National Insurance: Charity Sector

Baroness Sater Excerpts

Monday 13th January 2025 Lords Chamber

Asked by

[Baroness Sater]

To ask His Majesty’s Government what assessment they have made of the impact of the increase in National Insurance contributions on the charity sector.

[Baroness Sater (Con)]

I beg leave to ask the Question standing in my name on the Order Paper and refer your Lordships to my registered interests.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

The Government highly value the charity sector and its positive contribution across society. However, as noble Lords are aware, we have had to take a number of difficult decisions on tax, welfare and spending to fix the public finances, fund public services and restore economic stability. The Government publish tax information and impact notes for tax policy changes, which give a clear explanation of the policy objectives and an assessment of the impacts. This was published on 13 November 2024.

[Baroness Sater (Con)]

I thank the Minister for her Answer. In an open letter to the Chancellor, co-signed by 7,361 charities, the National Council for Voluntary Organisations gave as its initial estimate of the impact of the proposed increase in the employer national insurance contribution on charities an additional annual bill of £1.4 billion. This will have a devastating impact on the sector and the services it provides. Does the Minister agree that we have to protect our valuable charity sector by exempting it from this damaging national insurance increase in the same way that the Government are protecting the public sector from the impact of these increases?

[Baroness Twycross (Lab)]

I have not seen the workings out where the sector arrived at the figure, but I am not trying to play down its concerns about the NICs increase. It is a usual approach for the Government to support the public sector with additional employer NICs costs, as was the case with the previous Government’s health and social care levy. The Government have committed to provide support for departments and other public sector employers only. I know that Ministers have met voluntary sector representatives and are aware of the sector’s concerns. There are other measures within the suite of the tax regime—including exemptions from business rates, for example—that are among the most generous of anywhere in the world.