National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

Moved by

[Baroness Bennett of Manor Castle]

11A: 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 until 6 April 2026 (after which the relevant percentage is as determined by the rest of this subsection);”. (A2) After section 9(1A) of that Act insert—“(1B) A “specified employer” means a charity.(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””

[Baroness Bennett of Manor Castle (GP)]

My Lords, I tabled my Amendment 11A after our extensive discussion, on the previous day of Committee, about the impact of the national insurance rise on charities. As I prefaced in my presentation last time, it started with a CEO of a significant charity, who came to me and said, “If we could have one year to sort things out first, we would just about be able to cope with this, but the speed with which this increase in costs is happening is more than we can cope with”.

I apologise that there is no Member’s explanatory statement on this amendment—that is entirely my fault—but I lay out for clarity that it is intended to delay, for charities, the increase in the employers’ national insurance contribution by one year.

It is interesting that, earlier today, I was hosting an event launching a report on debanking in Muslim charities and its impact on charitable activities. There was much discussion at this event about the many difficulties that charities currently face, but the top one that was listed—after the issue under discussion—was the national insurance rise and the speed with which it is hitting charities.

I note some of the figures around this. The sector has said that the cost to charities will be about £1.4 billion. Research from 400 charities by the Charity Finance Group shows that 87% are concerned about being able to afford this increase. Some 27% of organisations running charity shops say that this increase is likely to result in closures of charity shops; those are the Charity Retail Association’s figures. We are often concerned about what is happening on our high streets, and there is perhaps concern about the dominance of charity shops, but if they close, we will just have even more empty shops on our high streets—as well as the loss to charities in terms of the services they provide and the funds raised.

Let me give one example of this, which was reported by ITV. The CEO of the Little Miracles charity, which helps 50,000 families that have children with life-limiting disabilities, said that this measure will cost that charity a minimum of £24,000. It is a small local charity with about 670 volunteers, so finding that sum of money is a really big challenge for that organisation.

It is worth noting that one of the reports from the West Lothian Voluntary Sector Gateway told the local council:

“This wholly unexpected cost will inevitably place additional financial pressures on already stretched Third Sector and social enterprises locally”.


That unexpected, sudden arrival is really the issue there. The National Council for Voluntary Organisations wrote to the Chancellor. In response to its suggestion that charities should be exempted, Rachel Reeves said:

“The government has committed to provide support for … public sector employers”,


given the rising costs, but for no one other than the public sector. It is worth considering that the combination of austerity and ideology has meant that, for many services, the slack in much of the provision that used to be picked up by public services has now been picked up by the charitable sector. It is then being hit again with this cost.

This amendment is quite moderate and small-scale. I do not have the capacity but perhaps the Minister could tell us what the one-year cost would be. I note what the cost will be if charities have to deal with this sudden increase in costs when they are facing so many other pressures. I beg to move.

[Baroness Sater (Con)]

My Lords, I rise to speak to my Amendment 32. I refer your Lordships to my registered interests, in particular my roles with charities. The purpose of my amendment is to deal with the huge concerns we are hearing from across the sector and elsewhere, as the noble Baroness just mentioned, as well as the impact of the increase in employers’ national insurance on both the charity and voluntary sectors and the services that they deliver.

The sector is telling us that these increases will force many to reduce staff, cut salaries, scale back their services and, in some cases, consider closure. The increases will adversely affect the support that they give to people and their communities, which is why my amendment asks for the much-needed impact assessment. Had the Government already prepared the impact assessment—and I do not accept that the impact note to which the Minister has referred provides the evidence needed—they might already have accepted the need to make exceptions to the charitable sector.

Many noble Lords have spoken with passion about the negative effect of the increases in national insurance on the charitable sector. I am very aware that the Government have not been able to move on any of the requests at the moment. At the risk of repetition, up and down the country the voluntary sector is feeling the strain. Its representatives, such as the National Council of Voluntary Organisations, the NCVO, have already voiced concerns in their open letter to the Chancellor, highlighting that this increase will add an additional £1.4 billion in unwelcome and unsustainable costs, as the noble Baroness, Lady Bennett of Manor Castle, said.

