National Insurance Contributions (Secondary Class 1 Contributions) Bill

Luke Evans Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[James Murray]

I recognise that the decision we are taking will have impacts, and in some cases it will mean that employers have to take difficult decisions. We are, however, reforming business rates to help retail, hospitality and leisure on the high street, so I would suggest that the hon. Member speaks to the Scottish Government about their doing something to support businesses in the same way; I cannot speak on their behalf.

Taken together, the measures, should the Bill pass, will mean that 865,000 employers pay no national insurance at all next year, with over 1 million—more than a half of all employers—paying the same or less than they did previously. I have been clear, however, that I recognise that there will be impacts on some employers as a result of the changes. While many small businesses and charities will be protected through the employment allowance increase, others will have to contribute more.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The Minister talks about protecting businesses or charities, but hospices, for example, employ many more than four people. I cannot think of one hospice that does not employ more than four people. How will they be protected?

[James Murray]

I thank the hon. Gentleman for his question. That will depend on the exact set-up of the hospice, but typically hospices are independent charities, so they will be able to use the employment allowance against their national insurance contributions liability. They will also be able to access the other tax reliefs in the system that benefit charities, such as business tax relief and gift aid relief, which we have maintained in the Budget. We have taken the decision to maintain—

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[Richard Fuller (North Bedfordshire) (Con)]

I beg to move,

That this House declines to give a Second Reading to the National Insurance Contributions (Secondary Class 1 Contributions) Bill because it breaks the manifesto commitment of the Labour Party not to increase National Insurance; and will lead to lower growth, lower wages for working people, fewer jobs and the closure of businesses.

Today we turn to the latest chapter in this Government’s book of economic incompetence, which is their choice to increase employers’ national insurance contributions—Labour’s job tax on workers across the UK. Today’s measures are the major reason that the public’s immediate reaction to the Budget was negative, with YouGov polling the day after the Budget showing that nearly twice as many people thought it would leave the UK worse off than thought it would be better off. When it came to judging each of the many measures in the Budget in turn, today’s proposal to increase national insurance was rated the second worst decision of all in the Budget, just behind hiking bus fares by 50%. Back in October, 47% of the public thought Labour’s job tax was the wrong thing to do, but as employers have spelled out the impact of Labour’s job tax, the public’s view has soured further. In polling last Monday, those saying that this measure is wrong have increased from 47% to 57%. The public know that the Labour Chancellor has got this choice wrong.

[Dr Luke Evans]

The shadow Minister is an astute man, and he has picked up on some of the indices of concern. One of those is the economic confidence index, which in October was -52. In November, it was -65. That is the second lowest figure on record since the pandemic in 2020. If we had an eminent economist running the Treasury, they would be able to see that this is a bad idea for businesses and the country.

[Richard Fuller]

Obviously it would be useful to have people with business experience in the Cabinet, if they are going to levy taxes on business. Sadly, the Government do not have that. My hon. Friend’s point about business confidence and the reaction from businesses goes to what the Minister was trying to say in his summing up about what the Conservative party would do. The way we raise more taxes is by enhancing business confidence, so that they invest, grow and make profits that can be taxed. This Budget has done precisely the opposite. Each and every day since the Budget, confidence in the financial competence of this Labour Government has been ebbing away. Less than one in four of the public now believe that this Government are handling the economy well.

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[Richard Fuller]

I will be very happy to give way, but I will make some progress first.

If we take the Government at their word that their intention is to raise funds for public services, this measure is an inefficient way to do so. Under the provisions of the 1992 Acts on social security provision, only a proportion of the moneys raised by this form of taxation will be allocated to public services; the vast majority is essentially hypothecated to the national insurance fund. Will the Minister tell us what proportion of the moneys raised by the Bill will actually be allocated to the national health service? Will he also advise us of why the Chancellor chose this particular tax, which, uniquely, will burden the economy with far more in taxes levied than will actually end up going to support public services?

Employers large and small across the United Kingdom have been pleading with the Government to reverse this measure, letting them know about the impact it will have on jobs and on wages; the particularly harsh impact it will have on female workers and on young people starting out in their careers; the vulnerability of our hard-pressed hospitality businesses and high street retailers; or the pre-Christmas pleas of our charities, hospices and GPs about the way their contribution to public services has been completely ignored. Has the Minister been listening to the voices of people who actually have experience of running a business, creating jobs or delivering public services, who are telling him about the negative impact the Bill will have on jobs and pay, and even on their own viability, or has he been turning a deaf ear?

[Dr Luke Evans]

Is it not the biggest slap in the face for people listening to this that when Labour uses “working people”, it cannot define that term? Pub landlords and people working in charities are by definition working people—they are of working age and earn a living—and they will now be hit by this tax, which will have such a detrimental impact on their livelihoods. Is that not a disgrace?

[Richard Fuller]

I have been listening to questions from Members who believe that this is “not a tax on working people” asking for exemptions from it. When we hear that these taxes are being levied on hospices, charities, GPs and small businesses, we cannot help but believe that Labour thinks that people work only when they work for the Government. The truth of the matter is that working people work in many institutions across the country—in small businesses, large businesses and in the third sector—as well as for the Government. This Government are taxing working people.

