Social Care and Special Education Charities: Employer National Insurance Contributions

Lord McColl of Dulwich Excerpts

Monday 9th June 2025 Lords Chamber

Asked by

[Lord McColl of Dulwich]

To ask His Majesty’s Government what assessment they have made of the impact of changes to employer National Insurance contributions on charities working in the social care and special education sectors; and what steps they are taking to mitigate that impact.

[Lord McColl of Dulwich (Con)]

My Lords, I beg leave to ask the Question standing in my name in the Order Paper and declare my interest as vice-president of the Shaftesbury Society and my involvement in many other similar charities.

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

My Lords, the Government have had to take difficult decisions to repair the public finances and rebuild the public services. Giving careful consideration to and properly assessing the impact of these decisions is a priority. A tax information impact note was published alongside the introduction of the Bill containing the changes to employer national insurance contributions, which sets out the impact of the policy on individuals, businesses and civil society organisations. As I committed to your Lordships’ House during the passage of the Bill, we will continually monitor and assess the impacts and effects of these policies.

[Lord McColl of Dulwich (Con)]

The Government’s national insurance increase to 15%, plus lowering the threshold to £5,000, will cost charities an additional £1.4 billion annually. One in four employers are implementing redundancies as a result. This will drastically cut charitable services, which is akin to kicking in the teeth the most vulnerable in our society. Has any assessment been made of the impact on charities serving vulnerable young and old people?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. Of course the Government recognise the important role that charities play in our society as a trusted and independent partner to the public sector in helping deliver vital public services. We also recognise the work done by unpaid careers and welcome this week’s Carers Week as an opportunity to pay tribute to the invaluable work that they do throughout the UK. As I said in my opening Answer, we had to take a number of very difficult but necessary decisions, including on employer national insurance, to fix the public finances and restore economic stability. In doing so, though, we recognised the need to protect the smallest businesses and all charities, which is why we have more than doubled the employment allowance to £10,500, meaning that more than half of businesses, including charities, either gain or see no change in the amount that they will pay. As I also said in my Answer, we will continually monitor and assess the impact and effect of those policies.