National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Ahmad of Wimbledon Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

[Lord Londesborough (CB)]

My Lords, I will speak to Amendments 3, 12 and 59, to which I have added my name. I declare my interests as an investor in SMEs, including those employing part-time workers.

In the interests of economic growth and especially flexibility in the labour market, which is so crucial for sectors such as hospitality and retail, the time has come, to use the words of the noble Baroness, Lady Kramer, to aggressively restructure an employer’s NICs scheme rather than subject all employers to one set rate of contributions and, indeed, thresholds, on which I will speak later in group five. Indeed, by dropping the threshold from £9,100 to £5,000, Clause 2 is disproportionately hitting employers who, frankly, have no choice but to employ part-time workers, often on a shift basis. Without introducing a lower secondary percentage, such as the 7.5% proposed in Amendment 3, part-time work will be on the retreat, hitting those very workers who are dependent on such employment and who cannot work full-time, including students, parents and family carers.

As we have heard, the numbers published today of payrolled employees have dropped by 47,000 during December alone. That is the biggest fall since November 2020. It would be interesting to receive a breakdown of those figures and to see how many of those departing roles were part-time employees. It would be equally interesting to see whether the OBR will revise its forecast.

The NI threshold cliff edge discriminates against part-time jobs, raising costs disproportionately for sectors already having to absorb huge increases in the national minimum wage. It does not fit with the world of flexible, part-time or temporary labour. Remember, we are talking about 8.4 million people who are part-time employed. That is one quarter of our workforce. Amendments 3 and 12 would go some way to softening the blow of the new threshold cliff edge contained in Clause 2 and help protect these vital jobs, let alone the working people.

[Lord Ahmad of Wimbledon (Con)]

My Lords, briefly, I agree with much of what the noble Baroness, Lady Kramer, said. But again, to dwell on the coalition, she and I served in the same Government, so agreeing with her is not unusual for me.

I wanted to make a brief point. Both previous speakers highlighted the impact on the hospitality industry. The figures are quite startling. There will be an impact of about £1 billion on the industry itself, thereby impacting 750,000 workers. As we have just heard from the noble Lord, Lord Londesborough, the impacts of this are already being felt by an industry which is already challenged. We should look at this again. Perhaps in a later group when we talk about the importance of impact assessments it will again be underlined that we do not just need reviews. Doing the work beforehand, consulting and working with the industry is an essential prerequisite to ensure that these changes are not detrimental and lead to a depression of growth, which I know ultimately was not the intention of the Government, as they stated.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, usually I have a lot of sympathy and respect for the noble Baroness, Lady Kramer, and my noble friend Lord Londesborough. However, on this occasion I am going to disagree, first, because if you cut tax in one area, you are only going to have to raise it somewhere else. It might benefit the hospitality industry, but some other industry is going to suffer as a consequence.

--- Later in debate ---

[Lord Livermore (Lab)]

HMRC has provided a tax information note, as it does for all similar policy changes. The Government have no intention of publishing additional assessments.

[Lord Ahmad of Wimbledon (Con)]

My Lords, just to confirm, does the Minister honestly feel that that note is sufficient, given the importance of the issue we are debating?

[Lord Livermore (Lab)]

I believe that that note is in line with what we have done for similar policy changes.