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[Luke Murphy]

I am not sure that it is for me to give reassurances—it is probably for Ministers to do that—but what I can do is repeat what the Minister said earlier: the Government will bring forward the settlement for GPs in the usual way.

[Dr Luke Evans]

Part of the biggest problem that I have with the way this is being done, looking at the NHS as a whole, is that while at the front door of primary care the raising of national insurance contributions means that GPs do not want to recruit, at the back door social care is also being hit by the increase. It is all very well protecting the centre—the hospitals—but the biggest problem is system-wide, in that both the back door and the front door are jammed shut. How will the Bill resolve that? This is the practicality that the Labour party must explain to the health services, because they are asking the same question and it is going unanswered.

[Luke Murphy]

Both the back door and the front door of the NHS have been broken over the last 14 years, so we will take no lectures from the Conservatives about the state of the NHS or the impact of policies.

The protection of small business is also built into the Bill. The increase in the employment allowance to £10,500—as the Minister said—and the expansion to all employers mean that 250,000 employers will pay less national insurance, and that 820,000 employers will see no difference in their national insurance bills. That will ensure that these changes fall only on the businesses with the broadest shoulders. This Government continue to champion entrepreneurship and wealth creation, boosting public investment by more than £100 billion over this Parliament.

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[Daisy Cooper (St Albans) (LD)]

This Saturday is Small Business Saturday. It is an opportunity for every single one of us to celebrate the fantastic small businesses in our constituencies—businesses that are the engine of our economy and the backbone of our communities.

We know that behind every single business there is a story. Either it is a family business that has passed through the generations and evolved, or it is a start-up that was somebody’s life’s dream, but behind every story there is blood, sweat, tears and hard work. This Saturday, as we all go around our constituencies meeting and greeting small business owners, we only need to scratch the surface of even the most successful business to know that they are very worried about the impact of the Budget, particularly the rise in employer’s national insurance contributions. We have heard from many of them already, and we know what the impact will be: they will suppress wages, freeze recruitment and, in the worst cases, shut up shop.

Rightly, the Government keep talking about growth. We all want economic growth, but this particular tax will undermine growth, not unleash it. We have all heard from GPs, dentists, hospices, social care providers, charities that are commissioned to provide health and care, and public health programmes. They are all incredibly worried. None of them has been given a guarantee that the money being taken away with one hand through the rise in employer’s national insurance contributions will be given back through the renewed contracts with the NHS. We oppose this tax, but if the Government will not reverse it, we urge them at the very least to exempt health and care providers.

[Dr Evans]

We have heard a number of times from the Prime Minister and the Chancellor, and even from the Exchequer Secretary to the Treasury today, that allocations will be made in the usual way, but we are six weeks on from the Budget and health services are trying to decide what to do now. They cannot wait.

[Daisy Cooper]

I agree with the hon. Gentleman that GP services, dentists and hospices are having to make decisions now on freezing recruitment and not providing wage increases, so there is real urgency to this measure.

The changes go beyond health and care. They will also affect early years providers and education providers, at a time when we should be reducing the costs of childcare and care services and supporting parents back into work. The measure will undermine that. I have heard from housing associations, Citizens Advice and hospitality companies that the pressure from this measure will make life incredibly difficult for them. Hospitality in particular relies on a lot of part-time workers, and the changes to national insurance contributions will have a terrible effect. Many of them tell me that at the moment—before the changes have taken effect—employer national insurance contributions liability is incurred only once a part-time worker starts earning £9,100 per annum. That is 15 hours a week on the current national minimum wage. Once the changes take effect, however, liability will be incurred at only £5,000 per annum, or the equivalent of 7.5 hours a week on the new national minimum wage. That will disincentivise small businesses from taking on part-time workers. Let us be honest: many people can only work part time because they are picking up the pieces of a broken health and social care system.

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[Paul Waugh]

I am, indeed, coming to exactly that point, because this is set in the context of what the Tories left behind. The clear trajectory of their last Budget was to squeeze day-to-day public spending to just 1% above inflation every year until 2029. That carried dire implications for every unprotected Department—up to £20 billion of cuts a year. The Resolution Foundation calculated that that would be the equivalent of three quarters of the cuts of the austerity years—austerity 2.0.

Sadly, there is no evidence that the former Chief Secretary to the Treasury, the right hon. Member for Sevenoaks (Laura Trott), left her own note for her successor. If she had, it surely would have read, “I’m afraid to tell you there is no money for public services.” If the Conservatives had won the last election, what would that have meant in practice? My right hon. Friend the Health Secretary revealed that when he took office, he was told that the NHS was facing such large deficits it would have to cut 20,000 appointments and operations a week. Thanks in part to the national insurance rises in the Bill, he can now deliver on our manifesto commitment to provide 40,000 extra appointments every week, with our investment in mental health services treating an extra 380,000 patients.

