National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Sharkey Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Lord Sharkey (LD)]

My Lords, this is an unsatisfactory Bill, not because it raises taxes—that was, and is, an obvious necessity—but because it does so in a way that exacerbates existing unresolved and urgent problems or, as in the case of social care, in effect ignores them entirely.

The provisions of this Bill will probably not help with growth, the Government’s chief objective. I say “probably not help”, but that may be a little bit generous. Many noble Lords who have spoken this evening have felt strongly that the Bill will have negative consequences for growth. Arguably, two of the most important engines of growth, or what have been and should continue to be engines of growth, are our SMEs and our higher education sector. This Bill has damaging consequences for both. I will speak a little later about our university sector, but I want here to make some points about SMEs.

My colleague in the Commons, Christine Jardine, asked the Minister at Second Reading:

“How does it help morale and positivity among small businesses, which will be vital to economic growth, if some of them see their salary bills double?”


The Minister replied by saying:

“I urge her to understand that what we are doing on national insurance is taking a tough decision to fix the public finances, while at the same time providing the stability that businesses need to invest and grow””.—[Official Report, Commons, 3/12/24; cols. 202-03.]


It is the last bit of that, frequently repeated as an explanation of or an excuse for government proposals, that is the problem.

No convincing case has been made for the proposition that the measures in the Bill will provide stability. Indeed, it is hardly surprising that many see the Bill’s measures as actually reducing stability and creating further uncertainty. In a recent survey, 44% of UK SMEs said that the NI increases would negatively affect them. As Todd Davison of Purbeck Personal Guarantee Insurance, an important operator in the SME arena, noted:

“The increase in employer National Insurance contributions … could prove to be a fatal blow to thousands of small businesses, despite the increase in the Employment Allowance”.


He went on to say:

“There will be thousands of business people who have put their home and life savings on the line by signing a personal guarantee for a business loan who will now be facing some very difficult choices”.


I note in passing that, in trying to justify the national insurance rise, the Government have pointed to the increasing availability of funds for the NHS. This is, of course, welcome, but the extra funding is being raised in the wrong way and on the wrong people—and what about carers and the care sector? Will we have to wait until 2008 and beyond for any significant progress? In the meantime, what additional support will be available to offset increased costs? What about the additional payroll cost to GP practices? The Institute of General Practice Management estimates that the NI rise will mean that the average GP surgery tax bill will rise by around £20,000 a year. How is this to be mitigated? Second Reading in the Commons did not produce an answer to any of these questions. I would be grateful if the Minister could address the issues about SMEs, the care sector and GPs when he replies.

I now turn to another critical factor in growing our economy: our higher education sector. I declare an interest as a member of council at UCL. Our university sector has a very strong international reputation, very high academic standards and world-class research output and influence. This is despite the UK spending significantly less on R&D than our rivals. We spend 1.7%, China 2.2%, the US 2.8% and Germany 3.1%. However, in the last QS worldwide ranking, the UK had four universities in the top 10 and 16 in the top 100.

The Government explicitly acknowledge the importance of the sector. The Secretary of State for Education wrote to vice-chancellors on 4 November last. She started her letter by saying:

“The institutions which you lead make a vital contribution, as education and research institutions, to our economy, to society, and to industry and innovation. They contribute to productivity growth; play a crucial civic role in their communities; and have a key role to play in enhancing the UK’s reputation across the globe. I also passionately believe in education for education’s sake: a more educated society is happier, healthier, more cohesive, and socially and culturally richer”.


She went on to say:

“I am clear that we need to put our world-leading higher education sector on a secure footing”.


She went on to speak of student numbers, international students and the financial status of the sector. This financial status is in need of very urgent attention.

The main leader in last Thursday’s Times was critical of the very large travel and expenses costs of some vice-chancellors at a time when the sector is under critical financial pressure. The leader’s chief point concerned this financial pressure. It said:

“There is no doubt that higher education is experiencing extreme financial difficulties”.


It pointed out that these extreme difficulties will be made worse by the increase in employers’ NI. The small but welcome increase in student fees will increase revenue by around £370 million. The increase in national insurance will cost universities around £450 million.

The Times went on to note that, according to the OfS, the combination of lower revenues from both home and overseas students means that nearly three-quarters of our universities will be running a deficit by the end of this academic year. Some 40% already have less than a month’s cash in the bank and 10,000 jobs are expected to be lost in this academic year. This is a genuine and pressing crisis.

