National Insurance Contributions (Secondary Class 1 Contributions) Bill

Helen Maguire Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Ms Creasy]

He will therefore understand why I suggest that we as a Parliament could look at how we address those issues. Right now, the sector is concerned. I do not think that is a surprise to anyone. It may be a damascene conversion for the Conservative party to suddenly care about it, but there is a concern across the sector about not going backwards.

Clause 3 will increase the employment allowance from £5,000 to £10,500 and will reduce the current £100,000 threshold. It might be perceived that for some small businesses, particularly in the childcare sector, that would be a potential way forward in reducing some of the impact of the changes so those businesses can continue to expand. However, the challenge is right now, with the majority of childcare providers not qualifying for the employment allowance because of the way in which the sector operates and because it has been ignored, dismissed and derided by previous Governments. The majority of positions are produced in the private sector. That means they do not qualify.

There is perhaps an unintended irony in all that, however, which is that investing in more childcare, as we are doing, means that many of those small businesses will not be eligible for the employment allowance. As it is about companies that receive less than 50% of their income from public funding, while many childcare providers were originally in that position before money started going into them, the irony is that many fewer will be in that position in the coming years as a result, meaning that they will be denied the opportunity.

Childcare provision in educational settings will be able to benefit, so it is not a total denial. That means that if we are looking to expand childcare, in the current environment and without looking at how we can make that an equal opportunity for all childcare providers, that will have to be done through the state sector, which means having to find nurseries that can be provided in spare classrooms or childcare settings within an educational setting. That accounts for a small amount of the structures in place at the moment, and there is a risk that we will not see the investment in expansion because expansion in previous times has come through the private sector.

My concern, if I am frank, is that this is a perfect storm of our own making. With the best intentions of investing money from the Budget in childcare, we may inadvertently make it harder to expand childcare. That is why we need a review, because it is not clearcut that that will be the outcome, which is why I have tabled new clause 4. I also urge Ministers to look at business rates, which currently add around £21,000 to the average nursery. We found support in the Budget for those in retail and hospitality. We could look again at the childcare sector on the same basis.

Above all, we need to raise those questions and ask how we can ensure that we do not see a curtailment of childcare in this country, because the reality is that fees will then go up, making it even harder for parents to use it. That is what the Pregnant Then Screwed surveys are showing us: 90% of parents who have a place are terrified that costs will go up in the coming year, and 60% say that if that happened they would reduce their hours or leave work altogether.

This is a tough time, this is a tough Budget, and there are tough decisions to be made. We are not shying away from that and I am proud to be a member of a political party in government that is getting a grip of this country’s needs. However, I am also determined, as I am sure is everybody on the Back Benches, to make sure that we do that in the best way possible. If the Minister will not accept new clause 4, I hope he can tell us what work the Treasury is doing to ensure that childcare as a form of economic infrastructure can grow and support this country as it recovers from the last 14 years of Conservative Government.

We know that all those who will be affected—in the choice to work, to stay in work and to stay open and run a nursery—are literally the ones who have been paying the price of having a Conservative Government. We do not wish to make them pay all over again. The Conservatives broke Britain. We now need to be honest about the work and the investment that it will take to repair it.

[Helen Maguire (Epsom and Ewell) (LD)]

I am greatly concerned about the consequences of this Bill. There are consequences for businesses, for employees and for essential primary care providers in my constituency and across the country. The Bill represents an unfair jobs tax that risks harming the livelihoods of countless individuals and the viability of small businesses at a time when they are already grappling with a multitude of challenges.

I wish to begin by highlighting the impact that this legislation will have on community pharmacies, which are at the frontline of healthcare in our local areas. The owner of Horton Pharmacy and Travel Clinic in Epsom has expressed grave concerns about the financial burden that this increase in employer national insurance contributions will impose. He told me:

“We are estimating that it’s going to cost an extra £12,000 a year. It’s very distressing and making it harder to keep our doors open and help reduce the burden on other parts of the NHS.”

Community pharmacies such as Horton Pharmacy play a critical role in alleviating pressure on our overstretched NHS by providing accessible healthcare and advice, yet the Bill threatens their financial viability, which in turn risks leaving constituents without the local care they rely on, thus increasing the burden on the NHS.

