Employer National Insurance Contributions

Josh Fenton-Glynn Excerpts

Wednesday 4th December 2024 Commons Chamber

[Julia Lopez]

I was interested by the train drivers’ pay deal, where the Government actually went back to the deal that we had made and undid the productivity commitments that we put in.

Why would the Chancellor front-load spending on the NHS before the Health Secretary even has a plan for how he will use that precious cash, therefore risking billions being wasted? It makes no sense, and everyone outside this place and all those inside it, apart from the Labour Members who are gleefully wafting their Order Papers around, can see that.

The Chancellor is asking for an extra £40 billion in taxes from the British people, and it is largely being taken from some of the most productive, entrepreneurial people in the country: the people who provide jobs and who do the right thing. I worry deeply that their good money is going to be poured into the public sector and benefits without any noticeable improvement in public services, and that when that happens, the Chancellor is going to come back for more. The incentive for anyone in this country to be entrepreneurial, to stick their neck out, to take the risk of employing people or to build true wealth for this nation will diminish. We will then find ourselves in a downward spiral, ever more unable to withstand external shocks and ever less appealing as a country in which our young people will want to stay to create, to innovate and to build.

As we know, a big chunk of that £40 billion is coming from the sneaky rise in employer national insurance—something the Government obscured from their plans in July—but let us start with the pain that the Chancellor’s choice on NI is causing her own Cabinet colleagues. She has blown holes in the budgets of every major Government Department. The Health Secretary now has problems with GPs, pharmacies, social care and hospices. The Deputy Prime Minister has councils telling her that they have to find over £1 billion extra to pay providers for their services. The Culture Secretary has charities, tourism businesses and cultural venues telling her that they have major problems. The Education Secretary has had to raise tuition fees by £400 million because universities are telling her that they now have a hole in their budgets of exactly the same size. It goes on.

I want to talk about the pain that this policy is causing to my constituents, particularly the lowering of the NI threshold, which is whacking the kind of businesses that employ a lot of young lower-wage workers, parents getting back into the workplace and people who are picking up extra jobs to make ends meet. Let me give some examples. The first is a local after-school club provider employing 34 people and offering wraparound clubs that help out hundreds of Havering families. It is the kind of club that makes that work/family juggle survivable. Because of the NICs hike and the lowering of the threshold, its bill is going to rise from £10,851 to £26,040 annually. The last thing it wants to do is to lose staff or hike fees for local families, but it cannot see a way around that.

Another example is an outdoor activities business that gives young people across London the most amazing opportunities. Its costs next year are going to increase by £70,000 as a direct result of the Budget, and it now worries that it will not be able to fund the young people’s bursary that is providing over 1,300 disadvantaged kids in the region with outdoor experiences. A third is a home care business that looks after older people in Havering. Its branch in Hornchurch faces paying an extra £100,000 a year, making it loss-making from April. That is absolutely crazy.

[Josh Fenton-Glynn (Calder Valley) (Lab)]

Will the hon. Lady give way?

[Julia Lopez]

No, I am afraid there is simply not enough time.

Finally, I want to mention a small private school in my constituency. Its pupils are some of the most vulnerable and deprived in our capital, as it is an alternative provision school. First, the Labour Government hit it with VAT. Now they are going to hit it with NICs and wage increases. Either it absorbs that cost or it passes it on to the local council. Those are four businesses from Harold Hill to Hornchurch providing critical services to my constituents, employing young people and giving working families opportunities. Now they are going to be hit by tens of thousands in extra costs, and that is before I even talk about the GPs, the pharmacists, the dentists, the charities, the shops, the restaurants and the pubs. It is for them that I am going to wholeheartedly—