National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Lord Howard of Rising and Lord Forsyth of Drumlean

Committee stage
Wednesday 29th January 2025 Grand Committee

[Lord Howard of Rising (Con)]

Given what my noble friend has said, would he agree with what I said earlier: that, actually, the money does not come back into the economy and that, when it is taken out, those companies that have been hit so hard end up going abroad? It becomes so much cheaper and easier to manufacture abroad that, looking at it from a wider perspective, it is completely negative.

[Lord Forsyth of Drumlean (Con)]

I completely agree with my noble friend. Actually, it is worse than manufacturing going abroad. Just think of this: where are the sorts of areas of business, in terms of distribution or marketing, where people are employed who are not particularly well paid but on whom there will be a big impact from this national insurance cost on the employers? They are in places like call centres. Suddenly you find that you get a huge additional bill for running your call centre, which you may be required to do as a matter of government regulation or for all kinds of reasons—it may not be directly related to your product. So what will you do? You will outsource it to India or some other country. The jobs will go, because it will be much cheaper. The quality may not be the same, but it might be the difference between surviving and not. So, as the noble Lord, Lord Eatwell, pointed out, this national insurance thing has to be seen in the round. Then add all the other things that are going up: the energy costs, which are going up—

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Lord Howard of Rising and Lord Forsyth of Drumlean

Committee stage
Tuesday 21st January 2025 Grand Committee

[Lord Forsyth of Drumlean (Con)]

Indeed, but let us not get into that argument. What is the biggest problem facing the country? It is that more than 9 million people who are of working age and capable of working are not working. An argument that suggests that by making it more expensive to take people on, and then add to that—I am not making a Second Reading speech —employment protection, that this will not result in job losses and therefore is not a tax on employment is, even by the standards of great economists, stretching the argument too far. The consequence of this will be, as the noble Lord acknowledged, that some people will surely lose their jobs because employing them will become too expensive.

[Lord Howard of Rising (Con)]

I just say, in relation to that and to the noble Lord’s arguments, that what he completely forgets is that manufacturing companies faced with this will simply move their production abroad. That is what he forgets.