(1 month, 1 week ago)
Lords ChamberMy Lords, I will briefly speak to Amendment 40, which is in my name. It asks for an impact assessment of this Bill on Scotland, because of the differences that have been identified.
The Government have said that they will compensate the public sector, but we are all waiting for the detail of how they will do it. A figure of £4.7 billion as the global sum has been mentioned, but not the detail. There is a concern that the structure of the public sector in Scotland is significantly different from that in England and that it may not be sufficient to sustain public services at even the current level in Scotland, where they ae struggling, as they are everywhere else. My own health board, Grampian, has had to absorb a £20 million charge just for this Bill, on top of a £75 million deficit that it is currently running. It is in a substantial crisis.
I have questions for the Minister. He will have seen the Fraser of Allander review of the impact; it may not be definitive but it is independent. It suggests that the impact is something around £550 million in Scotland. If one applied the normal rules of the Barnett formula, £4.7 billion would presumably give Scotland something between £400 million and £450 million. However, government officials in Scotland tell us that the Treasury has said the Barnett formula will transmit £300 million, or just over that. How can the Minister justify a £300 million transfer through the Barnett formula against a £4.7 billion overall budget for compensation?
More to the point, how will the Government establish the criteria for what level of compensation they will give to which kind of public bodies? If they do that, can they ensure that the same conditions that apply in England will follow through in Scotland, and that the money will go with them? All I am asking for is equality of treatment, not special treatment.
As I have said before, there is quite a lot wrong with what is going on in Scotland. The Scottish Government are not known for their efficiency in management; I am not trying to defend them and I do not think the UK Government should compensate them for their incompetence. However, I do not think that the public sector and the people of Scotland should suffer because of that, when an additional measure brought by the UK Government has added insult to injury or misery to misery.
Will the Minister acknowledge that, if he is talking about compensation of just over £300 million, that falls a long way short of the comparable impact, pound for pound, in Scotland compared with England? What are the criteria? Will they be applied fairly and consistently across the UK?
My Lords, I will speak to Amendment 9, which is in my name. I suspect that it may have been subject to pre-emption, along with Amendment 8. If the noble Baroness, Lady Bennett of Manor Castle, is surprised, I am equally surprised that I think I agree with all of her remarks. That means that I would like to focus on Amendment 4, dealing with charity revenues of less than £1 million, which I believe is not subject to pre-emption.
According to the Charity Commission website, there are about 170,000 charities in the UK, with about £100 billion of income in aggregate and 1.3 million employees. My noble friend Lady Neville-Rolfe wants us to concentrate on those charities with an annual revenue of below £1 million.
There is different terminology that can be used by the Charity Commission, because it talks about gross income. On average, charities’ donations and legacies are about one-third of their total income, as was the case with the Thames Hospice, which I described earlier. The rest of the income is grants, investments and so on. A charity with £1 million of revenue will probably raise only some £350,000 in donations. I calculate from the available information that the sums raised by charities with revenues of less than £1 million total some £12 billion, which is 12% of total charity income. But there are 162,000 charities with an income of under £1 million, which means that we are talking about 95% of all UK charities.
As for their spend on national insurance, it is hard to determine, because we do not know exactly how much they spend on employment. We do know how much they spend on total expenditure, which is some £12 billion. If we assume that 50% of that—it is a very generous assumption—is on employee costs, and if we assume a salary of around £25,000, because it is a low-paid sector, then my noble friend Lady Neville-Rolfe’s amendment would impact only 240,000 people.
To try to answer the criticisms from the noble Lord, Lord Eatwell, I calculated that my noble friend’s amendment would cost the Government around £480 million—half a billion pounds. Is the Minister going to tell us that he is not prepared to protect 95% of charities for just £500 million? Does he recognise my figure? If not, what is the cost of the amendment? I invite him to join us in pausing the hike until we work out what it is, so that we can then have a meaningful discussion.
I remind the Minister that in a speech to the civil society summit last year, hosted by Pro Bono Economics, Sir Keir Starmer promised to reset the relationship between civil society and government. Is this what he meant? He said that
“for too long, your voice has been ignored”.
I have read the full speech, and he also said,
“we know it’s people on the ground, people with skin in the game, who understand the problems best and have the best answers”.
He continued in his speech to civil society leaders, which largely rubbished Tory policies, by saying,
“let’s be honest, for too long, your voice has been ignored between the shouts of the market and the state”.
Are the Prime Minister and his Ministers listening now? Those leaders are calling for this national insurance hike to be dropped.
Why would the Government want to penalise 162,000 charities, where our fellow citizens give so much of their time freely, and in many cases their cash, simply for the betterment of fellow citizens at home and abroad? It is a shameful imposition.