National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Altrincham Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

Moved by

[Lord Altrincham]

9: Clause 1, page 1, line 1, at end insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”(A2) After section 9(1A) of that Act insert—“(1B) A “specified employer” means a person employing an individual who is aged under 21.(1C) For the purposes of this Act, the specified employer secondary percentage is—(a) 13.8% in respect of any employees under the age of 21 at the start of the tax year;(b) 15% in respect of all other employees.””Member's explanatory statement
This amendment would ensure that employers would continue to pay the current rate of National Insurance for staff under the age of 21.

[Lord Altrincham (Con)]

My Lords, Amendments 9, 10 and 11 concern young people, and I thank the noble Baroness, Lady Neville-Rolfe, for adding her name to the former.

In previous groups of amendments, we discussed economic forecasting and the estimates made by the Government and the OBR, which the noble Lord, Lord Eatwell, referenced, and some of the predictions that surround this policy. The predictions estimate that, in aggregate, 50,000 jobs may be lost. These three amendments concern hundreds of thousands of young people—actual real people; they are not in aggregate in any way. They are a particularly vulnerable part of the current employment market, because hundreds of thousands of young people are not in work, and the numbers are getting worse.

Last summer, 870,000 young people aged 18 to 24 were not in employment, education or training. To give a sense of proportion to the number of 870,000, it is more than one whole cohort. Most of us in this Room were born in much larger cohorts, but the cohort sizes for people in their 20s are around 700,000. The number of NEETs in that group—people who are currently not in employment—is more than one whole cohort’s worth, and that is the age group that should otherwise be in secondary or higher education. Unemployment, which is obviously measured differently, is already running at 12% for people in their 20s. So we are talking about an exceptionally vulnerable group of people in the population, who are currently struggling to enter the market for jobs and who need either part-time work or a first job; they are not doing too well. This policy is coming in at a time when there is a very large number of very vulnerable young people.

Amendment 9 seeks to ensure that individuals under the age of 21 will continue to pay the current national insurance rate of 13.8%. This amendment inserts a provision into the Social Security Contributions and Benefits Act 1992 defining a “specified employer” as one who employs individuals aged under 21 at the start of the tax year. This is a useful and proactive measure for two key reasons. First, it supports employers in taking on young workers without an additional financial burden. Secondly, it helps young people gain the experience they need to start their careers, thus addressing the long-term challenges they face in the job market. Before I move to Amendment 10, bear in mind that this amendment concerns people who are 21 and under. I ask noble Lords to pause for a second to reflect on that part of the population. We are asking for a little caution in approaching people who are 21 and under, who are often looking for their first job.

Amendment 10 extends the benefit to those who are under the age of 25, further strengthening this approach. Under this amendment, employers would pay a reduced rate of 13.8% for employees under 25, while the standard 15% rate would apply to employees above this age. The reduced national insurance rate lowers the overall cost of employing younger workers, making it more affordable for businesses to offer opportunities to this age group. This is especially important for small and medium-sized enterprises, which may have limited resources and may not have been able to participate in various apprenticeship schemes. By extending this financial benefit, we would help to create more opportunities for young people, while also supporting businesses that are committed to developing the next generation of workers. Again, I ask noble Lords to pause to reflect that we are talking about people who are 25 and under, and to consider the essential intergenerational unfairness of landing this tax rise on people in this age group.

The third amendment, Amendment 11, extends the beneficial approach even further by including young adults under the age of 28. Under this amendment, employers would pay a reduced national insurance rate of 13.8% for employees under the age of 28, while the standard rate of 15% would apply to all those above that age. In supporting Amendment 11, we are not just addressing youth unemployment but making a statement about the importance of providing young people with the opportunity to gain the experience that they need to build a successful career and contribute meaningfully to the economy.

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[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have taken part in this debate. I will address the amendments tabled by the noble Lord, Lord Altrincham, and the noble Baroness, Lady Neville-Rolfe, which seek to exempt the salaries of young people from the increase in employer national insurance.

