National Insurance Contributions (Secondary Class 1 Contributions) Bill

Jim Dickson Excerpts

Tuesday 17th December 2024 Commons Chamber

[Shockat Adam]

I totally agree with the hon. Member that GP services are already on their knees, and this is going to further increase their despondency. It will give them no confidence whatsoever.

A second issue relates to our charities. I do not think there will be a single Member in this House who has not posed in front of a charity for a photo for their social media or for the work that they do. In my short time in this profession I have seen that this country is virtually run by charities, but every single year they have to jump through fire hoops just to make ends meet. They have to prove their worth and look for funding every year, living virtually hand to mouth. This will be the final nail in the coffin for many charities that are doing vital work for our communities.

There are so many that I could mention, but I will mention just one. Jasmine House is a charity in my constituency that provides vital support for women who have been victims of sexual violence. We already know the dire state of the judicial system, with women who have been raped having to wait up to five years or sometimes seven years for justice. This home, which provides much-needed psychological and emotional support, already has a two-year waiting list. This rise in national insurance will completely destroy this charity and many more like it across the country, which is why I urge the Government to rethink this disastrous policy and accept my amendment.

[Jim Dickson (Dartford) (Lab)]

It is a pleasure to speak once more on this critically important Bill, after an excellent debate on Second Reading several weeks ago. I do not wish to rehearse the entire debate on these national insurance changes, but I will raise a few points about the Bill and why it is necessary.

As we have discussed at some length, this Government inherited public finances that were in a parlous state and public services that were not delivering what residents in Dartford and across the UK need. Yet, from their contributions today and on Second Reading, I do not think that Conservative Members have really accepted that legacy. In the five stages of grief, they are still in denial.

When the previous Government left office—it is painful to repeat these statistics—NHS waiting lists were at 7.6 million, with 300,000 people waiting longer than a year for treatment. Those waiting lists were already growing before the pandemic, with the number of people referred but waiting for treatment doubling between 2010 and 2019.

On crime and community safety, neighbourhood policing was decimated and PCSO numbers were halved, and the number of arrests has halved since 2010, including sharp drops for theft. Perhaps most concerningly, we face a real crisis in our prisons. The National Audit Office recently confirmed:

“The current crisis in the prison estate is a consequence of”—

the previous Government’s—

“failure to align criminal justice policies with funding for the prison estate, leading to reactive solutions which represent poor value for money.”

That is as close as the National Audit Office ever gets to saying, “You wasted money.”

The previous Government also spent a whopping £715 million on their Rwanda gimmick over two years, in exchange for a sum total of four voluntary departures. That is the legacy of the Conservative party, yet Conservative Members still refuse to acknowledge their mistakes. They vote against every measure, including the national insurance changes to raise crucial funding to fix the problems they left behind, without ever saying which investments in public services they would scrap.

In a long and, at times, entertaining speech, the right hon. Member for Beverley and Holderness (Graham Stuart) rehearsed the greatest hits of the previous Government, in which the omnishambles Budget seemed to feature very strongly, but his speech was fatally holed below the waterline by his inability to answer one simple question from the hon. Member for Tunbridge Wells (Mike Martin): “What would you do instead?” We heard a lot of flannel about train drivers, but that was basically it.

[Graham Stuart]

I talked about the need for fiscal discipline, one element of which is taking at least £12 billion of savings out of the benefits system, because we cannot continue with more and more of us out of work and out of the workforce. Most importantly, I also said that we have to grow the economy first, because that is the only way to sustain it. This Budget had the opposite effect, as the OBR has laid out.

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

Order. I remind Members that this debate in Committee is about national insurance contributions.

[Jim Dickson]

I thank the right hon. Member for Beverley and Holderness for his comments. He praised the Conservative party as the most successful party in western democracy because it always takes a pragmatic and hard-headed view of matters such as the public finances, but I am afraid that he has just revealed why it is no longer in government. None of what he said added up. The £12 billion of welfare savings that we were repeatedly promised when he was in government were never realised, and none of what his party has proposed since makes those numbers any more likely to be achieved.

