National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Jackson of Peterborough Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, this feels very much like a knee-jerk Treasury groupthink policy, because the October 2024 Budget had the biggest tax increase we have seen for many years. It is a levy or tax and, as noble Lords have previously said, you generally tax things that you do not like. In this case, it is a disproportionate tax on jobs.

I have to let your Lordships’ House into a little secret. I am young enough to have read the A-level textbooks written by the noble Lord, Lord Eatwell—I am sorry if that gives away his age. Much as I agreed with a lot of what he said, I have to disagree with him about the unique propensity of the previous Conservative Government, of whom I have occasionally been critical myself, for creating public sector debt. Between 2007 and 2010, public sector net debt as a proportion of GDP, under a Labour Government, increased from 36% of GDP to 65%—unprecedented numbers. So, much as I agree with him on some issues, such as the disproportionate concentration on low-skilled immigration to drive growth, he was wrong on that particular issue.

A truly courageous Government with a strong and confident mandate would have responded to the challenges put by the noble Lords, Lord Eatwell and Lord Macpherson—who is not in his place—on policies to drive growth. But they also would have looked at raising money for some big policy issues, such as the policy on social care, which we will now not see till 2029, or policies on the planning system, on our dysfunctional housing and mortgage market, on our universities’ funding model, on reducing immigration and our dependence on low-skilled foreign workers, and on our worklessness crisis. As my noble friend Lord Forsyth of Drumlean said, 9 million people who could work are on benefits or are not able to work.

Those are the choices that the Government could have made. They could have made them via some really courageous fiscal decisions, which they have not made—on, for instance, the triple lock or changes in fuel duty, which they have shied away from; moving to a project-based approach to overseas aid; and, of course, my favourite one: tackling public sector pensions, which this Government will never do, for obvious reasons. This proposal is what Labour Governments always do. When they come to power, they clobber the wealth creators, the innovators, the entrepreneurs and the investors, while taking care of their trade union friends. It happened in the 1970s and it is happening again today. We thought we had had a break from that with the Blair Government, but we are now back to the bad old days.

This proposal is also an egregious breach of a manifesto commitment. My noble friend Lady Noakes did not dwell on this, but the right reverend Prelate the Bishop of Southwark did. It has broken a solemn promise—a binding contract with the electorate before a general election. In May, the now Chancellor said that Labour would not increase income tax, national insurance or VAT, and would not raise either income tax or national insurance for

“the duration of the next parliament”—

namely, the Parliament we are now in.

The distinction between working people and employers is tautology and disingenuous. It most assuredly is not a measure that will give rise to economic growth in any meaningful sense. It also betrays a fundamental misunderstanding of the impact of fiscal policy. In its pre-Budget paper on 28 October 2024, the Institute of Economic Affairs stated correctly that

“the incidence of a tax doesn’t always fall on the person who pays it. When we tax businesses, it is often workers who end up bearing the burden in the form of lower wages”.

Secondly, tax affects behaviour, and the choices people make in response to a tax increase or a tax cut can have a significant impact on how much revenue is raised. I do not think that His Majesty’s Treasury has really considered the impact on, for instance, concealed employment and forced self-employment that might arise from behavioural changes that this tax gives rise to.

Even the OBR assumes that just over two-thirds of additional business costs will be passed directly to working people, giving us higher prices, lower wages, the decision to hire fewer people and, therefore, an impact on real wages. Already, the S&P Global Purchasing Managers’ Index composite employment index shows a drop in new jobs being advertised. This policy has undermined consumer, business and investor confidence. The policy will be introduced in April against a backdrop of lower growth, rising wage/price inflation, increased debt and the potential that, within the next two or three years, tax as a proportion of GDP will hit an all-time high of 38%.

These changes are, as my noble friend Lady Noakes said, also regressive, even allowing for an increase in the national living wage. They will disadvantage almost 1 million businesses, and the figure of £25.7 billion by 2030 is illusory due to the offsets and allowances the Government have been compelled to offer. This raises perhaps £16 billion by the end of the Parliament.

