National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Consideration of Commons amendments and / or reasons
Monday 24th March 2025 Lords Chamber

[Lord Scriven (LD)]

My Lords, on Report, this House passed Lords Amendment 1 and a number of consequential amendments to exempt NHS services and social care from the Government’s hike in employer national insurance contributions. I am grateful that the House agreed with these Benches that such a rise will have potentially devastating consequences for those that form the backbone of community healthcare and the people they serve. Despite the immense financial pressure that these vital services already face, and despite the clearly expressed views by this House, the Government have chosen to overturn our amendments in the Commons. We accept the Commons reasons that these amendments engage Commons financial privilege, and we will not seek to break with convention today by asking the House to look at alternative amendments that would produce the same response.

This brings me to Motion A1 in my name, which seeks to introduce Amendment 1B in lieu, and Motion E1, which seeks to introduce Amendment 5B in lieu. They look complicated, but they really are very simple. These amendments would introduce a regulation-making power to allow the Government, at a later stage, to exempt social care, pharmacists and other NHS services included in my original amendment. Noble Lords will know that I do not propose this lightly. We on these Benches are naturally suspicious of giving any Government such powers without full scrutiny provided in primary legislation, but we are so profoundly worried about the impact of the Bill on the NHS and social care.

My amendment seeks to address the deeply concerning implications of the national insurance contribution increases for our vital health and social care providers, NHS dentists, community pharmacists, hospices, GPs and social care organisations. The Government’s current approach to reimbursement, embedded in next year’s financial contract negotiations, will not solve the financial cliff edge and cash-flow issues many providers face. It is a damaging policy that will only exacerbate the existing financial crisis these sectors already face.

I will not dwell at length on the consequences of the national insurance increases as we have already explored them thoroughly. However, it is essential to reiterate the stark realities. The national insurance contribution increase imposes an immediate and substantial financial burden that will force some NHS dentists, community pharmacists, hospices, GPs and social care providers to make difficult choices, potentially reducing services and care packages, cutting staff, reducing access and indirectly impacting the most vulnerable in society. This will also add pressure on the NHS, as hospital beds will be blocked by keeping medically fit individuals in hospital because they cannot access appropriate social care packages.

The Government’s proposed solution—reimbursing these costs through next year’s contract negotiation—is fundamentally flawed. It amounts to a system of taking money away from those struggling organisations, with no guarantee of its full return. This will create significant cash-flow problems, particularly for those already operating on tight budgets. It could be the very issue that pushes some community pharmacists, social care providers and dentists over the edge, rendering them unable to continue to provide essential NHS services and care.

Furthermore, the NHS contracting cycle is notoriously complex. I know this as a former NHS manager. The reality is very different from being in a Whitehall office. It is complex and opaque. Contract negotiations bundle in various factors, including inflation and other cost pressures. There is no guarantee that the full amount of the national insurance increase will be reimbursed. Too often, initial drafts appear to include all necessary provisions, only for providers to discover mid-year that the additional activity requirements and other tricks that funders put in have effectively negated the promised increase.

Also, delays in finalising contracts are commonplace, leaving many sectors with months of accumulated pressures and unresolved cash-flow and debt issues. For example, community pharmacists are currently operating under a contract that ended in March last year. With only two weeks remaining in this financial year, a new agreement is still outstanding and they have not been reimbursed for the cost pressures of this financial year.

The uncertainty and delay create immense financial instability. The current system lacks the flexibility needed to address the immediate crisis that the national insurance increase will impose on some NHS and social care providers. A more agile and realistic approach is urgently required. Therefore, my amendment proposes that the Government can be granted the power to utilise a statutory instrument if necessary. This would allow for targeted and timely support to ensure that these vital services are not destabilised and pushed to the brink. The Government must abandon their rigid adherence to self-imposed rules and listen to the concerns raised about the impact of the national insurance increase. They must not continue marching forward blindly with this act of folly.

My amendment makes this offer to the Minister: give yourself some flexibility. Allow yourself to act quickly to reverse this damaging national insurance contribution rise for our health and social care systems. It would give the Government a way to get off the hook once they see how this increase will jeopardise community health, social care and other essential services. If the Minister will not listen, he will leave me no option but to test the opinion of the House. This is a generous offer. I urge him to accept my amendments. I beg to move.

