National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Smith of Newnham Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

[Lord Forsyth of Drumlean (Con)]

Yes, but that that completely removes the private sector providing, for example, social care. A report on social care from the Economic Affairs Committee, which I chaired some time ago, was very much endorsed by the House as a whole—there was unanimous agreement across the House. It made clear what is happening in private care homes, for example. People who are paying their own fees, as opposed to them being paid by the local authority, are being charged up to 40% more to subsidise people who are in those homes as a result of the local authority. Here we have a situation where the burden is placed even more strongly on people providing care out of their own savings and resources.

It seems to me that a distinction is being made between the elements that are providing care. For example, in dentistry, every time I go to the dentist—I see him every six months, when he has me in a position of some vulnerability—he tells me that he is unable to take on NHS patients because if he does so, the amounts he is allowed to charge mean that he is making a loss. That loss occurs because of staff and other costs, which will increase as a result of these measures. That will mean that the problem of getting dental care in the NHS, which is acute at present and even more acute for people with particularly severe orthodontic conditions, will get worse. He tells me, for example, that people can wait until their teenage years before they get treatment, and then they have to show that they have had treatment for the previous few years. If they have not had that, they are no longer eligible. The result is that people do not get treatment at all. Everyone knows that NHS dentistry is in crisis. As the noble Lord, Lord Scriven, pointed out, this will make it even worse.

Then we have the issue of the hospices. The noble and learned Lord, Lord Hope, mentioned the case of Cyrenians and I would be remiss if I did not. My noble friend Lady Goldie asked me to mention the letter that she received from that organisation, and the noble and learned Lord highlighted the fact that this will mean £171,000 extra for a charity—not a big one—which is struggling. When I was Health Minister in Scotland a million years ago, I introduced pound-for-pound funding for hospices, whereby the Government would match the funding raised by the hospices. That was hugely successful but subsequently repealed by the Scottish Parliament when it came into action. Hospices are organisations that we should be supporting. We should not be thinking of new taxes on the people that they have to employ, although of course they benefit from many volunteers.

The whole Bill is deeply misguided and, as the noble Lord pointed out, will have a devastating effect, not just on private providers but on all providers and charities. I remind the noble Lord that had we had his excellent amendment on the Floor of the House, we could have divided on it and sought the opinion of the whole House, but because we are put in here, we are unable to do so. That is a great disservice. Of course, it means that the Liberals—

[Baroness Smith of Newnham (LD)]

And democrats.

[Lord Forsyth of Drumlean (Con)]

Well, I am not so sure about the “democrat”, but they are certainly called Liberal Democrats. They will be able to say, “We raised your concerns”, but they raised our concerns in a way that made it difficult to have the rules of engagement that would enable us to refine those amendments in Committee.

I hope that in considering his amendment, the noble Lord, if he takes it a stage further—I do not anticipate that the Government will accept it—may take account of the concern that it is not just about the public sector but the private sector. Bear in mind that this is just one measure on top of others—the increase in the minimum wage and the employment rights legislation—that will make it much more difficult for people to be flexible in their labour arrangements. All these things together are crushing these important public service organisations.

I support the amendment, but I hope that the noble Lord might think further on the contribution made by those private providers providing services to people who pay from their own pockets.

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Moved by

[Baroness Smith of Newnham]

2: Clause 1, page 1, line 1, at end insert—
“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.(A2) In section 9(1A) after paragraph (aa) insert—“(ab) if section 9AA applies to the earnings, the veterans secondary percentage;”(A3) After section 9A insert—“9AA Veterans secondary percentage(1) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b), this section applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is a veteran.(2) For the purposes of section 9(1A)(ab), the veterans secondary percentage is 13.8%.(3) For the purposes of this section, a “veteran” means a former member of any of His Majesty’s forces.””Member’s explanatory statement
This amendment would exempt veterans’ salaries from NICs changes.