--- Later in debate ---

Given the points that I have set out, I respectfully ask noble Lords not to press their amendments.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank all noble Lords who have taken part in this rich and frequently passionate debate, and I thank the Minister for his answer. I think that I will cross-reference something that the noble Baroness, Lady Sater, said, which is that charities are helping vulnerable people in dreadful circumstances. We have been talking about charities as organisations and institutions, but, ultimately, at the end of the line are those vulnerable people. The noble Lord, Lord Altrincham, made the point that those vulnerable people will still be there with their needs; if the charity closes down or cuts back its services, the Government will have to pick up the slack at that point. The Minister said that, if any of the measures proposed in this group of amendments were introduced, the Government would have to lower spending. But that would mean that they would have to raise spending on things they are not spending on now because the charities would not be providing it. We are in a circular situation, with all the disruption that happens as people lose jobs, organisations close down and things have to be recreated. That is the situation that we are in.

There were many contributions, so I will not go through them in length, but there are a couple of points that I want to raise. The noble Lord, Lord Leigh of Hurley, spoke about his brave, regular running commitments. To build on what he said, we know that what encourages people to give to charities is the sense that their money will be directly used to help the relevant people. Of course, when we are talking about something like WaterAid—speaking as someone who is passionate about antimicrobial resistance and maternal health—it is absolutely crucial. People want to see it providing the services and, if they do not see that, and they hear all the talk about this, maybe they will not donate, because they will feel like they are just giving money to the Government. That is a further damaging factor for charities and their fundraising.

The noble Lord, Lord Leigh, also spoke about sacking fundraisers. If one of the things that we are talking about—what my amendment aims to get to—is to delay so that charities have a chance to prepare. If there is not that delay, however, and there is an emergency that has to be dealt with now, you of course do not want to cut the direct service providers who care for those vulnerable people. Fundraisers, therefore, are the obvious people to sack, but the long-term consequences are obvious.

[Lord Jackson of Peterborough (Con)]

Does the noble Baroness agree with me that one of the other cumulative problems is the national living wage? We all agree that it should be increased to help low-paid people, but accommodating that for small charities—with an increase in national insurance charges plus the encumbrance of paying the national living wage—will be very difficult, particularly for homelessness charities, for instance. The Government’s strategic aim is to reduce homelessness, but this will put huge pressure on charities such as Crisis and Shelter.

[Baroness Bennett of Manor Castle (GP)]

In responding to the noble Lord, I can only applaud the increase in the national minimum wage—indeed, I would encourage it to be significantly higher. None the less, the noble Lord’s point about the situation for charities is entirely accurate.

The noble Lord, Lord Jackson, said something earlier—and the noble Baroness, Lady Lawlor, backed this up—about how many ideas the Government end up delivering actually start with small, campaigning charities. They save the Government having to do the work because, when there is a problem and something really needs to be done about it, they do all the work on what needs to be done about it.

Obviously, I will withdraw my amendment at this stage, but it is clear that we will come back to this issue on Report. I am still quite dedicated to the idea of at least delaying the measure, which would not interfere with the Government’s long-term economic plans but would give charities time to adjust. On the £1.4 billion, the Government could save that much in the extra spending that they will have to make if they insist on collecting that money, so it all balances out.

[Baroness Sater (Con)]

I totally agree, but there will be charities going bust in the next six months. I know that we want to delay it, but there is an urgency in saying, “This is going to be really detrimental, and that knock-on effect is going to be huge”. That is why I cannot quite understand why we have not had a detailed assessment statement—and why I am asking for it—because surely this would come through in that detailed statement.

[Baroness Bennett of Manor Castle (GP)]

I agree with the noble Baroness and support her amendment. I have already reflected on the lack of a proper impact statement in many different areas; I would entirely back the noble Baroness’s approach. We need to understand what is happening, but we have two things here: giving charities time to deal with it, and understanding what we are doing. We may well end up coming back to both of those things on Report, but in the meantime I beg leave to withdraw my amendment.

Amendment 11A withdrawn.

--- Later in debate ---

[The Lord Bishop of Southwark]

My Lords, I will speak to Amendment 67, which stands in my name. It is supported by the noble Lords, Lord Alton and Lord Forsyth of Drumlean, whose names were not entered in time for the Marshalled List.