[Dr Luke Evans]

Is the hon. Member aware that the Royal College of General Practitioners said that it will cost 2.2 million appointments just to service the NIC payments that must be made? How does that resolve our service provision in primary care?

[Paul Waugh]

The Heath Secretary said that he will address that in due course, and I am sure that he will before April, as my hon. Friend the Member for Ealing North (James Murray) set out. The hon. Member for Hinckley and Bosworth (Dr Evans) may want to answer the question I put to the Conservative Front Bench. If they are so opposed in principle to national insurance rises, why did they support the health and social care levy in 2021? The hon. Member voted for it, as did the hon. Member for South Shropshire (Stuart Anderson) and the right hon. Member for Beverley and Holderness (Graham Stuart)—why? They cannot tell me why because they know they are being inconsistent.

[Dr Evans]

Will the hon. Member give way on that point?

[Paul Waugh]

If he would like to explain why he voted for it, yes.

[Dr Evans]

Absolutely. Does the hon. Member realise that we had to deal with that because the amount that we had to borrow in 2010 was £158 billion? For the pandemic, it was £400 billion. That is the kind of thing that the Conservatives have had to deal with that led to the difficult decisions. We were on track to have the fastest growing economy, which has now been trashed by decisions taken by Labour.

[Paul Waugh]

In the process, you left us with a massive structural deficit.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Luke Evans Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The hon. Member has hit the nail on the head. The Labour Government say that they want to deal with this situation, and that they effectively protected secondary care, but the NI applies to GPs at the front end and care homes at the back end. That means that it will be the hospitals who hold the responsibility—the acute places that we need to keep clear if we are to help the backlog move through. Without getting an answer now, we risk recruitment decisions being kept on hold over the next three or four months and cutbacks being made. Does the hon. Member agree that, on top of the difficulties of an already hard winter, that will cripple the NHS?

[Pippa Heylings]

I agree with the hon. Member. I will give one example: the Arthur Rank hospice, which serves all of Cambridgeshire. I had a tour there and saw the work being done by its dedicated professionals. I was informed by its senior leadership that these hikes in national insurance contributions for employers will be the equivalent of £230,000 in additional payroll costs on top of the fundraising that it already has to do. That is money that it does not have. We know from the debate on assisted dying, assisted suicide and the terminally ill how critical palliative care and end-of-life care is. That is one hospice that will struggle severely to deal with these charges.

Hon. Members have spoken about the GP crisis. According to the British Medical Association, 1,387 GP practices have closed since 2015 and the NHS has lost the equivalent of 1,333 full-time, fully qualified GPs. Each GP is responsible for an average of 2,294 patients, and about 3 million people have been directly affected in the last decade by shrinking GP numbers. At a time when we desperately need more GPs, we are introducing a tax that risks driving even more practices out of business. It is not just me saying that; I am sure that hon. Members across the House will have heard from GPs in their constituencies.

In my constituency of South Cambridgeshire, I have heard from the Harston, Comberton, Queen Edith, Eversden and Melbourn practices. I have spoken in particular to Dr Gee of Harston surgery, who has told me that his practice with 7,600 patients faces a £20,000 bill from April just to maintain its current services—just to stand still.

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[Joe Morris (Hexham) (Lab)]

I rise to speak about the need for the Bill and the continued assault by the Conservative party on public trust and the public finances. When I go out in my constituency, I speak to people who are appreciative of the “bin fire”—that is the term that one of my constituents used—facing Treasury colleagues when we assumed office. Money for projects and half-baked plans was used more to launder the Conservative party’s reputation than to improve our public services.

When someone comes into office and finds out that the job is not as had been advertised and that the previous person in post set fire to the office, they have to do things differently. They have to begin to rebuild trust with the people they serve and to have honest conversations with the public. That is what the Government are determined to doing. [Interruption.] Opposition Members can chunter as much as they like, but they know that they gambled with public trust and undermined every aspect of themselves and the institutions of the British state. That is not just a failure on their part but a failure on the part of everyone in their party and everyone who knocked on doors. Ultimately, they were judged harshly by the British public for that.

The Bill is necessary to repair the public finances and rebuild public trust. We did not want to do this. We had to maintain our manifesto promise not to see tax rises for working people, but we must ensure that the country that we hand on is in a significantly better state than the country we inherited. That is the Government’s task.

[Dr Luke Evans]

I am enjoying the hon. Member’s exposition of his thinking on this matter. Will he set out how this works for national insurance contributions, which is what we are talking about? Those on the frontline—the likes of GPs and care homes—are private, but they are commissioned only by the NHS. Is he aware of where the funding will come from? Will it come from the £22.6 billion? That would make sense, but if so, the Government need to clarify where that money is going. Part of the problem is that it does not add up for the Government to say that they want to support the NHS yet tax those very people—the doctors, the hospices and the care homes—to fund it. Will he elaborate on how that will work?