[Baroness Smith of Newnham (LD)]

My Lords, in moving Amendment 2, I will also speak to Amendments 17 and 20 in my name and those of my noble friend Lady Kramer and the noble Lord, Lord Randall of Uxbridge. I was not able to speak at Second Reading. The Grand Committee will be delighted to know that I do not intend to give a Second Reading speech, even though there appears to be a precedent this afternoon. Nor will I talk about the quantum of £X billion, although I will briefly explain why I was not at Second Reading.

I realise that it is not necessary to apologise, but I was detained up north waiting for a meeting associated with my father’s discharge from care, without which the NHS is paying for his care in a care home and has now done so for three months. Until it and social services are able to come to a resolution, the NHS is paying for his care, rather than either the local authority or, indeed, my father and his family. All the issues we heard about in the discussion on the first group of amendments are absolutely as acute as everybody said. We really need to deal with some of them, but whether they are best dealt with by increasing employers’ national insurance contributions I am not at all persuaded.

As we heard in the previous group, this is a tax on jobs. In concluding the group, the noble Baroness, Lady Neville-Rolfe, said something about our wishing this legislation through or hoping to see it pass. I am not looking forward to seeing this legislation pass, because it is undoubtedly a tax on jobs, and it is not clear how it will help growth or any of the ambitions that His Majesty’s Chancellor of the Exchequer seems to think are necessary for our economy to improve.

There is a serious issue at the moment. The specific issue on which my group of amendments focuses is veterans. I am aware that that sounds even more niche than health and social care or the voluntary sector, and that the noble Lord, Lord Eatwell, will be poised to jump up to say that this just adds yet more complexity. Why does a Liberal Democrat appear to be simply finding a way of adding to the complexity of the tax base? There are two reasons.

One is that the Government and this country have a commitment to our veterans, as part of the Armed Forces community. We have a very clear commitment to supporting our veterans, in particular by getting them back into work. As tabled, this set of amendments is rather broad and I am aware that if we were on Report, I would not have amendments quite as broad as they are at present. The detail of the amendment is, in form and structure, identical to that of those for health and social care and all the other Liberal Democrat groups of amendments, where we are essentially saying that we should keep the threshold and the percentages as they are, rather than increase the thresholds and tax rates.

The issue with veterans is that people who leave our Armed Forces are highly skilled and capable, yet not always seen as the most obvious people to employ. Larger employers may do so but it is not inevitable. A report by the Federation of Small Businesses back in 2019, A Force for Business, clearly highlighted the importance of bringing veterans back into the workforce. Its commitments to bringing veterans back into the workforce built on a report that highlighted that 12% of small businesses had employed veterans in the previous three years, and about 20% of manufacturers. It is important for veterans to be employed, but it is also important for small businesses to be able to employ them.

On the back of those proposals and the report from the Federation of Small Businesses, under the previous Government, as of the tax year April 2021-22, there was an exemption for newly employed veterans: not for all Armed Forces veterans, as the current amendments talk about, but for those who were in their first job after leaving the Armed Forces, however long the period between leaving the Armed Forces and having their first civilian job might have been.

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[Baroness Neville-Rolfe (Con)]

I did not say I wanted the Bill to go through. I agree that that it is a jobs tax, as the noble Baroness said. What I accept is that the Government have a large majority in the other House, and what I am trying to do in this House is to have a proper discussion on the Bill with a view, perhaps, to amending it and persuading the Government that they have made some mistakes and that we can improve the Bill.

[Baroness Smith of Newnham (LD)]

The noble Baroness is trying to encourage the Liberal Democrats to be in agreement with the Conservatives, rather as her noble friend Lord Forsyth suggested at one point that he was in favour of the amendment from my noble friend Lord Scriven. We need to be a little bit careful not to agree with each other too often. But she is absolutely right. The Government have a large majority in the other place and it is not the business of this House to go against the Salisbury/Addison convention. However, I do not remember this being a manifesto commitment.

