National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Helen Maguire and Gareth Snell

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

[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.