National Insurance Contributions (Secondary Class 1 Contributions) Bill

Viscount Chandos Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, I echo some of the comments made by the noble and learned Lord, Lord Hope of Craighead, who identified some key Scottish voluntary organisations that play a vital role in supporting particularly vulnerable people.

I draw attention to CrossReach, the social care arm of the Church of Scotland. CrossReach employs something like 16,000 people. Over recent years it has been able to support its services by drawing on reserves to the extent of not thousands but millions of pounds. That sort of thing is not sustainable. It has 32,000 beneficiaries across Scotland. In my year as moderator of the General Assembly of the Church of Scotland, I remember visiting many of these facilities and seeing the valuable work done by CrossReach in supporting young children, many of whom had disabilities. It also supports drug and alcohol rehabilitation schemes, elderly care and care homes, and young people with learning difficulties moving from the school environment into the adult environment. The work being done was quite remarkable. I fear that you cannot continue to run down your reserves for ever.

I received representations from the Coalition of Care and Support Providers in Scotland, which surveyed its members. More than 50 members participated, with a combined expenditure of £850 million, employing around 28,000 staff and supporting 230,000 people across Scotland. In the responses, 57% of respondents were seriously considering handing contracts back to commissioners next year; 55% were considering reducing the amount of support available to beneficiaries in services they do not plan to continue next year; 92% said that if employers’ national insurance contribution changes are not fully reimbursed, it will negatively impact on pay awards; 88% said it will negatively impact on staff pay differentials; 67% are budgeting for 2025-26 on the basis that they expect to reach financial balance only through the use of reserves, and 91% of these said they will no longer be a going concern within four years if they continue to reach financial balance through drawing down reserves in this way.

I hear what the noble Lord, Lord Eatwell, says, but when CrossReach is spending millions of its own reserves, that is not exactly taxpayers’ money. I will not make the excuse that these are unintended consequences; one must assume the Government know what they are doing, even if that is a bit of a far stretch. I would like to know what impact assessment the Government have made of the cost to the public purse if these services are withdrawn. If it is not a cost to the public purse, it is a cost to vulnerable people the length and breadth of this country. That is a completely unacceptable position for the Government to take up. I would like the Minister to tell us the impact assessment of the consequences if some of these services have to be withdrawn.

In my exchanges with the Coalition of Care and Support Providers in Scotland, it flagged up to me, only at the very end of last week, a possible problem with some of the definitions. You have English organisations with legislation passed by this Parliament, Welsh ones with legislation passed by the Welsh Senedd and Scottish ones with legislation passed by the Scottish Parliament. But, for example, “domiciliary support service” in Amendment 1 is not a definition that is known to Scottish legislation. It was too late to table a manuscript amendment to try to address that. The coalition also wanted some time to try to see what precisely needed to be done to extend it to Scotland. I am sure the House would agree that if this amendment is carried, we would also like to make sure it is fully adequate for the entire United Kingdom, not just for some parts of it. I therefore propose to table an amendment at Third Reading, if my noble friend’s amendment is carried, to try to address the specific Scottish issue.

[Viscount Chandos (Lab)]

I shall speak briefly to support the arguments and analysis of my noble friend Lord Eatwell and to remind your Lordships of the comments at Second Reading of the noble Lord, Lord Macpherson, who said that if we aggregate the reductions in employee national insurance that were introduced in the last year of the last Government with the effects of this Bill, the effect is about net unchanged. As my noble friend Lord Eatwell has said, all the various causes and organisations that will be proposed as excepted have benefited as employers, in effect, from the employee national insurance cut. Therefore, if they have to moderate their future wage rises, the net income over that period of 12 or 18 months will essentially be the same. That seems to me another argument for treating all the 38 amendments to which my noble friend referred as a heartfelt cry for help that has already been given.