[Lord Randall of Uxbridge (Con)]

My Lords, I find myself again being somewhat like a bully standing behind the Lib Dems urging them on. But, of course, they are not bullying but providing a good service. I should also say, with regards to this Lib Dem-Conservative coalition, I was actually Deputy Chief Whip during the coalition period and I have to say that the Lib Dems, certainly in the Whips’ Office, were extremely good partners and very sensible. So I have great sympathy for the amendment.

I thank the noble Baroness, Lady Smith or Newnham, for her speech and express sympathy for the situation she finds herself in with her father. We all will have sympathy, even if we have not gone through similar things ourselves. As with the previous group, I can understand why the noble Lord, Lord Eatwell, said what he did, and I would prefer that we did not have all these exemptions. But the fact is that there are exemptions. That is what happens. I also say that, with regard to the veterans, the noble Baroness, Lady Smith of Newnham, has done us a great service in showing how many different sectors can be affected by this.

We all have a debt of gratitude to veterans. If there was an exemption, as put down in the amendment, that might be an inducement for employers to hire those people. There could be no greater service to those people, who have given everything. As the noble Baroness said, they are very skilled and have a lot to offer. One could go on down the exemption line, but I do not want to incur the ire of the noble Lord, Lord Eatwell, any further. One could apply this to people who have come out of prison, because we want to encourage rehabilitation, and so forth.

However, the point is—here I reiterate—that there must be alternative ways of raising this tax. I have not got them. I could, probably, upset most people in Committee today by saying that we should perhaps have looked at introducing national insurance contributions for those over the pension age. There may be quite a few people who would come into that category who could well afford it. There again, however, I will have to watch my back on the Metropolitan line on my way home today, in case I am taken out by a couple of sticks and so forth.

I understand the difficulties the Government face, but I reiterate that we are having a deleterious effect on some vulnerable sectors—we have not got on to charities yet, so I will hold my fire on that. However, this is something we should be taking very seriously.

With regard to the point about the large majority in the Commons, there is part of me—not the nice part or the Deputy Chief Whip part—that would be very keen to see some Labour Members vote against measures that will affect their local charities and veterans, and so on. We should do a service to the gallant men and women who have taken this up in the other place by making their lives a little easier.

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[Baroness Neville-Rolfe (Con)]

My point was in relation to the points made by the BMA and the dentists. There are two separate points. It is not in this group, but it might be as well to have a discussion on this so that we can be clear about this and on the impact on these important areas for the future of health in the NHS.

[Baroness Smith of Newnham (LD)]

Can the Minister clarify something? I understood that the national insurance contributions relief for veterans had been extended for one year and that this Bill was not going to affect veterans. Surely at some point it cuts out. Is that correct, so that this would be valid only up to 2026?

[Lord Livermore (Lab)]

The noble Lord, Lord Altrincham, set out in his speech that it was extended year by year under the previous Government. This Government have done the same thing and have extended it for a further year.

On the basis of what I have set out, I hope the noble Baroness will feel able to withdraw her amendment.

[Baroness Smith of Newnham (LD)]

I thank all noble Lords who have contributed to the group, and I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Financial Assistance to Ukraine Bill

Baroness Smith of Newnham Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 15th January 2025 Lords Chamber

[Baroness Smith of Newnham (LD)]

My Lords, from these Benches, as always, I associate my comments with those of the Minister and the noble Baroness, Lady Neville-Rolfe, on our unwavering support for Ukraine. One thing that has been notable over the past almost three years is the extent to which there has been unwavering cross-party support for Ukraine. The previous Government were clear in their commitments and the present Government are making the right noises and the right commitments to Ukraine. I welcome the Minister’s tone in seeking to reiterate that support for Ukraine in opening the debate.

As the noble Baroness, Lady Neville-Rolfe, reminded us, this is not just a question of Ukraine and its sovereignty but a wider issue. I would like to take the discussion a little beyond the G7 and further than the Official Opposition position. The Liberal Democrat Benches would like the Government to consider going further and seizing frozen Russian assets—to go beyond spending the revenue, which is welcome, and look at the assets.