Research by the Centre for Policy Studies, in its report Punching Down, published just last week on 3 January, shows that the huge tax hike for businesses will disproportionately hit those employing lower-wage employees, especially in areas such as leisure, hospitality and social care. There will be a 60% tax increase for those employing people on the lowest wages in 2024, adding £1,617 per capita in NICs for those full-time equivalents on minimum wage. A full one-fifth of employment costs will now be taken up with tax liabilities from April this year. Tesco alone will be paying £1 billion extra, and across ASDA, Sainsbury’s and Morrisons there will be an extra £1.3 billion in tax liabilities. As we heard earlier, the British Retail Consortium estimates a total cumulative cost of £7 billion across the economy.

That will have an inevitable impact on income and wealth inequality, and especially on young people. We have heard the British Chambers of Commerce say just today that 55% of companies are now planning to increase prices in the coming three months, up from 39% in the third quarter. Many are very concerned about the national insurance changes. Shevaun Haviland, director-general of the BCC, said:

“Businesses confidence has slumped in a pressure cooker of rising costs and taxes”,


and

“Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging”.

David Bharier, head of research at the British Chambers of Commerce, said:

“Faced with rising costs, our survey paints a difficult picture and shows businesses are having to make some very difficult decisions”.


Because of His Majesty’s Government’s incompetence, lack of planning and ill-thought-out policy, this gives rise to a number of perverse consequences. We read last week that His Majesty’s Treasury is scrabbling around to cut sweetheart deals with public sector contractors and providers who are intending to pass on the costs to the customer—in other words, the taxpayer. They are seeking variations in their contracts to cover “legislative increases”. Either way, this represents price gouging at the expense of largely private sector-employed taxpayers. Perhaps the Minister will specifically update us on these negotiations.

We still do not have a comprehensive picture of the extent of the amelioration and offset funding available, and to which bespoke public sector organisations it applies. Whether it is £4.7 billion or £5.1 billion estimated by the end of this Parliament, it still means higher public expenditure without meaningful reform, higher inflation and an indirect tax hike for private sector employers and employees. Will the Minister also update the House on this issue?

In the last minute or so of my remarks, I will focus on two important healthcare areas impacted by the changes, which other noble Lords have already mentioned and to which I think the Government have given too little thought. GP surgeries are independently owned private sector entities delivering public healthcare services. The NHS Confederation and even the BMA have raised significant concerns about the changes that will result in a forced choice between reducing staff and increasing patient numbers. Both will have an impact on the quality of service delivery in primary care. Does the Minister have an update on the response to these concerns by His Majesty’s Treasury and the Department of Health and Social Care?

In addition, the charity sector, as we have seen, faces existential challenges and threats to its funding model and operational effectiveness as a result of these tax changes. Mencap, which specialises in delivering services for people with learning difficulties, is having to find an extra £18 million a year in the light of the national living wage, increases in NICs and the contingent pay rises for those who are already paid by them.

The final issue is community pharmacies. The national living wage, NICs and business rates mean that they have to find an extra £200 million a year in mitigation as a result of this policy, despite the fact that 90% of their work is dispensing NHS medicines and delivering NHS services. What we see is essentially a crisis in the community pharmacy sector.

In conclusion, these tax changes and the increase in job taxes are inimical to the Government’s professed aim of GDP growth. They will damage businesses and investment and destroy job opportunities, especially for low-paid working people, and are unfair and regressive. The Government must not only think again but be clear on how they help to offset these increases, and who they help in doing so. For this reason, I support the spirit of the Liberal Democrat amendment and urge the Government to bring forward an amended scheme as soon as practicable to tackle the impact of this deeply flawed, damaging, job-killing Bill, which will do nothing for jobs, growth and prosperity.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Jackson of Peterborough Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

[Lord Leigh of Hurley (Con)]

I thank the noble Baroness, Lady Lawlor, for that. One of the four charities that I chair is a think tank, so I totally agree with her. In this country, the Charity Commissioners are particularly effective and very good at clamping down on organisations that are not proper charities. So we can be comfortable that any organisation registered with the Charity Commissioners as a charity is bona fide and generates good work, as the noble Baroness said.

I urge the Minister to have a deep think about this and consider an additional exemption for the private sector. An exemption has already been made for the public sector, so it is doable.

[Lord Jackson of Peterborough (Con)]

My Lords, I support the amendments in the name of the noble Baroness, Lady Bennett of Manor Castle, and my noble friend Lady Sater. It is a pleasure to follow my noble friend Lord Leigh of Hurley.

