Employer National Insurance Contributions: Police Forces

Esther McVey Excerpts

Tuesday 11th February 2025 Westminster Hall

[Esther McVey (Tatton) (Con)]

I beg to move,

That this House has considered the impact of planned changes to employer national insurance contributions on police forces.

It is a pleasure to serve under your chairmanship, Dr Allin-Khan, and I am grateful for the opportunity to speak on this important issue. I rise to address a matter of significant concern that will affect police forces in my constituency and across the country.

Hon. Members will be aware of the broader tax and fiscal challenges presented by the Government in the autumn Budget, including changes to the agricultural property relief and the cruel cutting of the winter fuel payment, which have been rightly widely condemned, and to which I have objected many times in this House. In fact, this room was jam-packed last night with hon. Members from across the House condemning the Government’s family farm tax. People sat on the ledges here trying to speak—some were not able to—such was the feeling against some of the disastrous consequences of the Budget.

[John Slinger (Rugby) (Lab)]

Will the right hon. Lady give way?

[Esther McVey]

I will not just yet. Please allow me to make the case, and then I will come back to the hon. Gentleman. We know about the removal of the winter fuel payment from nearly 10 million pensioners, we know about the family farm tax and we know about the VAT on private schools. All have received much attention in this House, but we must not overlook the breadth of the ramifications of the autumn Budget, particularly the changes to employer national insurance contributions. They will have a devastating impact on individual employers and businesses, but their impact on our treasured public services has been widely overlooked. I want to focus my comments on the impact on our police forces.

You will be wondering, Dr Allin-Khan, how the Member for Tatton knows what is going to happen here. Did the Treasury conduct an impact assessment? Did the Chancellor generously share the assessment with Members from across the House? Were police forces consulted on such changes? The answer to all those questions is no, as is often the case with the Government’s policy announcements.

Late last year, I submitted freedom of information requests to every police force in the UK, asking for the expected additional costs that each will incur as a result of the Chancellor’s hike in employer national insurance contributions. I was shocked, yet unsurprised, to learn of the devastating impact that the policy will have on our police forces. In my county of Cheshire, the local constabulary will face an additional £3.7 million per year in employer national insurance costs.

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

I thank my right hon. Friend for giving way and for securing this debate. She is making an excellent speech, as always. She and I are both Cheshire MPs, and we are fortunate to work with the Cheshire constabulary, one of the best forces in the country. Like me, however, she will know the challenges that Cheshire police face with rural crime. It is estimated that the changes to employer national insurance contributions will cost the force £3.7 million. Does she share my concern that that could have a significant impact on rural crime, in particular, especially if cuts are made or funding is diverted away from rural into urban areas?

[Esther McVey]

My hon. Friend and neighbouring MP makes a valid point; £3.7 million is the equivalent of about 67 police officers. That is a recurring expense, not a one-off. In places such as Devon and Cornwall, the police will face a £6.3 million tax bill each year. Greater Manchester will be hit with a whopping extra tax bill of £11.9 million each year. Those are just a few examples, and the list goes on.

[Wendy Morton (Aldridge-Brownhills) (Con)]

The estimated cost for the west midlands is in the region of £12.8 million, which is a huge amount of money. What this Government do not seem to understand is that when the pressure of national insurance is put on to businesses, people cannot squeeze and squeeze profit margins; in the end, that will impact employment, training, and so on. When it comes to the public sector, if we keep squeezing and squeezing, the money has to come from somewhere. Does that mean reduced public services—fewer police officers, as in this case—or will the burden come back on the taxpayer?

[Esther McVey]

My right hon. Friend might have hit on a point, as the burden could well come back to the taxpayer. Remember that this is tax—it is money that will be going on tax, and a bill that the Government are imposing. However we look at it, it is money that the frontline police service are being deprived of. Let us consider the financial burden that the changes will place on the police force. Employer national insurance contributions represent a significant cost for everyone, but they will hit the police especially hard. For police forces that employ a number of police officers and staff to protect our communities, the cumulative cost of the increase will run well into the tens of millions of pounds. To put that into perspective, take West Yorkshire, where the figure of £11.2 million per year is the equivalent of 220 police officers. That is potentially 220 fewer police officers keeping our communities safe as a direct result of the Government’s Budget.

Let me name a few other places, such as my home area of Merseyside—[Hon. Members: “Hear, hear!”]—Thank you very much indeed. It will be paying an extra tax bill every year of £7 million, which is roughly 130 police officers. Kent will be paying more than £6 million, which is about 100 police officers a year, and Thames Valley police will face an £8 million tax bill every year.

