, in Scotland are employed by the voluntary sector. The support that they provide is an essential part of the system, for social care, in Scotland, as a whole.

Without their support, the public services as currently funded would be quite unable to meet what the public need. To put a little colour on what has been said. If I may return very briefly to point that I made in a grand chamber, a committee to give a example. The example I gave was that of a charity that addresses the causes and consequences of homelessness, in the south-east of Scotland. What they see, they see homelessness as the sum which is always a much more about, more than a lack of housing.

It can't be solved simply by building more houses. Nor can it be solved by the public sector alone. What they do is to help people to avoid becoming homeless, in the first place. With a bunch of services that, such as mediation and support, to prevent further risk of breakdown, leading to homelessness. They also include services to ensure that people coming out of hospital are not coming out of hospital are not discharged. They run a residential community, for people with acute psychiatric and mental health problems.

Who has been discharged from hospital, when they have been receiving treatment. These are people who can only be discharged, because that support is available. All in all, they employ and run over 60 services with a staff of over 200 and they estimate that the charges are to National Insurance Contributions that are provided for, in this bill, the increase will cost them about £470,000 a year. This is a significant burden on their finance is, which, for various reasons have already been stretched very thin stop I'm told that they cannot benefit from any increase in employment allowance.

The Minister will correct me if I'm wrong. They believe that is so. They are not eligible so Class 1 National Insurance Contributions were more than £100,000, in the last year. And of course the public sector section is not available either. The result is that they will no longer be able to provide the training and development that their staff need. That will lead, inevitably to an erosion in the extent and the quality of the service they offer. Those who will suffer will be those worst in need of protection.

Those were at risk of, or who are already suffering, following the public services. Another Scottish charity 's arc housing association. It is the larger association, a large association which is in a similar position to that of the others, in that it seeks to provide services, across a large area of Scotland. In their case services which are offered to vulnerable adults, such as those with a learning disability and other particular complex needs. As matters stand that charity to is not eligible for any support from the government, as it has a turnover of about £24 million, per year.

700,000 per year. It estimates that the effect of its operations, on this bill will be devastating. As matters stand, the charge for them to do their work, barely met year after year. National Insurance increases will amount to a further 600,000 per year. This means that it will not be able to survive without will not be able to survive without damage and cuts to reduce costs. It may not be enough it's the survive. As in the case I mentioned, the most affected are the thousands of vulnerable people, the social care that Arc provides.

They have nowhere else to go. I do not think it is an exaggeration to say that as the bill stands, social care in the third sector, in Scotland face a situation and a crisis. The public services simply cannot cope. Something has to be done. The responsibility lies with the government. I hope the double of the Minister will feel able to reassure the House that something needs to be done to minimise the impact of these increases. I will support the noble Baroness, Lady Barker, if she

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decides to move her amendment. I'm afraid I too was unable to be present at the earlier stages of the
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Lord Howard of Lympne Portrait Lord Howard of Lympne (Conservative)
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present at the earlier stages of the bill, but I arise to support the amendment and in particular the provisions in it which relate to hospices. Which would have the same effect as the amendments in the name of Lady Barran's role -- Baroness Royall. I draw attention to my interest in the register, as chairman and of Hospice UK. The added burden which the increased contributions, which were placed on the hospice are considerable. The extra cost has been estimated at no less then £34 million a year.

Sir less then £34 million a year. Sir Christopher's Hospice, in itself London has said it will face increased costs of around £450,000 a year. Equivalent to the cost of nine specialist nurses. Dorothy House hospice in Wiltshire estimates an additional costs of £422,000 a year. The Kirkwood hospice has had to put 33 at risk of redundancy, citing the increased national insurance cost, as one of the drivers. Nottinghamshire hospice is also proposing redundancies, again citing these extra costs, as one of the symptoms.

These are just some of the examples of the devastating effect of these measures will have, on hospice care. And My Lords, this is all so shortsighted. We all know that one of the major challenges facing the NHS is a bed blocking. And as I have told your lordship before, hospices can make a huge contribution to overcoming this challenge, by looking after patients, in the community. Either in hospices, or look after my hospices, at home. But in order to make that contribution, hospices need more resources, not fewer.

So, this change will add to the challenges facing the NHS, not directly in respect of its own employees, but indirectly, by diminishing the capacity of hospices to help. The Minister said to the Ministers recent announcements, 100 million has be available to hospices was that that is indeed welcome. But that money is for capital projects. Not a penny of it is available to defray the extra costs of the increase in a national, national insurance contributions, which we are debating today.

So, it will have little or no effect on the crisis in hospice care, which I have described. So, I urge the government to think long and hard about this amendment and to come up with a constructive solution.
16:44
Lord Eatwell Portrait Lord Eatwell (Labour)
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I find some difficulty in addressing this group of amendments. Specifically because these amendments are but a part of 38 out of the total of 44 amendments, in the marshalled List, that are all essentially the same. There are 38 amendments all proposed exemptions to the changes proposed in the bill, or variations in the various thresholds, which employs a national insurance is charged. All the amendments have the same internal logic. They are designed to reduce revenue.

All of the 38 are the same, they vary only in the individuals, firms or groups that are to be firms or groups that are to be exempted. Many of whom, many of the individuals and groups, of course are groups which the House would deem, not just worthy, but really deserving of support. Now, if we look at this, I would wish to address the 38 amendments collectively, because they are the same. The Liberal Democrat benches notably, with amendments associated with the noble Lady Baroness Kramer seeks to exempt, providers of care homes of a domiciliary care, primary care providers, dentist, pharmacist, charitable providers of health care, hospice care, carers and part-time hospice care, carers and part-time And she also adds providers of care to children under five years of age, universities, providers of higher education, registered charities, housing associations, small or micro businesses, town councils, parish councils.

And businesses in the hospitality sector. Not to be outdone, ONS Neville Rolfe adds providers of transport for children with special needs, employers of persons under 25 years of age, small charities, all charities. Employers in the earlier sectors and farms. In addition, the noble Lord, Lord Londesborough, focuses on firms with fewer than 25 staff. All these are to be exempt from the measures in this bill. And finally, the noble Lady, Baroness Noakes, and into amendment 39, which provides for further exemptions, but they have not thought of which ones yet.

Milos, the 38 amendments -- My Lords, the 38 amendments and up to a set of wrecking amendments, since they recce chancellors budget judgement. Moreover, and I think this is usually important in the context of this House discussing what is essentially a money bill because of the technicalities of insurance, the 38 amendments embody to serious fiscal errors. First, consider the fact that every exemption, every adjustment, is an expenditure of taxpayers money. Are the proposers of the 38 amendments really prepared to endorse this scattergun, blunderbuss approach to spending? All proposals in 37 of the 38 amendments involve commendable, valuable public services and contributions to the economy and society but this while scattering of public funds is not a serious way to determine the structure of public expenditure.

It might be argued by the proposers of the wrecking 38, that they are only pitting their scattering of funds against unintended consequences of the measures in the bill. But to make that argument would make the second serious fiscal error. In the raising of revenue, simplicity is a fundamental requirement. As contrasted to the necessary decisions should be taken as the Adam Smith's Wealth of Nations. As Smith argued, proposals for raising revenue should always emphasise the reduction of complexity, to make compliance easier, and administration more efficient.

And most important of all, to reduce the opportunities for avoidance. The 38 amendments add up to a charger for avoidance. You can be sure that they avoidance. You can be sure that they will be gained and exploited by those with avoidance. My Lords, in opposing the amendments in this first group, I am opposing all the wrecking 38. All add damaging complexity to the bill, and scatter public funds in an ill considered manner. All should be withdrawn.
16:49
Lord Wallace of Tankerness Portrait Lord Wallace of Tankerness (Liberal Democrat)
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My Lords, may I echo some of the comments made by Lord Hope of Craighead, who I think identified some key Scottish voluntary organisations who play a vital role in supporting particularly vulnerable people. And I would like to particularly draw attention to cross reach, which is the social care arm of the Church of Scotland. Cross Reach employs something like, I think it is, 16,000 people. It I think it is, 16,000 people. It has, over recent years, been able to support the services by drawing on reserves.

To the extent of millions, not even thousands of pounds, but millions of pounds. That sort of thing is not sustainable. They have 32,000 beneficiaries across Scotland. And in my year as moderator of the General Assembly of the Church of Scotland, I remember visiting many of these facilities. On seeing the valuable work that was done by Cross Reach, in terms of done by Cross Reach, in terms of supporting young children, in supporting drug and alcohol rehabilitation schemes, in terms of elderly care and support for care homes.

And also for young people with learning difficulties moving from the school environment into the adult environment. It was quite remarkable, the work being done. My Lords, I just fear that, as you say, you can't run down your reserves forever. My Lords, the coalition of care and providers in Scotland, they had a survey of their members. Over 50 members participated, with a combined expenditure of £850 million, employing around 15,000 staff, supporting thousands of people across Scotland. And the responses they got.

57% of respondents were seriously considering handing back to commissioners next year. 55% were considering reducing support to beneficiaries in services they do not plan to continue next year. 92% said that if employers national insurance changes are not On staff payment referential is. 67% of the respondents are budgeting for 25 and 26, on the basis they only expect to reach financial balance through the use of reserves. And of these, 91% said they would no longer be a going concern in four years, if they continue to reach financial balance through drawing down reserves in this way.

I hear what the noble Lord says, but when Cross Reach is spending millions of their own reserves, it's taxpayers money. And no doubt, I will not make the excuse that there is unintended consequences, one must assume the government knows what it is doing. It a far stretch. But I would like to know what impact assessment the government had made on what the cost would be to the public purse, if indeed these services are withdrawn. And if it is not a cost to the public purse, it is a cost to vulnerable people, the length and breadth of this country.

And that I find is completely unacceptable position for the government to take up. And I would like the Minister, in reply, to tell us what was the impact assessment with regards to what the consequences would be if these services had to be withdrawn? My Lords, in my exchanges with the coalition of care and support providers in Scotland, they flagged up to me, at the very end of last week, a possible problem with some of the definitions. I think the definition you have got there, English organisations, with legislation passed by this parliament, Welsh ones with legislation passed by the Welsh Senate, Scottish ones with legislation passed by the Scottish parliament.

And for example, in amendment one, the support services not one that is known to Scottish legislation. It was too late to do a manuscript amendment to try and address that. They also wanted some time to actually try and see what precisely did need to be done to extended to Scotland, because I'm sure the House would agree, if this amendment is carried, then we would also like to make sure it is actually fully adequate for the entire United Kingdom, not just for some parts of it.

And I would therefore propose to bring back the amendment at 1/3 reading, if the amendment is carried. Ringing but the amendment 1/3 reading that Scottish issue.

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I would like to speak very briefly to support the arguments made and the analysis made by my noble friend. But also to remind your lordships of the comments made by the noble Lord, Lord Macpherson, by the noble Lord, Lord Macpherson, second reading. Which is if you aggregate the reductions in aggregate the reductions in employees national insurance that were introduced in the last year of the last government, with the effect
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17:00
Lord Macpherson of Earl's Court Portrait Lord Macpherson of Earl's Court (Crossbench)
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I do think it is an important principle that budgets should be determined by the House of Commons and those who argue for exemptions really should be obliged to explain how they will pay for the tax cuts, in those exemptions. The fact is if you cut taxes in one area, they will need to be raised somewhere else. And actually that will result in a higher marginal rates for everybody else and higher marginal rates due to far more damage than low marginal rates.

I would also like to just support the point made by the noble Lord, Lord Eatwell. In this case I would just like you to spare a thought for the HMRC official. The fact is these amendments are very specific, being applied to narrow professions and employments and will cause all sorts of problems in determining whether particular in businesses or individuals are entitled to the exceptions, or not. We do not need a more complicated system.

It is too complex as it is. I do wish we would return to the principles of the late Lord Lawson who believed in, as a wider tax base as possible and as a low marginal rates as possible. Finally, I would just like to take issue with Baroness, Baroness Masters. The fact is that? Sorry, many, many apologies. Baroness Noakes, I stand corrected. The fact is that the cotton employs national insurance was considerable and in terms of the labour market, if you actually look at the macro effects of employee and employer National Insurance, I would regard the changes which have taken place as broadly neutral, across the board.
17:02
Baroness Fraser of Craigmaddie Portrait Baroness Fraser of Craigmaddie (Conservative)
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My Lords, I'm not an economist.

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My Lords, I'm not an economist. But I do run a small Scottish charity that provides Scottish health services. I just want to come back on some of the points. I wish the noble Lord, Lord Eatwell and the noble Lord, Lord Eatwell and Viscount Chandos and had we had the Viscount Chandos and had we had the recess that I just had. Which has been, looking at our employees, some of whom who have been with us for over 20 years, who are highly trained clinical specialists.

Telling them that their roles are under threat, of redundancy. As I said, earlier stage of this bill, I haven't been able to participate as much as I would wish, because of the effects of this bill, or my organisation. And the effects will be that people will lose their jobs and organisations will lose skill. And those are very difficult things to build up again. I too, like the noble Lord, Lord Wallace had been in touch with coalition of the Scottish providers in Scotland.

I'm slightly concerned that these amendments don't cover Health and Social Care services in Scotland. If he is going to bring back an amendment at third reading, I will happily work with him on it. I think all I really want to say is that yes, I would love, a more simpler tax regime. I would absolutely support that. And the way to do that is until not have this National Insurance increase was that I think that would be very simple. But the lists that have been covered by these amendments are all organisations that support public services.

That support the public sector. And so, you know, these are services that many government agencies are supposed to provide, are required to provide, but yet they are farmed out to organisations, like ours, like a cross reach, like arc. It demonstrates a huge lack of understanding by this government on how these measures will affect vulnerable people. The people that these organisations can support. Because those of us, like the organisation, cerebral palsy Scotland we are a registered charity.

We cannot put up prices. Our raison d'etre is to make our services available to people who cannot pay for them. We cannot put above prices. Yes we may have benefited last year, from slightly less employers National Insurance or employee national insurance. All our providers, so the people who come in clean our centres, the people who help us with IT, the people who empty our sanitary bins, they all employ people and they are all putting up their costs. So our costs are rising, our national insurance is rising and because of the minimum wage increase at the same time, it is becoming more and more expensive for us to employ people.