This week, The Guardian reported on a poll by the University of Bristol of 5,000 voters—a large sample—that found that fewer than a quarter of respondents thought that the changes to tax announced at the Budget were “not necessary”. Nearly 50% of people polled thought the changes were “necessary”. So the British people, showing admirable common sense, understand the steps that need to be taken to address our country’s problems.

Based on that polling, the kindest thing to say about the Conservative party is that it is out of touch. Indeed, we learned this week that the Leader of the Opposition is apparently toying with the idea of flat tax, which would be a big gift to the already wealthy. According to estimates from the Tax Policy Associates, such a change would mean average earners would pay £1,200 a year more and those earning above £200,000 would pay £30,000 a year less.

[The First Deputy Chairman]

Order. The hon. Gentleman is making an interesting speech, but I remind hon. Members that in order to be in scope for the debate, the majority of their remarks need to address the issue in front of us, which is national insurance contributions.

[Jim Dickson]

Thank you for your advice, Madam Chair.

In closing, in raising national insurance, the Labour Government are taking the tough choices to fix our public finances. As I said at Second Reading, the Bill is a crucial part of our plan to fix the foundations of this country. It provides a major part of the funding needed to fix our public services after 14 years of decline under the previous Government.

[Jim Allister (North Antrim) (TUV)]

When we talk about national insurance, it is easy to forget that it is only part of the tax burden placed upon employers. However, within the matrix of tax, the reach of national insurance that has been delivered by the change is truly shocking, particularly because of the reduction of the threshold to £5,000. I suspect that will mean that there is not a single person who does a part-time job whose employer will not now be paying 15% national insurance. Before we even come to the viability of the business they work for, that makes the viability of that job questionable.

To reduce the threshold by that amount is the most punitive part of the measure. It is not even tempered, as it could have been, by a phased reduction, so rather than paying 15%, someone could pay a lower amount, such as 5%, if the threshold was reduced to £5,000. The measure is excessively punitive and will hit many small businesses in everyone’s constituency, including mine.

I think of small businesses throughout North Antrim. They employ six, seven, eight or 10 people, and may stretch to take on an extra worker, but they will not be stretching like that any more. They will be stretching the other way, because the consequence of the measure is putting them over the edge in terms of what is affordable. I am talking not just about small businesses but about a vast swathe of a critical sector that keeps our society in operation. Our community and voluntary sector will be among those most cruelly affected and particularly those who are often doing the job of Government, delivering services in our community. They will bear it unabated, without any assistance such as the assistance that the public sector will have.

I was interested to receive and to read the report from the Northern Ireland Council for Voluntary Action, which is clear that whereas public sector organisations will have their budgets on this aspect reimbursed, voluntary and community sector organisations will not have the same protection. They will have to absorb the budget increase. Yet, as I have said, many of those in the voluntary and community sector deliver services on behalf of Government. The public sector therefore gets matters ameliorated, but those that deliver services for Government in the voluntary and community sector will not. That will have an effect not just on those organisations, but on the services they deliver and, therefore, on all our constituents to whom those services are delivered. When we ally 15% on national insurance with the increase in the living wage, we have a double whammy. The two together are the very thing that will produce a negative outcome.

The hospitality sector in my constituency, as a sector that already runs on relatively small margins and employs a lot of part-time people who will now fall within the ambit of employers’ national insurance, has drawn attention to the fact that the increase, along with the living wage increase, will impose a huge burden. Indeed, the sector’s organisation has suggested that the living wage and national insurance increases will add £2,500 a year for every employee. What business, in current circumstances, can simply shrug that off and carry on unaffected? There will be very few, indeed.

The consequences will be substantial and will affect many small businesses, be it the butcher on our high street, our community services provided by voluntary organisations, our doctors or our dentists. The latter are already under huge pressure and many are giving up national health service provision. Why? It is because they cannot make ends meet. Then, Government come along and put this burden upon them.

I therefore say to the Government that, yes, they have the numbers that mean they can close their ears to all of this. They can impose this if that is their will, but in imposing it they will do irreparable damage to those who they say they care about. This is a wake-up moment. If the Government truly care about ordinary people, whose jobs will be lost and who will be affected by this measure, and about ordinary businesses, which are not rolling in riches but making ends meet, they need to find a way to readdress this issue and to bring back some viability, going forward, for those businesses.