National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Kramer Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

Moved by

[Baroness Kramer]

At end insert “but that, while recognising the need to rebuild public services and finances, this House regrets that the Bill risks worsening pressures in the NHS and social care by placing costs on GPs and dentists, social care providers and hospices; increases burdens on small businesses, early years providers, universities and charities; and penalises part-time work, and puts jobs and economic growth at risk”.

[Baroness Kramer (LD)]

My Lords, before I begin, I say to the House that on these Benches, we will make sure that the words of appreciation and expressions of friendship for Baroness Randerson will be passed back to her family. I am sure that they will mean a great deal to them. I suspect that on many Benches, as on our Benches, noble Lords are somewhat in shock. We have lost not just a colleague and highly respected politician but a very real friend. We give our thanks to this House for its shared respect and friendship.

We on these Benches recognise the difficult state of the public finances and the desperate need for investment in public services and infrastructure to drive growth and tackle climate change. We can see that the responsibility for the current condition rests with the Conservatives. However, in our general election manifesto we did not duck the issue of new funding. We took the approach that we must find the broadest shoulders to raise additional tax revenue—from the gambling industry to share buybacks, from big banks to big tech. We have tabled this amendment to the Motion today to make it very clear that we believe that the Government have taken the wrong approach in hiking employers’ national insurance contributions as their way to fill the funding gap, and we fear that the present plans will undermine national recovery. We ask the Government to think again.

Our amendment addresses a wide range of sectors that will be particularly badly injured by the NICs increases. Look at whom the changes impact: small businesses—bigger than micro, which get some protection, but small businesses still. These businesses, especially in hospitality, underpin the resilience of our communities. They need to be investing in growth and productivity, not struggling for survival. The changes impact many businesses that offer part-time work, which in turn is often the route out of disadvantage since much part-time work will now be subject to NICs for the first time. Almost every childcare provider will have to hike fees or cut places, forcing some parents to give up work. Universities, many already facing dire funding pressures, are struggling to cope and will face a much more difficult situation. The hikes impact charities of all kinds and housing associations, which should be focused on building new affordable and social homes.

In the course of today, colleagues will address many of these issues, as well as the impact on devolved authorities, town and parish councils and veterans. We will follow with amendments to the Bill in its next stages. However, our deepest concern, and where we will focus our efforts, is the impact on community care and social care, with significant consequences for the NHS. The Conservatives drove this sector into the ground. The Government are setting up the Casey commission, to report in 2026 and 2028, but this sector is in crisis now. We cannot understand how the Government cannot see the harm that NICs increases will do to this vital sector.

Our research has revealed that the NICs hike will cost GP surgeries some £125.5 million a year, which is equivalent to funding 2 million appointments. Hospices, which face a £30 million bill, have warned that they may have to withdraw beds. Research from the Nuffield Trust shows that the cost to adult social care alone will exceed £900 million next year. I point out to the Minister that this is more than the extra funds that the Government allocated to the sector in the last Budget. It in effect wipes it out, and then some. We risk losing many small care providers and seeing large ones cut capacity. Pharmacists and dentists will not receive compensation in full. Surely the Government must recognise that the knock-on effects will undermine their ambitions to revive the NHS; this in turn will undermine jobs and economic recovery. My colleagues will expand much further.

The last Government failed the economy, failed our public services—including the NHS and social care—and, I fully accept, pursued a scorched-earth policy with the public finances. However, this Bill is not the way forward. We ask that this House press the Government to step back and reconsider. I beg to move.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, this has been a very impressive Second Reading on a very important Bill. I hope that in Committee we can have a really constructive discourse in which we can hopefully find some common ground and make some progress. However, as I look at the Bill as it stands today, I am afraid that I continue to regret. Under those circumstances, I beg to test the opinion of the House.