[Lord Londesborough (CB)]

My Lords, it is with some regret that I do not insist on my Amendment 8 and its consequential amendments. I am disappointed that financial privilege has been invoked to prevent a full and proper debate in the other place on the potential damaging impact that reducing the class 2 secondary threshold by a brutal 45% will have on jobs and growth for small businesses and organisations employing fewer than 25 staff. I fear the Government will look back on 6 April, the day the new NICs regime kicks in, as a day of economic self-harm—a second April Fools’ Day, if you like.

I do propose to move Amendment 8B in lieu. In the spirit of pragmatism, my amendment, like that from the noble Lord, Lord Scriven, would simply bestow on the Treasury the power—through statutory instrument—to specify exemptions on the lowering of secondary class 1 thresholds for businesses, charities and, indeed, all organisations employing fewer than 25 people. We are talking about 10 million jobs across the UK that are not protected by Clause 3’s increase in the employment allowance, which offsets the NICs increases but, typically, only for those employing three or fewer staff. Given the potential damage to employment, wages and growth, why would the Government not want this weapon in their armoury in what will be a very difficult year ahead for small employers, who also face close to 7% increases in the national minimum wage and added compliance costs with the new Employment Rights Bill?

I support Amendments 1B and 5B in the name of the noble Lord, Lord Scriven, which strike me as an entirely sensible and pragmatic exemption tool to give to the Treasury given the very challenging circumstances facing care homes, hospices, pharmacies and other primary care providers.

Finally, I also support Amendment 21B in the name of the noble Baroness, Lady Neville-Rolfe, which seeks a review of the impact of NICs increases by sector. The impact note that came with the Bill was extraordinarily light on detail, especially when you consider that the Bill commits employers across these sectors to more than £5 billion per annum in additional NICs and impacts more than 10 million jobs.

I asked the Minister in Committee how many jobs in each sector would be impacted by the increase in NICs—a fairly basic question, one could argue, and yet no answer has been forthcoming. We heard on Report that such assessments would be

“econometrically impossible”.—[Official Report, 25/2/25; col. 1672.]

I respectfully disagree. We are asking for sectoral impact assessments that cover such key issues as the number of jobs impacted and the impact on vacancies, job creation, redundancies, labour activity and output, and wages. It was an entirely reasonable request and one the Treasury should readily embrace.

[Baroness Neville-Rolfe (Con)]

My Lords, the amendments in this group, including my Amendment 21B, address the very real negative impact of this jobs tax that the Government refuse to acknowledge. The Bill is the most important economic measure they have put forward so far and it makes significant changes to millions of businesses and social enterprises on a very short timescale. These businesses have raised concerns that are reflected in a flat-lining of growth, as worried owners seek to anticipate such a brutal change. Noble Lords from across the House have raised the consequences a number of times, yet the Government remain unreceptive.

At every stage of this Bill’s progression, we have raised the concerns of the healthcare sector about the effects on care homes, pharmacies, dentists, GP surgeries and hospices. It will have a real impact on people’s lives. I am particularly concerned about the hospice sector. The recent extra funding provided is capital funding and will not support day-to-day functions. Hospice UK has reported that the burden of the increase in employer NICs will be £44.3 million a year, which will not be covered by the £26 million of revenue funding for children and young people’s hospices, previously mentioned by the Minister. Last year, children’s hospices were provided with £25 million through the children and young people’s hospice grant. Can the Minister tell us how much of his £26 million is additional funding and how much is in fact recurring?

--- Later in debate ---

Moved by

[Lord Londesborough]

At end insert “, and do propose Amendment 8B in lieu—

8B: Clause 2, page 1, line 15, at end insert—
“(3A) The Treasury may by regulations made by statutory instrument specify that businesses or organisations with fewer than 25 full-time employees are exempted from the changes to secondary Class 1 thresholds made by this section.
(3B) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””

[Lord Londesborough (CB)]

My Lords, I beg to move Motion H1 and wish to test the opinion of the House.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

3rd reading
Tuesday 4th March 2025 Lords Chamber

[Baroness Kramer (LD)]

I am sorry to disrupt the House, but it is common to use do now pass to say thank you and I certainly have thank yous to say.