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[Baroness Noakes (Con)]

Occasionally? It is more than occasionally.

[Lord Jackson of Peterborough (Con)]

I am getting gently heckled by my noble friend Lady Noakes. It may be more than occasionally. On a serious point, we know that some taxes are easy to raise quickly; one is fuel duty and this is another. I implore the Minister that this will have real consequences for many years. It is having consequences now in displacement activity that is not going to the most vulnerable people.

I know that the Labour Party would not inflict that sort of upset on people; most people in the Labour Party are decent and community minded, and want to do the best for the local community. I know, having served with Labour Members of Parliament in the other place, that they care about their local community and their constituents.

I would just ask the Minister to think about this again, particularly this case of people who are trying to do their best for their fellow citizens. All these amendments are extremely compelling, so I ask him to reconsider. It will not show weakness, but will show strength, magnanimity and the ability to govern wisely. I think he should consider pushing that forward because it is the right thing to do.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank all noble Lords who have taken part in this rich and frequently passionate debate, and I thank the Minister for his answer. I think that I will cross-reference something that the noble Baroness, Lady Sater, said, which is that charities are helping vulnerable people in dreadful circumstances. We have been talking about charities as organisations and institutions, but, ultimately, at the end of the line are those vulnerable people. The noble Lord, Lord Altrincham, made the point that those vulnerable people will still be there with their needs; if the charity closes down or cuts back its services, the Government will have to pick up the slack at that point. The Minister said that, if any of the measures proposed in this group of amendments were introduced, the Government would have to lower spending. But that would mean that they would have to raise spending on things they are not spending on now because the charities would not be providing it. We are in a circular situation, with all the disruption that happens as people lose jobs, organisations close down and things have to be recreated. That is the situation that we are in.

There were many contributions, so I will not go through them in length, but there are a couple of points that I want to raise. The noble Lord, Lord Leigh of Hurley, spoke about his brave, regular running commitments. To build on what he said, we know that what encourages people to give to charities is the sense that their money will be directly used to help the relevant people. Of course, when we are talking about something like WaterAid—speaking as someone who is passionate about antimicrobial resistance and maternal health—it is absolutely crucial. People want to see it providing the services and, if they do not see that, and they hear all the talk about this, maybe they will not donate, because they will feel like they are just giving money to the Government. That is a further damaging factor for charities and their fundraising.

The noble Lord, Lord Leigh, also spoke about sacking fundraisers. If one of the things that we are talking about—what my amendment aims to get to—is to delay so that charities have a chance to prepare. If there is not that delay, however, and there is an emergency that has to be dealt with now, you of course do not want to cut the direct service providers who care for those vulnerable people. Fundraisers, therefore, are the obvious people to sack, but the long-term consequences are obvious.

[Lord Jackson of Peterborough (Con)]

Does the noble Baroness agree with me that one of the other cumulative problems is the national living wage? We all agree that it should be increased to help low-paid people, but accommodating that for small charities—with an increase in national insurance charges plus the encumbrance of paying the national living wage—will be very difficult, particularly for homelessness charities, for instance. The Government’s strategic aim is to reduce homelessness, but this will put huge pressure on charities such as Crisis and Shelter.

[Baroness Bennett of Manor Castle (GP)]

In responding to the noble Lord, I can only applaud the increase in the national minimum wage—indeed, I would encourage it to be significantly higher. None the less, the noble Lord’s point about the situation for charities is entirely accurate.

The noble Lord, Lord Jackson, said something earlier—and the noble Baroness, Lady Lawlor, backed this up—about how many ideas the Government end up delivering actually start with small, campaigning charities. They save the Government having to do the work because, when there is a problem and something really needs to be done about it, they do all the work on what needs to be done about it.

Obviously, I will withdraw my amendment at this stage, but it is clear that we will come back to this issue on Report. I am still quite dedicated to the idea of at least delaying the measure, which would not interfere with the Government’s long-term economic plans but would give charities time to adjust. On the £1.4 billion, the Government could save that much in the extra spending that they will have to make if they insist on collecting that money, so it all balances out.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Jackson of Peterborough Excerpts

Committee stage
Tuesday 4th February 2025 Grand Committee

Moved by

[Lord Jackson of Peterborough]

34: Clause 2, page 1, line 16, leave out “2025-26” and insert “beginning after the tax year in which an impact assessment is published assessing the impact of the provisions in this section on community pharmacies.”
Member's explanatory statement
This amendment would prevent commencement of this section until a full impact assessment is published for community pharmacies.

