National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Baroness Sater and Lord Leigh of Hurley

Committee stage
Tuesday 4th February 2025 Grand Committee

[Baroness Sater (Con)]

I rise in support of my noble friend, who made an excellent and passionate speech about hospices and the dire need for support they will have if the NICs changes go through. They will affect, as we have heard already, redundancies and the level of staffing. The burden that will be put on hospices will be extraordinary and the figures are unbelievable if we consider how much they will have to raise if they have to find that money in the future. As I have said previously, it is imperative that we have an impact assessment whereby we can understand these individual sectors and the absolute devastation that will happen if we do not know what will happen, going forward. So I plead with and urge the Minister to reconsider and support my noble friend on this important sector. It is important that we know a little more about what will happen if these insurance rises take place.

[Lord Leigh of Hurley (Con)]

My Lords, I support my noble friend Lady Monckton of Dallington Forest in much the same way. If all goes to plan, I will speak on Thursday in respect of social care homes, particularly adult social care homes, where many of the same issues arise. I cannot imagine the response if a Conservative Government had decided to put national insurance rises on such institutions; can noble Lords begin to see the headlines that would be against us?

This House is a revising Chamber; it allows the Government the opportunity to pause, rethink and consider, and if ever there was a case to do so, this is it. Before the Government have the acute embarrassment of urging Peers to go through the Division Lobby to penalise care homes and hospices in such a way, I very much hope that they will take advantage of the gap between Committee and Report to reflect on the arguments.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Baroness Sater and Lord Leigh of Hurley

Committee stage
Wednesday 29th January 2025 Grand Committee

[Lord Leigh of Hurley (Con)]

My Lords, I support all the amendments in this group. I spoke in respect of small businesses and, as the Minister will have detected, I was upset about the effect that the NI increases will have on small businesses. I would not say that I am upset about the effect that it will have on charities: I am angry and disappointed. The Labour Government have dramatically let down charities and they should know better. The total increased cost of employers’ NIC is estimated at £1.4 billion a year to the charity sector alone. Those are not my figures; they are from the highly respected aforementioned NCVO, with which I have worked in the past.

I have done a lot of work in the charity sector. I formed the committee to look at fundraising abuses, working with the NCVO, from which the fundraising regulator came about. I chair four charities in the United Kingdom. I work for a number of other charities, as indeed do other noble Lords in this Room.

For example, every year I run 10 miles for WaterAid. One of the noble Lords present in this Room supports me, for which I am grateful. Every year, I raise £50,000. I have raised £0.5 million for WaterAid in total. The entire benefit of my fundraising for WaterAid has been wiped out by the national insurance increase. The whole purpose of the fundraising for so many people is wasted, gone, because the money has gone to the Government for the purpose of raising revenue, which I understand is perfectly reasonable. But surely the Government could be more intelligent and sympathetic to charities in seeking to raise revenue. I know that the Minister is driven by empirical statistics.

[Baroness Sater (Con)]

Can I just follow up the point that my noble friend raised about fundraising? When we start to lose staff and people in the charity sector, and in charities as a whole—charities are people, after all—we will not have the ability to raise the funds that were assisting the Government to provide services. So it is a double whammy: charities will not only lose money through paying increased national insurance but lose money that they would fundraise to help support them.

[Lord Leigh of Hurley (Con)]

I am most grateful to my noble friend Lady Sater for underlining my point. It is exactly that. People will turn to me and ask, “Well, why should I give to you, Lord Leigh, and your fundraising efforts, because the Government are going to take away much more?”

According to the Charity Commission website, there are 5,435 charities with an income between £0.5 million and £1 million. On average, they make a surplus of just over £13,000 and employ about 12 people. So the increased cost caused by the raise in the NI for people on the minimum living wage, which is a large proportion of such people, will be £997. There are some heroic assumptions in this, but it is not unreasonable to say that the cost to these charities, on average, will be just over £12,000, which wipes out almost their entire surplus.

I accept that those charities will receive employment benefits, so let us look at some of the larger charities. There are 6,000 charities in the £1 million to £5 million range. Interestingly, they raise a total of £13 billion and spend a total of £12 billion, most of which is on salaries. On average, they employ some 35 people and the surplus is just over £19,000. The extra cost to them will be £35,000, which will not just wipe out their entire surplus but push them into deficit.

There are only 1,200 charities with income in the £5 million to £10 million range, and they employ an average of 104 people, so the extra cost to them of the NI burden is £103,000. Their average surplus is £47,900. Once again, their surplus will be completely wiped out and, thanks to the imposition of these extra costs, they will make a loss.

As my noble friend Lady Sater said, the NCVO wrote to the Chancellor, and I note that its letter was signed not just by the NCVO but by 7,360 charities. It employs over 1 million people. Charities deliver benefits to the public sector of some £17 billion a year, so this is distressing, to say the least. My noble friend raised a number of specific charities; she mentioned a local Age UK, with which I do not have any connection. Age UK states:

“This particularly impacts organisations that employ significant numbers of low paid staff … Local Age UKs are warning that these changes will significantly impact their ability to provide essential services to vulnerable older people, particularly in underserved areas”.


In turn, this will have

“a knock-on effect on older people’s health and wellbeing, increasing demands on our already hard-pressed health and social care services”.

I made the point earlier—it was a political point—that the Labour Front Bench does not have as much business experience as it might, although it has many other attributes and qualities. It has a strong and close connection and experience with the charitable sector; there is a good relationship. So why on earth would the Government not accept these amendments to help the charitable sector and save it from these disastrous costs?