I thank the House for passing a number of amendments that will substantially reduce the damage and harm being done by this Bill. The noble Lord, Lord Londesborough, took the lead on small businesses, the Conservative Benches took the lead on charities and transport for special needs children, and my own party took the lead on community health and social care. Those are all exceedingly important and I hope the Government will take the issues very seriously. I do not think we have ever heard better debates, frankly, than those in this House that talked about real-life experience to convey the significance of the impact of the original Bill.

I thank the Minister. He and his team were unable to give us any concessions but they said no in the nicest of ways. I thank all the other Benches. We worked closely together—Cross Benches, Conservatives and our party—because we all felt in an almost non-political way that it was really necessary to try to come to the rescue of the damage that we could see was going to occur.

There is one amendment that I did not mention and which I think is important because it may survive some of this process and that is from the Conservatives on an impact assessment. That is becoming a recognised vehicle for important assessment of Bills such as this and has historically not been adequate. Perhaps we could now change that for the future.

Lastly, I thank my own Benches. I thank my noble friends Lady Barker and Lord Scriven and the others who led on various areas within this. I also thank Elizabeth Plummer of our Whips’ Office who did so much of the heavy lifting. She will have my eternal thanks. It is so good to have somebody covering one’s back when trying to deal with complex issues. I thank the House in general for taking this issue so seriously and recognising its significance to so many people.

[Lord Londesborough (CB)]

I too have some thanks to give. I thank all noble Lords from across the House who voted for my exemption amendment on the 45% reduction in Clause 2’s secondary threshold for all organisations employing fewer than 25 staff. I particularly thank my supporters, the noble Baronesses, Lady Neville-Rolfe and Lady Kramer. I was delighted to have the support of both the Conservatives and the Liberal Democrats and, indeed, the majority of Cross-Benchers who were able to vote at that late hour.

I also thank the Public Bill Office for helping to draft an amendment that turned out to require five consequential amendments, the staff of the Whips’ Offices, and the Minister for at least listening and for his patient approach. I appreciate that he has a lot on his plate, but I hope that he and the Treasury appreciate that my amendment sits right behind their number one priority, which is to generate sustainable economic growth. That is why I tabled the amendment and I trust it will be given the full consideration and scrutiny it merits.

[Baroness Neville-Rolfe (Con)]

My Lords, in concluding for the Opposition, I thank the many Peers on my Benches who have made valuable contributions during the Bill’s passage. I cannot thank them all today as the list is too long but I thank particularly my noble friend Lord Altrincham—my comrade in arms—and our opposition research team.

I also thank noble Lords from across the House, because this has been a cross-party effort, reflecting the widespread damage this Bill will cause. I particularly thank the noble Lord, Lord Londesborough, for his amendments to protect small business, the noble Baroness, Lady Barker, for her amendments on health and social care, and the noble Baroness, Lady Kramer, for her support across the board, including for the amendment calling for a review of the impact of the Bill.

I will say a couple of things. We have consistently heard that this is a job tax, plain and simple. It is the most important economic measure the Government have introduced so far, and it will have wide-reaching damaging impacts across the whole economy. It is being brought in on a tight timescale, creating a cliff edge on 6 April with no staggering for those who may be hurt. It has not been accompanied by an adequate impact note. It has led to businesses losing confidence in the Government, and that, I believe, is very bad for growth, of which I am very supportive. Despite the Minister’s protests, Peers from all Benches have agreed that the short document the Government call an impact note is an affront to the House, and that the Government have failed to provide sufficient sectoral information to allow for the effective scrutiny we try to bring. That is why we must have the review of the impact on affected sectors.

Despite the importance of these measures, the Government have made no effort to engage constructively. This House therefore voted to exempt small charities, transport providers for children with special educational needs and disabilities, early years providers and, as I have already said, small businesses and health and social care providers that provide public services in the private sector.