[Joe Morris]

I was not sure if the hon. Member would take interventions during that. Ultimately, we need to support the NHS, our care homes and our GPs. It is very rich of the Conservative party to lecture us on supporting GPs and care homes. I have been out speaking to GPs in rural communities, who have been consistently undermined by the Conservatives’ failure to appreciate the challenges facing the modern countryside. I have been out speaking to care homes; I spoke to the Charlotte Straker care home, which looked after my grandmother, to hear its concerns. I have had those meetings, as is my duty as a constituency MP. Ultimately, perhaps if more of the hon. Gentleman’s Conservative colleagues had done the diligent thing as constituency MPs, there would be more of them on the Opposition Benches.

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[Gareth Davies]

The hon. Gentleman was not here at that time, but those of us who were in Parliament then faced an incredibly challenging time in very difficult circumstances. Billions of pounds went to support businesses in his constituency; if he has a conversation with the average business that benefited from the furlough scheme, I am sure he will correct the record.

The problem is that socialists fundamentally do not understand or care what it means to have an idea, to take a risk or to work hard day in, day out to make a business a reality. That is the problem. They think it is all so easy—that profits just flow in. They think it will all be all right, because Government can step in and take us much tax as they want. That is not the case. If Government Members talk to the average business in their constituencies, they will find this out; if they set up a business, they will see it for themselves.

Perhaps most worrying of all, not only do the Government not understand the private sector, but they have completely overlooked the different ways in which the public sector provides for our communities, as my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) set out. Whether healthcare, childcare or the charity sector, organisation after organisation has warned Ministers that this tax rise will impact the services they provide. That may not have been intended, but the Government have yet to act. That is why we have tabled amendments 13 to 15 and 16 to 18, which seek to protect certain key sectors from both parts of this tax in Great Britain and Northern Ireland respectively.

[Dr Luke Evans]

My hon. Friend has hit the nail on the head, and the Treasury really needs to answer this question. Did it knowingly implement these tax rises on these industries, which would be a travesty in itself, or did it do so by mistake because it does not understand these issues? If that is the case, will the Government look to rectify the matter so that hospices, GPs and childcare providers are protected?

[Gareth Davies]

I could not have put it better myself. These amendments highlight the fact that Labour’s attempt to paint this tax rise as a necessity for public services is nothing but plain politics; Labour has always intended to do this, and now it is hiding behind public services to justify it.

Those working on the frontline of healthcare in and alongside the NHS will be deeply impacted. The Institute of General Practice Management estimates that the tax bill of each GP surgery will increase by £20,000 a year, likely resulting in a reduced number of appointments. The Nuffield Trust has said that providers in the adult social care sector will face a £940 million increase, dwarfing the social care support announced in the Budget. Community Pharmacy England says that community pharmacists will be hit by an additional £50 million each year, inevitably causing pharmacies to close and services to deteriorate. Hospice UK warns that £30 million will be added to the bill for 200 hospices across the country, which will lead to greater pressure on NHS palliative services.

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[Gareth Davies]

Once again, my right hon. Friend makes a valid point. As I have said already, I am not sure that this was intended. I do not think the Government understand what these measures will do to our communities, to the sectors I have outlined and to the businesses that I will speak about in a minute. The Minister will have to address my right hon. Friend’s point. What will the Government do to mitigate the damage of the Bill on the communities and organisations that I have highlighted?

A sector I have not yet highlighted is childcare, without which millions of parents across the country could not go to work—including, by the way, many in this House. The Bill will contribute an average of £47,000 in additional costs per nursery next year, according to the National Day Nurseries Association. The previous Government did so much to extend childcare to more families, boosting workforce participation and economic growth, but this tax hike will pull us back from that progress. That is not what people voted for. There is no mandate for this harm. I urge the Government to think again.

Ideally, all employers would be made exempt, which is why the Conservatives voted against the Bill. At this time of year, people should be reflecting on another year gone by all too soon and looking to the new year with hope, ambition and optimism, but so many employers will now enter 2025 with fear. Many will be thinking again about that planned expansion or the investment in new equipment or premises. Worse, some will be thinking about who they need to let go—never mind awarding the pay rises in the spring they once hoped to give.

[Dr Luke Evans]

My hon. Friend is an astute man, and he has picked up on something that I fear. According to S&P Global’s purchasing managers’ index, this has been the third consecutive month of job losses; December has seen the highest number since 2021, in the pandemic. It has said:

“Barring the pandemic, the survey has not seen job losses on this scale since the global financial crisis in 2009.”

That is a direct impact of the choices in the Budget and this NIC increase. Does my hon. Friend agree that this is something the Government really need to think about?

[Gareth Davies]

I agree completely with my hon. Friend, who has once again made a very astute intervention. It marries very clearly with what we have seen in business confidence. He mentioned the record since the pandemic. Business confidence has tanked to low levels that we have not seen since the economy had to be shut down during the pandemic. A survey by the CBI, which makes for stark reading, says that 62% of businesses have said that they will have to reduce recruitment, while 48% have said that they will be reducing existing staff levels. That is all because this Bill will impact them in ways they never imagined and were never told about. Whether businesses freeze or cut jobs, or, as the Chartered Institute of Taxation has warned, shift employees to a self-employed basis, or, even worse, offshore workers to overseas destinations, the potential impact on employment should absolutely worry us all.

