National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Monckton of Dallington Forest Excerpts

Consideration of Commons amendments and / or reasons
Monday 24th March 2025 Lords Chamber

[Lord Ashcombe (Con)]

My Lords, I would like to personalise this a little, because the hospice movement is unbelievably important in this country, and I am grateful to other noble Lords for raising the point again. I suppose that my family has been very fortunate, in unfortunate circumstances, to have the benefit of two hospices, both at end of life. Both hospices face significant shortfalls in their annual running costs and live off the back of occasional big legacies. They already have to raise substantial amounts of money, and the national insurance increase puts yet more pressure on the system. We have had the increase in minimum wages, which means that they have suffered those costs in addition; doctors and nurses do not come cheap, as we know. This just drives costs up further—for the hospice closest to home, the figure is nearly £0.5 million.

So what does the national insurance increase mean? In this particular case, it means either the loss of three nurses, who conduct some nearly 4,000 visits a year in the community, preventing the need for hospital care, or losing one bed, which would be dedicated to the most complex needs for patients at the end of their life.

If hospices are forced to reduce their care to the community, what happens next? They play such a critical role in supporting the NHS, which is not subject to the increase, both in terms of community care and in easing pressure on acute beds in hospitals, as well as facilitating discharges from hospital. If the Government continue to impose financial strain on the hospice sector, more hospices will be forced to scale back services or even close. That is something we cannot live with in this country, and it would place yet greater strain on the NHS—a particularly difficult sector, as we know, and one that we are trying not to pressure any further. When salary increases for medical staff and the rises in national insurance are factored in, this particular hospice will have to raise yet another £200,000 on top of the £0.5 million that I mentioned earlier, and that hospice is but one of 200 fantastic operations in this country.

I make again the point that various noble Lords have made: the recent announcement of the £100 million funding from His Majesty’s Government for the hospice movement and the £26 million for the children’s hospices is for capital projects, which, while very welcome, does not help this particular situation—a situation that the Prime Minister singularly seemed to ignore at PMQs last week. I beg the Government to reconsider their position.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I rise to speak in favour of these amendments and to speak very briefly about hospices—which I know many noble Lords have already done. Our hospices support over 300,000 people, mostly in the community, and this tax will cost the sector hundreds of thousands of pounds. Beds will close and outreach services will be decimated. Where will people go to die? Yes, hospitals offer palliative care, but only four out of 10 hospitals have the services that are necessary seven days a week, despite this having been a national standard in 2004.

The assisted suicide Bill is being debated in the other place. Assisted dying is what hospices do: ensuring that people can die in dignity, are properly cared for and can live as fully as they are capable of right to the end of their life. We only die once. I agree with what my noble friend Lord Leigh of Hurley has said previously: that not exempting hospices from this tax is shockingly cruel. But it is worse than that, because it shows a lack of compassion and an absence of humanity that are truly shocking. It leaves me speechless, and I have nothing more to say.

[Baroness Kramer (LD)]

My Lords, we on these Benches do not dispute that the Government were handed a dire fiscal situation; the question is what taxes they choose to raise to remedy it? We feel that they have made the wrong choice in this instance.

With these amendments in lieu—certainly those from my noble friend Lord Scriven and the noble Lord, Lord Londesborough, from the Cross Benches—we have proposed that, in key areas, power is provided to the Government and to the Treasury to reverse that decision in these narrow circumstances if they discover, as they see this event play out, that the choices they made were not those that they thought they had made. It is very unusual from these Benches for us to be willing to provide what is, in effect, a Henry VIII power to the Government, and that we do so reflects our deep anxiety. This is not political game playing; we are deeply anxious about what will happen with community health, social health, small businesses and the knock-on consequences of all that.

I want to thank the noble Baroness, Lady Noakes, because it was her thought in Committee that one way to at least find some common ground would be to pass powers over to the Secretary of State. That is the pattern that we have followed. I hope that the Government will see that they are not forced to act in any way by two of these amendments in lieu; they are being given the opportunity and the possibility, and we hope they will accept them in that spirit.

The noble Baroness, Lady Neville-Rolfe, has proposed an amendment in lieu which would require an impact evaluation. I have to say to the Minister that, when he spoke at the opening of this debate about how few businesses would be impacted by the increase in employer NICs, I began to think that he had not been given the central information that he should have been given. If he were to look, he would discover that that vast number of companies that are not affected are those with three employees or fewer, but that those small companies that we look to for scale-up and to drive growth are impacted.

Again, this underscores the fact that to roll it out effectively—and I fully accept that this is new and has not been the pattern of past Governments—we need to move to a time when we get much more detailed impact evaluation as we deal with these issues in this House. We on these Benches hope very much that the Government will accept the three amendments in lieu. If they do not, then we will support all three.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Monckton of Dallington Forest Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Baroness Monckton of Dallington Forest (Con)]

My Lords, I declare my interests: as chairman of Team Domenica, a charity that looks after adults with learning disabilities; as a patron of the Acorns Children’s Hospice; and as a non-executive director of the Watches of Switzerland Group, a FTSE 250 company headquartered in Leicester.