[Dr Luke Evans]

Is the hon. Lady aware that the National Pharmacy Association has agreed to collective action for the first time in its history, directly as a result of this Government’s Budget? Does she have any comment on that?

[Helen Maguire]

Yes, I am aware of that and I agree that it is a good way forward.

Another business in my constituency, the Family Building Society, is also facing substantial repercussions. Last Friday I met its chief executive officer, Mark Bogard, who shared that this national insurance increase will cost him approximately £300,000 every year. He said:

“Even as a mutual building society, with no shareholders to generate returns for, we cannot simply swallow that cost. So, going forward, we will inevitably now employ five or six fewer people.”

Madam Chair, these are real-world examples of the damaging ripple effects of the Bill. It will hit not just businesses, but employees, with fewer jobs, lower wages and missed opportunities. This Government claim that they want to kickstart economic growth, but how can firms grow when they are forced to cut jobs instead of investing in their business. How can the economy thrive when ambition is replaced with survival? This Bill does not kickstart economic growth; it slams on the brakes.

Across the board, this Bill threatens sectors vital to our economy and to society. Social care providers, GPs and hospices, already at breaking point, will now face further financial strain. Most of these organisations do not qualify for the employment allowance, meaning that they are exposed to these increases.

The Liberal Democrats have called on the Government to exempt these essential providers from the tax rise, but those calls have been ignored. This decision will worsen the crises in our NHS and social care system, pushing more providers to the brink of bankruptcy.

Six in 10 care homes in the UK are operated by companies vulnerable to even mild economic shocks. How then can the Government justify imposing additional financial burdens on a sector already struggling to stay afloat? Let us be clear: the Government’s own analysis admits that nearly four times as many employers will lose out under this Bill as will benefit. For many employers, this will translate into an average annual tax increase of over £26,000. This is not just a jobs tax, but a growth tax, a productivity tax and, ultimately, an attack on people’s living standards.

This is a deeply inefficient way to raise funds, especially when fairer alternatives exist. The Liberal Democrats have proposed several measures that would raise revenue without harming jobs and growth. These include reversing Conservative tax cuts for big banks, increasing the digital services tax and introducing a fairer form of capital gains tax to ensure that ultra-wealthy people pay their fair share. These measures would protect small businesses, support families and safeguard essential services, while still addressing the country’s fiscal challenges.

The people of Epsom and Ewell deserve better. They deserve a Government who support, not stifle, innovation, enterprise and community spirit. They deserve a Government who listen to small businesses, healthcare providers and families who are already struggling under the weight of rising costs and stagnant wages. This Bill is not the solution to our economic challenges; it is a blunt instrument that will do more harm than good, jeopardising jobs, living standards and essential services. I urge the Government to reconsider this unfair and counterproductive measure and to work with us to develop a fairer, more sustainable approach to taxation that prioritises people and communities.

[Gareth Snell]

I wish to start by reflecting on something that the hon. Member for Grantham and Bourne (Gareth Davies) said in his opening speech. He talked about socialists thinking that taxes just flow in. Given that he was a member of a Government that raised taxes to their highest level in history, perhaps this season it is less secret Santa for him, and more secret socialist. Perhaps, if he is lucky, under his Christmas tree on 25 December he will find a red flag that he can fly. I jest, Madam Chair, but the point is that that Government agreed with tax and spend—they taxed; the trouble was what they chose to spend the money on.

That is the difference between this Government and the Government that came before: we have made clear commitments about what we will spend the money raised by this national insurance Bill on. We will make investments into the NHS and our public services, such as our schools and hospitals, and we will fix the railways. [Interruption.] The hon. Member for North Bedfordshire (Richard Fuller) chunters, but I cannot actually hear what he is saying. If he wishes to intervene, I will happily give way—no, I thought not.

The fact of the matter is that although this is not a decision that I would particularly have liked the new Government to make, having looked at the levers available to us and having made a political choice to protect the pay packets of individuals in work, this is a way of raising revenue.