An employer national insurance relief is already available for the earnings of those aged under 21 and for apprentices aged under 25, meaning that employers are not required to pay national insurance contributions up to £50,270 for these groups. Despite the challenging fiscal inheritance that this Government faced, we are maintaining these important reliefs for under-21s and apprentices under 25; they are not changing as a result of this Bill. Creating other thresholds and rates based on the age of staff would add additional complexity to the tax system. These amendments would introduce new pressures that would have to be met by more borrowing, lower spending or alternative revenue-raising measures.

The noble Lord, Lord Altrincham, mentioned NEETs. I completely agree with him, but the situation that this Government inherited is completely unacceptable. That is why, at the Budget, the Government announced £240 million to fund 16 pilot projects across England and Wales in order to improve the support available to the economically inactive, the unemployed and people who want to develop their careers. This will include eight youth guarantee pilots to test new ways of supporting young people into employment or training.

It is also why, in the spring, the Government will bring forward a welfare reform Green Paper. I have read with interest the proposals mentioned by the noble Lord, Lord Blackwell, from the Economic Affairs Committee of your Lordships’ House; I hope that many of them will feature in that Green Paper. For now, given the points that I have set out, I respectfully ask the noble Lord to withdraw his amendment.

[Lord Altrincham (Con)]

I beg leave to withdraw my amendment.

Amendment 9 withdrawn.

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[Baroness Kramer (LD)]

My Lords, I will be very brief, because these Benches spoke extensively on charities in an earlier grouping, where the amendment would have overturned the change that the Government are introducing. I particularly want to pick up the amendment from the noble Baroness, Lady Bennett, because, like others, I am very conscious that, of the charities that I have talked to, a fundamental part of their problem is that they cannot turn around and respond quickly enough to a measure that is being introduced so quickly. I am not up on all the rules of the Charity Commission, but I suspect that it would frown greatly on a charity spending when there is no clear funding mechanism coming in to replenish its resources. I think that there is a requirement to have several months’ contingency on the books, so there is a real problem here for many charities in having to turn around very quickly.

One of the amendments deals with increases in the employment allowance. That runs into a problem that the Government could help us with. It is my understanding that an entity that sells 50% of its services to the public sector does not qualify for employment allowance, so there will be many charities that are excluded from any benefit that is offered under that amendment. I wonder if the Minister could help us to get a better grip on that, because I think we have all struggled with understanding the application of those rules.

My last point did not occur to me until I started reading the input from various charities. A number of charities that have been able to survive and are fairly confident about their funding will now find themselves in a position where they need to battle and compete for grants. Some of the very smallest charities are concerned that they may get excluded from the grant offering because charities with a bigger reach are now turning to those particular pots. I am not sure whether the Government considered that as they put together this picture.

[Lord Altrincham (Con)]

This is an interesting set of amendments, given that, in essence, through this policy the Government are looking to take £1 billion out of the charity sector to fund public services, when the charity sector obviously provides public services—so it is a uniquely baffling government initiative. We on these Benches absolutely support the comments made by the noble Baroness, Lady Bennett, on Amendment 11A and by my noble friend Lady Sater on Amendment 32.

I speak to Amendment 52, in my name and that of my noble friend Lady Neville-Rolfe. This amendment would increase the employment allowance for charities from £10,500 to £20,000 to assist with the burden being placed upon charities. It is a probing amendment, and I would like to understand the cost that this would have for the Treasury and the plans the Government have to support the sector with the increased costs and the rise.

The remarkable comments made by the National Council for Voluntary Organisations, and its estimate that this will cost the sector £1.4 billion every year, has been referenced in this debate by my noble friend Lord Leigh and others. It would leave charities in a position where they are unable to absorb the costs and will, as a result, be forced to reduce the number of services they provide. In essence, as we talked about on day 1 in Committee, these services are public services. Charities in this country have become quasi-public service providers in the last 20 years, and it is most unlikely that, in pulling back services, those services would not have to be provided by the Government elsewhere. It is therefore most unlikely that the Government will not wear the costs of this change. It is naive to assume that charities provide some other service that is not a public service or a substitute for a public service.