Of course we understand that taxes should be simple, as the noble Lord, Lord Eatwell, has explained, but when the Government fail to recognise the egregious impact this Bill will have on real people, we believe that some rethinking is necessary. Some of our changes would be modest in cost terms, but I know they would earn the thanks of many right across society.

I end by encouraging the noble Lord to use all his charms to persuade the Chancellor to think again.

National Insurance Contributions: Hospitality Sector

Lord Londesborough Excerpts

Thursday 13th February 2025 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is quite right. We inherited a situation where there was a complete fiscal fiction. We have had a tough Budget, but we have wiped the slate clean and restored transparency and honesty to the public finances. We inherited a situation where there were no spending plans in place; we have a spending review and, for the first time, we have put certainty into public spending. We inherited a situation where capital spending was falling, and we have ensured that capital spending is rising. We are bit by bit restoring and rebuilding the foundations of this economy.

[Lord Londesborough (CB)]

My Lords, would the Minister acknowledge that SMEs employing part-time workers, particularly in hospitality and retail, are facing 20% to 50% increases in their national insurance contribution bills on April 5, and that this hardly fits with a world of flexible and part-time work, and nor will it help the Government’s mission to get Britain working?

[Lord Livermore (Lab)]

We know it is particularly important to protect the smallest companies, and that is exactly why we doubled the employment allowance, meaning that 865,000 employers will now not pay any national insurance at all and more than 1 million businesses will pay the same or less than they did previously.

Economic Growth: Public Spending

Lord Londesborough Excerpts

Wednesday 12th February 2025 Lords Chamber

[Lord Livermore (Lab)]

I completely agree with my noble friend, and I am grateful to him for what he says. It is absolutely no approach to say that we should continue a previous Government’s cover-up and not be honest about the difficulties in the public finances. It is also completely wrong to say that we were wrong to deal with those challenges and should instead have maintained what my noble friend describes as a £22 billion black hole in the public finances. We were absolutely right to do what we did. We know that there are costs to responsibility, but the cost to irresponsibility would have been far greater—we saw that in the Liz Truss mini-Budget. Repeating the failures of the last 14 years is exactly not what the British economy needs.

[Lord Londesborough (CB)]

My Lords, taking together the impact of national insurance contribution increases and the 6.7% hike in the national minimum wage, can the Minister explain how raising the cost of employment by an average of £2,400 per employee is consistent with boosting economic growth?

[Lord Livermore (Lab)]

I am sorry that the noble Lord is not able to support the increases in the national minimum wage; that is a shame to hear. I do not know whether he was able to read the monetary policy report that was published alongside the growth forecast last week, but the Bank of England said that the combined effects of the measures in the Autumn Budget are expected to boost the level of GDP by around 0.75%.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

But also, as I understand it—the Minister will confirm —where the public sector is going to be reimbursed for increases in employers’ national insurance contribution payments, the payment to Scotland will be on the Barnett formula, which is based on population in Scotland and does not reflect the fact that the structure of the public sector is different there and is therefore proportionately bigger than the proportion reflected through population. In other words, whereas a public service agency in London, for example, would be fully reimbursed for the additional cost of employers’ NICs, its equivalent in Scotland is unlikely to be fully reimbursed because the reimbursement is tied to the Barnett formula. We have asked for a review here but really, there should be far more engagement between the two Governments to try to sort this out. I beg to move.

[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.

Public Finances: Borrowing Costs

Lord Londesborough Excerpts

Thursday 9th January 2025 Lords Chamber

[Lord Livermore (Lab)]

Clearly, ensuring that UK businesses have access to finance is crucial to this Government’s economic policy.

[Lord Londesborough (CB)]

My Lords, further to the point from the noble Lord, Lord Fox, about investor sentiment, the pound has suffered its biggest three-day slide in two years, and this morning’s yield on 30-year government bonds has risen to 5.385%. That is the highest level seen since 1998. Does the Minister accept that the pound’s weakness and the bond sell-off signal that investors are sceptical about the Government’s growth ambitions and particularly the impact of the October Budget?