If we want to maintain our large and very high-quality university sector, if we want to remain among the global leaders in the life sciences, if we want to continue to create the IP that forms the basis of new and innovative commercial ventures, and if we want our towns, cities and regions to continue to benefit from their universities, we must act. Increasing the national insurance burden is to act completely in the wrong direction.

In the absence of a coherent plan for our universities, the Government have, in an almost cavalier way, significantly worsened their already extreme financial difficulties. There is a pattern here. There is no sign of a meaningful intervention to relieve social care of the increased costs imposed by the Bill. There is no sign of a meaningful plan for social care before 2028. There is no proposal for providing significant help to SMEs. There is no proposal for helping GP surgeries to mitigate the effects of this Bill.

There are plenty of indicators and predictions about the damage that these NI changes will bring to critical parts of our economy and society, but no indication of how this damage may be mitigated or avoided and nothing positive for growth—but plenty in the negative.

There is much to regret in how and on whom the Government are imposing this significant tax, and much to regret in the effect of this tax increase on carers, on SMEs, on GP surgeries and on our universities. I strongly support the regret amendment from my noble friend Lady Kramer. If she chooses to divide the House, as I hope she will, these Benches will support her.

[Baroness Sater (Con)]

I thank the noble Lord for allowing me to make a small intervention. The noble Lord is arguing passionately against the Government’s job cuts and the damage that will be done to care providers, charities and others. Does he therefore agree with me that this Bill must be scrutinised in a Committee on the Floor of the House? Does he also agree that it is in the interests of the charitable sector for this Bill to be scrutinised as fully as possible?

[Lord Sharkey (LD)]

I think there were three questions there, so perhaps I can answer very quickly: no, no and no.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Sharkey Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

[Lord Storey (LD)]

My Lords, I attended Second Reading but, as some noble Lords may have noticed, I was 90 seconds late and the Government Chief Whip said that I could not speak in the debate. I was quite disappointed by that, but never mind, here I am.

Nurseries have been struggling financially for more than 20 years, and the outcome of this struggle usually falls on parents in the form of increased fees. As Jess Phillips said, this NI increase will “undoubtedly” make this worse. This is supported by nursery spokespeople, who stress that the most likely outcome of this increase in NI is an increase in nursery fees. This is because the consequence of government-funded nursery places makes most nurseries ineligible for the employment allowance scheme, meaning that nurseries, which are already struggling to break even, cannot apply for discounted NI bills.

According to the qualifying criteria for the employment allowance scheme, if 50% of a non-charitable organisation’s work is determined as public work, and 50% of the organisation’s income comes from public funding, the organisation is designated a public body and therefore cannot claim employment allowance. Because of government-funded places in nurseries, many have become a public body under this policy, meaning that they are excluded from applying for the employment allowance.

The number of nurseries impacted by this is likely to increase as a result of increased government funding for nursery places. The Government are proposing to increase places by September 2025 so that any child of working parents earning less than £100,000 can receive 30 hours per week across 38 weeks between the ages of nine months and five years old. This will mean that around 70% to 80% of nursery places across the UK will be government-funded. As the number of funded nursery places increases, the larger a nursery’s public-funded income will be, removing them from employment allowance eligibility.

The chief executive officer of the Early Years Alliance, Nick Leitch, summarised this problem:

“Early years providers are stuck between a rock and a hard place”.


If nurseries do not accept government funding for free nursery places, they lose a huge proportion of their income. If nurseries do accept this funding, they lose a huge proportion of their income on NI bills.

The Government have yet to estimate how many early years providers will be eligible for the employment allowance when NI charges come in in April 2025, and there has been no explicit response from the Government about how they will support nurseries through this increase in NI costs.

In a speech on 17 December about the proposed changes in the Bill, James Murray, the Exchequer Secretary, commented only on the Government’s pledges to increase government-funded childcare places. He reassured that there will be a rise in funding for these places to “over £8 billion” but did not address the implications that the NI increase will have on these nurseries. Repeated throughout his speech was the lifeline that the employment allowance scheme will provide for many organisations, but overlooked was the exclusion of most nurseries from this scheme because of government-funded places. Currently, the likely solution for nurseries is to either increase fees or decrease the number of government-funded places they accept.

