National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Monckton of Dallington Forest Excerpts

Committee stage
Tuesday 4th February 2025 Grand Committee

Moved by

[Baroness Monckton of Dallington Forest]

29: Clause 2, page 1, line 16, leave out “2025-26” and insert “beginning after the tax year in which an impact assessment is published assessing the impact of the provisions in this section on hospices.”
Member’s explanatory statement
This amendment would prevent commencement of this section until a full impact assessment is published for hospices.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, Amendment 29 is in my name and would prevent commencement of the Act until a full impact assessment is published for hospices. The NI announcement was a big blow for hospices already struggling with their budgets. There is also understandable frustration in hospices being told that this was for the benefit of an NHS that is already chronically underfunding most children’s and adult hospice services.

Sam Royston said:

“We project that over the coming 25 years the need for palliative care is going to rise by 25%, with around 150,000 more people needing”


end-of-life services. He said:

“We have no plan, no plan at all to address the scale of that challenge”.—[Official Report, Commons, Terminally Ill Adults (End of Life) Bill Committee, 29/1/25; col. 189.]


Hospices are particularly impacted as most have significant retail operations employing many people close to the minimum wage and many on part-time contracts. These are the employees where, typically, the impact of this tax is proportionally highest.

Many hospices already struggling with deficit budgets modelled the financial costs at between £150,000 and £450,000 in proportion to their turnover. For example, St Christopher’s Hospice in south London said that it will face increased costs of around £450,000 a year, which is equivalent to the cost of nine specialist nurses. Nationally, the hospice movement estimates that the cost to the sector will be £34 million for England and just under £40 million for the whole of the United Kingdom. Only this week, the Kirkwood hospice announced that it would be reducing its costs by £1.7 million a year, which will involve placing 33 roles at risk of redundancy.

We all know how important hospices are and the difference that they make. I got in touch with Rachel Street, who is the CEO of Heart of Kent Hospice. This is a hospice I know well: my mother was a founding patron, and I have seen the dedication of the frontline staff, their professionalism and their compassion. They make—and I use this phrase deliberately—a life-changing difference. I visit it every year to present colleague awards in my mother’s name, and I am always moved by their stories and by the kindness and tenderness that they show to those at the end of life’s journey.

As a charity, Heart of Kent Hospice has been hit with the double whammy that my noble friends Lady Noakes and Lady Fraser discussed earlier: increases to the national living wage and employers’ national insurance. Plus, as a charity employing doctors and nurses, it anticipates being impacted by any increases to the NHS Agenda for Change pay scales. It has more than 60 staff whose salaries will need to be uplifted to the national living wage, which is more than a third of its workforce. It now needs to look to reinstate differentials between roles, otherwise shop assistants and shop managers in its retail operation will be on the same salary. The ripple effects up through the organisation are huge, squeezing pay differentials throughout.

The retail teams are where hospices are seeing the cost pressure the most, drastically reducing the surplus made by their charity shops, which is an important part of their income for the delivery of palliative care services. For all hospices, the main costs of delivering vital services are wages and salaries, and, like other charities, they employ many colleagues on the national living wage, often in part-time roles, so they are all significantly impacted. For the Heart of Kent hospice alone, this change will cost it over £200,000 a year, on top of the £6.5 million it needs to raise, of which only 20% is funded by the integrated care board.

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[Lord Livermore (Lab)]

We are also providing an additional £26 million of revenue to support children and young people’s hospices.

As I have said previously, delaying commencement of the Bill would reduce the revenue generated from it and require either higher borrowing, lower public spending or alternative revenue-raising measures. The Government carefully consider the impacts of all policies, of course, including the changes to employer national insurance. As I have also said previously, an assessment of the policy has already been published by HMRC in its tax information and impact note.

Further, the OBR’s economic and fiscal outlook sets out the expected macroeconomic impact of the changes. The Government and the OBR have therefore already set out the impacts of this policy change. This approach is in line with previous changes to national insurance and to taxation. The Government do not intend to provide further impact assessments.

In the light of the points I have made, I respectfully ask the noble Baroness to withdraw her amendment.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I am grateful for the thoughtful contributions to this debate from my noble friends Lady Sater, Lord Leigh and Lord Swire. I note the contribution on Amendment 41 in the name of my noble friend Lady Neville-Rolfe. All I can say is that I urge the Minister to consider carefully the amendments we have been debating and to acknowledge the essential services provided by the hospice sector. However, for the moment, I beg leave to withdraw the amendment.