We are wholly committed to the Bill and do not in any way wish to delay it. It needs to go through today to demonstrate the commitment to the G7 agreement and to allow the £2.26 billion British loans to go forward, but we would like the Government to think again. My understanding is that the regret amendment in the name of the noble Lord, Lord Blencathra, may be about going further. From these Benches we would like to go further but not at the expense of delaying the Bill, which would not be appropriate.

As part of the international community, we have given much support to Ukraine. As we have heard, the United Kingdom has given significant military support and financial aid. That is vital. As the noble Baroness, Lady Neville-Rolfe, said, if our renewed commitments and the loans go towards military defence for Ukraine, that will be welcome. At the same time, as the noble Baroness pointed out, we need to reassure ourselves and the country, as well as our NATO allies, that we are committing sufficient resources to our own defence. There is a very real concern that our defence expenditure is too little and our Armed Forces are too small, not adequately resourced and without sufficient equipment. The 2.5% commitment is essential.

Is the Minister able to help the House understand when the spring fiscal event may happen? One thing about parliamentary or governmental time is that it does not necessarily fit with a standard calendar. For most of us, spring starts either on 1 March or in late March, depending on which approach you take and whether you look to the moon or to the calendar. For the Government, sometimes an Autumn Statement has happened in late December. Can the Minister reassure the House that a spring fiscal event might happen well before Easter and will ensure not just that the £3 billion in military support for Ukraine is still in place but that His Majesty’s Government are not making any cuts to defence, providing us with a clear timeline for 2.5% of GDP for defence?

Earlier in the week, there was discussion in the other place about the Chancellor’s visit to China and the fact that, since taking over last July, the Prime Minister has been very active on the international scene. It is very welcome that Government Ministers talk frequently to our partners and allies in the G7 and NATO, and to the wider international community. The discussions with China are perhaps a little more unusual.

Is the Minister able to tell the House whether the Chancellor was able to talk to China about the sanctions that have been imposed? While the Minister was very clear that we need to work with the G7 and the European Union in terms of the imposition of sanctions, those sanctions would be so much stronger if China were also fully on board.

Further, what conversations have the Foreign Secretary, the Prime Minister or the Chancellor—or indeed any other Minister—had with our Commonwealth allies? While the response from the West, including the United States, so far to the Ukraine crisis has been very strong, the support from our Commonwealth partners has not been so strong. If the international relations in which the Government are currently engaged are really to be as effective as they might be, using the opportunity to engage with our Commonwealth partners to try to explain to them the importance of the sanctions regime and the importance of supporting Ukraine would reinforce the United Kingdom’s place on the international scene and help us give additional support to Ukraine.

In short, from these Benches we support the Bill, but we would like to see the Government go further and use all the tools at their disposal, diplomatic as well as military and financial, to give Ukraine as much support as we can as it reaches the third anniversary of the Russian invasion.

Queen’s Speech

Baroness Smith of Newnham Excerpts

Thursday 4th June 2015 Lords Chamber

[Baroness Smith of Newnham (LD)]

My Lords, I welcome the Government’s commitment to a long-term economic plan and to reduce the deficit, but I have to agree with the excellent speech of the noble Lord, Lord Low of Dalston, suggesting that there is a long-term economic plan because the short-term economic plan did not get very far in the last Parliament. As a Liberal Democrat, I obviously welcome the fact that the deficit was halved as a percentage of GDP in the last Parliament, along with the commitment to getting rid of the deficit and beginning to reduce public debt. However, the Lib Dems were also committed to doing that fairly, as my noble friend Lady Kramer noted earlier. It is to be hoped that the Conservative Government will indeed reduce the deficit fairly, although, as the noble Lord, Lord Fowler, pointed out yesterday, to announce £12 billion of cuts without saying where they will fall is a perilous venture, so we are in perilous waters.

