National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I begin by joining other noble Lords in offering the Green group’s tribute to the enormous contribution of the noble Baroness, Lady Randerson, and express our sorrow at her death.

We are debating a measure—the increase in secondary class 1 national insurance contributions—that was announced on 30 October. It feels like quite a long time ago in politics, but the timing is apt—if perhaps not intentionally so on the part of the Government—given that this is what the High Pay Centre calls “fat cat Monday”: the day on which the chief executives of the FTSE 100 companies will have made more money by 11.30 am than their average worker does in a whole year. The median pay for FTSE 100 chief executives is £4.22 million, or 113 times the median full-time worker’s pay of £37,430. After 29 hours, that is an equal amount of pay. If we compare that to last year, CEOs had to work a whole further 90 minutes to get to that figure. It is getting worse; it is heading in the wrong direction in terms of inequality.

The Minister used the term “working people” eight times in his fairly short introduction. What are the Government going to do to rebalance the rewards for working people—from the cleaner to the CEO? If the Government are looking for ideas, I am happy to proffer the Green Party policy that the top-paid person in an organisation should not be paid more than 10 times the lowest-paid person. We could perhaps start by making that a requirement for bidding for government contracts. I am interested in the Minister’s thoughts on that.

This has been a perhaps surprisingly lively debate. To be noted in particular are the wise comments of the right reverend Prelate the Bishop of Southwark, not currently in his place, about parties making promises during election campaigns, particularly promises not to do things as a knee-jerk reaction when they come under rhetorical attack. The country is in an awful state—the state left by the former Government—with eviscerated public services, rampant poverty and inequality, as fat cat Monday illustrates, and terrible public and environmental health.

The country had a hope and expectation that the new Government would come in with a plan and a worked-out vision for what to do. Instead, we have this national insurance employer contribution increase, which is a large plaster—and for many crucial services, such as health and social care, a toxic plaster—on the obviously awful state of the national finances. The noble Baroness, Lady Neville-Rolfe, spoke about the importance of national morale, which is of course suffering from the rampant unfairness and desperation wrought by the two-child benefit cap and the cuts to the pensioner winter fuel payment. The depressing of the mood is coming from many directions.

On a specific point, I declare my position as vice-president of the National Association of Local Councils. At present, as I understand it, parish and town councils are not included in the Government’s public sector compensation scheme. It is now calculated that the cost of compensation for them would be just £10 million a year in England. Conversely, the absence of compensation could risk council tax rises of 1.5% to 3% for parish and town residents. Is that something that the Government are going to pick up?

My honourable friends in the other place were part of a reasoned amendment that this Bill not be given a Second Reading because the Office for Budget Responsibility has found that the increase in NI contributions will lead to stalled real wage growth and higher prices for workers and incur additional costs for the public and third sectors, and noting that the Government did not choose to pursue more progressive forms of taxation, such as full equalisation of capital gains tax with income tax rates and by introducing a wealth tax to raise revenue. The Minister suggested that anyone complaining about this Bill should suggest alternatives. I point him to the wealth tax proposed by the Green Party in last year’s election campaign, which is gathering further support around the country all the time, and to that equalisation of capital gains tax. Fat cats, by definition, have broad shoulders.

I come now to the question of what this Chamber should do. In the other place, Greens joined Liberal Democrats in backing amendments to ameliorate some of the worst aspects of the Bill, but I see no point in repeating that exercise here. I wonder what the Benches to my right would have said a year ago had Labour tried the same tactic that they are apparently planning on what is not quite a money Bill. The Green group will support the regret amendment from the noble Baroness, Lady Kramer, tonight, while regretting that the Government have got themselves into this mess by making narrow electoral calculations in last year’s election campaign.

We need courage and vision in our politics, and we need to offer hope of addressing poverty and inequality, rampant ill health and environmental damage. As Greens, we know, as we have heard from many sides of the House today, that what are all too often hollow promises of growth do nothing to address the question of who benefits from that growth and what damage is done as a result. The Minister spoke about the increased size of the economy, but the pie cannot keep getting bigger. You cannot have infinite growth on a finite planet, and you cannot rely on those now getting crumbs from the fat cats’ table getting a few more crumbs. We have to slice up the pie more fairly.

While the Treasury is used to thinking that it is fiscal levers that it has to pull and fiscal measures that it has to adjust, it will have to come to terms with the reality that the physical limits of our planet and the rapidly changing climate, which is having significant impacts on food security and supply right across our supply chains, as well as the disasters of fire, flood, drought and heat, are not responsive to any economic theories, particularly not outdated and failed economic theories that are deployed again and again to get the same result.

I spent my holidays reading, among others, the ecological anthropologist Alf Hornborg, who notes:

“Among the … obvious shortcomings of the current world order is its inclination to generate abysmal inequalities and ecologically disastrous patterns of consumption and resource use, and yet our mainstream discourse tends to represent these conditions merely as the deplorable but unavoidable side effects of progress”.


Yet the disasters are catching up with us, and this Bill and most actions of the Government are not acting to address the “abysmal inequalities”. Indeed, they risk increasing them, and are going to increase them.