That is why we have tabled new clause 1, which would require the Chancellor to publish an assessment of the impact of this tax rise on the employment rate within a year of the passage of the Act. It is not controversial; it just seeks clarification and an assessment.

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[Daisy Cooper (St Albans) (LD)]

Will the hon. Lady give way?

[Dr Luke Evans]

Will the hon. Lady give way?

[Yuan Yang]

I will take two interventions. I will take one from the. Member for Hinckley and Bosworth (Dr Evans).

[Dr Luke Evans]

I am very grateful. The hon. Lady makes a fantastic point about wanting to set out the tax base. The difficulty is that the Government are also spending on the NHS. Fundamentally, GPs are private contractors to the NHS. Care providers are private contractors. Therefore, the Government have to make a choice: are they going to exempt them or will those private contractors have to pay? At the moment, the Government have done neither thing. That is the fundamental argument we are having on these amendments in trying to protect those contractors, because the Government have not made a choice. They have said that at some point there may be some payments along the way. That is the concern on the Opposition Benches. What is her answer to that?

[Yuan Yang]

I thank the hon. Member for his intervention and for highlighting the perilous state of GPs in my constituency of Earley and Woodley after 14 years of the previous Government stripping away the NHS. I am very confident in the announcements made by my right hon. Friend the Secretary of State for Health, which he has made several times in this Chamber, to take all funding decisions in the round. I very much look forward to seeing the quality of GPs improve. I also highlight the funding already announced for increasing the number of practitioners in GP surgeries. I expect to welcome them in my constituency, as well as across the UK.

I return to my point about long-term fiscal planning. The hon. Member for Hinckley and Bosworth (Dr Evans) made the point that we need to make choices. Over and over again on the doorstep I have been told that public services are broken, that crime too often goes unpunished on our high streets, and that mortgage rates, which have shot up wildly over the past few years, are too much of a burden on everyday families. All that creates uncertainty and it is that economic uncertainty that hurts businesses. That is why I welcome, for the first time in many years, a credible Budget that addresses the fundamental problems facing our society. Yes, we have to understand the current fiscal situation in the context of the bad decisions that were made before us. We all know about the tax giveaway mini-Budget under Liz Trust and the perilous effects it had on gilts, pension funds and, of course, mortgages, for which we are all now paying the price.

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[Chris Curtis]

I thank the hon. Lady for her contribution. I refer her back to the comments made by my hon. Friend the Member for Earley and Woodley (Yuan Yang). Our tax system has got even more complicated, particularly after the last 14 years, and we do not want to see the level of complexity, which costs businesses and organisations, continue to spiral out of control. It is important that we make these changes in a simple way, but extra money is going into our NHS and will be flowing through the system. At the moment, the Department of Health and Social Care is looking at how to make sure that the extra funding is spent as effectively and efficiently as possible. I look forward to hearing soon from the Health Secretary about how that money will benefit all elements of our national health service, but I do not think that that is a reason to add extra complexity to an already complex tax system.

We do not want to raise taxes, and I appreciate that decisions like this are never easy—[Interruption.] The Conservatives laugh, but they raised taxes to record levels, broke our public services and left us with a £22.6 billion black hole. The reality is that they left us with no choice. Our goal is to lay the foundations for a thriving, resilient economy, where businesses can grow, communities can prosper and future generations can thrive.

What we have heard from the Opposition today is a repeat of what got us into this mess time and again. Liz Truss promised unfunded tax cuts and crashed the economy. The last Tory leader promised unfunded tax cuts and left a £22 billion black hole. The Tory party is promising unfunded tax cuts again, and will not say where the money is going to come from. That is what got us into this mess, and it is ludicrous to think that it will get us out of it. However, the mess that the Conservatives got this country into is about more than basic arithmetic; it was a complete failure to achieve any economic growth.

If growth in the UK had simply matched the OECD average, workers would have £5,000 more in their pay packets and the Treasury would have £50 billion more in tax revenues, without having to raise a single penny in tax. Just imagine how much better families would feel with that money in their pockets. We would not need to raise any taxes today if we had the extra tax revenue that was stolen from us by the Conservatives’ failure. Instead, they trapped us in a cycle of low growth, low productivity and low investment. That is the grim legacy of a Government who failed to create conditions for businesses to thrive. From a chaotic planning system to a revolving door of four Chancellors in five years, they have sown uncertainty at every single turn. Let us not forget the economic self-harm of Brexit, which was executed without a clear plan.

The Budget, including the NICs changes—

[Dr Luke Evans]

On a point of order, Ms Nokes. We are debating the National Insurance Contributions (Secondary Class 1 Contributions) Bill, in which I am not sure that Brexit is mentioned. I look to your leadership to decide whether the hon. Gentleman is in order.

[The Second Deputy Chairman]

I thank the hon. Member for his point of order. He will be aware that it is important that Members stay in order. The hon. Member for Milton Keynes North (Chris Curtis) has given some context in his speech, but he might be reminded of the need to stick to national insurance contributions.