The Government will be well aware of the severe issues that charities are facing, following the open letter from the NCVO to express concern that three out of four charities will have to withdraw from public service delivery or are considering doing so. This is an extraordinary way to treat a sector that would provide a public service. In fact, the Government have accepted the principle that the delivery of public services should not face this tax, following the exemption of both the Civil Service and the NHS. What justification does the Minister therefore have for the exemption of some providers of public services but not charities? Charities provide close to £17 billion in public services every single year, and the services they provide are invaluable to communities across the country, so a failure to protect them would be devastating.

I support my noble friend Lady Sater’s Amendment 32 and recognise the importance of the Government fully assessing the impact that this tax increase will have on the sector. The Government owe it to charities to fully consider the impact that this will have across the sector and, as such, I hope the Government will consider both Amendments 32 and 52 very carefully as we progress.

[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have contributed to this debate. I will address the amendments tabled by the noble Baronesses, Lady Bennett of Manor Castle and Lady Neville-Rolfe, and the noble Lord, Lord Altrincham, which seek to maintain the rates of employer national insurance for charities at 13.8% and increase the employment allowance specifically for charities from £10,500 to £20,000. The Government of course greatly value the vital work that charities do in this country, and I have listened carefully to all the points that have been raised in this debate.

It is important to recognise that all charities benefit from the employment allowance, which the Bill more than doubles from £5,000 to £10,500. This will benefit charities of all sizes, particularly the smallest charities. The Government also provide wider support for charities via the tax—

Conversion Therapy Prohibition (Sexual Orientation and Gender Identity) Bill [HL]

Lord Altrincham Excerpts

Friday 9th February 2024 Lords Chamber

[Lord Altrincham (Con)]

My Lords, this Bill comes at a time of very wide distress among young people. The NHS reports that 25% of 17 to 19 year-olds are experiencing significant mental health problems. Even if we adjust that and imagine that it is quite a bit of ordinary human unhappiness, there is great distress at the moment. We should be careful to protect services that help those young people. They are presenting with a wide range of mental health concerns. That is across the whole spectrum, but it is particularly true at the end of the spectrum that this Bill is focused on. In the Cass review, it was noted that 70% of young people presenting had more than five different forms of mental health problems, such as trauma and depression. The sheer complexity of these mental health concerns only adds to the importance of talking therapy and protecting psychiatric services in the country.

This is against a backdrop in which the use of drugs is increasing tremendously—we heard about this in our House of Lords inquiry last year into the integration of primary and community care. Far too many drugs are being prescribed to all age groups, including young people, and they are being prescribed because there are insufficient mental health services and insufficient other ways of looking after people. Drugs are not the way forward; talking therapies are all we have got. We might be careful about limiting talking therapies in any way, particularly for the very small group that is the subject of this Bill. If there is harm in this Bill, the first harm is that they themselves might find a limitation in access to talking therapies; they might find that the therapists available to them have moved sideways or elsewhere. The Bill obviously criminalises discussion and activities to an extraordinary extent. Only in England would a conversation with pronouns at one end and puberty blockers at the other have a policeman somewhere in the middle, trying to give expression to Clause 1. It is an extraordinary intervention into public health.

More broadly than this group, we cannot afford any reduction in mental health services for young people. We cannot, at this point, restrict these services at all; we are in no position to do that. There are, at best, 11,000 psychiatrists working in public health in this country, across all age groups, of which maybe only a few thousand are dealing with young people. Only a small change in that number downwards would increase the distress of tens of thousands of young people and their families. It is an extraordinarily sensitive area for us to wander into with criminal justice.

In summary, this Bill is in conflict with mental health services and provision in the country. It seeks to bring criminal justice and politics into the most sensitive area of public health and mental health, to the detriment of young people.