The only thing we can therefore do is to cut our cloth and employ less people. So I do not understand how these measures and, you know, I will support the lists of different sectors. Because these are delivering support. It gives people choice, quality-of-life, control over their lives and do things to support the NHS, social care sector, but otherwise will be stuck. I just feel that this is a measure that will not save public services as the Minister has told us it has been put in place to do.

I am afraid it will crush them.
17:07
Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Conservative)
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I stand very briefly to support the amendment, so ably tabled by the noble Lady, Baroness Barker and I pay tribute to her for her attentive nature during committee stage and a state of the noble Lord equal well, the fact that there is this extensive list demonstrates once again the lack of an impact assessment. I did implore the Minister during committee stage, I was the Minister for over 12 years, one thing you learn as a Minister, when you're taking a bill through is to consult and speak to the sectors.

Talk to them, understand the challenges and then address those issues. Unfortunately, that had not been done. Just taking adult social, the impact is close to £1 billion. And yes, we may hear from the Minister this has been addressed in the budget, but it is not. The Nuffield Trust said as much, that the actual measures put forward in the budget will be dwarfed, by these contributions. And that is just an adult social. Talk to community pharmacies, they will tell you a desperately, akin to what we have just heard, from my noble friend, that they will have to shut.

Why? Because they cannot afford to keep employees. So, even at this late stage, I implore the Minister, listen, connect, communicate and I hope, take on board, some of the challenges, but also the important concerns being put across, in this House, a behalf of many, many different community services, which are so desperately will be impacted by these national insurance hikes.

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My Lords, I am somewhat amazed by
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Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Conservative)
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My Lords, I am somewhat amazed by some of the answers I've heard on Are Are revising Are revising House. Are revising House. Purpose Are revising House. Purpose is Are revising House. Purpose is to debate the bill, put forward amendments, debate the amendments and vote on them. So the idea that we should be changing it, because we shouldn't change the budget is absurd. It is the whole purpose of having the House of Lords was that we are revising techno, we bring expertise and experience, which many of us would like to be assisted on, when it makes bad decisions, of which this is one.

Desiring simplicity, he also wanted fairness. What has happened here is not fair. I think if he consults at the organisations which I know he has been connected with the charitable organisations, this is a very unfair organisations, this is a very unfair imposition on their memoranda. The reason there are so many amendments, the first amendment is an excellent amendment. The amendment would deal with all the issues ongoing. If it is not successful, then other amendments will follow that will detail particular set is which will also focus their attention on.

Noble Lords eat well and others may not have heard me in committee stage where I did attempt to cast the various different types of amendments and indeed the whole, the whole effect of the bill on the charitable sector. We have made attempts to detail them. And indeed I will be talking about those numbers and inviting the Government to comment upon them. In the total amount of the charitable sector itself has said this will impact will be 1.4 billion in the alleged 22 billion is at their black hole.

We have also made suggestions about how this may be grouped in other areas. At committee stage, I talked about the enormous damage of the Government is about to impact on the Adult Social Care Select Committee. Heartless and utterly demotivating for the many people who go out fundraisers and others in this chamber, he got fundraising for such chamber, he got fundraising for such charities, doing their best to help those in need. Only now to see the government snatching away in such a hot this way.

At committee stage, we talked about some of the big numbers. I at that stage focused on social care. Talking about the cost that community care faces. The 1.1 million, which it has in God. This national insurance. At this time I want to talk about hospices. Perhaps because I do not want to repeat what was said at committee, albeit with that Grand Committee, which Thames that Grand Committee, which Thames Hospice is close to home. I introduce it, by then a local MP, now my noble friend, Baroness May, the excellent CEO there, Dr Rachel Cohen is spraining that it is now going to have to post a £1 million deficit and that the AI increases together with the National Minimum Wage increases will cost it £650,000.

This is a charity that raises the sum of £4 million from its fundraising. That is a very material some. As she herself is memorably put it, the NHS is supposed to be from cradle to grave. What we have, now is from cradle to a few months before the grave. Yes, there is £100 million for the sector, announced before Christmas, but as my noble friend, has explained it is a one-off spend, over two years, actually it is largely back ended in the second year, restricted to capital sums and in actual fact it is spread over 170 hospices.

It is a bit of an insult to claim that that is proper compensation. Thames Hospice is looking to try to serve a 400 people. Mainly actually in their home. I was very pleased to see in the amendment, subclause F, specifically covers those people who have been cared for, at home. As a charity, they are dependent on the local community for their generosity and financial support. The government only covers about 30% of their costs. The hospice has to raise £34,000, a day, to provide all its services.

And the Government knows that demand for these sorts of services going to grow. It is estimated that tens Hospice catchment area alone, the overall demand for palliative and end-of- life care is expected to grow by at least 9%, by 2030 and the number of deaths are rising to 4150, in 2030. So, perhaps the noble Lord the Minister can explain it to Thames Hospice, what they expected to do, by this attack on the hospice? By the government. Are they supposed to turn people awake? Are they going to have to offer less care? Are they going to turn people away.

They are going to see more people die in pain and agony, as they cannot offer the palliative care they wish to do. I'm sorry to be so graphic, but that is the choice of your Lordship's House today. Who is going to help and have their head held high as they walk through the lobby seeking to cause such damage to the hospice sector. such damage to the hospice sector.
17:14
Lord Clarke of Nottingham Portrait Lord Clarke of Nottingham (Conservative)
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In principle, it is not a very good idea to have a system of taxation in which you suddenly start writing dozens of exemptions, particularly chosen groups, when it is introduced. Taxation should be straightforward, simple and collected in the most straightforward fashion, across the whole economy, subject to the effect. I will actually be supporting these amendments, mainly as a symbolic sign that I disprove extremely strongly of the choice of tax rise, the government made in the budget.

In fact this increase in employers National Insurance, in a serious effect, damaging effect, on a very important sections of the economy, as a whole. Many small, medium sized businesses. Many businesses, joint ones, in a labour-intensive part of the economy are being badly affected, at a time when there are many other features of our financial crisis which are affecting them as well. We had some exchanges in the House a few moments ago, about the withdrawal investment ago, about the withdrawal investment This country is not an attractive place for investment at the moment and yet we desperately need investment if we are to begin to recover from the appalling stagflation that we see the economy is now stuck.

Everybody knew that whichever party won the election was going to have to raise taxation, because of the appalling fiscal state of the nation. I trust that both party leaderships goes of thought which particular taxes they would have to raise on their first inevitably unpopular budget, which was going to be the duty of a new government to introduce. Of course, the choice would have been difficult. I think the one chosen was the very worst possible, in view of the state of the economy as a whole.

And also, as these particular amendments illustrate, the particular crisis we are in social care, providing for the lack of social care, the desperate dependence so many families have uncharitable support, -- On a charitable support, hospices and someone, these amendments do illustrate some of the worst effects of a choice made. I would start a debate on what taxes might raise. Any tax increase is unpopular and they are all open to objections. I think I probably would have gone for fuel tax, VAT, looked at their passenger duty.

Quite a lot of others, and certainly, quite a lot before this particular time I would have looked at the employer's national insurance. The government will go to desperate attempts in the elected house to get any amendments we pass reversed. They will have to do that. No doubt they will have difficulty, because many MPs will find them very uncomfortable to support that. But I certainly think as far as this House is concerned I am attracted by the idea of casting your vote to show how strongly I feel for the many sentiments that have been expressed about the damaging effects on many families and many people, when hospices, charities, and others find their whole work is threatened by this unexpected and wholly-owned desirable position.

-- Wholly undesirable position. I think the Minister, as far as this debate of this House is concerned, is defending an indefensible position.
17:18
Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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My Lords, I am going to be very brief. Can I just join with Lord Lee in saying to the Lords, Parliament has given us the responsibility, under the national insurance contributions legislation, to come forward with amendments and press them. I am not going to walk away from that responsibility, simply because it looks rather difficult. Can I say to Lord Eatwell who talks about supplication, it is very easy to have a high level issue like that. But I am not going to put simplification ahead of what will basically be the cancellation of something like 2 million GP appointments, because of the additional costs on GPs.

I'm not going to sit by and watch dental practices cut back their services, so that we have much more of this DIY dental care that people are DIY dental care that people are carrying out. I'm shocked by the numbers rising in dental sepsis alone. I am not going to sit there while pharmacies basically cut their while pharmacies basically cut their hours and services. I'm not going to sit there when social care, and we heard so many cases here given, basically have to work out how they set aside the most vulnerable in our society, because that is the implication.

But we have heard also from hospices, people are being told now that their jobs are at risk. This is not a hypothetical. This is not some exaggerating claim, this is a process that is under way across the Community Healthcare and social care sector. To absolutely cut back in response to this increase to employers national insurance contributions. We are trying to stop a disaster and I do think when it came forward to these proposals, the government did not absorb the fact the National Health Service does not work in isolation.

It is part of a much more holistic complex landscape. And if you underline the private elements of both social care Community Healthcare, you undermine the NHS. And that surely is not what they want to be doing to these circumstances. My Lords, I could go on because there is so much to be said, but it has been brilliantly saved by so many across this House. -- Brilliantly said. I do ask, if the government were to stand up and said they accepted this amendment, there will be a hallelujah across this House.

But please understand the problems we are trying to deal with. This is not hypothetical, this is not playing party political games. This is actually dealing with a really difficult serious problem that our society is facing. So I beg that our society is facing. So I beg to, I don't know what you quite do in a winding speech, but if I could move anything, I will!
17:21
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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I write to echo much of what has been said by the noble Baroness, Lady Barker, noble Baroness, Lady Kramer. What my noble friend, Lord Ahmed, said about it being a pity the Minister had not engaged more with those affected, and I think the noble Lords plea for fairness. This bill is the most important economic measure the government has put forward since they took office. And has become apparent from our debates. Especially detailed examination committee. It is a misguided measure with numerous defects.

This will hit hardest of sectors which apply more labour, care homes and hospices. But they will also flow through to SMEs and bigger businesses as they seek to cut costs and staff. We have seen action from big names like Sainsbury's shedding staff and Federation of Small business at the chartered into personnel. With cuts in the surveys. Now, during our debate today, the opposition is proposing amendments to reduce some of the bill's most egregious effects. That is the answer of the noble Lord, Lord Eatwell, we have to find a way to limit the impact of this ill thought out jumps tax.

The tax system is not simple and we are where we are because of the choices the government has made. And the changes are having real impacts on real people in their everyday lives. One charities, small businesses, nursing schools, special needs drivers, pubs, young people. And the specific subject of this amendment, in care homes and pharmacies, in dentists, GP services and hospices, and that is why we are supporting the noble Lady, Baroness Barker's amendment. And will be voting in favour. At every stage throughout the progress of this bill, we have raised the plight of these sectors because of the decisions the government made a budget.

-- Acta the budget. They are facing these in a very short -- At the budget. They are facing these in a very short timescale. At every stage, the government has remained unmoved, the Minister has remained stony faced and utterly unreceptive to the genuine and deep felt concerns of millions of businesses and charity trustees across the country. We have heard the noble Lord, Lord Hope, about a minions, and by noble friend, Baroness Stedman-Scott, about the shed -- Shade scale of impact on charities, and my noble friend, nor Frasier, on the loss of jobs and skills and the difficulty in deciding what to do.

They and others are facing a cleavage in April and that is thanks to the government. -- A cliff edge in April. At the same time, choosing to give £9.5 million pay rise to the friends in the private sector. To pledge £8.3 billion to the amorphous GB Energy project. And to increase day-to-day spending by £23 billion this year. These were all choices, my Lords. And it is hospices, charities, healthcare providers, earlier settings, and small businesses, who will be paying the price of these choices and that is what my noble friend, Lord Clarke of Nottingham, was saying.

It was the wrong choice. I would add in November last year, the trust predicted the tax would affect the social care employers in the region of £940 million in 25 and 26 and that is on top of around 1.85 billion more that they need to meet the new minimum wage rates from April. These are all relevant to this amendment. I'm particularly concerned about the hospice sector. It is why I have tabled my own amendment with the support of my noble friend Lord Lee, both have spoken with great elegance, along with Lady Kramer.

I won't repeat any of that. But it has been confirmed towards the sector is heading towards a £16 million deficit this year. The Health Secretary did announce £100 million to make sure we are protecting our hospices. But last week, the prime Minster was forced to admit that as capital funding. And will not have a direct impact on the day-to-day costs. Further, I understand, boring to the details that the 26 million the Minister mentioned in committee on day three represents almost no new money at all.

So we have a big problem. How should say finally it was reported in the national pharmacy Association have taken the unprecedented step of voting for unprecedented step of voting for collective action. In protest. At a £250 million hike in business costs they are facing another government. So a noble Lord, domestic, won't listen to the official opposition, perhaps you listen to the experts, GPs, hospices, charities, who are all telling us the government must think again. So, we agree with Sabrina Dhowre Elba Baroness Barker the government must act urgently to protect our healthcare providers, our GPs, and our hospices, before it is too late.

Should the noble Lady choose to test the opinion of the House, we will be with her in the lobby.
17:27
Lord Livermore Portrait Lord Livermore, The Financial Secretary to the Treasury (Labour)
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My Lords, I'm very grateful to all noble Lords who have spoken in this debate. I will address the amendments tabled by the noble Baronesses Lady Barker and Lady Kramer, seeking to maintain the rates and thresholds at their current level for NHS commission services, including GPs, dentists, social care providers and pharmacists. As noble Lords will know, as a result of the measures in this bill and wider budget measures, the NHS will receive an extra £22.6 billion over two years, helping to delivering additional 40,000 elective appointments every week.

Primary care providers, general practice, dentistry, pharmacy, and Eyecare, are important independent contractors, who provide nearly £20 billion worth of NHS services. Every year, the government consults with these primary care sectors about what services they provide and about what money they are entitled to in return for their contract. This continues to be the case this year. The government has announced an extra 800 The government has announced an extra 899 The government has announced an extra £899 million in general practice for 25 at 26 and to set out the reform, which has helped us deliver on our commitments.