[Lord Livermore (Lab)]

I repeat to the noble Lord what I said in my opening remarks. Financial markets are always evolving, so it is a long-standing convention that the Government do not comment on specific financial market movements. I will not break that convention today. Financial market movements, including changes in government bond or gilt yields, which represent the Government’s borrowing costs, are determined by a wide range of international and domestic factors.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, it is an interesting optic that I am following the contributions of 15 noble Lords from the Conservative Benches and, curiously, just three from the Government Benches. I am not sure how we should interpret that but, as an objective Cross-Bencher, I could not possibly comment.

Two months ago, many of us here today took part in the debate on the October Budget, and many of us warned of the consequences for a stuttering economy. Two months on and I am afraid that those concerns are growing, from employers, business owners, entrepreneurs and investors—in fact, from those who drive 70% of our nation’s GDP. That is what I will focus on today, and in so doing I declare my interests as an investor in SMEs, as set out in the register.

Momentum is critical for sustained economic growth. We did not have much of it in the first half of last year, but what little we had appears to have evaporated. As we have heard, GDP flatlined in Q3; worse still, GDP per capita fell by 0.2%. Q4 has brought a string of disturbing indicators, raising the prospect of a second consecutive quarter of zero, or even negative, growth.

As we have heard, the British Chambers of Commerce reports that business sentiment among its members has fallen to its lowest level for two years. The number of job vacancies in November fell at the fastest rate since the start of the pandemic and the spread between UK and German 10-year bonds has now eclipsed the peak triggered by Liz Truss’s mini-Budget two years ago. The spectre of stagflation is spooking the markets, meaning that interest rates may well remain higher than expected for much of 2025.

That is the macro. I turn to the micro, in particular the impact on our SMEs. I find it extraordinary that the Government devised an NIC regime that hits the vast majority of SMEs, which employ between five and 250 staff, particularly by dropping the threshold from £9,000 to £5,000. As we have heard, particularly from the noble Baroness, Lady Kramer, it is indiscriminate, falling as it does on all sorts of undeserving organisations, including charities, hospices, care homes and GP practices. Taking together the impact of NICs and the 6.7% increase in the minimum wage, will the Minister explain how raising the cost of employment by an average of £2,390 per employee this April is consistent with boosting economic growth?

For start-ups and our all-important scale-ups, it is a punitive tax on job creation and much-needed risk taking. While I accept the argument made by my noble friend Lord Macpherson and others that tax revenues had to be increased, there were plenty of fiscal alternatives that would have caused less damage to our economy—for instance, reversing the pre-election 2% cut in employees’ NICs brought in by Jeremy Hunt, indexing fuel duty, raising VAT selectively, and, last but not least, making modest adjustments to the bands and higher rates of income tax. But the Government could not do any of that, for they had tied themselves into knots with the tax pledges in their manifesto. Once again, politics trumps economics.

I was an entrepreneur for 30 years and in the last 10 years I have backed, chaired and advised a wide range of start-ups and scale-ups. I will finish by sharing how they are reacting to the increase in NI contributions. This comes from business owners, investors and management teams working at the coalface. In summary, some say they will reduce pay increases and bonuses; some will also reduce working hours, particularly for part-time staff in hard-hit sectors such as hospitality and retail; and some will slow the rate of job creation. Those that can will pass on the increased costs of employment to consumers and their clients, as their suppliers are already doing to them. Finally, and perhaps most worryingly for productivity, investment in new projects will be reduced or delayed in many cases. This is bad news for the worker and the employer, bad news for growth and inflation, and very bad news for our future competitiveness.

National Insurance: GDP

Lord Londesborough Excerpts

Thursday 19th December 2024 Lords Chamber

[Lord Livermore (Lab)]

I have the greatest respect for the noble Baroness’s consistent focus on the importance of social care. The answer to her last question is no, but the Government are providing at least £600 million of new grant funding for social care in 2025-26, as part of the broader estimated real-terms uplift to core local government spending power of approximately 3.2%.

[Lord Londesborough (CB)]

My Lords, does the Minister agree that the drop in job vacancies in November at the steepest rate since the pandemic is not only bad news for economic growth but reflects very poorly on both the run-up to the Budget and the Budget itself—in particular, raising employers’ national insurance contributions while increasing the minimum wage at three times the rate of inflation? Is this not a recipe for job destruction rather than job creation?