Neither is a good outcome for increasing access to early care for parents or for children. Nurseries do not have to accept government funding, and if they did not, they could apply for a decrease in NI bills from the employment allowance scheme. Many nurseries do not want to do this because of the income that government-funded places provide. It is also worth noting that currently, even with government-funded places, most nurseries barely break even. The most likely solution is therefore increased fees, so hard-pressed parents will have to shoulder the burden. I beg to move.

[Lord Sharkey (LD)]

My Lords, I have added my name to Amendment 4 in the name of my noble friend Lord Storey, which proposes to exempt universities from the NIC increase, among other things. I will speak to that exemption for universities. I am grateful for the extensive briefing provided by UUK, and I declare an interest as a member of council at UCL.

Even before the NIC increases proposed by the Bill, our university sector was in deep financial trouble. Funding per student has fallen to its lowest real level for 25 years and, because of an ongoing inability to recover the full economic cost of research—partly the fault of government—universities lost £5.3 billion on their research activities last year. A decline in overseas student numbers has made the financial problems worse. In the year ending last September, the number of visas issued to foreign students fell by 19% on the previous year, while the decline at master’s level was 25%.

All this has produced a situation where many universities face urgent and very serious financial problems. The OfS’s latest modelling suggests that 72% of our universities could be in deficit by 2025-26. It is not as though there are widespread reserves available to smooth the problem. In fact, 40% of our universities are predicted to have fewer than a month’s cash by the end of the next academic year. The proposed employers’ NIC rise will make an already fragile system more fragile and more precarious. The universities will have to find £372 million to fund this increase. There is a risk of real and hard-to-reverse damage to our higher education sector.

There has already been extensive media speculation about breaches of covenant, reluctance of lenders to lend, and even insolvencies. This sector is of critical importance to our future and to our prospects for growth. AI is an example. We are well placed to be world leaders because of our research and our research standing. But if we want to fulfil the Prime Minister’s aspirations, we need a healthy and sustainably funded university sector with strong connections to business. The higher education sector is critical in its liaisons with business and in its generation of spin-offs, start-ups and social enterprises, as well as in the generation of IP and in providing key public service workers. Every year, our universities train over 100,000 public service workers: around 42,000 nurses, 21,000 medics and 38,000 teachers. The total economic impact of the sector has been estimated at over £265 billion. This impact is widely spread around the country, not just confined to our largest cities and oldest universities.

In very many of our towns and cities, our universities are engines of growth and critically important supporters of the local economy. It is true in general that our universities are of exceptionally high quality and standing. According to the last QS survey, here in the UK we have four out of the world’s top 10 universities and 16 out of the top 100. These are astonishing figures and an astonishing advantage to be leveraged to help produce the growth we need. The figures demonstrate our international standing and our success in education and research, and this standing boosts our soft power. The HEPI 2024 soft-power index found that 58 serving world leaders received their higher education here in the United Kingdom.

Perhaps it is in research that our universities most obviously display their world-class quality and reach, but this kind of quality and reach is under severe financial pressures and increasing global competition. Our current financial arrangements rely on a high—disproportionately high—cross-subsidy from overseas students, which is an obviously unstable element in today’s geopolitical world.

If we want our international standing to remain at the highest levels, and our universities to continue to be engines of growth, then we need very urgently to do something about our funding system. What we do not need is to impose additional costs on an already overstressed system. We also should not discourage overseas students from coming to the UK, as the previous Government did. These students contribute at least £37 billion to the UK economy. That is important, but it is obviously not a substitute for sustainable funding. Increasing employers’ NIC will not help with any of that and may, in some cases, push some universities to the financial brink.

The Minister will be aware of the financial dangers faced by our higher education sector. He will be aware of the conversations in Whitehall and elsewhere about how to reform our funding system and of the urgency of producing a stable and sustainable funding system. He will also know that the employers’ NIC increase will damage universities’ finances, at least until we have a better funding system. The additional funds raised will be relatively small from a Treasury perspective, but relatively and dangerously large from the sector’s perspective.

Applying the NIC increases to our world-leading higher education system will inevitably damage its contributions to our leadership in research and in the production of IP. It will damage our prospects for growth. Can the Minister give us his assessment of the likely impact of this NIC rise on our university sector and its ability to operate? We need a proper impact assessment on this and many of the other things that we are discussing.

[Baroness Grender (LD)]

My Lords, I will speak to Amendment 5 in this group, which would amend Clause 1 to retain the original rate of 13.8% for both charities and housing associations. I refer to my interests as set out in the register. I also support Amendment 4 in the name of my noble friends Lord Storey and Lord Sharkey, and Amendment 8 in the name of my noble friend Lady Kramer. I thank the noble Lord, Lord Randall, for his support for my amendment.