Elections Bill

Lord Altrincham Excerpts

2nd reading
Wednesday 23rd February 2022 Lords Chamber

[Lord Altrincham (Con)]

My Lords, I compliment my noble friend Lord True on his excellent introduction to this rather complex Bill. I will comment on the topic of overseas electors, which has been commented on several times already. I note in particular the comments made by the noble Baroness, Lady Hayman, and the noble Lord, Lord Wallace. There is obviously controversy around some of this, but I will make a few comments about it.

The history of overseas voting goes back a long way to 1918, when service men and women were allowed to vote outside the country. Overseas votes became very significant in 1945 because, as noble Lords know, they contributed around 2 million to the franchise and delivered perhaps 10% to the landslide of that year. However, civilian votes outside the country are relatively new. They started in 1987 and initially were allowed only for people who had moved out of this country for a period of five years. That was increased to 15 years in 2000. The Bill seeks to extend that to life following manifesto commitments made since 2015, including at the last election.

The significance of this is that the UK might proportionately have more of its population living around the world than any other OECD country. The numbers are striking. There are at least 400,000 British citizens living in Spain, 400,000 in Ireland, well over 1 million in Australia and well over 1 million in North America. The current estimate, based on the current arrangement of 15 years, is that the franchise is theoretically open to nearly 1.5 million people. Although the number seems extraordinarily soft, the current expectation is that the franchise might increase to another 3 million people under these arrangements. Thought of in constituency terms, UK passport holders and UK citizens living in the UAE, New South Wales and California would all be larger constituencies than the Isle of Wight. There are great concentrations of British citizens in different parts of the world at this point.

The passage of this Bill provides an opportunity to look at what is really happening with registration and this franchise. Registration is extremely difficult. There have been repeated efforts over the years, including campaigns organised by the Electoral Commission, to get people to register. One way or another it has proved very difficult, for reasons expressed already. There is the remarkable situation of applying by post and waiting for a reply, and plenty of people have found that nearly impossible to do.

The other core issue is the need to register in a British constituency. Noble Lords have made quite a few comments about this. At its heart, this franchise rests on the concept of the declaration of a local connection. That requires people to be resident and non-resident at the same time. They need to register in a constituency where they once voted, which they might not have visited for many years, and at an address that might no longer exist. We ask them to register in a constituency about which, as noble Lords have mentioned, they may know very little and their votes are counted alongside other people in that constituency. Even at 285,000—the peak number of this franchise, which was registered in 2017—that number could affect constituencies quite significantly. There would be enormous electoral effects on the basis of registering votes by constituency in the numbers that might be registered under this Bill.

The Bill comes at a time when other parts of the Government have, in effect, moved on on this issue. We heard views on the concept of taxation and representation, which seems to come up regularly. Before I get to that, the issue of registering people around the world, which is rather old-fashioned, sits uncomfortably with, for example, the EU Settlement Scheme which has been running in this country for the past 18 months. It allows European citizens to register through ID on their phones and is handled centrally by the Home Office. It is perfectly possible to register large numbers of people centrally, using cell phones.

On the topic of taxation and representation—which, of course, we have historically had issues with—it is worth bearing in mind that the last Labour Government extended the tax horizon for our citizens who leave from one year to six years of tax exposure or responsibility to the UK. The period in which HMRC might seek to chase our citizens is fully six years, so we already have a significant need to represent these citizens merely on the grounds of tax.

I am aware of the time limit, so I will finish briefly. I think the comments already made about registering citizens in overseas constituencies need to be looked at. It may be too soon, but other European countries already do this, and it is notable that French citizens in London are represented in the French parliament.

Critical Benchmarks (References and Administrators’ Liability) Bill [HL]

Lord Altrincham Excerpts

2nd reading
Wednesday 13th October 2021 Lords Chamber

[Lord Altrincham (Con) (Maiden Speech)]

My Lords, I am honoured to follow the noble Baroness and to speak on this Bill and in this House for the first time. I declare my interest as a director of the Co-operative Bank in Manchester.

