National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Haskel Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Baroness Barker (LD)]

My Lords, it may be a surprise that I stand up to take part in proceedings at this point, having not taken part in the Bill so far. I do so because my noble friend Lord Scriven is unable to be here. Indeed, my only involvement in the Bill so far was to be the chair when it was in the early stages of its consideration in Grand Committee. I was therefore forced to remain sedentary and say nothing throughout the proceeding. It was very good, actually: I sat and listened to everybody else’s contributions, and that turned out to be excellent preparation for today’s debate, in which I seek to move Amendment 1 and to speak to the consequential amendments in this area.

As noble Lords who have taken part in and listened in great detail to previous stages of the Bill will know, the central issue that the amendments are having to address is the sudden imposition of a rather blunt fiscal instrument, in the form of an increase not only to national insurance contributions but to the rate at which they are paid, and the effects that that will have across the whole economy. These amendments address just one part of that wider problem.

I should at the outset declare an interest: in my family, we are reliant upon carers. We pay for those carers ourselves, and do so through a private agency. This issue is therefore not academic for me but very personal at the moment.

I should also say that before your Lordships today there is a manuscript amendment, for which we thank the clerks for their consideration. This is a tax matter which is UK-wide, but it has effects, which the amendments tabled so far seek to mitigate, in England and Northern Ireland. Noble Lords may well have been contacted by care providers in Scotland who will need similar provisions to enable them to cope with the problems.

The problem we are dealing with is that, in the health and social care sector, the sudden imposition of these changes to national insurance, along with the increases in the minimum wage, are going to threaten the existence of large numbers of providers and have a profound impact on budgets.

We have a real problem in that the health and social care sector is not solely a statutory one. We have a number of different providers, many of which are small but are related to large statutory providers. Unfortunately, because of the swift nature of the imposition of this rather dramatic change, we are having to come up with ways in which we can mitigate the damaging impact, which means we have had to resort to measures that perhaps we would not otherwise have wanted to take, in seeking to create different classes of employers.

The Government have come forward with some of their public sector exemptions because they realise the effect that this is likely to have. But those exemptions will not apply across the board. In particular, they will not apply to the organisations set out in these amendments, such as dentists, pharmacists, providers of care services and hospices, all of which are central to the Government’s other stated policy objective of improving health and of improving the health service and making it a community-based and more preventive service, thereby driving down demand on our health service, which is the greatest problem our NHS is facing at the moment. Because the Bill does not do that—indeed, it cuts across those other policy objectives—we have been forced to take these measures.

It would perhaps help noble Lords if I were to explain that 87% of a typical local authority’s budget spend is now on social care. That expenditure is not capital heavy; it is labour heavy and labour intensive. These are not organisations, unlike some of their private sector counterparts, that can suddenly adjust and vary their income streams to a dramatic extent that will enable them to mitigate rapidly or absorb the effects of the imposition of this policy.

I listened very carefully in Committee to all the arguments put to my noble friend Lord Scriven, and he and I, and others, went away and redrafted our amendments in order to take on board as many of those criticisms as we could. We have extended the remit of these amendments as far as we possibly can to include private sector providers of NHS services. I agree that there is not the exact equivalence between the private and public sectors that many people would want, but it is, within the scope of this measure, a significant step forward. We did that not least because one of the consequences, perhaps unintended, of the government proposals as they stand is that they will disproportionately affect local authorities that have for prudent reasons sought to outsource much of their provision. If their provision is outsourced, they will be hit and will have no mitigation against this change in national insurance.

I sat and thought about this the other night. You could have a realistic situation in which you have two local authorities that have broadly the same demographic profile and challenges, and that probably work to the same acute hospital, yet they could be in a completely different position in terms of their budget, solely because of the imposition of this measure.

We on these Benches have been quite clear. We have said that we understand that there is a need to increase funding, not least for health and social care. We believe there are other ways in which that could have been done—by closing capital gains loopholes and doing things such as taxing online gambling and taxing share buybacks.

There are a number of ways in which that could be done, and none of them would have the direct counter-effect on policy of changing and moving our National Health Service away from being a very inefficient organisation which does not at the moment have a system which works towards greater productivity, promoting health and driving down demand. For all those reasons, we are proposing these amendments today, and I hope that noble Lords will see the case to support them. I beg to move.

[The Deputy Speaker (Lord Haskel) (Lab)]

My Lords, I must inform the House that if Amendment 1 is agreed, I am unable to call Amendments 6, 7 or 9 by reason of pre-emption.