National Insurance Contributions (Secondary Class 1 Contributions) Bill

Earl of Kinnoull Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

Both these sectors provide vital services. They are critical partners to government and in turn reduce pressure and save costs for organisations such as the National Health Service and the police, to name just two services that are supported. Tax reliefs for charities will not be sufficient to cover this shortfall. National insurance contributions and any changes to them, given some of the previous arguments, are making things even more anomalous, but let us all be honest with ourselves: for anyone who has ever looked into them, NICs have always been an anomalous form of taxation. I ask the Government to think again on charities and housing associations.

[The Earl of Kinnoull (CB)]

My Lords, I rise to speak to the charitable themes of Amendment 5. I declare my interests, as set out in the register, as a trustee of three charities in Perth and Kinross which employ people. The number of people that they employ ranges from 30 to 130. In particular, I am chair of Culture Perth and Kinross, which employs about 130 people, which is equivalent to 98 full-time people.

Culture Perth and Kinross has 14 libraries and two museums and, as a charity, we run those things. I have been the chair for nine years. Of course, in the winter, these 16 locations are warm spaces for the people in Perth and Kinross. Although Perth and Kinross has an image which is quite ritzy, it is actually rather a poor place. Statistically, it is one of the poorer places in Scotland, which is statistically poorer than England. As such, we on the board, which is made up of local people of every description, focus very much on that aspect of our community service.

I should say that the local council involved is also not very well funded and at the maximum of its borrowings. Of course, it has suffered from the way in which the Scottish Government have dealt with local council funding over the years. We have a very good relationship with the extremely hard-working chief executive of that council. When we have money problems, we cannot go to it. Our money is essentially fixed some way beforehand. We get a lot from the council and some from the Scottish Government; we get some from generous charities, and we have a few individuals who give us money as well, including some who serve on the board. However, our money is fixed.

I asked to have the figures made available for this debate, and the figure for us is £124,000 extra. About a third of that is the increase from 13.8% to 15%. About two-thirds of that is the reduction in the limit as it comes in because, in our 98 full-time-equivalent posts—occupied by 133 people—we employ quite a lot of people who do a small number of hours, and we made use of that space of between £5,000 and £9,100 over the starting limit.

The board will meet on 31 January to discuss what on earth we will do in this very difficult position. Of course, I have the benefit of having had extensive discussions with the chief executive, and I know what the briefing paper will say because I have helped to settle it. It will say that our options are limited: to reduce staff, which will presumably increase the cost on the Government in terms of people not working; and in particular to reduce opening hours, which will remove the warm spaces that I was talking about a moment ago. I am sure that these are unintended consequences of the changes the Government have wanted to make all round.

I have heard the Minister talk many times about why he has taken the choices he has. I understand that, but it occurred to me that, with this type of unintended consequence and with the detail I provided, there is at least a case for some sort of carve-out for smaller charities, either on the increase in the rate or on the increase in the starting limit, or it is simply to have a delay—

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

Which, indeed, we are about to have, my Lords. The Division Bells have rung and the Committee will adjourn for 10 minutes.

--- Later in debate ---

[The Earl of Kinnoull (CB)]

I had really come to the end but I will repeat my final couple of sentences. I ask the Minister whether there might be some room, given that the net gain to the Treasury in the situation for Culture Perth and Kinross would be very small at best, and that I suspect that for similar circumstances the story would be the same, for an exemption or carve-out for either the increase in rate or the increase in the starting limit for smaller charities, or indeed simply a delay for one year. We are simply not flexible enough to try to attend to the funding requirements for that.

[Lord Randall of Uxbridge (Con)]

My Lords, I support Amendments 4 and 5, to both of which I have added my name. I echo the excellent words of the noble Lord, Lord Storey, who introduced the issue of the childcare sector. I do not particularly need to add to those words, or indeed to what the noble Lord, Lord Sharkey, said about universities, except to say that I have a university that I can remember being built in my back garden, effectively—it is not really my back garden but I could see it rise. That is Brunel University, which is excellent and, like every other such institution, it has its problems. A few years ago, I suggested that it changed the name to “Uxbridge University”, hoping that some benefactors from across the United States might get confused with Uxbridge and Oxbridge and send lots of money across. Like so many of my cunning plans, that was rejected out of hand.

I also want to speak particularly to Amendment 5 about charities, although housing associations are an important issue, too. But the issue of charities is the one we should probably be most aware of. I have to declare that I am a trustee of several charities. I have stood down from a few more in the past year or so but a lot of these charities have approached me and told me of the huge costs. Although for some of the smaller ones the costs may not be the same, in relative terms they are just as difficult.

Earlier today, I wanted to get in on a Question about the National Trust, and there were many people on both sides, but particularly on the government and Liberal Democrat sides, saying that the National Trust is a great organisation, and I would echo that. But I wonder how many people who pay their subscriptions want to see them going not towards the landscape or the historic houses, or whatever, but being swallowed up by these increases.

One charity where I was a member of the council—a trustee—until earlier this year was the RSPB and it was the same thing. It was a huge amount; we are talking about it having to pay out a couple of million. The thing with charities—I think this was mentioned by the noble Earl, Lord Kinnoull, but I would like to reiterate it—is that it is not a matter of putting any prices up because they are supplying stuff. Their funding comes from either organisations, such as foundations or whatever, or individual donations. Charities are not charging for their services. They are performing lots of things which the state would otherwise have to pick up.

One thing which struck me when these organisations approached me, having seen that I put my name down to amendments, is when they told me how much they were going to have to pay they were reticent about me disclosing that, which I will stick to. I thought first, “Why are they so reticent? Is it that they do not want to upset the Government because they want to keep on-side?”. That is a perfectly logical position at this early stage of a Government. After a while, most organisations start to hate the Government rather than the political party who form that Government. Then I thought, “Maybe they do not want to because they have to rely on donations”. Whether it is somebody giving just a few pounds to the Dogs Trust or in a charity shop, if they think that that money is effectively going to the Treasury and not to the good cause that they want to support, they might be less keen. People sometimes do not need much of an excuse.

I am sure many noble Lords here today will have heard the excuse when people do not want to give to charities. They say, “Oh, it is not going to go directly to what I want it to go to”. This is something that charities will be nervous about saying publicly. I am sure that the Minister will have had representations from many charities, because they are extremely worried. This has really upset the whole sector, and it should be reconsidered.

As the noble Earl, Lord Kinnoull, said, there is another possibility. I do not want to give the Minister too many let-outs, but one possibility would be to delay it. Most of these organisations, particularly by this time of the year, have made their budgets. They have put in applications for funding from other organisations and put various amounts in. To suddenly find an increased cost that they were not expecting makes it very difficult for those budgets to be met. Although I have raised the point on other sectors, to me it is the charitable sector which is the most vulnerable. We should really be considering whether we want to impose this on it.