This is the largest uplift in GP funding since the beginning of the five year framework and as a C trend in funding. As a result, the total NHS resources will be going to general practice. The Department for Health and Social Care Levy's come salting with general -- Is consulting with the general practitioners committee on the 2025, 26 GP contract. We will consider a range of proposed policy changes. These will be announced in the usual way, following the close of the consultation later this year.

The Department of Health and social has also entered into negotiations with the pharmacy, regarding the 2025 and 26 community pharmacy contractual framework. The final funding settlement will be announced in the usual way, following this consultation. The NHS in England invest around £3 billion in dentistry every year. NHS pharmaceutical and dental allegations for care systems, 2025, 26, having published, alongside NHS plan guidance. The noble Lord, Lord Howell, and Lord Lee, spoke about hospices. The government recognises the vital role hospices play in supporting people at end of life and their families.

We recognise the range of costs the hospital -- Hospice sector has been facing over the years. We will support the hospice sector with a hundred million pounds increase for adult and children's hospices to ensure they have the best physical environment for care and we have also allocated an additional £26 million in revenue to support children and young people hospices. The hundred million pounds investment will go towards helping hospices improve their buildings equipment and accommodation, to ensure patients continue to receive the best care possible.

Regarding social care, the government has provided a real turn to increasing core local government spending power of 3.5% in 2025-26. Including £880 million of new grant funding, provided to social care. This funding can be used to address the range of pressures facing the adult social care sector. To answer the noble Lord, Lord Hope, or charities can benefit from the employment allowance. As a result of this bill, from April 2025, the threshold of £100,000 or less will be removed.

The noble Lord, Lord Wallace, raises the question of impact assessments, as we discussed at length in grand committee, HMRC has published tax information and impact note, and have set out the macroeconomic impact of this bill. Ultimately, the response in part to the noble Lady, Baroness McIntosh, in adding additional sectors, this bill is necessary to fund public services, and contained in these amendments, they would, as Lord Eatwell said, put much of this funding at risk. They would require higher borrowing, lower spending, alternative revenue raising measures and in light of this, I would respectfully ask the noble Baroness to withdraw her noble Baroness to withdraw her
17:31
Baroness Barker Portrait Baroness Barker (Liberal Democrat)
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I would like to thank all also taken part in this debate, including Lord Eatwell, with whom I disagree. He raised an important point. It is, I think it is entirely wrong to characterise the amendments as being blunderbuss and scattergun. We are dealing with a very crude fiscal measure, which is going to impact measure, which is going to impact all sorts of different sectors, at different points. The amendments, on the contrary are not, they are very targeted and precise.

There are different attempts to mitigate the overall. My amendments are solely confined to the Health and Social Care. And one of the issues that I'm trying to drive out, in my amendments is the fact that we have yet, for all their have been the announcement of the increases in funding, particularly in the NHS. Just laid out for us. The question , the question of productivity and sustainability of public services is one that we think is really very important.

And a very key aspect of what I'm trying to drive that is driving down demand upon the NHS. The work that is done about many of these organisations is going to lead, in future, to there being demand for elective surgery, within the NHS. If it is correctly funded and targeted. We are not blunderbuss at all, we are trying to be a very precise about what we're doing. The second thing I would say, noble Lords might understand this. The second passes are not particularly obvious, but there are a number of people, thousands and thousands of people, in this country, who continue to be able to work, because their family members are looked after, by these organisations.

So after, by these organisations. So this is a question not just about the cost of public services, but the indirect costs to the economy of taking people out of, out of other jobs, in order, in order to sustain their family lives. The final thing I would say is, many of the services that I and other people are trying to maintain our comparatively inexpensive. A lot of them rely on volunteers. They are much less expensive than acute public services.

For all of those reasons, that is why we think that this is important. I agree with the noble Lord, Lord Ahmed. I do not think we have had an adequate impact assessment with this bill. Had we had that, it would have been ideal to have taken a more of what the to have taken a more of what the Minister said as, as being, as indicating that less is more. That he doesn't get that these are not wrecking amendments. These are amendments that are about trying to improve the nation's health and well-being and finances, as a whole.

I therefore, in view of all of that

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wish to seek to test the opinion of the House. The question is that the amendment agreed to call? As many as are of that opinion, say, "Content". are of that opinion, say, "Content". Of the contrary, "Not content". I
17:35
17:48
Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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My Lords. Amendments My Lords. Amendments to, My Lords. Amendments to, Baroness

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Kramer. Can I start by thanking everybody

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Can I start by thanking everybody who voted for the previous amendment, there is such a powerful message that is engaged. In effect message that is engaged. In effect of that statement. My Lords, I am here to move amendment number two, which is different in character from amendment one. The list of amendments in this group are primarily, a couple are in there from Lord Londesborough as well, which I also support, and I know he will present very effectively.

But the amendments that I down in my name -- That are down in my name, that deal with essentially part-time workers. My Lords, it was in the course of looking at the impact of the employers that we became really conscious of the changing petition of part-time workers as members of our workforce. There are now over 8.4 million people engaged in part- time work. And these people are exceptionally hard-hit by the changes posed by the government in the next bill. People who work typically 14 hours a week that is incurred employers NICs in the past, but that has dropped to people who work typically eight hours a week, so really there are a huge group of part-time workers who have become far less attractive to the employers that have provided their opportunities in the past.

And the impact is especially great on the hospitality industry, an industry that we know is already on its knees. Some 37% of employees and hospitality are part-time. I think there is a view in Treasury, I think Lord Macpherson express it unwittingly during committee stage, that part-time work as sort of a rich person's luxury. It is people working for pin money. And that is frankly a completely outdated attitude. Today, part-time is concentrated in the lowest pay bands. It is an entry point to work for many people in disadvantaged communities or people with difficult histories.

It is an economic lifeline for carers who can work part-time but not full-time. For students, for many with disabilities. For those who are economically inactive, we have got a government who says it wants to take two people... 2 million people off benefits and get them into work. Part-time work is the entry point, it is the obvious first step. And we also want employers to see part-time work as exceedingly attractive, so they start to add additional support like training and career opportunity into part-time work, because it is a far more fundamental role than it is played.

But what we have seen with this bill is many work employers are now openly saying they intend to outsource abroad rather than employ part-time workers, or they will require part-time workers to be self-employed, with all of the capacities of IR 35, so while we capacities of IR 35, so while we look at our concerns, both of hospitality, the high streets, though sectors, often the backbones of communities, and because we looked at the nature of the part- time workforce, we made the call to go farther in this amendment than in our other amendments.

And seek not just to exempt part-time workers for the increase in employers that end that I Cs but reduce the rate to that I Cs but reduce the rate to My Lord, as Baroness Barker said in a previous set of amendments, we did it in our manifesto, we have since, we have identified other tax opportunities that are available for fundraising, none of them are easy, but frankly we would close loopholes in capital gains tax, we have talked about taxes on share buybacks, we would reinstate the surcharge on the major banks.

We had in the previous set of discussions are whole series of proposals coming from Lord Clark, who, of all people, is very aware of the range of possible choices. They may not be ideal but they are certainly most -- Much better than what is happening. In this particular case, we made that decision and that is the characteristic of this amendment. The other amendments in the group and my Neymar concerts. As I say, Lord Londesborough's amendments in this group, I am fully supportive of those amendments.

My Lords, I beg to move.
17:53
Lord Londesborough Portrait Lord Londesborough (Crossbench)
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Amendment proposed, clause 1, page 1, line 1, the words as inserted on the Marshalled list.

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My Lord, I rise to speak to my amendment. My manuscript amendment, 15 A, and its consequential amendment, 17 and 24, both of which amendment, 17 and 24, both of which are supported by the noble Baroness, Lady Neville-Rolfe, and Lady Kramer, Lady Neville-Rolfe, and Lady Kramer, and I'm grateful for their support. I also will speak to the I also will speak to the consequential amendments 30, A, 30 consequential amendments 30, A, 30 1A, and 30 2A, and for my sake, I will not be pressing 30, 31, or 32.

will not be pressing 30, 31, or 32. In short, these exemption amendments seek to protect all small businesses and organisations, including charities, that employ less than 25 staff, from clause 2's sleep and sudden drop in the NICs threshold, or on a monthly basis, from £758,- 417. And those who are paid weekly, to £96 per week. By maintaining these existing thresholds, these amendments would particularly protect part-time workers and small organisations, including charities, hospitality and retail. Which, in some cases, phase increases of the bill, per employee, as high as 50 to 70%.

And for this reason, I wish to support the noble Baroness, Lady Kramer, with her amendment number two. I will quickly declare my interest as set out in a register, specifically as an adviser and investor to arrange -- To a range of small businesses in the UK, including a community owned public house. I will, to the impact of these amendments shortly, particularly in relation to the challenging and interesting comments coming from the noble Lord, Lord Eatwell, I certainly do not agree that my amendments are designed to reduce government revenue, and I will come onto that in a moment.

But surely, this is our role, this is the most important economic policy this government is yet to produce. And we are where we are and surely we should be scrutinising, particularly, if we feel that poor decisions or poor structuring of these national insurance increases is doing damage to the economy. And on that particular theme, let me just quickly share, the latest survey from the Federation of Small Businesses reported the proportion of its amendments facing contraction in the last quarter, Q4, jumped to 24%, its highest ever level outside the pandemic.

And that is up from 14% in Q3, and the FSB has also reported that confidence among its membership has fallen to its lower -- Lowest point in 10 years. Meanwhile the chartered of development -- Chartered is to development confirmed that two thirds of who they interviewed plans to reduce their headcount into a 25 through redundancies, or recruited fewer workers. So, rather than taking a sectoral approach, for which many others have spoken passionately already, my exemption amendment applies to all small businesses and organisations, including charities with fewer than 25 staff, which as the bill stands, face sudden and steep drops.

In fact, 45% drops in their per employee threshold, at which employers become liable to pay that NICS, this on a salary of £30,000 are set to increase 30% to 3750. For those employing more than three staff. The part-time workers, earning, say, £15,000 per week, the employer NICS can increase by more than 50% per job. These are not trivial increases. While I acknowledge the government and salute the government for increasing the employment allowance in clause 3 of the bill, it is from £5000 to 10,500 and this typically washes out increases, only for micro businesses.

Typically those employing less than three staff. All employing less than three staff. All , in terms of employees, the higher the salaries paid, the lower the increase in percentage terms, to their NICS. Of course, I understand why the government is raising tax revenues, I have no issue with that, but by placing this burden so disproportionately on small employers this bill threatens to do significant damage to jobs, pay, and economic growth. Anecdotal evidence suggests this is already happening. My amendments would help to protect the jobs of some 6 million workers employed by about one million businesses and organisations across the UK.

Now, many of these are companies operating in low margins and are at critical stages of their development. Yet they grow a fastest rate, create jobs at the fastest rate, and through their size and agility, can be great innovators. They are a vital component of both GDP and our growth. With an annual turnover of some £900 billion. But this group also includes a huge sway of family and local businesses, spread across the country, struggling to keep their head above water in what have been five very difficult trading years.

My Lords, a fall of just two-3% in employment levels and hours worked in this small business sector could, I would argue, cost the Treasury more in lost tax revenues and increased benefit payments, then it would gain from this measure. Incentivising employment, by restoring the needs threshold, would be looked if the GDP growth, the government's number GDP growth, the government's number one priority. It would help boost income tax revenues, employees that NICS and it would boost the revenues in corporation tax and above all, it would lift business sentiment and stimulus investment.

Now, I listened with interest to the noble Lord, Lord Eatwell, describing all these amendments as, I think, wrecking amendments. And I would say, because we don't have a proper detailed impact assessment, that that is an unfair charge. I would challenge it, on behalf of these amendments. So, I look forward to hearing from the noble Lord, the Minister. But with respect, I do expect to move these amendments when the time comes.
18:01
Lord Bruce of Bennachie Portrait Lord Bruce of Bennachie (Liberal Democrat)
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Just briefly to amendment 36, to which I have added my name, on Amendment two, I don't need to as much as what has been said, apart from the disproportionate hit on part-time workers seems to me to be extraordinarily damaging. And has been said, very often, these are percipient businesses that might grow to be full-time businesses and whole swathes of the economy, students, which nearly all of us have got in our family, they are dependent on this work to get them through their studies, so it is a significant impact.

I think that has been said. The hospitality industry has had not just five difficult years, I know a number of hospitality businesses but I have got personal knowledge, some of which did not survive COVID, many of which survived COVID but with a massive debt overhang which they are still trying to pay off. At this particular measure on top of that, those that just managed to survive will now probably fail. And those that can hang in there are going to struggle to get themselves back into viability.

I also have got an amendment later on which I will speak to, about the impact of these taxes in Scotland in terms of the public sector. But also in the private sector, there is a difference in hospitality business rates between Scotland and England, and I know the way business rates are determined as not exactly, rubble, UK hospitality Scotland has done an analysis of the fact that businesses in Scotland, which are in the very, rubble sector, so they give us an example.

A local pub, an average pub, would pay £6000 more in business rates, 66% more, then businesses in England. A town centre restaurant would pay almost £8000 more. Which is also 66%. And a hotel would pay £26,000 more, which is 70% would pay £26,000 more, which is 70% I'm not here to judge the measures of the Scottish government who haven't followed in terms of discounts. I think it would be helpful if they had. But I would challenge the government to do is to recognise the combined activities of two governments on businesses in Scotland leaving many businesses in Scotland comparable to similar businesses over the country disadvantage, compared with the rest.

I do not believe the government gave any consideration that unintended consequence and they haven't recognised that it means that the Scottish economy is going to be disproportionately high by to be disproportionately high by this. Just throw the one political mix. The majority of people in Scotland did not vote for the SNP. To give some recognition that they are looking for an approach to their businesses which shows some appreciation of understanding. Just occasionally it would be helpful if the UK government acknowledge that.



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I wanted to add very briefly I support for what is proposed. I've spent a lifetime in the city. Funding them, looking after them, Funding them, looking after them, developing. At the early stage, they are particularly vulnerable in the early stages. The Liberals early stages. The Liberals amendment. 25 people or fewer. It is amendment. 25 people or fewer. It is easy to forget just how difficult and persistent of the effort needed and persistent of the effort needed to keep a good business going, keep it going and grow it.

