National Insurance Contributions (Secondary Class 1 Contributions) Bill

Dave Doogan Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[Gareth Davies]

I remind the House that inflation has already gone from 2% to 3% under this Labour Government, and in fact, the OBR scored the Hallowe’en Budget as inflationary. The hon. Gentleman is right that when these tax rises hit, they will be passed on through higher prices. I hope that that will not put pressure on inflation, but it will inevitably do so.

The combination of factors and how they are affecting businesses, including cafés, is not always appreciated either. The national living wage is going up. Conservative Members have welcomed that—we implemented the national living wage—but it is about the context in which it is going up: national insurance is on the rise and business rates relief for hospitality businesses and high street businesses is being reduced from 70% to 40%. All those things are compounding the impact on cafés, such as the one in the constituency of the hon. Member for Tunbridge Wells (Mike Martin). They will be devastated, inevitably leading to job freezes or job losses, which I will come to.

From healthcare to charities and small and medium-sized enterprises, I have made the consequences of this Bill clear since it began its stages in the House. Today, the Government have one more chance to change course, because what many people across the country want to know is this. What is this Bill for? We were told that it was a one-off tax rise to fix the foundations of the economy. We were told that there would be no more tax rises after this, yet we find ourselves just a week away from an emergency Budget, with speculation rife that other taxes may have to rise because the Chancellor will not meet her own new fiscal rules. Some are suggesting that Labour will break another pre-election promise and not unfreeze the income tax thresholds in 2028, but will rather extend the freeze to pay down their new debts. That surely cannot be true—the Minister himself gave me his personal assurance in this House that income tax thresholds would be unfrozen from 2028. I would like him to reconfirm that promise to me today, in order to end the speculation.

This is vital context for Members as we consider the amendments before us today. If more tax rises will be needed—if the original justification for this Bill is now void—why should we stomach the Bill’s terrible consequences? Why should Labour MPs have to go out and defend this to their constituents? Why should we allow the Government to punish the sectors that the amendments before us seek to protect? In fact, why must we stand here and see this entire Bill implemented at all?

One impact that hits every sector of our economy is the impact on jobs. Just yesterday, we heard Labour talk about the importance of lifting people out of welfare and getting them back into work, and it is right to do that. As Conservatives, we know that the dignity of work and the security of a regular pay cheque is what lifts us up as a country and lifts families out of poverty. The tragedy is that this Bill has caused so much concern and so much uncertainty that employment is already declining in anticipation of its passing. The Office for Budget Responsibility tells us that the Bill will depress workforce participation for years to come.

Put simply, this Government are cutting welfare to boost employment, while at the same time boosting taxes, which will cut jobs. No wonder business confidence has completely and utterly nose-dived. It is inexplicable and entirely avoidable.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The shadow Minister says it is inexplicable, and I agree that on the face of it, it is. However, is one possible explanation for fiscal misadventure on this scale not that the Government Benches are filled with people who have scarcely any understanding of the real economy, much less what it means to try to start, run and sustain a business?

[Gareth Davies]

That is right, and it is an important point, because the decisions made by this Government are having such a profound impact on people in the real economy. I simply say to the British public that if they are unhappy with the decisions being made, they have to change the people making them. [Interruption.] Unbelievably, I am getting heckled on that point. The hon. Member for Hamilton and Clyde Valley (Imogen Walker) should get out and talk to the average businessperson in her constituency. She might quieten down significantly.

The Minister implied that the Government had no choice, and he still seeks to ask me what the Conservatives would do differently. Others on the Government Benches are trying that, implying that there is no other alternative. The Minister should look at the £70 billion of wasteful spending commitments that I have already listed, including the quangos, such as GB Energy, the pay-offs to the unions without any reform or productivity gains, and the billions of pounds being surrendered as part of the surrender deal to Mauritius. We have growth on the decline and inflation, debt and unemployment on the rise. We have a Chancellor on the brink, and confidence crumbling. We may not be able to kill this Bill, but we have our chance now to dent the damage. I urge Ministers and Members across the House to do the right thing and to support these amendments.

--- Later in debate ---

[Neil Duncan-Jordan (Poole) (Lab)]

I am on record previously as calling for more support for hospices, but I have been contacted by a number of constituents about the issue of home-to-school transport for pupils with special educational needs and disabilities. That relates to Lords amendments 3, 6, 11 and 15, and I wish to consider those today.

For many children with SEND, their school transport is a lifeline to education, friendships and independence. Without it, these children risk being cut off, left behind and denied opportunities that they deserve. If these Lords amendments are rejected, local councils and transport providers will struggle, families will face uncertainty and, I believe, the fundamental right to education will be compromised. This is not just a technical change to national insurance rates and thresholds; it is a direct threat to the futures of vulnerable children and their families. These dry words on a page have a massive impact in the world outside this place.

