National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Barker Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

Moved by

[Baroness Barker]

1: Clause 1, page 1, line 1, at end insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”.(A2) After section 9(1A) of that Act insert—“(1B) A “specified employer” means—(a) a person providing a care home service or a domiciliary support service who is regulated under—(i) Part 1 of the Health and Social Care Act 2008,(ii) Part 1 of the Regulation and Inspection of Social Care (Wales) Act 2016, or(iii) Part 5 of the Public Services Reform (Scotland) Act 2010,(b) a person contracted to provide primary care under the provisions of—(i) Part 4 of the National Health Service Act 2006,(ii) Part 4 of the National Health Service (Wales) Act 2006, or(iii) sections 17J to 17O of the National Health Service (Scotland) Act 1978,(c) a person contracted to provide general dental services under the provisions of Part 2 of the National Health Service (General Dental Services) Regulations 1992, (d) a person contracted to provide pharmacy services under the provisions of—(i) Part 7 of the National Health Service Act 2006, or(ii) Part 8 of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013, or(e) a charitable provider of health and care,(f) a person providing hospice care whether in a hospice or elsewhere, or(g) a carer to whom section 2(3A) of the National Insurance Contributions Act 2014 applies.(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””Member's explanatory statement
This amendment, together with Baroness Barker’s amendments to Clause 2, page 1, line 12, Clause 2, page 1, line 14, and Clause 2, page 1, line 15 provides that care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care would continue to pay contributions at current rates.

[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.

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The noble and learned Lord, Lord Wallace, raised the question of impact assessments. As we discussed at length in Grand Committee, HMRC has published a tax information and impact note, and the OBR has set out the macroeconomic impacts of the Bill. Ultimately, though—I say this, in part, in response to the point by the noble Baroness, Lady McIntosh of Pickering, about adding additional sectors—the Bill is necessary to fund public services, and the proposals contained in these amendments would, as my noble friend Lord Eatwell said, put much of that funding at risk. They would require either higher borrowing, lower spending or alternative revenue-raising measures. In light of this, I respectfully ask the noble Baroness to withdraw her amendment.

[Baroness Barker (LD)]

My Lords, I thank all noble Lords who have taken part in this debate, including the noble Lord, Lord Eatwell; I disagree with him, but he raised an important point. It is entirely wrong to characterise the amendments as “blunderbuss” and “scattergun”. We are dealing with a very crude fiscal measure that will impact all sorts of sectors in different ways. The amendments, on the contrary, are not; they are very targeted and precise, and they are different attempts to mitigate the overall problem.

My amendments are confined solely to health and social care. One of the issues I am driving at in them is that, for all the announcements of increases in funding, particularly those for the NHS that the Minister just laid out for us, the question of productivity and sustainability of public services is very important. A key aspect of this is driving down demand on the NHS. The work done by many of these organisations, if it is correctly funded and targeted, will lead in future to a lower demand for elective surgery in the NHS. We are not a “blunderbuss” at all; we are trying to be very precise about what we are doing.

Secondly, perhaps it is not particularly obvious but a number of noble Lords might understand this: thousands of people in this country continue to be able to work because their family members are looked after by these organisations. This is a question not just about the cost of public services; it is about the indirect costs to the economy of taking people out of other productive jobs in order to sustain their family members.

Finally, many of the services that I and other people are trying to maintain are comparatively inexpensive. A lot of them rely on volunteers, and they are much less expensive than acute public services. For all those reasons, this is important. I agree with the noble Lord, Lord Ahmad: I do not think we have had an adequate impact assessment of the Bill. If we had, perhaps we would have been able to take on more of what the Minister was indicating. I think he does not get that these are not wrecking amendments. They are about trying to improve the nation’s health, well-being and finances as a whole. In view of all that, I wish to test the opinion of the House.

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Moved by

[Baroness Barker]

9A: Clause 1, page 1, line 3, at end insert—
“(1A) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.(1B) In section 9(1A) after paragraph (aa) insert—“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”.(1C) After section 9(1A) insert—“(1B) A “specified employer” means—(a) a person providing a care home service or domiciliary support service regulated under the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003,(b) a person providing primary medical services through contractual arrangements with a Health and Social Services Board,(c) a person providing general dental services under Part 2 of the General Dental Services (Northern Ireland) Regulations 1993,(d) a person providing pharmaceutical services under Part 2 of the Pharmaceutical Services Regulations (Northern Ireland) 1997,(e) a provider of health and care registered as a charity by the Charity Commission for Northern Ireland, or(f) a person providing hospice care whether in a hospice or elsewhere.(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””

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Moved by

[Baroness Barker]

10: Clause 2, page 1, line 12, after “£96” insert “or,
(b) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £175.”Member's explanatory statement
This amendment, together with Baroness Barker’s amendments to Clause 1, page 1, line 2, Clause 2, page 1, line 14, and Clause 2, page 1, line 15 exempts care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care from the changes to the threshold.