And hopefully eventually grow it to a great size where it will employ people and increase the prosperity of the country. It is our free stock. This is where I take from the noble Lord, who served with me many years ago. If you cut down the trees in any one year, those trees were not
18:06
Lord Hodgson of Astley Abbotts Portrait Lord Hodgson of Astley Abbotts (Conservative)
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reappeared. We should have a fewer number, when this particular number, when this particular proposal has its impact. It is also surprised, I find, how many members surprised, I find, how many members of your Lordships' House cannot of your Lordships' House cannot conceive a circumstance with a paycheck will not turn up at the end of the month. A lifetime of public service. It does ensure against service. It does ensure against that. If you are a business, you have to think, what is going to happen at the end of the month? Is happen at the end of the month? Is there going to be a call saying, "I'm very sorry, I'm not going to be able to meet your payment.

" That ghastly pressure, when you have responsible for people, is increased by the sorts of measures of the government, that they are proposing to take in this this afternoon. Could I say to the noble Lord the Minister, very gently, the phrases, revenue is vanity, profit is to resume, but cash is reality. What the government is doing subsequently, in this bill is proposing to undermine that reality of the cash that is desperately needed by the various state companies.

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The amendment proposed by

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The amendment proposed by Baroness Barker really, a classic example of how to distort a market. example of how to distort a market. Not only does she wish to exempt part-time employees from taking the part-time employees from taking the measures in the bill. But actually to reduce the national insurance charge on part-time employees. She
18:07
Lord Eatwell Portrait Lord Eatwell (Labour)
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charge on part-time employees. She does not appear to have reflect on what will be the impact on full-time employees. How many full-time employees will lose their jobs and be replaced by two or three part- time employees, as a result of this measure? How many companies will be reaching a cliff edge, with respect to their employment policies, which in assure that they only develop part-time employees who often have less opportunities and are certainly less opportunities for promotion, then do the full time.

So what has she got against a full time employment? That is what I think we need to be answering. And why therefore is she so content to distort the labour market, in this way. With respect to the amendments proposed by the noble Lord, Lord Londesborough, I have a greater sympathy with what he says. But however he is also creating a cliff edge. There cliff edge is at 25 edge. There cliff edge is at 25 employees. And at that cliff edge, from rules, considerably distort the operations of the market at that stage.

It will discourage companies from growing above 25 employees. It will encourage the breakup of the structures, so that units only employ 25 employees. Most interesting, he asked for an assessment, and impact assessment of the overall impact of employment, of the measures in this bill. There have been at least three. One by the National Institute, the economic and social research. Another by the OBR. And another by the Treasury. And all of them demonstrate that taking the of them demonstrate that taking the measures in the budget as a whole, next year will increase, not diminish.

The error, which the noble Lord made in his argument. Yes, indeed, because of the employment costs, there may be a reduction in employment per unit output, but because of the stimulation of aggregate demand in the budget, there will be more units of output. Not only with these measures encourage the growth of productivity, by reducing the impact of output. But also the expenditure of those measures through technical device and the budget will actually increase the level of employment coming here.

The impact assessment is there, for all to see.
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18:11
Lord Elliott of Mickle Fell Portrait Lord Elliott of Mickle Fell (Conservative)
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begin I should declare my chair of a small fintech company. I'm particularly concerned about the impact of the National Insurance rises on SMEs. Because they are remain a vehicle for job creation. A recent report, by the foundation in 2022 looked at the United States and found that in 2019, companies in the first year created, on average, five jobs each. While companies over that created on average just one new job, every two years. And a similar pattern can be found in the UK.

Santander, an ONS data, from 2018 show that employment growth in SMEs was three times faster than a other visitors. In the White Paper, the increase is laudable and I very much support the President of the jobs foundation, again as declared in the register. Achieving this objective requires moving to many people from welfare into work. And currently around 800,000 job vacancies in the economy according to the ONS. We need to create an additional 1.2 million jobs, to achieve this.

That will be very difficult with the employer NI rises. SMEs employ 16.6 million people in the economy and small businesses, between zero and 49 employees provide 30 million jobs, and the economy. We should see the national mention to get the employment rate back to pre-covert levels. This cannot be achieved if SMEs are not thriving. Supporting the amendments, to support small businesses, from the increase in NI, to enable it to fulfil the role, as the biggest engine in a job creation and even more importantly, the biggest mechanism for evolution, here in the UK.

here in the UK.
18:13
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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This has been a good debate. I a right to speak briefly. I stop I thank I've listened carefully to Baroness Kramer's argument for Amendment two. I have to say I commend the Baroness Hooper championing part-time workers, as she has done during the passage of this work bill. Much as a Lord Altrincham has been championing the issue of youth employment, and she is right to raise the impact that is right to raise the impact that the policy will have on the jobs.

We know that part-time workers are likely to be more at risk of losing their jobs, or missing out, on future opportunities, as a result of this bill. Particularly as a result and the drop of the threshold, which is one of the proposals. I also support the noble Baroness, in calling for more information on the government's assessment of the impact of this bill. I have tabled a review clause and that is in the later group, there goes wider than Amendment two 36. Andy seeks to create the government's failure to producing impact assessment.

I think That I have tabled an amendment 34, in my name. It has been put into this group to increase the employment allowance available to farmers. Our farmers are hurting. Starmer, farmer Harmer slides on a common site, on the country lanes of England. Although I doubt many government Ministers have seen them. We were not present and the Mateta division. We tabled at that amendment to call on the Government once again to support our farmers and reverse at the family farm tax.

Which is undermining, unfortunately, the long-term viability of British I now turn to amendment 17 which I wholeheartedly support and put my name to. As noble Lords no, small businesses close to my heart, because it is at the entrepreneurial heart of the economy. As my noble friend, Lord Elliott, was explaining. The Federation of Small business feedback, mentioned by Lord Londesborough, was particularly concerning. I was also pleased to hear from my noble friend, Lord Hodgson. From a practical business perspective, which we benefited so much from over the years.

About the desperate need for cash in some of the smaller enterprises. That certainly echoes with me from my experience. The noble Lord, Lord Londesborough, has been This process. And for all the reasons he has given, I believe we should all support his amendment. British Business Bank tells us there are 5.5 million small businesses in the UK, they employ 16 million people. And I hope the noble Lord, the Minister, will take this point well, they contribute massively to a cannabis growth. And we know that growth is the number one priority.

That is something that I think there is a wide measure of agreement on. So, why won't the noble Lord, the Minister, roll up his sleeves, work with the noble Lord, Lord Londesborough, to protect SMEs from the impact of this bill. I believe more can be done to fix this. We believe very strongly the government should consider further steps to support SMEs, beyond the welcome, but very modest, employment allowance. That is why we will support the noble Lord, Lord Londesborough, if he chooses to test Londesborough, if he chooses to test the opinion of the House.
18:17
Lord Livermore Portrait Lord Livermore, The Financial Secretary to the Treasury (Labour)
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My Lords, I am very grateful to all noble Lords who have spoken in this debate. I will address first the amendment tabled by the nobility, Baroness Kramer, that seeks to address a reduced rate of employment insurance for part-time workers, at 7.5%. As I've said before, the difficult decisions contained in this bill were necessary both to repair the public finances and rebuilds our public services. This would reduce the revenue raised from this bill and therefore reduce the government's ability to achieve these objectives.

Reducing the rate of employment national insurance only for part- time workers would also create additional laxity in the tax system and as my noble friend, Lord Eatwell has said, create distortions in the market. Employers will also continue to benefit from this, including hiring under 21's and apprentices where applicable. Onto the amendments tabled by Lady Kramer, Lord Londesborough, and Lady Neville Rolfe, which together has thresholds of businesses employing less than 35 staff. This would have cost indications, again, necessitating by the higher borrowing, lower spending, or alternative revenue raising measures.

I would also stress the government is taking action, as part of this bill, to protect the smallest businesses by increasing the employment allowance from £5000 to protect the smallest businesses by increasing the employment allowance from £5000- £10,500. This means that next year, 865,000 employers will pay no national insurance at all. More than national insurance at all. More than half of employers will seek no change or gain overall from this package for stubborn employers will be able to employ up to four full- time workers on the national living wage and pay no employer national insurance.

Also taken steps to help their ability to invest and grow. This includes freezing the small- business multiplier, permanently reducing business tax rates for retail hospitality and leisure properties from 2026-27 and publishing the corporate tax roadmap, to provide turbidity and certainty within the tax system, in businesses across the economy. Turning to the clause, which would require the government to press and impact assessment on the effect of the bill on SMEs, hospitality, tourism, and seasonal workers. The government of course considers the impact of all policies, including the changes to employer national insurance photo as we discussed at length during committee stage, an assessment has already been published by HMRC.

It attacks the information and the impact load. The outlook also sets out the suspected macro economic impact of the changes, to employer national insurance conurbations and employer growth and inflation. The government and the OBR have therefore already set out the impact of this policy change. The information provided is in line with the approach taken by other similar changes, the government does not intend to publish additional assessments. Finally, I will address the amendment tabled by the noble Baroness, Lady Neville-Rolfe, seeking to increase the employment allowance.

This amendment would then produce rates in this bill, necessitating higher borrowing, lower public spending, or new revenue raising measures. The government of course recognises and greatly appreciates the vitally important role of the farming sector. Despite the government's challenging fiscal inheritance, the farming and countryside program budget has been protected at £5 billion across the next two years. This includes the largest ever proportion of the budget directed at sustainable food reduction and nature recovery in our country's history. This will accelerate the transition to more resilient and sustainable farming sector, supporting investment in farm businesses and boosting Britain's food security.

Ultimately, this bill is necessary to fix the public finances and to fund the public services. Many of the amendments in this group would reduce the government's ability to do these things, and so I would respectfully ask noble Lords to withdraw their amendments. amendments.
18:21
Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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My Lords, I will be extremely quick. This has been a short but very useful debate. I want to say that in terms of impact assessment, I think I acknowledge that Baroness Neville Rolfe has an amendment, I think 38, that covers the scope more effectively than what we have on paper. That is one which I hope we have an opportunity to support later on today. Lord Londesborough's amendment. Can I just say to Lord Eatwell, there is already a cliff edge, the Minister has set a cliff edge at three employees.

In Lord Londesborough's amendment, moves this to a far more sensible 25 employees. It is a significant improvement that I hope the House will accept, and that we certainly will be supporting. Coming back then to our amendment to, which deals with part-time workers, this is an issue we are going to continue to pursue, we have begun to realise how significant the change is in the structure of the workforce. If Lord Eatwell were to look at that, I think it would be very surprised to think differently over the kind of measures we are looking at here.

Because we see providing this additional support for part-time workers is very much progrowth. Actually, we ought to appeal to the Prime Minister, he has positioned himself as the pub champion and out of all the sectors that need the support of part-time workers and is going to be impacted by the way this particular tax, increasing employers NICS, has been drafted, it is going to the public sector, already seeing six pubs a week close. So, for a champion, I hope we can look to the Prime Minister actually, try and provide us with some support around this issue.

Because of the importance of the sectors, because of the changing nature of the

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workforce, I will say to the House, I do wish to test its opinion. Amendment to be agreed to, As many as are of that opinion, say, many as are of that opinion, say, "Content". Of the contrary, "Not content". The question will be
18:23
18:34
Lord Sharkey Portrait Lord Sharkey (Liberal Democrat)
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This amendment in the name of Baroness Kramer and myself adds to the list of exemptions for the proposed increase in National Insurance contributions. I thought I would make it clear from the outset that he is not in his place. The arguments in favour of denying proposed adjustments in this amendment will discuss in some detail research. What the nine exemptions have in common is that it protects services vital to community life and are likely to suffer grave damage if it is introduced.

These services include early years education, charities, housing associations, town and parish councils. Each of these organisations makes an obviously vital contribution to our communal rights. They also have in common the fact most of them haven't got any money or no significant money. The proposed increase will inevitably reduce the critical services they provide, in many cases to the most disadvantaged in their communities. The list of exemptions in our amendment also includes further and higher education and I declare an interest as a member of council at UCL.

Our FE and HEE institutions are having financial difficulties. This has been true for many years for our somewhat neglected FE sector and is now also obviously true for our higher education sector. The countries future prosperity and prospects for growth depend very largely upon these sectors being properly and sustainably funded. If we want a skilled and up skilled workforce, then FE colleges have a vital and your replaceable role to play. To play that role they need adequate funding. I did ask and committee about the funding arrangements for the FE sector.

The Minister replied last week. He noted by way of preamble that the government would, and I quote, provide support for departments and other public sector employers for additional employer National Insurance contributions. He does not say what support means. He does say that the Autumn Budget provided an additional 300 million revenue for funding for FEs for the financial year 25/26 to ensure young people are developing skills this country needs. He does not say to what extent this will mitigate the imposition of the higher employers National Insurance contributions.

Could I therefore ask him again to say when he replies what percentage of the increase in employers National Insurance contributions will be mitigated by the allocation of funds from this 300 million, both in the short term from April to July and in the academic year 25/26. The ministers reply to my Committee stage question also includes a mention of the rise of 285 pounds and am in student fees chargeable from academic year 25/26. This will not be enough to sustain our higher education sector.

As I mentioned in committee, our university is already showing signs of deep financial distress. I noted then that nearly 3/4 of institutions are expected to run deficits in the next academic year and 40% have less than a month's liquidity. I also noted that three universities have joint the long list of universities cutting jobs and costs. Now Edinburgh has joined also. I hear that at least one eminent university is close to reaching its baking covenants -- banking covenants.

It is no surprise that it's estimated that 10,000 jobs will go this year. Mrs. A genuine crisis made worse by the proposed increase in the employer's national insurance contributions. This new levy completely wipes out any net increase arising from the increase in student fees. The UK is four of the top 10 worlds universities and we have 15 of the top 100 universities. We need to have them prosper and to be sustainably funded if we are to continue to be a world-class Center for education research and to contribute to the growth we so obviously need.