Amendment 29 withdrawn.

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Moved by

[Baroness Monckton of Dallington Forest]

31: Clause 2, page 1, line 16, leave out “2025-26” and insert “beginning after the tax year in which an impact assessment is published assessing the impact of the provisions in this section on the hospitality sector.”
Member’s explanatory statement
This amendment would prevent commencement of this section until a full impact assessment is published for hospitality.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, Amendment 31, in my name, would prevent commencement of this section until a full impact assessment is published for hospitality. I have spoken to several organisations in this sector and the message is clear: His Majesty’s Government have differentiated between larger and smaller businesses, making smaller businesses exempt, but larger businesses could have their profitability wiped out. As I said in the debate, the Government should have considered the mix of the labour bill on a company’s P&L and tiered the increase to relieve the pressure on high-labour, low-margin businesses, such as hospitality.

Companies are proposing to increase tariffs and pass on increases to their clients. This will bring its own problems. Bearing in mind that we have just managed to stabilise inflation, this will bring a cycle of increased prices. Companies are already getting signals from their supply chains that prices will increase due to the NI changes, so the spiral will continue. Meanwhile, growth plans are being reduced, new job opportunities are being cut and restructuring and redundancies are already under way. The people I spoke to saw no opportunity to grow their business and therefore the economy, and this is creating huge risk and pressure for businesses. They say that they are going to be so busy negotiating price increases and restructuring that they will have no time to address their strategic priorities. One business told me that it would significantly reduce the amount of capital it would have been spending in the year ahead, as it is unable now to justify the level of return. It is also reviewing labour costs to find efficiency savings to offset the cost increase. Prices for customers will increase, which will probably result in customers spending less, which will increase the pressure on businesses to reduce hours further to offset the volume decline. Entry level jobs, as we have heard already today, will simply disappear.

I had an email from someone who owns three hotels, and she gave me three examples of the effect that this will have. An over-21 year-old full-time kitchen porter having an increase of 50p per hour would mean that his salary would increase by £1,040 to £26,520 and the employer’s NI will increase by £818. A 21 year-old gardener with an increase of £1 an hour would increase his salary by £2,080 to £27,000, and his national insurance will also increase by £818. A part-time waitress over 21 with an increase of 50p an hour will have a total pay increase of £416 and the employer’s national insurance will increase by £690. So, across just three staff members, the extra salary is £3,536 and the extra national insurance is £2,477. When you consider that she employs 198 staff members across three hotels, the increase is huge. As she put it to me, “This is absolutely terrifying for us, as we simply cannot increase our prices to the same extent”.

I then spoke to James Chiavarini, who runs a long-established family restaurant in London, Il Portico. He said, “It is difficult to overstate how much hospitality helps our country by providing skills, training and employment to thousands of people, many of them neurodiverse, who want to work, want to contribute, but are not a natural fit for a 9 to 5 office job”. This is what we do at Team Domenica. We train people with a wide range of learning disabilities who want to work in this sector. With this new threshold, we know already that it will be so much harder to place them. James also said, “All the proposed increases will do is drive more businesses to close, create more unemployment and an even bigger benefit burden on the creaking state”. I will edit, for the sake of propriety and decency, his final sentence. “It’s a policy dreamt up by public servants who have never once in their lives taken on a risk to open a business, employ a struggling or vulnerable teen, or even work over a weekend”. Amendment 31 is important because jobs in the hospitality sector will disappear and restaurants, cafes and even hotels will be forced to close. I beg to move.

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[Baroness Monckton of Dallington Forest (Con)]

I am grateful for all the thoughtful contributions to this debate and, in particular, to my noble friend Lady Fleet for her impassioned defence of the arts sector, and to the noble Lord, Lord Londesborough, for standing up for pubs. In particular, I note the contribution on Amendment 49 in the name of my noble friend Lady Neville-Rolfe.

I urge the Minister to consider the amendments we have been debating and to understand the impact on the livelihoods provided by those in the hospitality industry. However, for the moment, I beg leave to withdraw the amendment.

[Baroness Neville-Rolfe (Con)]

I simply want to ask the Minister whether he had changed his view. The impact note came out in November. It was probably drafted based on data relating to before then, when it was far from clear what changes these national insurance measures would precipitate. What we have seen—we have heard from a working retailer today—is that this is having a depressing effect on confidence and jobs across the country. I hope that, before Report, the Minister will reflect on that and give us some assurance as to how the negative effects, which will affect his prime mission of growth, can be dealt with and alleviated.