There is a genuine fear that the cost of removing these Lords amendments, which will ultimately see more children kept out of school, will actually be greater than the additional revenue raised through the national insurance changes. In reality, to exempt SEND school transport from the national insurance rise is not going to bankrupt the UK. We know that local councils, even with additional funding, are already struggling with the impact of 14 years of austerity. I believe that we could certainly raise the money we need if we had a wealth tax and introduced other changes to capital gains tax. I would appreciate it if the Minister explained why we are unable to compromise on this issue and find a way to exempt SEND school transport from the changes he proposes.

[Dave Doogan]

It is almost three months to the day since we were here in this Chamber on Third Reading. The SNP and other parties warned at that stage of the very real, dire consequences for organisations, businesses, charities, hospices and so on. It certainly does not give me, or anybody else on the Opposition side of the House, any pleasure that those threats have come to pass. There is no pleasure in that whatsoever.

The British Chambers of Commerce spoke last month of a “powder keg of costs” for businesses, with 82% of firms surveyed saying that they faced the potential of staff lay-offs, wage freezes or cancelled promotions in the workforce, which will be a terrible drag on the economy. Last month saw vacancies in the UK contract at the second-fastest rate in nearly five years, while wage growth has slumped to an almost four-year low. If we want the evidence of what business thinks of this change, it is there in the figures: 300,000 small business owners surveyed last month said they intend to lay off employees in order to cope with Labour’s national insurance increase.

The economic impact is now becoming absolutely clear. Last week’s GDP figures show the UK economy shrinking in January. On Monday this week, the OECD downgraded the UK growth forecast for both this year and the next. The reality under Labour is that economic growth has fallen in four of the past seven months. The national insurance grab represents an extraordinary and unforced error in fiscal policy. If Labour genuinely has confidence in this move, then it should have no issue whatsoever in agreeing to Lords amendment 21 and publishing an impact assessment of its national insurance increase. What the Minister detailed as an impact assessment was in fact an analysis. An impact assessment deals not with the numbers, but with output in the real economy—the effect on business. The Minister knows fine that that is not what he is talking about.

On GPs and Lords amendments 1, 4, 5, 9 and 13, the Scottish Government will be investing—or compensating, rather—£13.6 million in general practice this financial year to support GPs in Scotland alone, obviously, to retain and recruit staff in the face of the change. But Scotland’s GPs, any more than England’s, Wales’s or Northern Ireland’s, should not be paying the price for UK Government decisions. Labour’s decision to increase national insurance contributions is a catastrophe for GP practices and for charities across Scotland—the relevant Lords amendments are 2, 7, 12 and 16.

There are 7,000 charities in Scotland at risk from this Labour Government. Marie Curie faces a £2.9 million inflation to its costs, with £75 million across the charitable sector in Scotland. The Scottish Society for the Prevention of Cruelty to Animals alone is exposed to a £400,000 recurring pressure from this Labour Government. Scotland’s public sector faces a £700 million recurring pressure, which, with the Government’s compensation, still leaves a £200 million shortfall. Scotland is again being punished for choosing to invest more in its public services and paying people who deliver those services better.

The Government regularly attack us by saying, “What would you do?” I will tell them what I would do: £30 billion by rejoining the single market; £16 billion by introducing Scottish income tax rates; and £43 billion from a wealth tax of 1% on assets over £10 million. But this Labour Government will not go after multimillionaires. They would far rather go after the disabled, hospices, family businesses, GPs, farmers, councils and charities. That is what these so-called socialists are intent on doing.

In conclusion, Labour’s fiscal bonfire is what my colleagues in the Scottish Government have had to deal with to try to ameliorate and protect communities from Labour’s economic ineptitude. But even fiscally incompetent Unionists—a cadre in whose number I include the Minister—must realise that the Scottish Parliament cannot exist simply to ameliorate and protect Scottish public services from the United Kingdom’s decisions. Devolution can only ever be a temporary face-lift for the crumbling foundations of Unionism. As the Union crumbles, I shed no tears, but I wish it was not ripping the economic heart out of Scotland on its way down.

[Wendy Morton]

I would like to start with a gentle reminder, if it is needed, that Labour promised in its manifesto not to raise national insurance. Yet we are here today because Labour broke that promise. We are here today because right hon. and hon. Members in the other place tabled some very important amendments to the Bill, which are, rightly, now here for us to consider. Let us also not forget that Labour colleagues voted against protecting small family businesses; against protecting hospices; against protecting GPs; against protecting care providers; against protecting small charities, including air ambulances; against protecting providers of school transport for children with SEND; and against protecting nurseries. Now they all face the jobs tax.