[Lord Jackson of Peterborough (Con)]

My Lords, it is a pleasure to contribute to this, the third day of Committee on this very important Bill. I say at the outset to the Minister and noble Lords that, again, this is a commencement amendment and does not seek in any meaningful way a permanent exemption to this jobs tax. It is merely an opportunity for the Government to think again, based on up-to-date and more contemporary empirical evidence, so that they can study properly a full impact assessment, as the Bill has an impact on a very important part of the healthcare sector: community pharmacies.

The Minister will know that there is significant concern across the whole NHS and the wider healthcare sector about the implications of these fiscal changes for community pharmacies. The figures produced by Community Pharmacy England suggest that these changes alone will generate an extra burden, an extra encumbrance, on community pharmacies of approximately £50 million, even with the changes in the employment allowance. If you strip out the employment allowance, the figure is approximately £74 million. If you add the two other cumulative factors to these fiscal changes, the encumbrance for community pharmacies is going to be very heavy.

Of course, on its own, we welcome the rise in the national minimum wage—we believe that low-paid people should be paid more and have a decent standard of living—but, remember, these burdens are falling on a particular part of the community. This will mean an extra cost of anything between £115 million and £152 million per annum, according to Community Pharmacy England. If you also add in the reduction in the business rates relief as it impacts on operating costs, the overall, universal impact on community pharmacies will be in the region of £200 million—that is, one-fifth of £1 billion.

Let us remember what community pharmacies are: an adjunct to the NHS, in that they are a neighbourhood health service. I accept that Governments have to make tough decisions; in fact, my own party, when it was in government, was not able to support community pharmacies to the level that we would have liked. There has been a real-terms reduction in pharmacy funding from central government since 2015. The lowest number of pharmacies are now open to the public at any time since 2009, which is 16 years ago: 1,250 pharmacies have closed since 2017. What we are talking about today is a policy decision that has at its heart the very viability of this sector.

As noble Lords will know, doctors and dentists are able to defray the costs of their non-domestic rates by direct reimbursement from the National Health Service. That is not the case with pharmacies; in fact, 90% of pharmacies’ work contracts are for NHS reasons and projects, such as dispensing advice and consultancy—principally dispensing.

Let us think about what community pharmacies do for their local communities. They are a lifeline. Flu immunisation, smoking cessation, sexual health services, alcohol misuse interventions, substance misuse services, healthy lifestyles, diet and nutrition, and generic health education—these are all vital functions that community pharmacies carry out. They take a sizeable burden off NHS acute hospital trusts—clinical commissioning groups as was—and, of course, primary care facilities.

They cannot put their prices up. Because they are locked into contractual arrangements, which are fixed, they cannot pass the costs on to the consumer. Often, they cannot make cuts in staffing or the services offered, or make redundancies, without in effect closing the facility—or at least hugely reducing the service that they deliver. They have, over the past 10 or so years, increased service delivery massively. They will put most public services to shame in terms of delivery of productivity in that period; indeed, they are the safety valve for the NHS.

We on this side of the Room are asking not for special favours or for the policy to be junked but for an opportunity for the Government to think again about the special circumstances of community pharmacies. My noble friend Lady Neville-Rolfe made an important point: the impact note that the Minister prayed in aid is out of date. I do not think that it has the up-to-date, topical data that it should have for the Government to properly consider, with the evidence available, the policy.

Incidentally, I should tell your Lordships that, naturally, I support the other amendments in this group: the employment allowance variation amendments, in respect of dentists and doctors, and, of course, Amendment 46 on pharmacies especially.

To conclude, this is about using an evidence-based analysis to create an impact assessment; to review the policy, at least; to inform the fairest and most sensible policy formulation; and to protect the interests of a vital part of our healthcare sector. If we do not do that, it will have a major impact on very vulnerable people who are NHS patients and who use the important services of community pharmacies. For that reason, I ask your Lordships to support this amendment and beg to move.