[Baroness Stedman-Scott (Con)]

My Lords, I have not spoken on the Bill so far, but I want to speak now on behalf of charities. Charities are not for profit and they are not for loss. The impact of the Bill’s proposals provides a fiscal challenge, whichever way we look at it. I understand that the increase proposed will impose on charities about £1.4 billion in additional annual costs, and 87% of charities are worried about absorbing these and other costs that are forthcoming. Charities are emotionally driven and business-led organisations; they give their heart and soul to the people they get up in the morning to serve, and we must make sure that the people who need their services are not impacted detrimentally in any way.

While people in the finance departments of organisations, not least the Government, are focused clinically on money, and I understand that, I ask that they look at the impact that the Bill will have on individuals. My dad used to say to me, “Debbie, measure twice and cut once”, and I would like that saying to be applied to decisions in the Bill.

Economic Growth

Viscount Chandos Excerpts

Thursday 23rd January 2025 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Horam, even though it is nearly 40 years since I could describe him in parliamentary terms as a friend. I am very pleased to be able to speak in the important debate which the noble Lord, Lord Farmer, secured and introduced, making many interesting points. Early in his introduction, he said that gloom must be dispelled. I agree, but not at the expense of honesty and transparency. This Government inherited 22—no, I will not steal my noble friend the Minister’s best lines—at least 22 acute challenges, from the fiscal position to the state of the NHS to crumbling infrastructure, which cannot be papered over with the boosterish rhetoric so beloved by Prime Minister Johnson.

There has been near unanimity in the debate so far on the importance of achieving economic growth, but before I address the “how”, it is worth asking: growth at what price and with what constraints? President Obama recently named Growth: A Reckoning by Dr Daniel Susskind as one of his best books of 2024. I strongly recommend it, although I am afraid that will have less effect on its sales than the advocacy of the former President. Dr Susskind, a research professor in economics at King’s College London, surveys the history of growth—only material in the last two centuries and only an explicit primary objective of Governments for less than half of that—and looks at the challenge for maintaining the path of the past 200 years. Drawing on Equality and Efficiency: The Big Tradeoff, written by Arthur Okun in 1975, Dr Susskind creates a framework for considering a wider range of trade-offs than equality alone, with the environment first among those. The costs of trade-offs can be managed and mitigated—the falling cost of renewable energy is a prime example—but, in some cases, decisions have to be made to accept a reduction in realistic growth targets, in recognition of these trade-offs.

I suggest that the willingness to acknowledge, manage and mitigate those trade-offs lies at the heart of the differences between some of today’s speakers and the views of these Benches—and even further, looking across the Atlantic, with the Trump Administration’s, “Drill, baby, drill” on the one hand, and the UK and most other European governments on the other.

I will pick up on two points. Economic growth crucially requires stability, both economic and social, as the noble Lord, Lord Farmer, argued. That social stability cannot be achieved without the investment in public services to which this Government are committed, and which the Governments of the previous 14 years wilfully neglected.

Despite all the efforts of the Opposition to allege financial crisis—interest rates are higher than in the recent past, but in line with global trends—international confidence in the UK is at an all-time high. PwC’s annual survey of global business leaders, published this week, shows the UK as second only to the US as a preferred destination for investment, up three places since this Government took office.

Finally, I turn to the financing of innovation and start-ups, where I find myself unusually in less than complete agreement with my noble friend Lord Eatwell. In 2023, venture capital investment in the UK represented an identical percentage of GDP to that of the US—nearly twice that of France and nearly three times that of Germany. In the words of David Clark, the chief investment officer of investment advisers VenCap,

“In the UK, there is no shortage of capital for world-class founders. There is a shortage of world-class founders”.


Much of that investment may come from overseas, although that would require knowledge of each US venture capital fund’s limited-partnership investor base, given that UK pension funds, insurance companies and endowments are significant investors in them. For me, the proposed pension fund reforms and restructuring, which I fully support, are about improving the return of those funds for the benefit of their pensioners, rather than filling a capital gap which does not really exist.