Given the previous Government’s record and the legacy they left, charities and not-for-profit organisations, such as housing associations, will be a vital part of the Government’s future plans—for instance, to increase housing and end homelessness, which is an ambition that can and should be realised. I am going to use one case study to highlight what is going to happen to housing associations. I would really appreciate it if the Minister could respond to that case study, which is about the housing association Peabody.

For context, the recent government announcement of £500 million for the affordable homes programme for the whole of the UK is the equivalent of around £500 million that Peabody alone spent in the last financial year on bringing new homes into play and having a development pipeline. It is a very significant partner, I would say, in terms of some of the objectives that the Government have.

Peabody estimates that the additional cost for it is likely to be around £800,000 and would challenge the viability of some of its services, particularly supported housing and care services that rely so much on high levels of staffing. Those supported housing and care services are provided for more than 10,000 people, with a wide range of complex needs, from addiction to recovery from mental illness, as well as people at risk from homelessness, those with learning disabilities and young people, as well as people who are older and in need of specialist accommodation. For some housing associations, the proposed increase would wipe out much of the additional revenue generated from the Government’s proposed five-year rent settlement. Across London’s 15 largest housing associations, it is estimated that the increase will cost around £30 million, which could impact other key priorities such as new homes in development.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Sharkey Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

[Lord Howard of Rising (Con)]

As my noble friend says, you get a knighthood—possibly even a barony. If you get something wrong, throw more money at it until it becomes an embarrassment that can no longer be hidden and hushed up. HS2’s original budget was £37.5 billion. Only when the estimated cost has risen to £90 billion—and counting—is the project being reined in. The idea of spending £100 million on a bat shelter defies the imagination. I mean: who could have thought of that one?

As economists are being quoted, might I quote Professor Milton Friedman? He said:

“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand”.


What the Government should do is what anybody in this Room, faced with the same problem in their own life—too much spending and not enough income—would do: cut spending to solve the problem. Given that that is unlikely to happen, will His Majesty’s Government carefully consider what they are doing and try to reduce some of the negative consequences of this increase in national insurance for employers? A sensible first step would be to prepare a proper impact assessment for those small companies, often described as the engine of the economy.

[Lord Sharkey (LD)]

My Lords, we have a lot of sympathy for the amendments in this group. My noble friend Lady Kramer has added her name to Amendment 22.

It is absolutely right that we should be concerned about the effects of the proposed NICs rise on small businesses. These businesses are at the heart of our economy. As the noble Lord, Lord Ahmad of Wimbledon, said several Prime Ministers ago:

“There are over 5.7 million Small to Medium Enterprises in the UK. They are the engine of growth in our economy, driving innovation and greater productivity, finding solutions and creating jobs”.


In fact, our SMEs provide 16.6 million jobs—60% of the total number in the United Kingdom. Their total turnover is estimated at £2.8 trillion. They are in many ways more important than much larger businesses—certainly when it comes to providing jobs—but they are probably more vulnerable than large businesses to these NIC changes, with less ability to absorb increased costs. The SME landscape is very varied, but it seems vital for us to be able to assess the likely effects of the proposals before us on different sizes of SMEs.

That is why I note in particular Amendment 33, in the name of the noble Baroness, Lady Noakes. As she explained, this amendment proposes an impact assessment of the provisions in Clause 2 on employers with an annual turnover of less than £1 million, less than £5 million and less than £10 million before the changes in the clause can be brought about; these are probably the sizes of business that are most likely to have difficulty dealing with the additional costs imposed by this Bill. It would have been good to have had such an impact assessment before these debates, but Amendment 33 would go some way to putting that right, as the noble Lord, Lord Londesborough, remarked—pace the charge of underspecification from the noble Lord, Lord Eatwell. Perhaps the Minister could provide us with more granular estimates of the effects of Clause 2 on the smaller SMEs even if he cannot, or will not, provide us with the traditional, full and necessary impact assessment.

--- Later in debate ---

These amendments would help to bring the Bill in line with government action in favour of young people. They would help the Government to stabilise the labour market, given other economic pressures, and of course help young people to develop a prosperous future. I ask the Minister to consider these amendments carefully.