[Baroness Lawlor (Con)]

My Lords, I support my noble friend’s amendment on pharmacies. We must think of the impact. I have spoken to those who have been impacted already and worry that there is an impact not just on community pharmacies, which employ more pharmacists, but on small providers. When we look at what happens in towns and villages across the country, we see that, when a pharmacy closes down, elderly people, families and people looking for their prescriptions have to take a bus and go somewhere else. The impact on town centres of this sort of change can be quite significant. We have 3,560 independent pharmacies today.

In all of our debates today, we have spoken about the impact on each sector and how it might be alleviated, with amendment after amendment proposed from these Benches and from the Liberal Democrats, who spoke earlier in Committee. Barring retail and hospitality, today’s groups of amendments cover what are usually called public services. They are provided by independent providers. Some, such as the early years and hospice sectors, are charitable as well as independent. If they do not provide these services, there will be greater costs to the taxpayer, and they will do so in a much more bureaucratic and less person-sensitive way. The quality will go down and the cover will be broader; in fact, it will not meet the kind of person-to-person approach that we see offered by many independent providers.

I support my noble friend Lord Jackson because we are talking about people and their jobs: 80,000 pharmacists were employed in 2023-24. As well as them, we are thinking of pharmaceutical technicians, of which there are 34,300. These are real people and real jobs, and they are on top of the jobs that we have spoken about day in and day out in this Committee. I implore the Government and the Minister to think about what happens when people’s jobs go: not only do we as communities lose the services that are vital and which we have spoken about; we see an impact on our streets and our communities, and we increase the cost to the taxpayer—that will go further, in addition to the high hike in borrowing and the tax rises that the Government intend. We will see the further damage that will be caused to the economy. I implore the Government to think again.

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[Baroness Neville-Rolfe (Con)]

It would be helpful if the Minister clarified that. I am concerned about this backward-lookingness that tends to be a feature of our discussions, because we are trying to look forward and make sure that growth stops flatlining, so that this economy grows in the coming months and years. Saying that a particular rule on employment was laid down in the past and therefore that the Government are not going to change it is a mistake.

In this area, there is a lot of evidence of a problem. The NHS has been compensated for these steep increases. The private sector part of the health services sector, which I know the Minister’s Secretary of State and his advisers think can play an important part in the future, is being sold down the river. That seems to be a pity; we should take this opportunity to try and do something to improve things.

I withdraw my amendment—no, I have not moved it. Forgive me.

[Lord Jackson of Peterborough (Con)]

People are withdrawing their amendments before even moving them.

If I could beg the indulgence of the Committee briefly, I wonder what the Liberal Democrats’ view on this policy is because I have a Liberal Democrat press release dated 16 December, entitled, “Liberal Democrats table amendment to exempt health and care providers from NICs hike”. Many Liberal Democrat MPs in the other place are quoted. I was not able to discern it in his remarks but is the noble Lord, Lord Scriven, against the whole policy with regard to community pharmacies and NICs, or just against the concept of doing a proper, thorough and robust empirical analysis and impact assessment?

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[Lord Livermore (Lab)]

I thank the noble Lord for that point. I am of course still happy to write, so that we have absolutely clarified the point.

[Lord Jackson of Peterborough (Con)]

We have established that an epistle will be oncoming from the Minister to the noble Lord, Lord Scriven. I am glad he has clarified that. I just think—

[Baroness Kramer (LD)]

Perhaps I may interrupt. I really think it was appropriate that we did not remake the speeches that we made extensively on days one and two. I am sorry if people were unable to attend or contribute on those days, but it is not sensible for us to continuously repeat the same statements that we have made over and over again. We have tried to observe that, out of respect for the Committee, and an assumption that those who are interested in what we had to say would have looked at Hansard.

[Lord Jackson of Peterborough (Con)]

I think the noble Baroness, Lady Kramer, is rather tetchy about that. I am seeking clarification of the Liberal Democrat policy, and the noble Lord, Lord Scriven, has given me a very clear explanation, for which I am inordinately grateful. Perhaps I can now move on to speak to my Amendment 34.

I heard the Minister and, notwithstanding what colleagues on the Liberal Democrat Benches have said, I still think that he did not adequately address the issue of the data and the response since the Budget on this particular policy with this particular healthcare sector. My noble friend Lady Neville-Rolfe made a very cogent and valid point that it is not good enough to just keep saying, “We have no intention of publishing an impact assessment; that is the end of the debate”. That is not discharging the proper fiduciary duty of Ministers to make sure that they are pursuing the correct financial policies and know the impact they will have on individuals in the NHS and wider healthcare sector. That needs to be looked at again; perhaps it will be.