To prepare for this debate, I have been in touch with several organisations across the sector to understand the devastating impact of the proposed legislation. To put my contribution into context, my career has been in luxury retail. In 1986, I opened Tiffany—the American jeweller—in this country in partnership with Tiffany’s in New York. This was a time when to be an entrepreneur was encouraged. The then-Chancellor proclaimed:

“It is the rediscovery of the enterprise culture … that will provide the only answer to the curse of unemployment, and the only true generator of new jobs”.


Little did I know at the time that this former Member of your Lordships’ House would become my father-in-law.

My noble friend Lord Forsyth of Drumlean is quite right in saying we need to reinvigorate the private sector. So, I started my research not in the luxury end of retail but in my local town in East Sussex. Heathfield Ironmongers, where I have shopped for the past 25 years, is closing on 31 January. Their website states:

“serving the local community since … 1919”.

It had suffered a drop in footfall after Covid, but the manager told me that the combination of the national insurance changes and the reduction of business rates relief was, as she put it, the final nail in the coffin.

Altus Group, the commercial real estate data provider, states that independent retailers are particularly expected to struggle this year. Around 85% of its predicted closures will be independents—that is 14,660 shops. Just think for a moment of the people who are currently employed there, and their families. What are they going to do?

I spoke to our immediate neighbour, who is a senior executive in a large insurance company. She told me that, partly because of this legislation, they will now be outsourcing most of their IT and project manager roles to India, Greece and Portugal. They are opening offices in these countries and making the UK roles redundant. They have accepted that, in order to do this, they will have to train people up to the level of competency that they have in the UK, but they say they have no choice, as their combined operating ratio—a measure of their underwriting profitability—would be too high if they retained their UK staff due to the changes in national insurance contributions.

One of the areas that is most affected—and we have heard this several times today—is the hospitality industry, in which Team Domenica plays a very small part. The group UKHospitality has calculated that the October Budget will deliver an increase to the annual tax bill of £3.4 billion, with a 10% rise in the cost of employment per person. The Institute for Fiscal Studies has said that businesses employing people on the national living wage will face the biggest hit from the increase. As an employer of 3.5 million people, hospitality is set to be the hardest hit. For example, it would cost an extra £1,140 to employ a student working 14 hours at the weekend. So, first-time workers will become unaffordable for hospitality businesses, thus removing valuable entry-level experience and training.

The overwhelming feedback I have received from across the sector is that this is just not sustainable. There were three particularly interesting points raised by the people I spoke to. First, all large businesses will be hit equally, but the Government should have considered the mix of labour costs on companies’ P&L and tiered the increase. Businesses with a high mix of labour will be hit harder and profitability will be wiped out. Secondly, businesses are significantly reducing the amount of capital they would have been spending in the year ahead as they cannot justify the level of returns, so growth will be stifled. Thirdly, inflation will accelerate as everyone is looking at increasing prices to mitigate.

On the charitable area, for my small charity alone the national insurance changes will add an extra £39,000 a year. However, for a charity like Mencap, which looks after 4,000 people with learning disabilities, the impact is huge, as my noble friend Lord Jackson of Peterborough has said. I spoke to Jon Sparkes, the CEO of Mencap, who told me that it has contracts with 80 local authorities, providing 650 different services. It has 5,000 staff, and large numbers of front-line care workers who are on the national minimum wage. Mencap’s income is £200 million a year. This is the bottom line, with no margin on the delivery of service. There is no way it can absorb these extra costs.

The impact of lowering the threshold will be £5 million, with a further £1 million due to increasing the headline rate to 15%. Jon told me that Mencap is having to give notice to 60 services and is working flat out to try to transfer them before 1 April to avoid the financial hit, but he does not think that it will be able to do that. Again, pause and think of the human cost of this: of the people who rely on these services, and of the families who thought they had found a safe haven for the people who they care most about and who are the most vulnerable. These are statutory services, so can the Minister give an undertaking that the public purse will pay for these public services?

Hospices are particularly impacted as most hospital charities have significant retail operations, employing many people close to the national living wage and people on short-term contracts. My colleague, Brian Duffy, CEO of the Watches of Switzerland Group, started the Watches of Switzerland Group Foundation. It supports a variety of charitable endeavours, most notably the King’s Trust and food banks. These organisations struggle to meet the demand for their services. They utilise volunteers where possible, but they also have permanent staffing and management costs. Brian told me that the message from the charities is that the increase in national insurance contributions can be funded only by cutting back on expenditure to those who need it most.

The outlook, frankly, is bleak. The optimistic entrepreneurial spirit will be stifled. Wealth creation will be stymied. This is a tax on employment, and the private sector is a sacrificial goat. Meanwhile, the state sector, which has decreasing rates of productivity, expands. Does the Minister agree that His Majesty’s Government should commit to the interests of wider society and not just the public sector?

During the election campaign, Keir Starmer declared:

“Small businesses are the beating heart of our economy, our communities and our high streets. Our Plan for Change will drive economic growth across the country so small businesses can thrive”.


How hollow that sounds now, and especially at Heathfield Ironmongers.