[Lord Sharkey (LD)]

My Lords, these amendments address very important issues. As noble Lords who attended the Committee last week will be aware, we on these Benches have taken an approach to the Bill aiming to exclude certain sectors from the Government’s rise to employers’ national insurance contributions—sectors that we feel will be particularly impacted by the change.

The amendments in this group follow the same structure as our earlier amendments, exempting employers of young people in various age groups from the proposed rise in employers’ national insurance contributions. We touched at least tangentially on that and on some of the concerns raised about youth employment when we debated amendments last week, tabled by my noble friend Lady Kramer, relating to part-time workers and to the hospitality and tourism sectors. For many young people, part-time work is the entry point into the world of work. A career in hospitality is often the first step on the career ladder for many young people entering the job market.

According to data commissioned by that well-known authority, the British Beer & Pub Association, pubs currently provide jobs for more under-25s than they ever did, with 350,000 people in employment in that sector. The association estimates that, to keep employing that same number of under-25 year-olds, the NICs liability for employers will increase from £82 million to £153 million.

I shall not repeat the points made in our debate last week, but I urge the Minister to address further some of the possible unintended consequences that the measures in this Bill might result in, as employers in these sectors look at ways in which to offset the additional costs that they will have to endure—perhaps instituting hiring freezes or freezing pay rates—and especially and specifically the impact that will have on young people seeking to enter employment for the first time. An impact assessment would have been very helpful, as would the application of the mechanism contained in Amendment 33 from the noble Baroness, Lady Noakes, which we discussed earlier this evening.

In the regrettable absence of an impact assessment, it would be entirely proper to postpone the NIC provisions until the Government make more age threshold granular data available to help to assess the effect of the measure on young people. I heard the Minister’s unequivocal refusal to provide any more impact assessments, and I expect that we will hear it again in Committee and on Report.

[Lord Blackwell (Con)]

My Lords, I want to add to the comments made by my noble friend Lord Altrincham in introducing these amendments. He spoke of a large number of young people who are not in economic activity, full-time education or training. Labour market statistics are notoriously difficult to interpret, as we know, but, if you take the unemployment rate he quoted—around 14%—we know that, in addition, a worryingly large number of people in this age group are also on long-term sickness benefits. All of them could be in productive work, with the right support and encouragement.

A number of Members of this Committee are also members of the House of Lords Economic Affairs Committee, which recently did a review of this area. Some of the evidence that we took made the point that, once a young person moves on to long-term benefits without ever having had meaningful employment experience, it becomes increasingly difficult for them to get work. They become stranded in a benefit life, which is not only wasteful for them but a huge cost to the taxpayer.

In stressing the importance of making it economically attractive for employers to take on young workers such as these, I wonder whether the Government should consider going further than these amendments: not just retain the existing levels of national insurance contributions for employers for this age group but reduce the national insurance contributions of young workers to give an additional incentive to help them, at this early stage in their lives, into a meaningful working career.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Sharkey Excerpts

Committee stage
Thursday 6th February 2025 Grand Committee

[Baroness Lawlor (Con)]

My Lords, I support the amendments in this group: Amendment 35 from my noble friend Lady Barran, which asks for the new employer rates to begin after the tax year in which an impact assessment is published in respect of schools and universities, and Amendment 43 from my noble friend Lady Neville-Rolfe, to which my noble friend Lord Altrincham has added his support and which asks for a higher education allowance. I do so not only because the education of children is an obligation for their parents, who must ensure that children of compulsory school age are receiving an education—most do this in schools—but because, in this country, with its tradition of support for freedom of conscience as an enabling state, not a domineering one, Governments have gone hand in glove with the right of parents to decide what sort of education is best for their children. In these matters, the state has enabled parents to choose, rather than forcing them into state institutions through financial penalties or totalitarian laws.

That view has been part of the political arrangements for education when, irrespective of who is in power, the tradition has been that, where the law requires, the state enables. Barring the often political and ideological debates over education, it has done so through, among other ways, funding. Initially, it was a grant in the mid-19th century. That was followed in the 1870s by Gladstone’s Liberal Party introducing the obligation on parents of elementary education, but he refused the demands of what he called the “Prussian element” in his own party, who wanted to supersede the voluntary schools and replace them with a comprehensive, uniform state system. Thus, he allowed to survive, and indeed encouraged, what we now call voluntary schools: independent schools and Church schools which have educated children in this country for centuries. He expressly supported the right of parents to choose the best education for their children. Voluntary schools would be supported and supplemented by the new board or state schools.