We would at least prevent the already perilous situation from getting worse while the government devises a new and sustainable funding arrangement. It also excludes SMEs and hospitality sector from the rise. SMEs are the wellspring of our economy and of his future. 60% of all jobs are provided by SMEs. These companies almost by definition, are those who have most difficulty absorbing the proposed rise in the rates. Significant job losses are inevitable. This matters not only because any job loss is regrettable, but because SMEs are the engines of growth, renewal and innovation in our economy and they create the jobs.

Large corporations may be easier for government to deal with, but they have been for a long time that destroyers of jobs. Many jobs created by SMEs will be in the hospitality sector which also excludes from the proposed rising contributions. Many of those jobs in the hospitality sector, currently around 350,000, are held by people under 25. For many this would be their first job and the first step on a career level. Keeping these young people in employment after the proposed scenic rise -- ENI C rise would nearly double the cost 253 million.

We should protect these young entry-level employees from job losses by exempting their employers from the proposed rise and I beg to

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move. Insert the words as printed on the marshalled list.

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the marshalled list. I rise to speak to amendment eight which appears in my name and to amendment 41 which appears in my to amendment 41 which appears in my name and that of Lord Alton of
18:41
Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (Green Party)
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name and that of Lord Alton of Liverpool. This is the first time I have taken part in the debate of report stage, but I sat and listened very carefully to the entire first grouping, which covered a lot of the issues that particularly relates to amendment eight. Amendment eight has a simple and clear purpose even though technicalities are quite technical. This amendment aims to delay for one year the introduction of the raised level of National Insurance for registered charities. That is for all charities.

Other amendments in this group deal with smaller charities, other amendments deal with groups and organisations, many of which may be charities, but this is an exemption for one year for all charities. I think it's really important and I want to take on a couple of points made by Lord Eatwell and I'm not quite sure which amendments he was counting in his 38, but I would strongly assert that this amendment eight in the 41, these are the ones that can be described in any way as wrecking amendments because this is something that does not affect the government's long-term economic policy, does not affect the long- term plans, it means for one year it is not receiving in the governments own estimation 1.4 billion pounds for one year.

What I asked the noble Lord the Minister at committee when I tabled the amendment and didn't get an answer, I would be interested to hear any response tonight, is a point that was raised in the first group of amendments about if charities go under, if charities are forced to slash their services, how much is the government simply going to have to fund through other means, through social care, through whatever mechanisms, the government provision. It seems to me, I donned the capacity to put a figure on that, but it seems likely there may not be much difference between those two figures.

The reason I put this down at committee was that a CEO of a fairly large charity who I happened to be having dinner with, and we weren't having a deeply political detailed discussion, she simply said to me, " If I just had one year to sort this out I would have half a chance." And it's interesting that the noble Lord Clark not currently in its place, in the first group said that what was happening with so many organisations, I think he was referring to charities, were encountering this unexpected expense.

It's the suddenness and no chance to think about can we shift some money into fundraising to increase the funding stream so we can cope with this down the track. That's what this amendment seeks to do. I find myself in an unusual position as a green, saying I put forward this moderate small, reasonable amendment. Quite small in scale compared to some of the other things we are discussing here, but it's a really practical step to attempt to protect charities and all the essential services, and we heard so much passion from people directly involved in delivering the service from charities.

I won't repeat the long list of those now, but I will raise one point that I don't think has been raised up until now, which is the place of charity shops on our high streets. They are all really struggling, we are seeing significant closures of charity shops on high streets faced by rising energy costs, by rising staff costs, due to the increase in minimum wage. If we hollow out further our high streets by losing those charity shops, that again is an impact that will have all sorts of costs that one way or another the government is going to have to pick up.

So that is amendment eight. I am in a position where I gave notice I was going to seek out this evening, I'm currently feeling inclined to test the opinion of the House on that amendment. Amendment 41 is different. It addresses issues I know another number of lords will pick up a stronger, more radical pick up a stronger, more radical This is amending 41. It is backed by Lord Alton and has a pedigree of being put forward at Committee by the Bishop of Southwark and also co-signed by Lord Forsyth.

The Right Reverend Prelate raised concerns the impact of the bill on the ability of children with special educational needs or disabilities getting into school at second reading and another lot of noble Lords also expressed concerns about this issue and I mentioned Lord Wigley not currently in his place who expressed concerns. I have revised the amendment to reflect passage of time and the fact that this bill is likely to reach the statute books before the changes take effect.

What the cause does is impose a duty on the Chancellor of the Exchequer to conduct a review on the act on the ability of local authority to meet statutory duty in respect of supplying school transport services either directly or through private providers for children with special educational needs, in the tax year of 25/26 in one week of the measures receiving Royal Assent. Regarding 26, 27 and 28 while urgent allow a month for the review so they can feed into the Treasury and they can keep ahead of the conclusion of phase two of the Spending Review in early June.

I have a great deal of detail, but I will cut short given the time and desire of the House and I suspect many of the issues will be raised later. What I will do is stress what this amendment is about which is about remembering the real victims. We are here in the House but we are talking about children out there in communities up and down the land who risk losing known, reliable and trusted services that many of them would have been caring for them, looking after them, taking them to school for many years.

I had a long school for many years. I had a long discussion with the transport providers association about this and I heard some stories of what these services do. One was a story of a driver and a carer who were transporting a child who was non- verbal and they off their own back decided to learn sign language so they could communicate with the child. It was not funded. That child had those people wrenched away from them because the service company could not afford it anymore and another story about a girl who was stressed because she was going to be 15 minutes late to school and she was stressed about getting in at that point.

The carer said it was OK as they would not go in on their own and it was not in the contract, but it was people going the extra mile and to throw those services in which is what will happen is they cannot renegotiate the contract. We have to hand them back and that is something that is not acceptable. Baroness Royall has a stronger amendment than this later on and I hope that will be put to a vote, but we really have to do something about send practice.
18:49
Baroness Grender Portrait Baroness Grender (Liberal Democrat)
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I would like to support amendment three moved by Baroness Kramer and Lord Sharkey and other amendments in this group that I and not having to mention so we can speed through as quickly as possible to get to the vote stop we discussed the plight of charities at Committee stage with a view to moving and amendment of this nature at this point. In particular this issue about simplification of the tax system, everyone would acknowledge the national insurance contributions will never be part of starting from here and simplifying the tax system and perhaps there is culpability on the benches introduced by Lloyd George -- Lord George, but also Clement Attlee, and failure to retain charities at the current rate will cost the sector £1.4 billion in the next financial year.

This compounds levels of underfunding in the long-term and threatens services to some of the most vulnerable in society. Homeless Link is a charity that 800 member organisations all work on the frontline of homelessness and they estimate the national insurance changes alone could take between 50 and 60 million out of the homelessness sector. Most charities, peanuts when it comes to revenue raising, but fundamental to services by 800 different organisations. Most charities do not function as profit making businesses and cannot adapt to the cost of the private sector by putting up prices or recovering elsewhere.

The increase in national insurance must be accounted for by cutting costs in staff and services to people in acute need, such as needing a bed for the night. The government has a welcome objective to develop cross departmental homelessness strategy is undermined by this additional cost. In previous Committee stages, the Minister defended the current UK tax regime for the charity sector, arguing that it is among the most generous in the world will stop I would ask the Minister to study with care the latest result of the charity aid foundation world giving index which has the UK now at 22, the lowest position ever having fallen out of the top 20 at the end of last year after a recent period decline.

The charitable sector is a significant partner in many of the future government plans, with a change in national insurance directly harming charities and the people that they need to serve. We urge the government to reconsider this additional financial burden.
18:53
Lord Bruce of Bennachie Portrait Lord Bruce of Bennachie (Liberal Democrat)
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I rise to speak to amendment 14 in my name which asked for an impact assessment of this bill on Scotland for specific reasons of the differences being identified. Firstly, the fact the government has said they will compensate the public sector but we are all waiting for the detail of how they will do it. £4.7 billion is the global some as £4.7 billion is the global some as mentioned, but not the detail. -- sum.

The public sector in Scotland is different from England, and it may not and it may not be sufficient to sustain public services at the current level which is struggling as they are. Grampian health Board has had to absorb £20 million charge just for this bill on top of a £75 million deficit that they are currently running and they are insubstantial crisis. The question I have for the Minister is he will have seen the review of impact which may not be definitive, but it is independent.

It suggests the impact is something around 500 and the impact is something around 550 million -- 550 million in Scotland. If you apply the normal rules of the Barnett for near -- Barnett Formula looks about 450 million, but the Scottish Government officials have said the Treasury said the Barnett Formula will transmit 300 million, or just over. My question is how can he justify 300 million transfer through that formula against a 4.7 million overall budget for compensation.

More to the point, how are the government going to establish the criteria for the level of criteria they will give to public bodies and if they do that can they assure that the same conditions that apply in England will follow through in Scotland and the money will go with them? That is all I'm asking for. Equality of treatment, not special treatment as I've said before, there is a lot wrong with what is going on in Scotland. Scottish Government is not known for efficiency in management and I'm not trying to defend them, but the UK government should not compensate them for their incompetence.

I do not accept the people of Scotland should suffer because of that. And additional measure brought by the UK government added insult to injury or misery to misery. My simple question is will he acknowledge that if he is talking about compensation of just over 300 million, it falls a long way short of the actual impact, comparable impact, pound for pound in Scotland compared to England. What are the criteria? Will they be applied consistently across the UK?
18:56
Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Conservative)
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I rise to speak in the name of amendment nine in my name but I suspect amendment nine may have been subject to re-entry which may be the case for amendment eight as well and Baroness Bennett of Manor Castle may be surprised and I'm equally surprised and I agree with all of her remarks. I would like to focus on amendment four which deals with charity revenues less than £1 million which I believe is not subject to contribution. According to the Charity Commission website, there are about 170,000 charities in the UK have about £100 million in aggregate of 1.3 million employees.

Baroness Neville-Rolfe wanted us to concentrate on the annual revenue low million pound charities. -- Below £1 million. It is about 1/3 of its income as was the case with the Thames Hospice which I described earlier on. The rest is grants and investments and so on. It will probably raise £350,000 in donations. I calculate from what I have found the sum raised by charities with revenues of less than £1 million total £12 billion and £1 million total £12 billion and that is 12% of total charity income.

There are 162,000 charities within income of £100 million which means that is 95% of UK charities. As for national insurance, it is hard to determine because we do not know how much this goes on employment, and we know what they spent on total expenditure which is £12 billion. If we assume that 50% of that is on employee costs, it means the salary of around 25,000, the amendment from Baroness Neville-Rolfe would impact to hundred and 40,000 people. To try to answer the criticisms, I calculated that the amendment will cost the government around 480 million.

Is the Minister going to tell us that he is not prepared to protect 95% of charities with just half £1 billion? Does he recognise the figure? If he doesn't, what is the cost of the amendment? Can I invite him to join us in pausing the hike until we can work out what it is because then we can have a meaningful discussion. I would remind him in a speech to the civil society summit hosted by Burnham economic, Keir Starmer said he would reset the relationship.

He said for too long voice has been ignored. I read the full speech and he also said he knows people on the ground, people with skin in the game understand it best and had the best answers. He continued in a speech to civil society leaders that was largely rubbish Tory policy, but he said let's be honest. For too long, your voice has been ignored between the market and the state stop is he and his ministers listening now? Because those leaders in the national insurance hike to be dropped why would the government want to penalised 162,000 charities when fellow citizens give so much of their time freely and in many cases their cash simply for the betterment of fellow citizens at home and abroad.

It is a shameful imposition.
19:00
Baroness Sater Portrait Baroness Sater (Conservative)
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I have received information that

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amendment eight still stands. I add my name to amendment four

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I add my name to amendment four and declare my interest as a trustee of the Dartington Hall trust will stop my contribution today will be stop my contribution today will be short because so much has been said through the passage of the bill and through the passage of the bill and we have passionate statements today as well. I have spoken of my as well. I have spoken of my concerns on the impact of national insurance contributions in the charity sector and the ability to charity sector and the ability to continue to deliver much needed service and support.

Along with many others, I believe we put forward compelling and passionate reasons why the charitable sector should not be subject to the government national insurance contributions increases. At both stages, I respectfully ask for the impact assessment of this tax on the sector and the noble Lord the Minister and the government have to date not reconsidered their position or reduced the impact -- produced the It seems unfair that the government declines to reimburse the charity sector.

At the risk of repetition at the national Council voluntary organisations estimate the risk of this increase is set to 1.4 billion. They have raised their concerns to the treasury. Together with the Association of chief executives for the volunteer organisations in the charities financial group, they perfectly summed up the situation when they wrote the knock on impact it will have on individuals, communities and local economies who rely on us will be devastating. This is from the sector. These are the voices from the sector who represent so many charities across the country.

I'm sure the noble Minister has been hearing many calls for help himself from across the charity sector. I do hope that he recognises that this tax will have a long- lasting impact on the sector's ability to deliver many of the vital services of which government and so many others rely. I would quite like to ask my noble lords this, if a charity approaches you for support for a good cause, I have little doubt that you would give generously to the extent you can afford to do so.

If the same charity asks you for a donation, not to do good works, but so that they can pay the increased taxes to the government, I suspect that you and I would not feel inclined to put our hands in our pockets. The charity sector should not be a cash cow for the government. Sadly, unless the government can reconsider this tax on our charities, they will greatly diminish. A majority will need at best to shrink in the number of people they employ and the services they provide.

In the worst scenarios, charities will close. We have already heard from the charities, including my noble friend Baroness Fraser today, of staff reductions or redundancies and of potential closures. Fundraising costs -- fundraising and cost management is difficult enough for charities at the moment, the future of the sec is looking bleak indeed. Many of them help the most vulnerable in society and do wonderful work across so many other areas, and I won't list them today. And are the backbone of our civil society.

