National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Sater Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Baroness Sater (Con)]

My Lords, charities of every kind are seeing massive increases in demand for their services. Many provide essential support and vital services to all parts of our society—to the vulnerable, the elderly and the homeless, and for children’s services, medical research and many other needs. I declare my interest as a trustee of the Dartington Hall Trust.

The increases in employers’ national insurance contributions, the living wage and the cost of utilities, goods and services have added huge financial burdens to charities’ budgets. Many have had no option but to cut costs, which means that services will be cut. Today, I add my voice to their concerns.

Delivering almost £17 billion worth of public services every year, many charities also provide support when public services fall short, without receiving any public funding. According to the National Council for Voluntary Organisations, the NCVO, charities employ almost 1 million people and raise money to provide services that would otherwise need to be commissioned by government. The NCVO and the Association of Chief Executives of Voluntary Organisations, the ACEVO, recently issued a letter to the Chancellor outlining their concerns for a sector that was already under considerable strain. The NCVO’s initial estimates have found that the employer national insurance contribution increases will place an annual additional bill of £1.4 billion on charities. The letter goes on to say:

“The harsh reality is that many organisations may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support”.


By way of an example, and as my noble friend Lord Forsyth mentioned, Marie Curie needs to find an extra £3 million each year to meet the increase. Essex & Herts Air Ambulance has reported that the change will cost it an additional £100,000 that would otherwise be directed towards other missions. Bridge Support, a charity devoted to providing essential mental health and recovery services, reported that its stretched budgets will have to absorb these additional costs, while its counterparts in the NHS and other statutory services will remain exempt.

These charities provide essential services: life-saving interventions that are not just nice-to-haves but must-haves. NCVO researchers have found that almost three out of four charities are withdrawing from public service delivery or are considering doing so, and most are reducing their services to reduce costs. It is a perfect storm of cost escalation while funding is in decline.

My noble friend Lady Fraser is extremely sorry not to be able to attend this important debate. She is CEO of the charity Cerebral Palsy Scotland and is having to deal with the practical implications of this policy at the coalface. She is conducting meetings about where and how to cut staff, and therefore services, to fund the increased tax burden. Anna Fowlie, the chief executive of the Scottish Council for Voluntary Organisations, wrote that many charities

“have already had to subsidise public services with their own funds, and increasingly we are hearing of organisations having to close their doors”.

I am very worried about the future, as to me it makes little sense for the Government to hamper the ability of those picking up the slack to do so. Have the Government made provision to fill the gaps in essential services that charities provide when they are unable to do so? How will the Government fund the services presently provided by the voluntary sector? As the NCVO and the ACEVO have asked, why can the Government not commit to reimbursing or exempting voluntary organisations’ increased employer national insurance contributions in the same way as they will for the public sector? After all, the biggest assets in charities are people, the largest costs are people, and employing people has just got significantly more expensive.

With all that in mind, I ask the Minister when the impact statement for the Bill will be published. I intend to seek an amendment to the Bill in Committee to ensure that the Government provide an impact statement, unless the Minister can tell us today when it will be published.

The Government have launched their civil society covenant, which talks about resetting their relationship with the voluntary sector. It talks of the essential role of working as partners with the sector, which is welcome, but the Bill does not strengthen the foundations of a stronger civil society. Rather than taxing, we should be supporting or, at the very least, exempting.

I know the Government and the Minister want our charities to thrive, but I fear that the Bill will hurt them. So many are feeling desperate. The Government must find a way to protect and support them. Doing so would demonstrate that they mean what they say and would illustrate that they truly want a productive relationship with the voluntary and charity sector.

--- Later in debate ---

[Lord Sharkey (LD)]

My Lords, this is an unsatisfactory Bill, not because it raises taxes—that was, and is, an obvious necessity—but because it does so in a way that exacerbates existing unresolved and urgent problems or, as in the case of social care, in effect ignores them entirely.

