National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Elliott of Mickle Fell Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Lord Elliott of Mickle Fell (Con)]

My Lords, I will focus on the impact of the Bill on employment and job creation. This is of particular concern to me in my role as president of the Jobs Foundation, as noted in the register.

Before the general election, the Government committed themselves to raising the employment rate to 80%, which, as the Minister knows from previous debates, I very much support and am keen to see achieved. This commitment to getting 2 million people into work was reaffirmed in December, in the Get Britain Working White Paper. I was encouraged when the Prime Minister said that:

“Getting Britain back to work is at the heart of my mission to grow the economy”.


Given that there are roughly 800,000 job vacancies at the moment, an additional 1.2 million new jobs need to be created to achieve this objective. It seems clear, however, that increasing national insurance contributions for employers will make it immensely more difficult for us to achieve this important target. This is not just my opinion; it seems to be the growing consensus.

The former chair of John Lewis, Sharon White, who is reputedly on the shortlist to be the next Cabinet Secretary, said that these measures

“will obviously affect jobs and wages”.

The research director of the Resolution Foundation, James Smith, said that:

“This is definitely a tax on working people, let’s be very clear about that”.


The restaurateur Tom Kerridge, one of 120 business leaders to back the Labour Party ahead of the general election, said on Sky News that the NIC changes would lead to

“a huge amount of closures”.

Toby Dicker, founder of the Salon Employers Association, said:

“I am angry and sad and shell-shocked. Our industry is totally done. We can’t afford it”.


Finally, James Reed, the CEO of recruitment firm Reed—a company already mentioned by my noble friend Lady Bray—said, “We’re going to cut hiring, we’re going to make people redundant, we’re not going to invest, we’re going to offshore jobs”.

Is it any wonder then that the most recent employment index from S&P Global UK showed that, excluding the hit from Covid, we have just seen the largest fall in UK hiring since 2009? This confirmed the OBR forecast that the measures in the Budget would reduce the employment rate.

The Bill therefore seems completely at odds with the Get Britain Working White Paper and the Government’s commitment to achieving an 80% employment rate. In light of these conflicting signals, will the Minister give us some clarity on whether the Government remain committed to achieving the 80% employment rate?

I conclude with an analogy shared with me by a business leader to whom I was talking shortly before Christmas. I was talking to him about the Get Britain Working White Paper, and he was enthusiastic to do his bit to help get 2 million people from welfare into work. He suggested that this national objective requires a new Dunkirk: that a huge flotilla of businesses is needed to come together to create the new jobs, provide the training and give people a much-needed step-up in life. I know that businesses across the UK are willing to be part of such a flotilla. Business leaders want to help the Government achieve their employment target, but the Government need to support a new business environment that will help businesses thrive and create these 1.2 million extra jobs.

The business leader then concluded his Dunkirk analogy by saying, “With the Budget and the increase in national insurance, it feels like the Government have smashed our rudders and blown up our motors”. I agree with him. The Bill does not help the national effort to get people back to work, which is why I hope the Government will reconsider these measures and instead prioritise getting Britain working.