National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Livermore Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I will briefly address the new clauses proposed by the noble Baronesses, Lady Neville-Rolfe, Lady Noakes and Lady Lawlor, requiring the Government to conduct assessments on the economic and sectoral impacts of this Bill. As we discussed extensively in Committee, the Government have published an assessment of this policy in HMRC’s tax information and impact note. This sets out that around 250,000 employers will see their secondary class 1 NICs liability decrease and around 940,000 will see it increase; around 820,000 employers will see no change. The OBR’s Economic and Fiscal Outlook sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment, on growth and on inflation. The Government and the OBR have, therefore, already set out the impacts of this policy change. The information provided is in line with other similar tax changes, and the Government do not intend to publish further assessments. The Government will, of course, continue to monitor the impact of these policies in the usual way. As a result, I respectfully ask noble Lords not to press their amendments.

[Baroness Neville-Rolfe (Con)]

I thank the Minister for his reply, but I am sorry that he does not feel able to go further. I am particularly grateful to my noble friends Lady Noakes, Lady Lawlor and Lord Hodgson, and the noble Lord, Lord Londesborough, for their support, and I agree with the noble Baroness, Lady Kramer, that the time has come to take a stand. I do not share the concern of the noble Lord, Lord Eatwell. This is the sort of assessment that we do in the private sector, and in some other departments, and it is possible for the Government to add to the amendment in the other House if they feel they need to do so. We heard earlier from my noble friend Lord Ahmad that the Treasury had failed to consult individual sectors on the proposals under discussion. I know how averse the Treasury can be to that, having been a Minister in a similar position in the Treasury. I also share the fascination of the noble Lord, Lord Davies with the state of the National Insurance Fund, but I think that is for another day.

The Government’s impact assessment has been woefully inadequate for a change on such a huge scale. It is in the interests of the public that we understand fully the impact of the Government’s jobs tax on individual sectors—albeit retrospectively—and the overall figures that we have received from the Minister, which have been helpful in themselves, are just not enough. So I intend to test the opinion of the House on my Amendment 38, but in the meantime I beg leave to withdraw my Amendment 37.

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[Lord Altrincham (Con)]

My Lords, I support Amendment 39 in the name of my noble friend Lady Noakes. I thank all noble Lords for their courage and grace in staying all the way through to group 7.

Amendment 39 would give the Treasury the power to exempt sectors that would suffer significantly under the Government’s national insurance rise. The amendment introduces a degree of flexibility that Ministers can use to protect the most vulnerable of British businesses; by allowing the Treasury to introducing specific exemptions when required, we can exempt them from the additional financial burden of the national insurance increase.

I am grateful to my noble friend for bringing forward Amendment 39. It is clear that we share many of the same concerns. The amendment in her name is closely aligned with those in the name of my noble friend Lady Neville-Rolfe that seek to exempt specific sectors, such as the social care or charity sectors. So many sectors need exemption from this policy, and we hope the Government will give the arguments thoughtful consideration.

[Lord Livermore (Lab)]

My Lords, Amendment 39, tabled by the noble Baroness, Lady Noakes, seeks to include powers as part of this Bill to exempt certain groups in future. As I have already set out, the revenues raised from the measures in this Bill play a critical role in repairing the public finances and rebuilding our public services. Clearly, any future changes that exempt certain groups from paying national insurance would have cost implications, necessitating either higher borrowing, lower spending or alternative revenue-raising measures. I would therefore respectfully ask the noble Baroness to withdraw her amendment.

[Baroness Noakes (Con)]

My Lords, I cannot make the Government accept a power that I have generously offered to be made a part of this Bill. I hope the Government do not regret at a later stage turning down this opportunity to allow them to save face in a simple, pain-free way. As I say, I cannot force the Government to accept a perfectly sensible measure that would allow them to repair some of the damage that this Bill will inevitably do. I beg leave to withdraw the amendment.

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[Lord Altrincham (Con)]

My Lords, I support my noble friend and thank him for his brief-ish words on local taxpayers and his update on the Great Reform Bill as well. I thank him for his amendment to ensure that the Government initiate a review into the impact of this tax on local authority finances.

As countless noble Lords have remarked, both in Committee and during this debate, local authorities already find themselves in a perilous financial position. As my noble friend Lord Jamieson said in Grand Committee, local government currently spends more than 70% of its funding on adult and children’s social care. The Local Government Association has estimated that this measure will cost local authorities a total of £1.7 billion. Some £1.2 billion of that is indirect costs. While the Government may have offset the direct costs of local authorities, they have not done so for the indirect costs they will face. They will have either to cut public services or to put up council tax.

Given this, a review of the impact on local authorities is surely the minimum we can expect from the Government. I urge the Minister to accept this amendment.

[Lord Livermore (Lab)]

My Lords, I will speak briefly to Amendment 43 tabled by the noble Lord, Lord Fuller, which would require the Government to publish an impact assessment of the Bill on local authorities within six months of its introduction. The noble Lord set out eloquently the damage the previous Government did over 14 years to public services and to the funding available to local government. He asked me the same questions as he did in Committee, and I give him the same answer as I did then: it is not for me to comment on the calculations made by other organisations.

On impact, as I have set out previously this evening and extensively in Committee, the Government have already published an assessment of this policy and a tax information and impact note. The OBR’s Economic and Fiscal Outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment, growth and inflation. The Government and the OBR have therefore already set out the impacts of this policy change. The information provided is in line with other tax changes, and the Government do not intend to publish further assessments.

The Government will of course continue to monitor the impact of these policies in the usual way. I therefore respectfully ask the noble Lord to withdraw his amendment.