The provisions of this Bill will probably not help with growth, the Government’s chief objective. I say “probably not help”, but that may be a little bit generous. Many noble Lords who have spoken this evening have felt strongly that the Bill will have negative consequences for growth. Arguably, two of the most important engines of growth, or what have been and should continue to be engines of growth, are our SMEs and our higher education sector. This Bill has damaging consequences for both. I will speak a little later about our university sector, but I want here to make some points about SMEs.

My colleague in the Commons, Christine Jardine, asked the Minister at Second Reading:

“How does it help morale and positivity among small businesses, which will be vital to economic growth, if some of them see their salary bills double?”


The Minister replied by saying:

“I urge her to understand that what we are doing on national insurance is taking a tough decision to fix the public finances, while at the same time providing the stability that businesses need to invest and grow””.—[Official Report, Commons, 3/12/24; cols. 202-03.]


It is the last bit of that, frequently repeated as an explanation of or an excuse for government proposals, that is the problem.

No convincing case has been made for the proposition that the measures in the Bill will provide stability. Indeed, it is hardly surprising that many see the Bill’s measures as actually reducing stability and creating further uncertainty. In a recent survey, 44% of UK SMEs said that the NI increases would negatively affect them. As Todd Davison of Purbeck Personal Guarantee Insurance, an important operator in the SME arena, noted:

“The increase in employer National Insurance contributions … could prove to be a fatal blow to thousands of small businesses, despite the increase in the Employment Allowance”.


He went on to say:

“There will be thousands of business people who have put their home and life savings on the line by signing a personal guarantee for a business loan who will now be facing some very difficult choices”.


I note in passing that, in trying to justify the national insurance rise, the Government have pointed to the increasing availability of funds for the NHS. This is, of course, welcome, but the extra funding is being raised in the wrong way and on the wrong people—and what about carers and the care sector? Will we have to wait until 2008 and beyond for any significant progress? In the meantime, what additional support will be available to offset increased costs? What about the additional payroll cost to GP practices? The Institute of General Practice Management estimates that the NI rise will mean that the average GP surgery tax bill will rise by around £20,000 a year. How is this to be mitigated? Second Reading in the Commons did not produce an answer to any of these questions. I would be grateful if the Minister could address the issues about SMEs, the care sector and GPs when he replies.

I now turn to another critical factor in growing our economy: our higher education sector. I declare an interest as a member of council at UCL. Our university sector has a very strong international reputation, very high academic standards and world-class research output and influence. This is despite the UK spending significantly less on R&D than our rivals. We spend 1.7%, China 2.2%, the US 2.8% and Germany 3.1%. However, in the last QS worldwide ranking, the UK had four universities in the top 10 and 16 in the top 100.

The Government explicitly acknowledge the importance of the sector. The Secretary of State for Education wrote to vice-chancellors on 4 November last. She started her letter by saying:

“The institutions which you lead make a vital contribution, as education and research institutions, to our economy, to society, and to industry and innovation. They contribute to productivity growth; play a crucial civic role in their communities; and have a key role to play in enhancing the UK’s reputation across the globe. I also passionately believe in education for education’s sake: a more educated society is happier, healthier, more cohesive, and socially and culturally richer”.


She went on to say:

“I am clear that we need to put our world-leading higher education sector on a secure footing”.


She went on to speak of student numbers, international students and the financial status of the sector. This financial status is in need of very urgent attention.

The main leader in last Thursday’s Times was critical of the very large travel and expenses costs of some vice-chancellors at a time when the sector is under critical financial pressure. The leader’s chief point concerned this financial pressure. It said:

“There is no doubt that higher education is experiencing extreme financial difficulties”.


It pointed out that these extreme difficulties will be made worse by the increase in employers’ NI. The small but welcome increase in student fees will increase revenue by around £370 million. The increase in national insurance will cost universities around £450 million.