So I do hope the noble Lord the Minister will reconsider his position and listen to what he is hearing today. hearing today.
19:04
Baroness Fraser of Craigmaddie Portrait Baroness Fraser of Craigmaddie (Conservative)
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I rise briefly to thank my colleagues. As the chief executive of a charity, I can tell you that the sector are watching and listening to what we're doing here and are urging us on to do everything we can to mitigate this disastrous policy. Lord Bruce mentioned the issue in Scotland. In an earlier debate, it became apparent that perhaps some of the drafting of these amendments did not cover Scotland and I would want to be reassured that exemptions, any charity in Scotland of any size has to be registered by the office of the Scottish charity regulator.

I want to be reassured it covered the entire sector. It is five% of Scotland's workforce and the increasing number of redundancies and struggling to recruit volunteers is happening now. It's a workforce already under strain, already potentially limited in its capacity to deliver services. The noble Lord, the Minister, earlier talked about the government's increased funding to various sectors, some of which covered by the charity sector, but he did not outline how that might help those not in receipt of public sector funding, but who are delivering services which support public sector delivery.

Finally, I just want to mention a little bit about SEMD transport because as chief executive of transports Colin, this is something firmly in my back. We already know the send system is under immense strain. We already know of examples of children who cannot go to the school that it has been assessed that they should go to because of transport issues. This is a very complex issue, mostly provided by private providers, there's already a limited choice of schools, many children need specialist vehicles in order to get from a to B and as the noble Lady, Baroness Penn it said, there are many firms that are going to be forced to hand back contracts.

I look forward with interest to how the Minister responds to these challenges.
19:06
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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Baroness Kramer's amendment three seeks to establish a relief for early years settings for universities, charities and small businesses. These are all important sectors that are going to be hit hard by the government's job stacks. We agree with the sentiments she expressed, but we have concerns about the financial application of relief for all these sectors in one amendment. We are instead promoting some modest and separate amendments which I'm afraid makes for a big group. First on charities, amendments four, 14, 21 and 28 in my name would exempt charities with an annual revenue of less than one million from the increase in employer National Insurance contributions.

My noble friend, Lord Lee, spoke persuasively in favour of this following the preemption of his own amendments. My amendment 35 proposes an increased level of employment allowance for charities. Noble lords across the House have been contacted by many charities who are facing tough financial decisions. We have had many worrying examples throughout the stages of this bill. My noble friend, Lady Sater and Lady Fraser made the case for action very strongly. My latest example was March in the UK which brings together people with and without learning disabilities and life sharing communities.

They are facing huge rises in employment cost. What we're seeing in the most vulnerable people in our society are going to pay the price for Ministers misguided budget decisions. Amendment five speaks to protect children with Special Educational Needs and Disabilities. I know the send it transport group has written to many noble lords highlighting the issues for families who rely on these services are facing. They estimate the associated local funding shortfall in the next tax year 25/26.

In respect of the services they contract out to private providers will be 40 million pounds. That's a relatively small number compared to the overall revenue expected from the job tax. Some 23 or 26 billion depending on the year, but the impact on vulnerable children is wildly disproportionate to that revenue. Like my noble friend Lady Fraser, we feel very strongly that these vital services should be protected. Like the noble Lady, Lady Bennett, we prefer our formulation on SEMD.

My amendment 33 addresses early years provision. It seeks to increase the employment allowance for early years providers. In government we took action to protect the earlier sector wall expanding the free childcare offer to all children under five in England last year. The government are right to adopt our expansion plan in full. We are grateful for that. I should add that some providers are really worried they will not be able to access the employment allowance because the public work they do.

It would be good if the Minister could look at that again. We are seeing very big increases in cost in early years provisions. That is extremely worrying. In conclusion, the official opposition feels the government must change its approach. We are not satisfied by the Minister's responses so far and our current intention is to divide on amendments four, five, and 33.
19:10
Lord Livermore Portrait Lord Livermore, The Financial Secretary to the Treasury (Labour)
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I'm grateful to all noble lords who have spoken in this debate. I will address first the amendment tabled by the noble Baroness which seeks to increase the employment allowance for early years providers. The government recognises the early years providers have a crucial role to play in driving economic growth in breaking down barriers to opportunity. We are committed to making childcare more affordable and more accessible. That is why in our manifesto, the government committed to delivering the expansion of child care for working parents and opened more nurseries through upgraded space to support the expansion of the sector.

Despite the challenging fiscal circumstances the government inherited in the budget in October the Chancellor announced a significant increase as to the funding that early years providers are paid to deliver government- funded childcare places. This means total funding will rise to over 8 billion pounds in 2025/26. Turning to amendment tabled by Lady Kramer and Lord Sharkey which would exempt providers of higher and further education from changes in this bill. The government recognises the great value of UK higher education in creating opportunity as an engine for social mobility and growth in our economy, and supporting local communities.

The government will provide support for departments and other public sector employers for additional employer National Insurance contributions costs. This funding will be allocated to departments with the Barnett formula applying in the usual way. In answer to Lord Bruce, Discord evolved governments to make their own decisions as to how that money is allocated. I say to the noble Lord, Lord Sharkey, that all additional cost will be considered as part of the spending review. The Autumn Budget provided an additional 300 million pound revenue funding for further education for financial year 25/26 to ensure young people are developing the skills this country needs.

This funding will be distributed to specifically to support student participation. 60 million pounds of this funding will be made available to general further education colleges and sixth form colleges for the time July 2025. This will enable them to respond to challenges, including workforce recruitment and retention. The remaining 250 million pound funding will be made available in 16 to 19 funding rates, academic year 25/26, with the aim of ensuring that all 16 to 19 providers are funded on an equitable basis from 2025/26.

Furthermore, the budget provided 6.1 billion pounds of support for core research and confirm the government's commitment to the lifelong learning entitlement, major reform to student finance, which will expand access to high-quality flexible education and training for adults throughout their working lives. I will now turn to the amendment tabled by Lady Kramer, Lady Neville-Rolfe, Lady Bennett, Lady Sater, Lord Sharkey and Lord Lee. Which seeks to exempt charities from the changes in this bill and increase the employment allowance for charities.

The government recognises the important role charities play in our society and recognises the need to protect the smallest businesses and charities, which is why we have more than doubled the employment allowance to 10,500 pounds. Meaning more than half of businesses including charities with national insurance liabilities either gain or see no change next year. As I have noted previously, it's important to recognise all charities can benefit from the employment allowance. The government also provides wider support for charities by the tax regime.

Tax relief for charities and their donors were just over 6 billion pounds in the tax year to April 2024. Lord Leigh of Hurley asked me again to cost his amendment as I said at committee, it is not for the government to cost amendments that don't reflect government policy. I will turn out to the amendments and new clause tabled by Lady Neville-Rolfe, exempting providers of transport to special educational children to and special educational children to and from their place of education to place in this bill, and require the government to publish an impact assessment on this.

In the budget and the recent provisional local government finance, the government announced 2 billion pounds of new grant funding for local government in 2025/26. Which includes 515 million pounds to support councils with the increase in employer National Insurance contributions. This additional funding has been determined based on a national assessment of the cost were directly employed staff across the public sector. However, this funding is for local authorities to determine how to use this funding for relevant services and response abilities. Thus providing a real terms impact in core government spending power of 3.5% in 2025/26.

To support social care authorities to deliver these key services, we announced a provisional local government finance, a further 200 million pounds for adult children social care. This will be allocated via the social care grant, bringing the total increase in 25/26 to 880 million pounds. Up to 3.7 billion pounds of additional funding will be provided to social care authorities The government has no direct role in publishing finances and is not providing further support the changes. Turning to the new clause tabled requiring the government to assess the assessment of the impact of the bill on the Scottish public of the bill on the Scottish public sector.

As I set out, we published a report to see the deductions decrease and around 820,000 employers will see no change. The economic and fiscal outlook sets out the macro economic impact of the changes to employer national insurance contributions on employment. The impact has been set out on the policy change and is in line with other similar tax changes and the government does not intend to published additional assessments. We will monitor it in the usual way. The points I have made I will ask noble Lords to withdraw the amendment.
19:17
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the House when voting is open. The question The question is The question is that The question is that amendment The question is that amendment three be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The content will to the right by the throne, did The The question The question is The question is that The question is that amendment The question is that amendment three There There have There have voted, There have voted, content There have voted, content 77, There have voted, content 77, not content 153.

The not content habit. content 153. The not content habit. -- Have it. We come to amendment four. Baroness Neville-Rolfe. The question is that amendment four be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The question will be decided by a division. I will notify the House when voting is open. Voting is open, You You want You want to You want to be You want to be a You want to be a bath You want to be a bath lady You want to be a bath lady until You want to be a bath lady until

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The The question The question is The question is that

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The question is that amendment for be agreed to. As many as are of that opinion, say, "Content". Of the that opinion, say, "Content". Of the contrary, "Not content". The contrary, "Not content". The contents will go to the right by the throne, the not contents to the left

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The The question The question is The question is that

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The question is that amendment

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The question is that amendment

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They They have They have voted,

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They have voted, contents They have voted, contents 235,

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They have voted, contents 235, not contents, 149. The contents not contents, 149. The contents habit. -- The contents have it. Amendment five. Do you want to test Amendment five. Do you want to test the opinion of the House? The question is that amendment five be agreed to. As many as are of that opinion, say, "Content". Of the contrary, "Not content". The question will be decided by a division, I shall notify the House when voting is open.

Voting is now

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The question is that amendment five be agreed to. As many as are of that opinion, say, "Content". Of the that opinion, say, "Content". Of the contrary, "Not content". The contrary, "Not content". The contents will go to the right by the throne, the not contents to the left The The question The question is The question is amendment The question is amendment five The question is amendment five be There There have There have voted. There have voted.

Content, There have voted. Content, 235. There have voted. Content, 235. Not There have voted. Content, 235. Not Amendment six and seven have been pre-empted so we come to amendment eight. Not moved. Right. That has flummoxed me. Amendment nine is pre-empted, I think. Amendment 10? Sorry, amendment nine a. I apologise. Not moved?... Consequential. Amendment 10? That is consequential as well. Excellent. Sorry? Oh, I'm so sorry. Amendment 98.

-- 9a. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. What about cairn? Do I have to do the same thing the 10? As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it.
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19:53
Lord Callanan Portrait Lord Callanan (Conservative)
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I want to start this statement by expressing my support for the government and for the absolutely unequivocal stance they have taken in standing with Ukraine against Russia's brutal and illegal war. Three years ago, the world watched in horror as blood amid Putin launched his full-scale invasion. It was against the principle of sovereign Street, and the rule of lawful -- sovereignty. We must ensure that Ukraine survives and prevails. The Foreign Secretary was right to remind the other place of the long history of Russian imperialism and deception.

We cannot allow history to repeat itself. Strength is the only language that Putin understand and that is what we demonstrate we have played a leading role supporting Ukraine from the beginning and under the previous Conservative government we wear the first nation to provide aid and we lead the world in sanctioning Russian assets. The proud legacy of leadership continues under this government and I welcome the Prime Minister and Foreign Secretary commitment to ensuring the UK remains at the forefront of international support.

We were the first mover of vital aid like Challenger battle tanks, Storm Shadow missiles and brought countries are long with us and we were one of the first to provide a cast iron multi-million multi-year funding pledge and all of that was the right thing to do and we stand by it totally. Let me be clear. There can be no retreat, no wavering, no false compromises. Peace cannot be dictated by Moscow or one that rewards aggression. Ukraine is the arbiter of its own future.

We must ensure any settlement guarantees in sovereignty, secures territorial integrity and provides ironclad security against any future Russian aggression. To achieve that, we must all accept that we must do all, however politically difficult it will be. The UK has committed £3 billion annually in military aid for as long as it takes. That commitment is right and is necessary and we commend the government for it, but we must work with European allies to ensure they are stepping up to the plate Europe must take greater responsibility for its own security including increasing defence spending and military support and welcoming the government announcement of that earlier today.

I wish the Prime Minister and Foreign Secretary well on their forthcoming visit to Washington DC. Our transatlantic partnership is vital and I hope that it will continue. Like many people, I was profoundly shocked by last night's UN vote. I never thought I would see in my lifetime the United States voting with North Korea, Russia and Iran against their own NATO partners for the first time since 19 -- 1945 and it was disappointing for those of us who believe in the transatlantic partnership and is a wake-up call for us all.

The sensible voices in the US and Congress can some stage talk some sense into Donald Trump stop sanctions remain a crucial tool in this fight and the latest package targeting over 100 entities including the shadow fleet of oil tankers is a significant step and I hope the Minister will accept we can do a lot more. We are buying more Russian fertiliser than we did before the war and there are Russian tankers unsanctioned and transporting gas to Europe and elsewhere.

We must continue to tackle the economic advice on the Kremlin and ensure they are starved of resources and there will be support in doing that. The UK's willingness to contribute to the Ukraine future security including the potential deployment of British personnel whilst the serious step sends a powerful message in demonstrating a long-term commitment to Ukraine and stability of Europe. At this profoundly disturbing time, the stakes could not hire. If Putin is allowed to succeed in Ukraine, we know he will not stop there.

Moldova, the Baltics and beyond will be at risk particularly with the current US administration. Authoritarian regimes around the world are watching and calculating what they can get away with and we must make clear that aggression does not pay and the free world stand united and I commend the government for their steadfast leadership. This is a time for resolve and not hesitation, for action and not rhetoric. The UK should never falter and the Ukraine should never stand alone.

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From these benches, I'm happy to associate myself with his comments with regards to supporting the
19:58
Lord Purvis of Tweed Portrait Lord Purvis of Tweed (Liberal Democrat)
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with regards to supporting the government as we did with the former government. I supported the previous administration's approach. The noble Lord closed by referring to the free world being united. It is no fault of any of our political parties that the free world is no longer united given the Trump Administration. It is the time to consider carefully how we European and allies around the world believe in honesty and support honesty and it is worth reminding ourselves that it was the Putin plan activated in February 2020 to that the timeframe of three days had been planned and Zelenskyy would be detained or assassinated, the Ukrainian parliament would be attacked and dissolved, and the Ukrainian people to have a public regime imposed on them and that would happen in three days.