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[Dr Sandher]

The young and the lowest paid work in the smallest businesses. Some analysis, including that from the Institute for Fiscal Studies, does not include these measures, and does not have matched employer-employee datasets. Indeed, Paul Johnson admitted as much when he came before the Treasury Committee.

[Dr Luke Evans]

I am grateful to my fellow Leicestershire MP for giving way. One of the ways that we can judge the market is by looking at vacancies. James Reed, who runs the Reed recruitment agency, has seen a 13% drop in advertisements on the company’s website. He has sounded the alarm that that could be a sign of recession, and that is the implication of what we are voting on today. How will the measure support young people if there are no jobs out there for them?

[Dr Sandher]

I direct the hon. Gentleman to today’s labour market statistics. Employment is still high; unemployment is about the same as it was; and I think inactivity is falling. In the official statistics, the picture looks good.

More broadly, vacancies are not the measure that we want to look at. Instead, we want to look at the number of people in jobs. The revenue that we are raising today will be invested in actions that directly create those good jobs. The warm homes plan will upgrade 300,000 homes, which is tens of thousands of good jobs. The expansion of early years childcare is tens of thousands of good jobs. Businesses need to know that they have the healthy workforce that they need, and more people who are available to work. This is a Budget for growth and for jobs.

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[Dr Luke Evans]

The hon. Lady has always been an advocate for childcare. One way the previous Government tried to address the issue was to try to stop the cliff edge for childcare by looking at households rather than individual parents. In the last Budget, the Government were looking at the proposal to consider households as one unit. Does that mean the hon. Lady has changed her mind and would support that mechanism being looked at again? It would solve a lot of the problems caused by, for example, a single parent having to pay for childcare because they are exempt, whereas a household containing a couple who earn under £45,000 are not eligible.

[Ms Creasy]

Let me reach the hand of co-operation across the House to the hon. Gentleman, if he wants to finally work on what would be a genuinely affordable and accessible childcare system in this country. However, I will temper his enthusiasm, because his party made things worse. Under the previous Government, there was a 50% reduction in childcare place. We saw nurseries closing time and again because of the changes his Government made. We are starting from a foundation where the places simply do not exist. For the places that are there, too often it is those who can well afford childcare who are taking them.

If we are to get to a position where we have the childcare places we need, so that every child can get the best start in life in this country, we need to invest. We need to ensure that we save what is there and encourage those nurseries that can expand to do so. If we do that, we will reap the rewards, both in the Exchequer and in society. That is why early years provision matters to the future of this country.

Research by the Education Policy Institute shows that 40% of the disadvantage gap at the age of 16 has already emerged by the age of five. Equally, investment in early years means we could save £16 billion a year later, according to the London School of Economics. It also means we will get more money, because more people—mothers, fathers and carers—can make the choice to work and pay tax.

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[Helen Maguire (Epsom and Ewell) (LD)]

I am greatly concerned about the consequences of this Bill. There are consequences for businesses, for employees and for essential primary care providers in my constituency and across the country. The Bill represents an unfair jobs tax that risks harming the livelihoods of countless individuals and the viability of small businesses at a time when they are already grappling with a multitude of challenges.

I wish to begin by highlighting the impact that this legislation will have on community pharmacies, which are at the frontline of healthcare in our local areas. The owner of Horton Pharmacy and Travel Clinic in Epsom has expressed grave concerns about the financial burden that this increase in employer national insurance contributions will impose. He told me:

“We are estimating that it’s going to cost an extra £12,000 a year. It’s very distressing and making it harder to keep our doors open and help reduce the burden on other parts of the NHS.”

Community pharmacies such as Horton Pharmacy play a critical role in alleviating pressure on our overstretched NHS by providing accessible healthcare and advice, yet the Bill threatens their financial viability, which in turn risks leaving constituents without the local care they rely on, thus increasing the burden on the NHS.

[Dr Luke Evans]

Is the hon. Lady aware that the National Pharmacy Association has agreed to collective action for the first time in its history, directly as a result of this Government’s Budget? Does she have any comment on that?

[Helen Maguire]

Yes, I am aware of that and I agree that it is a good way forward.

Another business in my constituency, the Family Building Society, is also facing substantial repercussions. Last Friday I met its chief executive officer, Mark Bogard, who shared that this national insurance increase will cost him approximately £300,000 every year. He said:

“Even as a mutual building society, with no shareholders to generate returns for, we cannot simply swallow that cost. So, going forward, we will inevitably now employ five or six fewer people.”

Madam Chair, these are real-world examples of the damaging ripple effects of the Bill. It will hit not just businesses, but employees, with fewer jobs, lower wages and missed opportunities. This Government claim that they want to kickstart economic growth, but how can firms grow when they are forced to cut jobs instead of investing in their business. How can the economy thrive when ambition is replaced with survival? This Bill does not kickstart economic growth; it slams on the brakes.

Across the board, this Bill threatens sectors vital to our economy and to society. Social care providers, GPs and hospices, already at breaking point, will now face further financial strain. Most of these organisations do not qualify for the employment allowance, meaning that they are exposed to these increases.