I agree with much of what the noble Baroness, Lady Monckton of Dallington Forest, said in support of Amendments 14 and 27, in her name, and others concerning the provision of transport for children with special educational needs and disabilities—many years ago, my identical twin brother was one of them. My amendment has the same intention, albeit a slightly different effect.

When I raised my concern at Second Reading, the Minister, in response, referred to both the increased settlement overall for local government in the coming financial year and to the extra £515 million to cushion local authorities against the impact of national insurance changes. I wrote to the Minister on 10 January about my concern that such funding did not cover contracted-out services, and I have yet to receive a reply—hence my amendment, which is now before the Grand Committee.

The Local Government Association on 28 November stated that the measures that the Government seeks

“will lead to a £637 million increase in councils’ wage bills for directly employed staff, and up to £1.13 billion through indirect costs via external providers including up to £628 million for commissioned adult social care services”.

It is therefore clear that the concerns that I laid before your Lordships’ House on 6 January are well founded and remain current.

The transport provision for children with special educational needs and disabilities is, of necessity, a very labour-intensive one. It also requires dedicated recruitment, since not any driver will do, and in some cases a passenger assistant is also required. As we have heard, the children involved place enormous value on continuity and trust. Hence, it is key that they trust the staff who serve them in this way and, once that trust is established, that these are the people with whom they routinely deal. It is hard to describe the anguish that will result if contracts become unviable, or the additional pressures this will place on parents. There will be inevitable breaks in education, which can easily affect the rest of an individual’s life.

Noble Lords resident in North Yorkshire, the West Riding, north Lincolnshire or South Yorkshire may have seen the regional news bulletin, “ITV Calendar (North)”, on 22 January, just a few days ago. Its first and main news item was this very issue, setting out, with some of the people affected, what the impact would be. It is hard not to sympathise with, for example, the bewilderment of the mother of a mute child at the very real likelihood of the loss of her son’s provision.

I accept that Governments take tough decisions and that there is a burden to public service borne by those who serve us in this way. However, in this instance, the chief burden and distress—the overwhelming hardship—will be borne by SEND children and their parents. As this is a situation brought into being by the Government, it is appropriate to look to His Majesty’s Government for a solution, and I would be happy not to press the amendment if they were to proffer a remedy such as ring-fenced funding.

Unlike Amendments 14 and 27, my amendment, which requires the Government to review and estimate the impact on the SEND transport sector in each of three tax years, and to state what remedy might be applied, includes the ameliorating provisions of Clause 3. However, as your Lordships will have established and the Minister knows, that clause will not be the remedy here. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

I rise briefly to offer the Green group’s support for all these amendments. Perhaps the right reverend Prelate’s amendment gives the Government a way forward that does not interfere with the general progress of the Bill but any of these would do.

I am going to make two quick points. First, I note the briefing I received from the chair of the Licensed Private Hire Car Association’s SEND group, setting out the points that have been made on how it is desperately concerned and the chaos that this national insurance rise has the potential to cause it.

Secondly, I point out that the Children’s Wellbeing and Schools Bill is in the other place. There, the Government are trying to deal with, help and support children with special educational needs and disabilities, and their parents, through that Bill. Then we have this Bill, which is undoing, and creating further risks and damage. It is useful to set those two against each other. In your Lordships’ House, we often hear expert testimony about how difficult life is for children with special educational needs and disabilities and, of course, their families and parents. This is—I am going to use an informal term—such a no-brainer to sort out.

[Baroness Kramer (LD)]

My Lords, I shall speak briefly. If I had spotted the amendment of the right reverend Prelate the Bishop of Southwark in time, I would have signed it because it makes absolute sense. There is a pressure created, when one knows that a review is coming afterwards, to think through actions now. All in this Committee recognise that this Bill deals with the weakest of the weak. As there are two Bills, this one and one in the other place, either of which could be used to manage a remedy, I should have thought the Government might have been able to see a way through this.

I wanted to mention a procedural thing, just as a comment on the statement made by the right reverend Prelate the Bishop of Southwark. I hope that he realises that if he does not withdraw his amendment at this stage, he will not be able to bring it back on Report. Some people are not clear on that element of the procedure, so I mention it simply in case it guides what he might wish to do.