[Lord Livermore (Lab)]

Well, no. The OBR has been very clear that the number of people in employment will increase by 1.2 million over the course of this Parliament. As I said before, we had to take some very difficult decisions to clear up the mess that we inherited. I would simply ask the noble Lord and other noble Lords what their alternative is to the course of action that we took? Are they seriously saying that we should not have repaired the public finances? Are they seriously saying that we should not have restored economic stability? Quite frankly, that is the path that the Liz Truss mini-Budget took. We saw what happened then: she crashed the economy and working people are still paying the price today.

Small Farms and Family Businesses

Lord Londesborough Excerpts

Thursday 12th December 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I too salute the noble Earl for securing this topical debate. Like others here today, he is an excellent example of this place’s vintage intake of hereditaries in 2021—but I am in danger of straying into yesterday’s debate.

I will focus on family businesses and inheritance tax overall. Given the dire state of our public finances, I acknowledge that this Government had no choice but to raise taxes in the Budget, but it is the way that it was done that troubles me. I have been an outspoken critic and raised a number of questions in this place on the impact of employer national insurance and capital gains tax increases and the minimum wage hike. We now have the troubling issue of inheritance tax and how to levy it in a way that is proportionate and does not unduly damage the economy.

Why should family businesses, and indeed farmers, not share in the burden of inheritance tax like the rest of us, particularly those sitting on valuable assets? It is a perfectly reasonable question. In my own case, I set up and built a business over 30 years, which I sold back in 2014. The sales proceeds first incurred capital gains tax—which, interestingly, thanks to Gordon Brown, had dropped to a much lower rate than under previous Conservative Governments—and, on my death, whenever that will be, a 40% inheritance tax will be applied to virtually all those proceeds, bar £325,000.

This was not a family business; I had no intention of burdening my son or daughter with succession, but that would have been far more tax efficient, as the noble Earl, Lord Devon, already noted. It would not have been in the interest of the company, the staff or the shareholders, let alone my children or indeed the wider economy. My point is that family succession can be far from optimal—just look at the Trumps and the Murdochs, for instance. Economies thrive from the trading of assets and changes of ownership.

I accept that, for small family businesses and farms, the situation is more complex, as we have already heard. In my attempt to be a constructive Cross-Bencher, I will propose to the Government three changes. First, they should cap BPR and APR at £2.5 million per person, rather than at £1 million. Secondly, they should apply the 20% inheritance tax rate above that figure up to £5 million. Thirdly, above that figure, they should apply the full 40% rate—the rate that most of us pay from a much lower level. That, in my view, is more measured and proportionate, and would still generate the budgeted tax revenues. It means that the very asset-rich will contribute more—as I think they should. Yes, some may have to sell their businesses or some of their assets, but that is life and how a modern economy should work.

Economic Productivity

Lord Londesborough Excerpts

Thursday 5th December 2024 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord is correct to say that both parties are absolutely aligned on the importance of skills reform, which is why we have announced Skills England. We will be increasing the number of people in training and they will enter the workforce as soon as they graduate.

[Lord Londesborough (CB)]

My Lords, the Office for National Statistics may have inadvertently thrown some light on our so-called productivity puzzle. The slide in the quality of its workforce data appears to have coincided with the increasing practice of its staff working from home—in many cases five days a week. Indeed, ONS staff have recently threatened industrial action—to go on strike—if forced to work from the office for two days a week. Do the Government have plans to commission a study across the public sector of the impact that working from home has on productivity? It is a crucial issue.

[Lord Livermore (Lab)]

I know that the noble Lord cares deeply about this issue. He has spoken in debates on this topic before and has made some very important points about productivity. I have also answered a Question in this House on working from home and its impact on public sector productivity. As I said then, the current evidence is mixed. There are clear advantages to working from home for some and there are also clear disadvantages to working from home. Most studies seem to suggest that there are significant benefits to a hybrid model. But there are no such plans to commission the kind of study he mentioned.