The Liberal Democrats have called on the Government to exempt these essential providers from the tax rise, but those calls have been ignored. This decision will worsen the crises in our NHS and social care system, pushing more providers to the brink of bankruptcy.

Six in 10 care homes in the UK are operated by companies vulnerable to even mild economic shocks. How then can the Government justify imposing additional financial burdens on a sector already struggling to stay afloat? Let us be clear: the Government’s own analysis admits that nearly four times as many employers will lose out under this Bill as will benefit. For many employers, this will translate into an average annual tax increase of over £26,000. This is not just a jobs tax, but a growth tax, a productivity tax and, ultimately, an attack on people’s living standards.

This is a deeply inefficient way to raise funds, especially when fairer alternatives exist. The Liberal Democrats have proposed several measures that would raise revenue without harming jobs and growth. These include reversing Conservative tax cuts for big banks, increasing the digital services tax and introducing a fairer form of capital gains tax to ensure that ultra-wealthy people pay their fair share. These measures would protect small businesses, support families and safeguard essential services, while still addressing the country’s fiscal challenges.

The people of Epsom and Ewell deserve better. They deserve a Government who support, not stifle, innovation, enterprise and community spirit. They deserve a Government who listen to small businesses, healthcare providers and families who are already struggling under the weight of rising costs and stagnant wages. This Bill is not the solution to our economic challenges; it is a blunt instrument that will do more harm than good, jeopardising jobs, living standards and essential services. I urge the Government to reconsider this unfair and counterproductive measure and to work with us to develop a fairer, more sustainable approach to taxation that prioritises people and communities.

--- Later in debate ---

[Graham Stuart]

The hon. Lady has not been in the House quite as long as I have. I was first elected in 2005, and in that Parliament I spent a lot of time—mostly in Westminster Hall, as I recall—in debates with then Labour Ministers talking about the importance of having a joined-up, coherent approach to the national health service and social care. It is clearly fiendishly difficult. The coalition Government, of which the hon. Lady’s party was a part, and the Conservatives kept working at it. We changed the name of the Department of Health to the Department of Health and Social Care precisely because of that. It is challenging, because social care is delivered through local authorities, but the opportunity is there. Before the Government get all that wiring and complexity fixed—we were working devotedly at that—they could vire funding over to the sector, or exempt from the Bill the sectors on which the NHS depends. Pouring money into the Hull royal infirmary while it is unable to unload the ambulances coming in, or get the healthier patients out, is a crazy approach. I am sure that the Minister recognises that.

I want to mention the impact on social care. Last Friday, I went to Merrywick Hall, a great example of a small, family-run, residential care home. Its 31 residents are not all elderly, but they all have learning disabilities. Some of them are elderly, making them doubly disadvantaged. The home charges a basic rate of just £699 a week to care for those people, and its staff are stretched. I met Katie, who runs the home, and her husband Carl, who oversees the finances, although the home is owned by another. It was quite clear that that they were not running a business in the way that I would recognise as a former businessman; they were running an institution that was absolutely committed to the welfare of the people in it. Between this jobs tax, which the Minister is foisting on us, and the national minimum wage increase, they have to find an extra £56,000 a year, which is equivalent to the care costs of 1.5 residents. That is the reality. That system and those places are vulnerable. If those places go, there will be a massive knock-on effect on the rest of the system.

I hope that hon. Members from across the House are less interested in the system—although it is our job to worry about it—and much more interested in the people. People cannot get much more vulnerable than the elderly who have learning difficulties.

[Dr Luke Evans]

When it comes to social care and GPs, there is a situation that has been described to me as Schrödinger’s care. Providers are seen by the state as being private, yet their services are commissioned solely by the NHS, which means that they are caught both dead and alive when it comes to NICs. This has happened either by design in the Treasury, or by accident. The answer from the Chancellor, the Prime Minister and the Health Secretary—I expect the Minister to say this—is that funding will be allocated in the usual way. The problem is that that will happen in April, four months away, while decisions are being made now. There are potential closures, and certainly redundancies, or decisions not to employ. How will that be addressed? Does my right hon. Friend agree that the Minister needs to address that, because these institutions are listening now, and need to know that answer?

[Graham Stuart]

I thank my hon. Friend, who is of course a doctor. In this and previous debates, such as Second Reading, it is good to encourage a discursive approach in the Chamber, if we are to be valuable. I hope that we will continue to gather in this Chamber, talking to each other and listening. No one would think less of the Government for making changes. I cannot speak for those on the Opposition Front Bench, but I would seek to give the Government some political cover if they found a way to ameliorate the impact of this measure on the system—and, more importantly, on the human beings on which the NHS relies.

In 2021, the then Leader of the Opposition, now Prime Minister, promised a plan

“to ensure that those with the broadest shoulders pay their fair share.”—[Official Report, 8 September 2021; Vol. 700, c. 295.]