There is a further pledge to legislate to cap tax rates. As the noble Lord, Lord Desai, said a few moments ago, that is a mad promise. Suddenly, alongside unfunded manifesto commitments, here is something that will put pressure on many government departments, particularly those that are not ring-fenced. The two I want to mention today are the Ministry of Defence and the Foreign Office. As my noble friend Lady Harris noted on Tuesday, cuts have consequences, and so, too, do unfunded spending commitments. As the noble Lord, Lord Fowler, rightly warned in his contribution, protecting the NHS in the manifesto, without clear funding, means that public spending in other areas will be reduced. The Treasury will have to look at reducing spending,

“on the police and on defence”.—[Official Report, 3/6/15; col. 430.]

This is also a problem for the Foreign and Commonwealth Office, despite the Government’s avowed commitment to continue to play a leading role in global affairs. There is a real danger to Britain’s place in the world if the salami-slicing of the FCO’s funding commitments continues.

The commitment, or lack thereof, to defence is, if anything, even more serious. The Prime Minister pressed others to commit 2% of GDP to defence at last year’s NATO Wales summit. That is a minimum and is not intended merely as an aspiration; nor is it a maximum figure. It is the minimum requirement and one that the Prime Minister argued for. At a time of global insecurity, credible defence commitments are crucial now more than ever. Will the Minister take back to the Chancellor the importance of ensuring that the welcome, albeit vague, commitment in the gracious Speech to,

“do whatever is necessary to ensure that our courageous Armed Forces can keep Britain safe”,

is delivered on? It is essential that this commitment is met, ideally with a firm 2% commitment on 8 July in the emergency Budget.

Of course, some may say that the economy is growing and therefore a 2% commitment is not as important as people have said, but I beg to differ. If this country genuinely seeks to be at the forefront of the NATO alliance, it must step up to the plate and deliver on its own commitments. After all, the time of a growing economy is surely the time when we should be delivering on them. As the Chancellor used to say to the Labour Party, you should fix the roof while the sun is shining. Now is the time to make that commitment.

The UK’s place as a key and engaged member of the European Union is also crucial to our place in the world and to our economy. The pledge to hold an in/out referendum and the prior renegotiation pose a threat to the UK economy by raising uncertainty. The noble Lord, Lord King of Lothbury, warned in his excellent maiden speech against having a laundry list of suggestions in the renegotiation. I am sure that that is right. We need a swift renegotiation and a clear commitment to staying in the EU. Brexit would be an even greater problem for the UK economy. Membership of the EU is clearly in the national interest in terms of our economic stability as well as our place in the world more generally.

The free movement of people is also vital to our economy, yet it is a freedom that is often seen as a cost to the British economy rather than as a benefit. In his excellent and powerful maiden speech, the Minister, the noble Lord, Lord O’Neill of Gatley, pointed out that economic growth depends on two things: productivity, which has been much mentioned already in the House, and the size of the labour force. The free movement of people and the fact that we are a magnet for those who want to come and work here is very significant to the British economy. We do not talk sufficiently about the merits of immigration or of free movement, both of which are important to our economic prosperity. These issues should be considered rather more fully than appears to be the case in the gracious Speech or in the nature of the debate today.

I hope that the Minister will accept that our economy is stronger for being an integral part of the European Union, just as the United Kingdom is better together, as almost everyone in this House and many Members of the other place—although not the newly elected 56 members of the SNP—would agree. If Britain is better together, the UK is better as part of the European Union. We are better when we work with our EU partners and allies. This country has prevaricated for too long about making a wholehearted contribution and commitment to the European Union. The time has come for us to do that. We need to be in the EU for our own economic prosperity. We have been talking about a growing economy. If that is to continue, it needs to be as a full part of the European Union. We need to hear “yes” and we need to hear it said loud and clear, and I hope that the Minister and her team recognise that, along with those in the Foreign and Commonwealth Office who accept that Britain is better off in the European Union.