National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Macpherson of Earl's Court Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I rise briefly to challenge the analysis of the noble Viscount, Lord Chandos. He claimed that if we took the health and social care levy employer element and what was proposed here, it would sort of level itself out. It would not. The employer element of the health and social care levy is roughly one third of the amount that is expected to be raised by this Bill. The two cannot be compared.

[Lord Macpherson of Earl’s Court (CB)]

I support the comments from my noble friend Lord Hogan-Howe: I think that it is an important principle that Budgets should be determined by the House of Commons. Those who argue for exemptions should be obliged to explain how they will pay for the tax cuts in those exemptions. If you cut taxes in one area, they will need to be raised somewhere else. That will result in higher marginal rates for everybody else, which do far more damage than low ones.

--- Later in debate ---

[Lord Macpherson of Earl’s Court (CB)]

Many apologies to the noble Baroness; I stand corrected. The cut in employee national insurance was considerable. Looking at the macro effects of employee and employer national insurance on the labour market, I regard the changes that have taken place as broadly neutral across the board.

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I am not an economist, but I run a small Scottish charity that provides health services. I want to come back on some of the points raised.

I wish the noble Lord, Lord Eatwell, the noble Viscount, Lord Chandos, and even the noble Lord, Lord Macpherson, had had the recess that I have just had—looking at our employees, some of whom have been with us for over 20 years and are highly trained clinical specialists, and telling them that their roles are under threat of redundancy. As I said at an earlier stage of this Bill, I have not been able to participate in it as much as I would have wished because of its effects on my organisation, which are that people will lose their jobs and organisations will lose skill. Those are very difficult things to build up again.

Like the noble and learned Lord, Lord Wallace, I have been in touch with the Coalition of Care and Support Providers in Scotland. I am slightly concerned that these amendments do not cover health and social care services in Scotland. If he is to bring back an amendment at Third Reading, I will happily work with him on it.

I would love a simpler tax regime and would absolutely support it. The way to have one is not to have this national insurance increase—that would be very simple. The lists covered by these amendments are all of organisations that support public services and the public sector. These are services that many government agencies are required to provide by law, yet they are farmed out to organisations such as ours, as well as to CrossReach, Ark and others.

Frustratingly, this demonstrates a huge lack of understanding by this Government of how these measures will affect vulnerable people—the people who these organisations support. My organisation, Cerebral Palsy Scotland, is a regulated, registered charity, so we cannot put up prices. Our raison d’être is to make our services available to the most vulnerable who cannot pay for them, and so we cannot put up our prices. Yes, we may have benefitted last year from paying slightly less employers’ or employee national insurance, but all our providers—the people who clean our centres, help us with IT, empty our sanitary bins, and things like that—employ people and they are all putting up their costs. Our costs are rising, our national insurance is rising, and because of the minimum wage increases at the same time, it is becoming more and more expensive for us to employ people. The only thing we can therefore do is to cut our cloth and employ fewer people.

I do not understand these measures. I support having lists of different sectors, because these are the sectors that are delivering support that gives people choice, quality of life and control over their lives, and that support the NHS and the social care sector, which would otherwise be stuck. This is a measure that will not save public services, as the Minister has told us it has been put in place to do, but that will, I am afraid, crush them.