[John Slinger]

The right hon. Lady is making an entertaining speech, as is often the case. In the midst of all those words about tax, I merely point out the Conservative party’s two unfunded national insurance tax cuts and the £22 billion black hole that is based on unfunded spending pledges and kicking the can down the road. What is her suggestion for filling that devastating black hole, which affects our constituents? Is it more austerity, an increase in borrowing or other tax rises? Ultimately, this Government, like any Government, have to deal with the crisis that is a £22 billion black hole.

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[Esther McVey]

I think I need to pull the hon. Gentleman up straight away. This is not in any way an entertaining speech—indeed, I would put this down as a horror speech. This is a disgrace of monumental proportions, so the word “entertaining” was used absolutely incorrectly.

Let me talk about the choices that different Governments have made, and where money could have been saved. One example is GB Energy, which the new Government thought they could find money for. They could not find money for the pensioners or the farmers—this Government are giving away half a billion pounds a year to farmers overseas, but they cannot find that half a billion pounds here. We would stop money being spent on things like GB Energy, which does not produce any energy; it seems to me like another quango that will cost money. We would not have increased foreign aid, and I can tell Members one thing that we would not have done: we would not have capitulated to the rail unions, finding money for the railway workers without any modernisation whatsoever. There is a big list of things that we would not have been paying for.

[John Slinger]

Will the right hon. Lady give way?

[Esther McVey]

I will not take another intervention, because I cannot quite get over the word “entertaining” being used about such a devastating policy, which will have devastating impacts on the streets of all our communities. There is a real risk that police forces will have to scale back on recruitment—that is not entertaining. There is a real risk that they will have to cut back on vital training—that is not entertaining—or reduce operational spending in other areas, which again is not entertaining. These decisions could have serious consequences for the police service’s ability to deliver an effective police force. The planned national insurance increases will make it harder for police forces to recruit new officers, particularly in areas where the cost of living is already high. The Government have committed to recruiting more officers, yet those efforts will be undermined by these fiscal pressures through taxation.

A common theme of this Government is their lack of foresight. They failed to consult with Back Benchers, public services and Government Departments before steamrolling ahead with this policy. They failed to understand the impact of the rise in employer national insurance costs on our public services, a mistake so basic that it is sometimes hard to comprehend. I think we all remember the immediate outcry that we heard from GPs, charities, social care providers and hospices. I remember being in the main Chamber when the Secretary of State for Health came to the Dispatch Box to answer questions on this policy, and he was taken aback. He did not know how to answer those questions, and his plea to the Chancellor at the time was, “Where are we going to get that extra money? I hope I will get that extra money, and I will come back to Members later with answers.”

[Joe Robertson (Isle of Wight East) (Con)]

Does my right hon. Friend agree that the Government must know that this policy is damaging the ability of the police to operate? The Government know it is causing damage to the public sector, and that is why they have exempted the NHS, but they have failed to exempt other public sector services such as the police. They cannot pretend that this policy is not causing damage.

--- Later in debate ---

[Esther McVey]

My hon. Friend is correct. That is why I highlighted the cost implications of the policy to the Secretary of State for Health that day on the Floor of the House, and he was absolutely taken aback. There was muttering among the Government Front Benchers, and the Government put in a solution straight away, but they overlooked the police. Later in my speech, I will come on to the fact that the Government now think they will put money into this area.

Fewer police will inevitably have broader consequences for public safety. Police officers are on the frontlines, tackling serious and organised crime, addressing domestic violence and responding to emergencies. Every officer we lose or fail to recruit means less protection for communities such as Tatton. To give an example, in Cheshire there has been a significant rise in serious sexual assaults by people who are in this country illegally. Money that should have gone into supporting our police force to halt that crime will not be there, which is making our streets less safe.

This Government are fiscally illiterate. They made a £25 billion grab in employer national insurance contributions at the Budget, without really thinking where that money would come from. Remember, the Government said that they did not want to tax working people, yet we know this will hit working people—the Government never thought where that money would come from. Instead, the measure was born from ideological reasons, whether that meant funding the Government’s net zero obsession, foreign aid or their union paymasters. In introducing the change, the Government have failed to consider the most basic duty of any Government: to protect their citizens.

[John Slinger]

On that point, will the right hon. Lady give way?

[Esther McVey]

I am afraid I will not.

I understand that the Government say that they will pick up the £230 million tab, but that still means that the Government will be paying a tax bill rather than having money to spend on frontline police. Last month, we heard the Home Secretary announce a £200 million boost to neighbourhood policing to fund the recruitment of 13,000 new neighbourhood police officers, as the Government said before the election, although they had been very quiet on that for a long period of time.

I wonder whether the Government can do that. The numbers are very similar: £200 million for 13,000 new neighbourhood police officers, yet they have given themselves a £230 million a year tax bill. Will those 13,000 neighbourhood police officers ever materialise? In her summing up, will the Minister say what will happen, particularly in light of the national insurance contribution black hole, as those national insurance contributions are to be paid year in, year out? Will the Government pay for those police officers, year in, year out? If so, what will be the amount paid during a whole Parliament? Where will that money come from?