Three years later, the bravery and fortitude of the Ukrainian people led by inspiring leaders and enduring a further wall winter with incredible psychological and physical danger and stress should be an inspiration for us all. The fact that under unbearable conditions, the Ukraine democratic representative functions continue and should also be an inspiration for any democracy, not the source of attack by leading democracy led by Donald Trump and Elon Musk. The Minister knows I have supported since the current neighbour government -- Labour government and sanctions reduced and they will continue to do so and I welcome those that have been announced today including those who seek to reduce the dark fleet as well as the Russian war economy.

We have played our part in the cross-party consensus in approving these But we have also sought to ensure that the Russian were economy does not circumvent with their training partners, which may be the case of our allies. We have been able to have unanimity, but also have frank discussions in this Parliament because that is what Democratic parliaments do. We have also sought to raise the need to do more on our trading partners who have seen an opportunity to profit from the war without contributing to the peace, be it Dubai or Delhi seeking more investment from the former without penalty of financing the Kremlin or seeking conditionality in the latter in trade deal talks that we are now opening up again with India, but we are potentially offering market energy to those who are purchasing energy from the Kremlin.

We have to be frank with our allies that we have standards both in trade and our diplomacy and therefore, we want to see that reflected in our agreements with them. It's also why we have sought to continue the pressure, not just for utilising the resource for assets that have been frozen, but to seize them. The ministers help me debated this in this chamber before and she is her my comments on this. I think what has happened now with the trump administration and he is seeking to blackmail Zelenskyy over minimal -- mineral rights.

Frankly any Russian assets that are seized should now be immobilised to be used by the Putin regime as part of some form of reward for doing a deal which excludes the Ukrainian people. There should be no movable assets to reward this, there should be no of reward this, there should be no of unity -- impunity, therefore we should be using the capital of the assets for the benefit of the Ukrainian people. I agree in the words of the statement that we must counter a foreign policy based on lies as the statement says.

The worry is that the vote in the UN Security Council is that increasingly it's hard to disaggregate the enforcements from our strongest ally, not just from our strategic investment in the Kremlin. As they put it, the new world is one where we now are seeing the reputation not just of the trump administration being put in question, but America as a whole. Given our relationship with America is so important to our national security and our diplomacy, this has to be something of a consideration.

I just want to close making the point that the debate we held in this House under my noble friend Baroness Northover about the need to protect the rules-based international order was pressing it, this is now an urgent matter for the UK. When it comes to the Trumpet ministration to demolish USAID -- USAID, the UK should of been filling the gap, seeing a strategic opportunity for us to expand our soft power, to have a debate which means our national security is one where we keep our people safe, but would build up coalitions around the world, we prevent conflict and work to remove the incentives for conflict, which could be hunger, migration.

The response to what is happening in America is for us to expand our international development, not to cut it by a bigger margin than the previous government cut it. This is sending the worst signal at the worst time about where the UK stands. We all support the increase of our National Security defence expenditure, it should not be funded through the backs of the leased able to, the most vulnerable in the world, where ultimately were we are seeking to have coalitions abroad, I hope the government will reconsider.
20:05
Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington, Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office) (Labour)
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We have discussed Ukraine many times in this chamber. Every single occasion on which we have done that, there has been close agreement between all parties. Can I commend the words of him this evening. I think he put the case for the opposition there incredibly well. He is supporting this government as we endeavour to support his government when he was in power. This matters, it is incredibly important that as a country we stand together on this issue.

I am very proud of the way that this chamber and the other place have done that again this week. A just peace means Ukraine at the centre of any resolution. We all agree on that, we have said that consistently and that has not changed. He is right to highlight the importance of the transatlantic relationship and we are all aware of what happened last night. All I would say on that is that the Prime Minister and the Foreign Secretary will be going to Washington tomorrow and they will have the conversations that we would want them to have and that we would be proud to see them have on behalf of our country, making clear our support for Ukraine which is in no way diminish.

We continued with a new raft of sanctions to mark the third anniversary. It is very important on this as well that we have the support expressed in terms by the opposition and by the liberal Democrat benches and Lord Purvis is right, that you continue as you have done since the very beginning to look for where we need to go next and to push us and to keep saying, why not here? Why not do this? What about this other considerations you could make? It is right, it is welcome, we thank you for it and we hope you continue in that way.

Thanks for reminding us of the bravery of the people of Ukraine. I think that as we have said before, but it's worth repeating, this was anticipated to be a short invasion that was quick. Zelenskyy was meant to leave, the world today was meant to be very different than that which we seen. Thanks to the bravery of the people of Ukraine and the leadership of President Zelenskyy, we find that now Russia is in a situation where it is having to go to North Korea in order to shore up its troops.

That has not happened by accident, that is something that's happened because of the resolution of the United Kingdom and its allies of the United Kingdom and its allies and the people of Ukraine. On the issue of our development spending, the decision to change our development spending to 0.3% in order to support our defence spending to 2.5%, of course this is controversial. Not a decision any Labour government would wish to make. We created the department for international development, we are very proud of it.

We are also proud of the impact our spending has had across the world over many years now -- need to spending. The fact is, the world has changed and we have to be able to invest in our Armed Forces, in new technology that will keep us safe. I do accept with the noble Lord says about the impact this will have in some places around the world, of course I do. But I am convinced and I disagree with him on what he said.

Decreasing our spending to 2.5% will keep people safe -- increasing. Not just people here, but that will enable us to prevent conflict. It will enable us to secure Ukraine, it will provide stability around the world. Sometimes it is about the tough choices. There is no doubt this was a tough choice, but I'm glad our Prime Minister was able to make it, he made it quickly, he won't be rethinking it, we have made our decision. We want to get back to spending more on international development where we can, that relies on growing the economy, which is the key focus of this government.

I hear what he says, I respect what he says, but I have to disagree on that point tonight. Having said all that, and there is no reason that anyone should feel that they can continue to press us on this. I think when it comes to Ukraine, what matters the most is that we are united and we maintain our firm clear position in support of Ukraine and that any negotiation has the people of Ukraine and their leadership at the centre of it.

leadership at the centre of it.
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Lord Anderson of Swansea Portrait Lord Anderson of Swansea (Labour)
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The foundations of what we have taken for granted in the West, possibly since the second world war, since the fall of the Berlin Wall have been put in question by the actions of Mr Trump. It is good we here in the House today a remarkable consensus on all sides of the House and I hope that will be heard, not just in Ukraine, but in Europe and even among our friends in the US. I just wonder what has happened to those voices in the US which were so vocal about strength and importance of the transatlantic alliance.

Three years ago, on the very eve of the invasion, and it was an invasion, I was at NATO Headquarters in Brussels receiving a briefing. I was told at that time that if the Russians were to invade, Kyiv would fall within three or four days. It did not fall. Why? Because of the bravery, yes. But also because of the national morel of the people of Ukraine -- more all. In the importance of morel in a time of warfare.

It is so important now to see the changes which have taken place, to send out that clear message and we must rally around our friends in Ukraine and a clear message all sides of the House that in this new world, we must put any anti-European ideology aside and be ready to join with our European partners, not just within the European Union, to look at ways of sharing our common response and we must therefore get that message clearly through that we stand and we have much to contribute in terms both of our military and our intelligent to our friends in Europe.

I am sure my noble friend will agree that our sentiment about the bravery, the morale of the people of Ukraine and the need to work more closely with our European friends.
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decided by a division, I will inform the House when the division has

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The question The question is The question is that The question is that this amendment be agreed to. As many as amendment be agreed to. As many as are of that opinion, say, "Content". are of that opinion, say, "Content". Of the contrary, "Not content". The contents will go to the right by the throne, the not content to the left

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The

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The question The question is The question is that The question is that amendment The question is that amendment 15 There There have There have voted There have voted contained There have voted contained 199, There have voted contained 199, not content 149. The contents have it. content 149. The contents have it. -- Content 199. Amendment 16, Baroness Barker. The question is amendment 16 be agreed to.

The contents have it. Amendment 17, Lord Londesborough. The question is amendment 17 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 18, Baroness Neville- Rolfe, not moved stop amendment 19, Baroness Neville-Rolfe. Moved formally. This is consequential on five. The question is amendment 19 B agreed to. -- 19 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it.

Amendment 20, Baroness Neville-Rolfe which has been pre-empted because 16 which has been pre-empted because 16 was agreed to. Not moved. 20 is not moved. Amendment 21, Baroness Neville-Rolfe. This is consequential on amendment four. The question is that amendment 21 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 22 Lord Leigh of Hurley. Not moved. Amendment 23, Baroness Barker. This is consequential on amendment one.

The question is amendment 23 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 24, Lord Londesborough. Amendment 24, Lord Londesborough. The question is amendment 20 4B agreed to -- amendment 24 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 25, Baroness Neville- Rolfe, not moved. Amendment 25 consequential.

The question is amendment 26 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 27 is pre-empted as amendment 23 was agreed to. Baroness Neville-Rolfe not moved. Amendment Neville-Rolfe not moved. Amendment 28. Consequential on amendment four. The question is amendment 28 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 29, Lord Leigh of Hurley, not moved.

Amendment 30, not moved. Amendment 30 A is consequential on 15 A. The question is amendment 30 A be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The contents have it. Amendment 31, not moved. Amendment 30 1A is consequential. The question 30 1A is consequential. The question is 31 30 1A be agreed to. The contents have it. Amendment 32 not contents have it.

Amendment 32 not moved. Amendment 33, 32 A. Sorry. This is quite complicated and I thank you for your patience. Moved formally, the question is question 32 A be agreed to. The contents have it. Amendment 33 Baroness Neville- Rolfe. The question is the amendment the agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The question will be decided by a division. I will advise the House when voting is open.

Voting is now The question The question is The question is that The question is that amendment The question is that amendment 33 The question is that amendment 33 be agreed to. As many are of that opinion will say, "Content". Of the contrary, "not content". The content will go to the right by the Crown and the not content to the left by The The question The question is The question is that The question is that amendment The question is that amendment 33 The question is that amendment 33 be There There have There have voted There have voted contents There have voted contents 189, There have voted contents 189, not There have voted contents 189, not contents 151.

The contents have it. Amendment 34, Baroness Neville- Rolfe, not moved. Amendment 35, Baroness Neville-Rolfe, not moved. Amendment 36, Baroness Kramer, not moved. In clause 3, amendment 37, Baroness Neville-Rolfe.
21:02
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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I rise to speak to my amendments in this group and that of Baroness Lawlor. One of the difficulties the house has faced in dealing with this bill has been the government's refusal to provide official estimates of the effects they expect proposals to have on the individual sectors of the economy. Where its affects are likely to be the most profound. When we discussed their them at committee stage we looked at the impact of note. I'm afraid it's a very limited document, only five pages, of substantive text.

And of no detailed assessment of the National Insurance charge on a number of important areas. Given the harm this policy will have on many sectors we have already discussed, it's vital the government assesses this properly. As a second-best measure we have suggested additions to the bill requiring the government to look at the various areas of concern. And make an assessment of the effect of the mixed changes, including the employment allowance, which should limit of course the damage to be very smallest businesses.

Amendment 38 would require a sector by sector analysis of the impact of the government's job tax, I am grateful to Baroness Noakes and Lord Londesborough for supporting the amendment. It includes key areas that are adversely affected, which we have barely discussed today. Notably hospitality, the creative industries, and retail whose challenges were starkly set out by Lord Wilson in committee with his unique experience of the sector. Amendment 37 six to establish the government's view on the effect of the jobs that on economic growth.

We know that economic growth is the Chancellor's number one policy, so I hope the noble Lord the Minister will be able to give the house some clarity on the government's expectations in this area. I also support Lady Lawlor's amendment, 42, and look forward to hearing from her. We are very concerned about the government's failure to publish a full sector by sector impact assessment for this policy. And I therefore intend to test the opinion

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of the house on amendment 38. Amendment proposed, after clause 3 insert following new clause is
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Baroness Lawlor Portrait Baroness Lawlor (Conservative)
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I rise to support my noble friend

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I rise to support my noble friend Lady Neville-Rolfe, and to say a few words on my own amendment, number words on my own amendment, number 42. To review the impact of the act one year on on the different sectors, small medium and large. This is needed given the worsening outlook for the UK economy and employment. Going month by month employment. Going month by month from bad to worse. Since and in response to the budget. Unemployment response to the budget.

Unemployment figures are up in the quarter ending December 2024, 1.56 million of working age were unemployed. The UK employment rate being 4.4%, unemployment levels increased by 210,000 over the last year. Economic inactivity is also up. At the end of the last quarter of 2024 9.29 million people aged 16 to 64 were economically inactive. The inactivity rate being 21.5%. Jobs are being cut, this month February's figures from S&P global indicate they are being cut, a decline in staffing numbers in February was the sharpest since November 2020.

The chief business economist at SNP global market intelligence explained the data reviewed business activity remained largely stalled for 1/4 successive month, with job losses mounting amid falling sales and rising costs. One in three companies were reporting lower staffing levels, directly linked to the budget, October's budget, and the policies in it. The number of vacancies fell in the last quarter, although they remain slightly above pandemic levels. I urge the Minister, and I repeat that we want the government to take responsibilities for its actions, to face up to the costs it has imposed on growth, productivity and employment.

And the impact on businesses, be they small, medium or large. I echo the comments of my noble friends throughout committee, that what we had on 14 November and the figures presented, at the time of the budget, work inadequate in detailing the sort of impact this country is already facing, and employees with their lives and livelihoods at stake. livelihoods at stake.
21:09
Lord Eatwell Portrait Lord Eatwell (Labour)
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I would like to address first of all amendment 38. As written it is economic correctly impossible. -- Economically impossible. It cannot be done until we have further specification of what is to be done. For example, are we to look at the effect of these changes assuming that the budget had not changed? Or do we have to look at the FAQ of these changes taking into account the consequential effects of the budget, which were also dependent upon the National Insurance claims.

And then there are other tax changes that took place at the time, which were also dependent upon the National Insurance changes. Are they to be taken into account or not? At the moment the amendment doesn't tell last. -- Tell us. Any serious economist faced with this would say, I'm sorry I can't do this unless you have to tell me what I can take as the underlying conditions. Amendments 38 is seriously defective and cannot seriously be taken seriously as it stands.