The Times went on to note that, according to the OfS, the combination of lower revenues from both home and overseas students means that nearly three-quarters of our universities will be running a deficit by the end of this academic year. Some 40% already have less than a month’s cash in the bank and 10,000 jobs are expected to be lost in this academic year. This is a genuine and pressing crisis.

If we want to maintain our large and very high-quality university sector, if we want to remain among the global leaders in the life sciences, if we want to continue to create the IP that forms the basis of new and innovative commercial ventures, and if we want our towns, cities and regions to continue to benefit from their universities, we must act. Increasing the national insurance burden is to act completely in the wrong direction.

In the absence of a coherent plan for our universities, the Government have, in an almost cavalier way, significantly worsened their already extreme financial difficulties. There is a pattern here. There is no sign of a meaningful intervention to relieve social care of the increased costs imposed by the Bill. There is no sign of a meaningful plan for social care before 2028. There is no proposal for providing significant help to SMEs. There is no proposal for helping GP surgeries to mitigate the effects of this Bill.

There are plenty of indicators and predictions about the damage that these NI changes will bring to critical parts of our economy and society, but no indication of how this damage may be mitigated or avoided and nothing positive for growth—but plenty in the negative.

There is much to regret in how and on whom the Government are imposing this significant tax, and much to regret in the effect of this tax increase on carers, on SMEs, on GP surgeries and on our universities. I strongly support the regret amendment from my noble friend Lady Kramer. If she chooses to divide the House, as I hope she will, these Benches will support her.

[Baroness Sater (Con)]

I thank the noble Lord for allowing me to make a small intervention. The noble Lord is arguing passionately against the Government’s job cuts and the damage that will be done to care providers, charities and others. Does he therefore agree with me that this Bill must be scrutinised in a Committee on the Floor of the House? Does he also agree that it is in the interests of the charitable sector for this Bill to be scrutinised as fully as possible?

[Lord Sharkey (LD)]

I think there were three questions there, so perhaps I can answer very quickly: no, no and no.

International Women’s Day

Baroness Sater Excerpts

Friday 8th March 2024 Lords Chamber

[Baroness Sater (Con)]

My Lords, I congratulate the noble Baroness, Lady Casey, on her excellent maiden speech; I am sure noble Lords all agree. I thank my noble friend the Minister for introducing this very important debate on International Women’s Day, focusing on the vital importance of the financial inclusion of women in our society. I declare my interest as a vice-chair of the APPG on Financial Education for Young People. I am a strong advocate of this subject and will always jump to make the case for more financial literacy in schools, as my noble friend the Minister may have heard me do several times before in your Lordships’ House.

In 2022, research by PwC showed that 10.7 million UK women are unable to access mainstream financial products. According to the Financial Times, on this important International Women’s Day last year, the average pension pot for a 65 year-old woman in the UK was around a fifth of the average pot of a man of the same age. It is excellent to see charities such as the Financial Literacy and Inclusion Campaign, which the Financial Times has fostered, stepping up to meet this educational challenge. As that campaign reports:

“Financial literacy has been proven to increase social mobility and improve financial behaviour for individuals and communities. It’s our aim to democratise financial education by providing free and engaging content to those who need it most: young people, women, and disenfranchised groups”.


We do not talk enough about the importance of physical and emotional well-being. The Mental Health Foundation report Uncertain Times: Anxiety in the UK and How to Tackle it tells us that worrying about money is the biggest cause of stress. In 2023, 21% more young women aged between 17 and 25 suffered anxiety and depression about money than their male counterparts, according to the National Centre for Social Research. Financial education leads to confidence and better financial decision-making for those who have received it, which in turn can lead to a more secure, stable and healthy financial future.

We have come a long way in many areas of gender equality, but—as has been confirmed by noble Lords across the House today—so much more can and should be done. The Government must continue their mission to ensure that everyone leaves school with a sound understanding of how to manage their finances. Any government-sponsored financial education initiatives can prove key to developing and growing more women’s participation in the workforce, widening access to financial products and increasing their chances of a more secure financial future.