I should start with thanks for the welcome that I have received from all sides of the House and for the help from Black Rod, the clerks, the doorkeepers, security staff, technology staff and the Library, and for the welcome in the dining room. In working for this House, each of them is working for our country. I also thank my two mentors, my noble friends Lord Leigh of Hurley and Lord Parkinson of Whitley Bay, and my two noble friends Lord Sandhurst and Lord Leicester who were elected alongside me in June—the first time that three Peers have joined this House by election since 1816.

It is with sadness that I stand before noble Lords because my election follows the death of my father, Anthony, and of his brother, John. The Altrincham title was given to my grandfather, Edward Grigg, in 1945, for service in the wartime Government. It passed to John Grigg, who then disclaimed the title for life in 1963, events reconstructed in season 2 of “The Crown”. Although I have lost my father, my mother, Eliane, is in good health. She was a child in occupied France and watched the RAF bombardment in 1944 from the air raid shelter in their garden.

With an English father and a French mother, I was lucky in my career. At 30, I was at Goldman Sachs and married to Rachel Kelly, a journalist on the Times, and we had our first child. The following year, 1997, I stood for Parliament in the general election. We had a privileged life, but we did not have privileged health. We were combining Goldman Sachs, the Times, the general election and little children. Later that summer, Rachel got very sick very quickly and we thought she was having a heart attack. I helped her into an ambulance and she was taken away to a psychiatric hospital, which was obviously quite a surprise. Then I learned that she had depression, and this was more or less the first time that I had ever heard of depression. That has been something important to our family ever since. Rachel recovered—she was sick for about a year—and went on to write about her experience in her bestselling book Black Rainbow, and subsequent books Walking on Sunshine and Singing in the Rain. I did not stand for Parliament again, but stayed at Goldman Sachs for another 10 years and then went on to work at Credit Suisse.

Libor was the bedrock of the financial system throughout this whole period but was shaken by the financial crisis. I saw the events of October 2008 as an investment banker working for the Labour Government at the time. We advised the Government on the rescue recapitalisations of both the Royal Bank of Scotland and Lloyds Banking Group—the so-called drive-by shooting. On the weekend of Saturday 11 October 2008, and on behalf of Her Majesty’s Treasury, we took control of the Royal Bank of Scotland; the recapitalisations took place on this day, 13 October 2008. I also worked on the bank asset protection scheme through that period, which, as noble Lords might recall, was the insurance scheme put in place behind the banking system. The learnings around that are still very relevant to understanding sovereign credit today.

Libor was put under great strain during this period, as was subsequently revealed in 2012. Quite apart from the integrity issues, the market needed a new rate. The changeover to SONIA, as noble Lords will know, is now substantially done and this Bill picks up the residual issues that arise around the year end. SONIA, meanwhile, is correlated to base rate, is less volatile than Libor and tracks short-dated gilts very closely.

The Government would not normally interfere in contract, so this Bill is extraordinarily unusual for doing just that, but in the absence of what we are agreeing to today there would be extensive room for dispute over what to do at the year end. The Bill neatly reinterprets Libor as synthetic Libor, as a direct intervention. However Libor is expressed in a contract, it would just be reinterpreted as synthetic Libor, which is a very neat solution, albeit highly unusual under English law. That should be effective in closing off most areas of litigation. It is also worth adding, as the noble Lord mentioned, that the FCA has still not defined which regulated loans will go into this safety net. It is now relatively urgent for the FCA to decide on that because the loans are not defined in this legislation.

The Bill is a reminder of the importance of financial services to London, and maybe also a reminder of the importance of financial services, regulation and law to this country. The Bill also, in a sense, closes a chapter from 2008.

This is an important day for me. I first stood for Parliament 24 years ago. It is very meaningful for me to be here today. I still believe that government and regulation can be a force for good. I look forward to working with noble Lords and for this House for many years to come.