While I am on my feet, for the avoidance of doubt, I did attend on previous days in Committee. I was there, and I moved an amendment on day one, I think, should noble Lords want to read Hansard. With that caveat made, I feel duty bound to beg leave to withdraw my amendment, subject to further discussion on Report.

Amendment 34 withdrawn.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Jackson of Peterborough Excerpts

Committee stage
Thursday 6th February 2025 Grand Committee

[Lord Porter of Spalding (Con)]

My Lords, I apologise if it is inappropriate to speak now, when I have not paid any attention to this debate previously—there is a good reason for that, which I will explain in a minute. I declare my interests as they pertain to this: there are a number, but the two main ones are that I am a vice-president of the LGA, so clearly I agree with some of what my noble friend Lord Fuller said, and I am also a non-executive director of a care company owned by another council. I could have spoken in a number of these debates, but I have chosen to speak now only because my noble friend Lord Fuller was speaking, and somebody has to put what he said in loads of words into a few short words. That is no disrespect to my noble friend, who is obviously much more eloquent than I will ever be.

I have not spoken before because I do not agree with my side on everything. I do not think it is the Ministers’ fault, or my colleagues’ fault when they were Ministers, or the coalition’s fault when they were Ministers. All the pressures facing public services have been in the system for at least 20 years. In 2006, before the 2008 crash, we had a declining budget for public services; all the political parties have fingerprints on that. I do not want to get involved in the debate about whose fault it is, why we are here and how we got this far. I really love civil servants—I was a NED in a department for a while—but it is their fault that the Government are now doing the wrong thing. The Government have created a jobs tax that will increase unemployment because it was an easy model that has been sitting on the shelf for the best part of 15 or 16 years. Other Governments resisted going down this route; the current Government have been caught on the hop and are acting against their own stated aims.

I really do not want to criticise the Government or the Civil Service, but if we are to have more money to spend on public services, which everybody agrees are underfunded, we have to get it from somewhere, so somebody is going to pay more. Hopefully, we will all make more, so we can all afford to pay more, but this will not give us more. It will end up giving us less, because people will be laid off and we will have to pay their benefits. We will get worse public services and more expensive benefits—nobody wins, but it is an easy solution to a big problem. So, while I agree that we are going to play Committee games and not move any of these amendments, at some point we will end up going through a Division Lobby and we will vote against the Government—not because we do not like them, but because we think they are being sucker-punched by people who have an easy solution that will not fix the problem.

This is a hard problem; we have to find the proper solution to it, and NI is not the way to get better public services. For those reasons, I have to agree with my friend John—my noble friend Lord Fuller—but I cannot speak as eloquently as he can.

[Lord Jackson of Peterborough (Con)]

My Lords, I will speak briefly on this issue. I find myself in agreement with both my noble friends Lord Porter of Spalding and Lord Fuller, because they are both right. My noble friend Lord Fuller puts his case with great elegance and eloquence, and has experience of having led a district council and being involved with the District Councils Network. We have something in common because I was also once vice-president of the Local Government Association and had the great honour of being a Front-Bencher for Communities and Local Government in the other place.

I want to focus on a particular aspect that concerns me about the unintended consequences of these fiscal changes and their effect on local government. There are huge demographic pressures that no government can get absolutely right, because no government can deal with, for instance, the problem of unaccompanied children that faces councils such as Kent County Council; social care for the over-85s, the number of whom is going to double in the next 20 to 25 years; children’s transport services, with the number of children who are given statements for special educational needs; and, of course, pensions in local government. These are all issues that any party in government is going to have to deal with, irrespective of how well-meaning Ministers are and how hard civil servants work.

My concern stems from what has happened recently in Peterborough, where the gap between the available budget and spending is around £20 million, which, for a small unitary, is a significant amount of money. The reserve has been reduced, over just one year, from £45 million to £14 million. My worry is about what Lord Macmillan, Harold Macmillan, described in 1985 as “selling off the family silver”. The problem with such a broad-brush fiscal change as this is not that it will necessarily force many authorities into a Section 114 situation where they are, de facto, bankrupt, but that it will force them to dispose of very important long-term assets, which they will never get back.