In the UK we do not have a problem with girls wanting more financial education. According to the London Institute of Banking & Finance young persons’ money index, 86% of girls want to receive more, whereas only 70% of boys want the same. This is an area ripe for both policy expansion and school accountability, where we already have a receptive audience. While financial education is a statutory teaching requirement in secondary schools, it is not in primary schools; there are calls to make it so from many quarters.

In isolation, none of these steps solves the disparity between men and women in financial inclusion, but much good work is being done, including the national programmes such as My Money Week, run by the well-recognised financial enterprise education charity Young Enterprise. It aims to encourage children and young people aged three to 19 to take an interest in financial matters, and the teachers also receive valuable support in delivery.

The Centre for Financial Capability, another expert charity in the field, is calling for increased financial education for all children from a young age, to ensure they are equipped with the financial resilience skills necessary for later life. There is clearly much more to be done and an opportunity to grow our audiences in schools, from the age at which primary school children start receiving their pocket money. But bear in mind that nowadays pocket money is more likely to be represented on an app, or in some cases a cash card controlled by parents, than the old-fashioned piggy bank. This makes saving a different educational prospect from that which it was previously. The young persons’ money index also stated that 71% of girls expressed interest in learning more about debt, whereas 6% fewer boys expressed the same concern. It is quite clear that the more prepared you are to cope with your finances when you leave school, the better.

Many reports have been produced, including by the financial education charity MyBnk, which showed in a study in 2020 that 43% of girls were not financially confident, a marked 18% less than boys. Boys display greater confidence in managing money, with 42% feeling highly confident in money management compared with 38% of girls. The gap is wider when we look at children aged 11 or older, according to the Money and Pensions Service in 2022. The hallmark of financial literacy is a combination of knowledge, ability and confidence. Breaking down barriers to high-quality women’s financial education is critical in furnishing more women and girls with the tools and opportunities to make informed financial decisions, which will only increase greater financial inclusion of women and better financial outcomes for women.

Banking Hubs

Baroness Sater Excerpts

Monday 11th December 2023 Lords Chamber

[Baroness Vere of Norbiton (Con)]

That is why the Government decided that it was time to legislate. We felt that the voluntary initiative was not coming along fast enough, and we legislated in the Financial Services and Markets Act in the summer. The FCA, the key independent regulator, has brought forward its consultation in short order.

[Baroness Sater (Con)]

My Lords, we know that banking hubs should provide the face-to-face communication which is so valuable and important for those who need extra help and support with their finances and may not be equipped with adequate financial understanding and skills. As we know, not all young people are leaving school having had an adequate financial education. Can the Minister assure us that there will be a person at each of these hubs to provide much needed and valuable face-to-face communication?

[Baroness Vere of Norbiton (Con)]

In many circumstances banking hubs have a private room where community bankers can meet customers to discuss their financial requirements. Cash Access UK, the partnership that sets up banking hubs, publishes a list showing where community bankers are available. I should also point my noble friend to other interventions that some banks are using, such as mobile banking services, pods and pop-ups. There are a lot of ways to have face-to-face contact with consumers.

Financial Inclusion in England

Baroness Sater Excerpts

Wednesday 30th November 2022 Lords Chamber

[Baroness Sater (Con)]

My Lords, the Money and Pensions Service has highlighted that children’s attitudes to money are well developed by the age of seven. According to the CBI, prioritising financial education could add nearly £7 billion to the UK economy each year. Does the Minister agree that the Government should consider making financial education a statutory part of the primary school curriculum?

[Baroness Penn (Con)]

My Lords, financial education in England is covered within both the citizenship and mathematics curricula. The Money and Pensions Service has also published financial education guidance for both primary and secondary schools in England to support school leaders and education decision-makers to enhance the financial education currently delivered in their schools. More broadly, after Covid and other disruptions there has been a commitment by this Government not to make any changes to the national curriculum for the remainder of the Parliament.