National Insurance Contributions (Reduction in Rates) Bill

Baroness Primarolo Excerpts

2nd reading
Tuesday 12th December 2023 Lords Chamber

[Baroness Primarolo (Lab)]

My Lords, I will make a short intervention in this debate to ask the Minister a few questions about the allocation from the National Insurance Fund to the NHS following the introductions of the measures in the Bill.

The Institute for Fiscal Studies estimates that 19% of the National Insurance Fund is paid directly to the NHS. My first question to the Minister is, will she confirm that that percentage is correct? When Governments quote figures going to the NHS, they always talk in cash terms, but when we see a reduction in funding for the National Insurance Fund, it is good to know exactly what we are talking about. Will the Minister confirm the percentage allocated to the National Health Service from the National Insurance Fund?

Secondly, will the Minister assure your Lordships’ House that the cash value currently paid in funding to the NHS from the National Insurance Fund will not be reduced as a result of these measures? Would she be good enough, after this debate, to provide the forecast figures for both the percentage and the cash terms of the money paid from the National Insurance Fund to the NHS? Should there be any shortfall, will she give an undertaking on behalf of the Government that that reduction—that loss of funding—will be made good by the Government from general taxation: that it will be earmarked not as extra funding but as replacement funding, should there be any reduction as a result of the measures in the Bill?

I absolutely appreciate that national insurance Bills are incredibly complicated, having dealt with them in the past in another place, so if the Minister does not have that information at her fingertips, which I would entirely understand, I would be more than happy for her to write to me and the relevant spokespersons in the House with those figures. While reducing national insurance has the implications that the Minister has rightly identified, it also has a potential downside, and we need to know what that is. Will the funding of the National Health Service be protected?

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

I suspect that we are now moving into an area of debate where is not appropriate to go today, because there is business still to come in the House; I know that my noble friend is desperately waiting to get up.

I go back to the point made by the noble Baroness, Lady Primarolo. Obviously, the balance of the national insurance fund is monitored closely. The most recent report from the Government Actuary’s Department—GAD—forecast that the fund will be able to self-finance for at least the next five years. But, of course, the Treasury has the ability to top up the NIF from the consolidated fund when needed. Indeed, this has been done in the past—it was routinely done in the 1990s—so it is not right to say that the cut in NICs puts any pressure at all on any payment to the NHS or otherwise; that is set independently from the national insurance fund.

[Baroness Primarolo (Lab)]

I do not wish to detain the House but, frankly, that is not the question I was asking. I was asking the Minister about something that she has confirmed: 20% of the 100% that the NHS gets comes from the national insurance fund and it is equated to a cash value. If there is less in the national insurance fund, less cash goes to the NHS. The simple question I asked was not about whether the NHS will still get the 100%; it was about whether the 80% will become 81% or 82%. It is quite a techy point and I do not want to delay the House, but it makes quite a difference to the cash that the NHS receives. I was just asking the Minister to confirm and clarify that; I am not seeking to score any points off her.

[Baroness Vere of Norbiton (Con)]

I am grateful to be able to clarify that it is not set on a percentage basis at all. The amount of money that goes to the NHS is set in actual terms; for example, it is £160 billion in 2023-24 and will be £162.5 billion in 2024-25. It has nothing to do with the percentage of anything.

I will write to the noble Baroness, Lady Kramer, on the Taylor review and everything that she raised. That would probably be the most appropriate thing to do.

For the time being, I am grateful to all noble Lords who have taken part in the debate and I beg to move.