I urge the Government and the Chancellor, through the Minister, to stop this ill-thought-through, ham-fisted Budget change to employer national insurance contributions. The only solution to the problem—

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

On that point, will the right hon. Lady give way?

--- Later in debate ---

[Esther McVey]

Can I finish my sentence? There is only one solution to the problem that will have the correct consequences: scrap the diabolical tax on our police forces.

[Adam Jogee]

I am grateful to the right hon. Lady for giving way. I want to say two quick things. First, my grandmother was born and raised in Birkenhead, so we have some common heritage. Secondly, the right hon. Lady just said that certain Labour Members are driven by ideology, but I want it to be noted that I am driven by a love of country and, in this context, by being tough on crime and on the causes of crime. I thought it was important to provide that clarification for the House.

[Esther McVey]

I thank the hon. Member for saying that. I hope he too shares my delight that Liverpool is top of the football division as well. We all should share a love of this country, and we should all want the best for this country. I too want a safe country, so it is vital that the money goes to the police and the police forces to ensure that happens, and not on increased tax bills. That is why I am asking for this ham-fisted tax increase to be reversed.

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[Dame Diana Johnson]

My hon. Friend makes an important point. I am also conscious of the loss of experienced officers in that 20,000. We know that the service is now very young; I think about 40% of officers have under five years of service. That presents all sorts of challenges for policing.

I want to make it clear that we have increased the funding available for neighbourhood policing by an additional £100 million. That is compared with the provisional settlement that was announced at the end of last year. We in this Chamber can all agree that neighbourhood policing is so important to our constituents, and the figure for that will now be at £200 million. That investment is to kick-start the delivery of the 13,000 neighbourhood police officers, PCSOs and specials that the Labour Government promised in their manifesto. It will also ensure that public confidence in policing is restored. As I said when opening the debate on the police grant report last week in the main Chamber, the settlement underlines the Government’s commitment to working with the police to deliver the safer streets that all our constituents deserve.

It is worth saying that I spoke to the PCC in Cheshire last week about the funding settlement. He was positive about the settlement that had been announced for his force. He did not raise any specific issues on national insurance, and the force did not raise any concerns in the consultation on the provisional settlement after it was published in December.

[Esther McVey]

Did the Minister receive a further letter from the chief constable, expressing serious concerns about the rising number of serious sexual assaults going on in Cheshire?

[Dame Diana Johnson]

As I have just said, the PCC I spoke to last week did not raise any concerns about the financial settlement. Obviously, the PCC and the chief constable use that money in the way that they decide for Cheshire. I have certainly had conversations with the chief constable of Cheshire, and the right hon. Lady is right that I have received a letter from the chief constable that was copied to a number of Members of Parliament in Cheshire.

I accept and recognise that the changes to national insurance contributions will have an impact on public sector budgets, including policing. Although the decision to increase national insurance was made to ensure the sustainability of essential public services, I recognise that the changes create additional cost pressures for police forces. It is useful to note that in 2003, and in 2011 under the coalition Government, there was an increase in employer national insurance to fund the national health service and wider national priorities. So this is not unusual; Governments of both complexions have taken forward changes to national insurance.

It is also worth noting that the changes introduced in the Budget last year broadly return national insurance contributions revenue as a proportion of GDP to the level that they were before the previous Government’s cuts to employee and self-employed national insurance contributions. That sets the context, and this has been done in a way that does not result in higher taxes in people’s payslips.

--- Later in debate ---

[Esther McVey]

I thank all Members for taking part in today’s debate. I think I understood from everyone that they would not want to see police officers taxed off our streets. There was one area on which I did not get consensus, which was why I said that the current Government were fiscally illiterate: what Government Members did not seem to understand is that money going to pay for extra taxes means money that will not be going on the frontline. The very fact that it is going in taxes and has to be compensated for shows that it will not go on the frontline. That is why I am asking for this policy to be stopped and reversed.

There seems to be collective amnesia among those on the Government Benches. The coalition Government came into power because the previous Labour Government pretty much crashed the economy. That was why the coalition was voted in. I have to say that I already see—in just seven months—that this Labour Government with that awful, awful Budget are doing exactly the same thing: they are crashing the economy all over again, but in record time. I just want to make sure that our police and our streets are protected.

I wish to thank the Minister because I know that she takes this matter very seriously. Whatever she said or did not say in the debate today, I know that she will take that message back and I know that she will be fighting to get this terrible employer national insurance contribution policy reversed.

Question put and agreed to.

Resolved,

That this House has considered the impact of planned changes to employer National Insurance

contributions on police forces.