That principle continued to inform education law in this country throughout the 20th century. Indeed, Britain’s history is a proud one. The education of children and young adults was often at the public’s expense, supported by those who could or would pay—be that the monarch, the guilds, the city corporations, the ratepayers or, later, in our own centuries, the taxpayer. In fact, until relatively recently, this country was an exemplar in educating its people irrespective of their parents’ means.

Under Elizabeth I, that tradition was recognised in law at the very start of the 17th century, when education was designated in law as a charity. Under the Tudors, some of the most famous schools had been just that: public schools. Winchester and then Eton were founded by the monarchs of the day to educate, as I recall, 70 poor boys so that their school education would equip them to go on to one of the universities of the day and be employed, I think, mainly as professional clerks in the Church, at the monarch’s service—a precursor to the Civil Service.

Anyway, many of those schools—Anglican, Catholic and dissenter—continue to flourish today, as Gladstone would have wanted. Not only were these schools regarded as the foundation of the education system, they were supported and encouraged in law through public funds. However, even if the funding systems changed, they were never penalised by discriminatory tax, as will happen under what this Government propose, not only in the extension of VAT but in the discriminatory penalty of the new NIC rates.

Despite stiff competition, they continue to be popular with parents, educating hundreds and thousands of children across the whole country. An impact assessment would reveal the true cost to children’s education and allow for a pause before this unthinking rush to destroy what works well and, as we have heard many times in this Room, continues to supplement what the state does and what the general taxpayer can afford.

There are 2,600 independent schools in the UK, mostly catering for the early years and primary stages of school. They educate more than 620,000 children, nearly 7% of UK school pupils and half of the parents who were at maintained schools: 25% in Edinburgh, 13% in London and 20% of all sixth-formers in the UK. They teach well. I will not go through the Ofsted reports on each of these schools but, on the whole, they do very well—better than maintained schools do on the whole, I am afraid, although some excellent maintained schools have done wonders recently; I take my hat off to them. They provide a school education to the highest potential of each individual student—just as the principles of the 1944 Act put it—which their parents judged was right for them.

I understand that one policy of this Government is an ambitious concentration on growing the public sector, with large pay increases—an aim of this Government that may go counter to the priority of economic growth for the whole economy. Perhaps the Minister would like to say, now or in writing, how many of the 28,000 new public sector appointments between July’s and October’s Budgets included new teachers and new doctors. Without good-enough teachers in our schools, maintained or independent, children at every stage of their education—early years and compulsory—will suffer.

Unless the Government listen and think again on these modest amendments, children’s education at this vital early and compulsory stage will suffer, as some independent and voluntary schools will be forced to lay off staff and will probably try to raise their fee income to make ends meet. They are the target of penal taxation, with the imposition of VAT and the new employer NIC hike. They are discriminated against because maintained schools will have these rises funded.

These amendments do not seek to run a coach and four through the measure. They are not demanding the outright abolition of the employer’s new NICs or the employment allowance, but they seek to improve the legislation. Wherever they are educated, we see the fruits of an education suited to the individual child. It is an essential stepping stone to adult life in which the recipient flourishes, and so the whole of society benefits. Education is not only a private good for a child; it is a public good for all of us and all who live in our country.

These are modest amendments designed to assess and ameliorate the impact on the independent sector—not to deny the Government their measure, but to do due diligence and mitigate the damage of an otherwise flawed measure. I hope that the Minister and the Government, in the spirit of the historic Labour Party, will be at one with the tradition of responsibility for the education of the young, in whatever institutions of the country they inherit, and will stop short of a new tax levy that will penalise those institutions and the education of our children. I hope that they will assess fairly the impact of the proposed measure on independent schools and will think again.

[Lord Sharkey (LD)]

My Lords, I will speak briefly to Amendment 35. I declare an interest as a member of council at UCL.

On the first day of Committee, I spoke in support of my noble friend Lord Storey’s amendment on education, including universities, as the noble Lord, Lord Altrincham, mentioned. That amendment would have excluded specified groups, including universities, from the rise in the employer’s contribution. We prefer exclusion to the delays promoted by Amendment 35. We prefer exclusion because of the disastrous damage that this Bill will quickly inflict on, among other things, our higher education system. We are uncertain whether similar damage will be inflicted on our further education system. Some additional money appears to be promised to FE, but it is not clear how it is going to be allocated. There is talk, for example, of it being used to fund a pay rise.