It does not specify the circumstances, the underlying circumstances within which the particular consequences of the changes in this act are to be assessed. And without that framework it simply is not possible to do, in anyway. Or if you like, anyone can produce any result they like by assuming different background circumstances. So I'm afraid amendment 38 is under specified, and in fact as a piece of serious econometrics is impossible. Because the amount of information required to perform the studies, the framework is not specified.

If I turn to amendment 42, I was very struck by the noble Lady Baroness -- Baroness Lawlor is request that the government stands up to its responsibilities. It would be helpful if the Conservative party answered for what it did to the British economy over the last 15 years, and faced up to the disaster they inflicted on the British people. Which the Labour Party is now desperately trying to repair, in very difficult circumstances indeed. But once again, the issue of the impact of employment and productivity depends on a whole series of other factors.

Are they to be taken into account or not? How is the particular effect of the National Insurance change to be done? If they were independently done you could do that, you could say the National Insurance change has no relationship to any other changes taking place in the economy, therefore we can isolate it. But that's not true. The National Insurance change has direct effects on the other components of the budget. And has effects which are interdependent. And without specifying again the framework in which these amendments are to be to considered, it's a false exercise.

You can sit down and make any result you like. So I'm afraid these amendments, which do suggest it would be very interesting to perform this exercise, but the amendments themselves are so defective that they can't actually give the guidance as to the exercise to be performed. Therefore it is entirely inappropriate for amendments like this to be on the face of the bill.
21:13
Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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I have to confess a smidgen of support for the amendments in this group. Not nearly enough to make me vote for the amendments, but I think I'm going to complain about a different lack of information that has been presented to this House in relation to this bill. The point is, it's a contribution bill. But a contribution to what? It's a contribution to the National Insurance fund. I pursue a somewhat lonely quest to persuade people of the importance of the National Insurance fund, and whole point of the National Insurance fund is that it receives contributions, it has reserves, and it pays benefits.

Somewhat oddly, simultaneously with earlier stages of the report stage there was a discussion in Grand Committee of the money going out. Simultaneous discussions, money coming in and money going out. My complaint is there's been no discussion of the state of the National Insurance fund. I am very much in favour of such a discussion because it's a crucial element in our welfare state. The problem is, the information is actually available. I have it in my hand here.

The report by the government actually on the benefits in 2025 and the Social Security limits, National Insurance funds payments and extension of relief regulations 2025. What's that got to do with the bill? It actually says here on page 7, this report also includes the expected effect on the fund of the National Insurance Contributions secondary class I contributions bill". This is information germane to our account discussions, but at no stage and I'm sorry to complain to my noble friend the Minister but at no stage has this been adequately or in any sense discussed as part of an overall sort about the state of the National Insurance fund.

That's my complaint, I've got it off my
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Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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I thank the Minister for his reply and I'm sorry he isn't feeling able to go further and I'm particularly grateful to my friends Baroness Noakes and Baroness Lawlor and Lord Hodgson and Lord Londesborough for their support. I agree with Lady Kramer that the time has come to take a stand. I don't share the concern of Lord Eatwell, this is the sort of assessment that we do in the private sector and in some other departments and as possible for the government to add to the amendment in the other house if they feel they need to do so.

We had earlier from Lord Ahmed that the Treasury had failed to consult individual sectors on the proposals under discussion, and I know that isn't however as the Treasury can be about that having been a minister in a similar position in the Treasury. I share also Lord Davies's fascination in the state of the National Insurance Fund but I think it is for another day. The government impact assessment has been woefully inadequate. For a change in such a huge scale.

It's in the interest of the public that we understand fully the impact of the government jobs tax on individual sectors, albeit retrospectively, and the overall figures we have received from the Minister which have been helpful in themselves are just not enough. So intend to test the opinion of the House on my amendment 38, in the meantime I beg leave to

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withdraw my amendment 37. Is at your Lordships pleasure that the amendment is withdrawn? The amendment is belief withdrawn. Amendment 38 Baroness Neville-Rolfe? The question is that amendment 38 is agree to. As many are of that opinion say, "Content", and of the
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Baroness Noakes Portrait Baroness Noakes (Conservative)
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An exciting part of this report stage. I rise to move amendment 38. We have had several debates on this bill, it will have significant impacts on some types of employers, some sectors, some sizes of business, some types of employee, and some types of provision for public services by bodies that are not themselves in the public sector. More broadly we have heard businesses will face the double whammy of the minimum wage increases and the National Insurance increases together, in just a few weeks time.

And they are likely to respond by taking actions to reduce their workforce, to reduce the hours their workforce can work, to reduce wages where they are not constrained by the national minimum wage. Prices are likely to go up, profits are likely to go down, all of this will have negative impacts on the economy. It is difficult to avoid opening a newspaper nowadays without seeing one or more campaign groups, industry representatives, charity representatives, making their case for the harmful impacts of this bill.

But to date the government have been completely deaf to all of these entreaties. All of this is bearing down on the economy, which is already flatlining. I can understand why the government don't want to make any changes to what was a centrepiece of their growth destroying budget last October. We know there's almost no room left in their fiscal rules for any changes. There are lots of downside risks to the economy and there are precious few upsides. And all of these are the results of choices the government has made in the last seven months.

So I understand why the noble Lord Minister's response to every issue resented to him during committee, and indeed again today, was that the government reject the cases being made. My amendment 39 is a very simple power for the Treasury to issue regulations that exempt categories of employer from the National Insurance changes, which this bill introduces. There is not even a parliamentary process attached to the regulations. My amendment would therefore allow the Treasury to act quickly once they face up to the fact that they really have created some problems.

There are no downsides to the government accepting this amendment, as they need never use it. But it would be a useful backstop if things turn out as badly as many of us believe they will. It's not often the opposition benches offer an unrestricted power to a government to do things. But I and I think others, are so alarmed by the potential impacts of this bill that I think it's the right thing to do, to take this kind of power in the interests of the country.

We have passed some amendments today which I hope will survive their passage through the Commons, which have taken some of Commons, which have taken some of the roughest edges of this bill. But it does not make the bill completely harm free. I hope the government will support this amendment, if not in its current form than in a --

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then in a different form. Insert the following new clause

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Insert the following new clause is printed on the Marshall list.
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Lord Fuller Portrait Lord Fuller (Conservative)
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Amendment 42, Baroness Lawlor, not moved. Amendment 43, Lord Fuller.

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I rise briefly to speak to amendment 43, standing in my name on the order paper. I know it is late the order paper. I know it is late but my purpose here is to probe whether the government really understands and appreciates the impact, damage and hurt these impact, damage and hurt these National Insurance proposals will National Insurance proposals will visit upon councils, those who work with them to deliver essential services, and of course the users of services, and of course the users of those services, many of whom are the most vulnerable in society.

Since most vulnerable in society. Since the great Reform Act of 1832 local authorities have been an integral part of our nation, Josep Chamberlain unleashed the powers of municipal entrepreneurialism in the 1800s to bring clean water to Birmingham. Councils sweep the streets, they issue planning permissions and cure conditions to permissions and cure conditions to build the national economy. I am a counsellor and for the last 14 years have led local government for Conservative councillors at the local governance Association.

Lord Pickles once said there are only two people who really understand local government finance, and I'm not saying I'm one of those experts but I am one of the small number of people who does more than most to celebrate the 140 things councils do to make a civil society. For every family in every street, every neighbourhood, every day. That's why I know councils finances in England are under pressure like never before. Reductions in grant funding, increasing complexity, I recent spike in inflation and wage costs have created the perfect storm.

The fundamental challenge facing the sector are costs and demand pressures are rising faster than funding. Inflation has fallen steadily since the peak, but demand pressures remain in the system. In essence, council revenues tend to grow linearly with the growth in the economy. But lately costs have grown geometrically, and there comes a point where the lines of income and demand diverged so much that the gap becomes unbridgeable. Some of the reasons for this geometric group have been demographic.

As society ages demand increases disproportionately, some have been cyclical, as the demand stutters increases in homelessness. They have been consequences elsewhere in the state, well-meaning changes of the DWP for example have driven the council's second-order spend on school transport up by 62.7% in the five years to 2024. And the COVID hangover has made things worse. We've already reached a moment where the gap has to be bridged between income and expenditure and its unbridgeable, as before the impact on councils and their contractors, which is the subject of my amendment.

This isn't a case of a Tory crying wolf. Just last week it was announced that in the financial year 25/26 the government has agreed to provide 30 councils with support to manage financial pressures by the exceptional financial support process. For eight of those councils, this included support for prior years. In aggregate, three services are responsible for two thirds of all the costs. Adult social care, children social care, and of course SEND. These pressures have seen the greatest increases.

Let's get some numbers on the record. Increased cost and demand in adult social care has seen a rise of 3.7 billion, 18% since 2019/20. Spend on children social care increased by 25% in real terms in the years from 2019 to this year, owing to the completion -- increasing complexity. The Labour run LGA tells me that by 26/27 these cumulative pressures will have added the cost of delivering services by 12.5% in the two years since last year.

Leaving councils facing an annual funding gap of £6.2 billion across the two years from 25 to 27, just to maintain services at 24 levels. These pressures come on top of the fact that councils have already absorbed 22.2% increase / -- Realtime's reduction in spending power since 2011. That was before Labour started its reckless war on the countryside by cancelling the services round. There is no more fat to trim. I want to explain why this is so serious and consequential, as we get to the knob of the matter.

The additional burden of National Insurance on councils own payroll is estimated to be £628 million for directly employed staff. But indirect National Insurance, as the commission providers, will cost councils an extra £1.13 billion next year. So take the 1.3 -- 1.13 billion and a 6.38, we see a total financial impact of the National Insurance impact on councils and Having given warm words the cost of an icy local authority would be compensated for as they might be with the health service.

The reality is there is just a one-off £515 million allocated to the sector. Let's do the arithmetic. The extra costs and the government grant has left councils with a £1.243 billion national insurance whole before all I I mentioned I mentioned have I mentioned have been I mentioned have been taken I mentioned have been taken into account. The effect on the tied contractors is important to understand, because those outside contractors put their shoulder to the wheel, they work exclusively for councils, they are an extension of the councils workforce, they are on the team.

But they can't afford to take this one for the team. I notice he is not in his place but in his time the noble Lord Lord Eatwell appreciate the magnitude of the damage visited on councils by his damage visited on councils by his party. The OBR tell us that council tax raises about £40 billion per year, that excludes, we know councils have just put up council tax by between three and five% and whether it's three or its five%, the Bald arithmetic is that the clear majority of last week's council tax rises that will kick in in April will be passport it straight to the Treasury through the national insurance tax.

The vast minority of the money extra money raised by council tax won't even stick to the sides and benefit in any measure local people. It means that most of the extra tax paid by council taxpayers next year won't even benefit the local taxpayers themselves. What this means of course is that taken together with , this is dangerously squeezing out all the other activities that should be the core purpose of the council, the sort of counsel that Chamberlain would recognise the planning for growth, keeping the streets clean, teaching kids to swim in the local baths.

The council is perpetrating a deceit on the council tax payer. Next year's council tax rises for the most part aren't financing local services. Most of that money is being passport it straight to the Treasury, and I really do think that Lord Eatwell, who tried to stifle debate earlier this evening, should be here in his place to hear that be here in his place to hear that simple truth. Put simply, this wholly new unexpected NIC pressure fails to provide councils with the security of funding they need to reliably and effectively deliver for all the communities, and potentially worse, all of this is aggravated because the £515 million allocated as some sort of sop to compensate in a small measure councils, is only for one year.

None of it is guaranteed in any event after the conference of Spending Review. Which could be another insult to injury. Just thinking, I'm conscious of the time, but it's a fantasy to think that local government reorganisation is the solution. Creating huge, remote, strategic authorities to replace the local friendly disappearance, will aggravate the disappearance, will aggravate the funding situation even more the work of district still has to be done, but substituting that most efficient part of local government, the mayoralty's, will not result in a reduction in layers of bureaucracy, there will still be three layers, just bigger and more remote.

I have a warning about the profligacy of the new larger, more remote tier of government. Lord Kempsell reports on his blog that the Greater Manchester combined authority has forked out a staggering £472,500 to fund its equality panels to advise support and challenge Greater Manchester's political leaders are matters that cause injustice and inequality was the further 52,000 to an advisory the further 52,000 to an advisory panel and 54 -- £54,000 to the Greater Manchester youth combined authority, in total nearly £600,000, money that would keep my district council going for nearly a month.

In fact half of the new unitary is established just three years ago ostensibly to save the hard-pressed taxpayer, council tax payer in Cumberland and Somerset are two of the 30 authorities which are now receiving exceptional financial support. Council finances are under stress, but if anything the national insurance, coupled with local government reorganisation, will cost council taxpayers even more. My amendment seeks the government to report on the effects of all this and by extension to open a conversation about compensating for the actual costs of the change.

My amendment would have the effect of doorstep services that the residents value the most. Cities and towns, new towns, the countryside, coastal communities and cathedral cities and be protected. I would like to ask the Minister, I did ask him before and he somewhat dismissively -- dismissively said but it is now even more stark. Does he accept the LTAs updated figures are substantially correct when the direct and indirect costs of tied employment on NIC are taken into account? Does he recognise that £1.243 billion recognise that £1.243 billion recognise that £1.243 billion He said he didn't want to understand this legacy only believe figures calculus by the Treasury.

The same people that told him that only a few hundred people were going to be affected by IHT. I would like to ask him when local government is being treated to national government? When assurances were given at the outset there would be equal treatment between the two. What assessment has been made on the most vulnerable? What commitment has been made to the conference of Spending Review? Can he tell us clearly how does allowing councils to borrow against the additional costs of financing this national insurance help change, help meet the Chancellor's golden rules? My amendment is classified as a probing amendment and is no less serious for it, Labour has quite simply lost control of the handfuls of money that councils rely on to deliver their services.

This national insurance will push them to the edge. They can't blame the Tories, this is a crisis devised in Downing Street, delivered by Malcolm Street, but felt in every High

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Street. I beg to move. Amendment proposed, after clause 3 insert the following new clause as
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None Portrait Introduction(s): Baroness Longfield CBE and Baroness Nichols of Selby OBE
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