Yet all the analysis available to Government Members shows that those with the least will pay the highest price for this measure. In my constituency, HICA, a large not-for-profit provider of social care homes and in-home care—a brilliant organisation that has had the same chief executive for the past five years—was finally getting a surplus to invest in its stock, some of which is almost as old as me, and to give its staff something above the national minimum wage. But following the changes in the Budget, it faces a bill of £3.5 million, more than offsetting any hope of a surplus, which it desperately needs in order to invest in its people and stock. The money will be taken away from that good social purpose in my local area, and instead will go into the Chancellor’s mythical black hole—for payment of additional sums almost greater than the total income of many pensioners, and for pay rises, for train drivers, so that they can pay their union fees; and so that Labour Members can carry on all too rarely mentioning in the Chamber their sponsorship by people who dictate so much of what they share with us—the hon. Member for Stoke-on-Trent Central aside.

Finally, it is interesting in these debates just how few of the more than 400 Labour Members—they can all cheer on the Government Benches at how many Labour MPs there are—want to come and defend these measures. The hon. Member for Hexham (Joe Morris) spoke bravely, but he looked a little world-weary. I think he has been going out and about in his constituency, so I am sure that he is hearing the same thing as me, but said a little more angrily, because he is responsible for it.

I appeal to those Members who are not here to seek change. The 2012 Budget by George Osborne, crudely and rudely called the omnishambles Budget, included a measure to bring in 20% VAT on static caravans. The Treasury civil servants love dusting these things off—they hate an anomaly more than anything. Those are the very caravans that ordinary working people use to holiday on the coast. I did not, alongside colleagues, run my campaign in the press; instead, I built up support from Conservative Members and coalition colleagues, who realised how damaging that measure would be for jobs in their area, the holiday opportunities of ordinary working people, and an industry that is 95% manufactured in the UK. People told me, “Change is impossible—this has been announced in a Budget. You cannot overturn a Budget measure.” You and I, Madam Chair, having been here some time, know that that is not true. Politics is a matter of arithmetic. If Labour Members can build enough support among colleagues on the Government Benches—they do not need to do it publicly, and they do not need to tell us about it—they have every chance of changing this. The Whips and Ministers start getting spooked when 15 Members turn up. If Labour Members can get 30 or 40, they can make a change. They should not feel powerless.

The Government could make changes. They could move £3 billion or £4 billion over to social care, hospices, GPs and the like. They could agree to our amendments. They could come up with some other solution. They have the power to do it. Stubbornness and perhaps a certain arrogance has crept in because of the size of their majority. Government Members, who go out to talk to their constituents more frequently than Ministers, will be in a great position to tell Ministers that up with this they will not put.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (James Murray)]

I am conscious that I have only a few moments to speak. I will not go through the four clauses of the Bill, as I take it that everyone will have read it already. I will instead go directly to the amendments that have been tabled, ahead of potential votes in a few moments.

I will address the amendments tabled by the hon. Members for St Albans (Daisy Cooper), for Angus and Perthshire Glens (Dave Doogan), for Leicester South (Shockat Adam), for Grantham and Bourne (Gareth Davies), and for Lagan Valley (Sorcha Eastwood). These amendments seek to exclude certain sectors, including healthcare providers, educational settings and charities, from the new rate and threshold for employer national insurance. As hon. Members know, the changes in the Bill before us represent one of the difficult but necessary decisions that the Government have had to take to fix the foundations of our economy and our public finances.

[Dr Evans]

Will the Minister give way?

[James Murray]

I cannot give way. I have given way to the hon. Gentleman many times in recent weeks, but I have about four minutes in which to address everyone’s comments.

As hon. Members have set out, we recognise that the changes we are making today will have an impact on employers. Making these changes was a tough decision that we did not take lightly, but we are also clear that the revenue raised from the measures in this Bill and others in the Budget will play a critical role in both restoring economic stability and getting the NHS back on its feet. As a result of the measures in this Bill and the wider Budget measures, the NHS will receive an extra £22.6 billion over two years to deliver 40,000 extra elective appointments a week.

The Government will provide support for Departments and other public sector employers on additional employer national insurance costs, including central Government, public corporations and local government. Independent contractors, including primary care providers, social care providers, charities such as hospices and nurseries will not be supported with the costs. That is the same as was the case with the changes to employer national insurance rates under the previous Government’s plans for the health and social care levy.

Primary care providers—general practice, dentistry, pharmacy and eye care—are important independent contractors that provide nearly £20 billion-worth of NHS services. Every year, the Government consults each sector about what services they provide, and about the money to which they are entitled in return under their contract. As in previous years, the issue we are debating today will be dealt with as part of that process in the round. The Department of Health and Social Care will confirm funding for general practice, dentistry and pharmacy for 2025-26 as part of the usual contract process later in the financial year, including through consultation with sectors.

I turn to adult social care. The Government have provided a real-terms increase in core local government spending power of around 3.2% for 2025-26, including at least £680 million of new grant funding for social care. The funding can be used to address the range of pressures facing the adult social care sector; again, they will be considered in the round.

Some hon. Members have tabled amendments to exclude charities from the new national insurance rate and threshold. However, it is important to recognise that charities can benefit from employment allowance, which this Bill has more than doubled from £5,000 to £10,500. That will benefit charities of all sizes, particularly the smallest. The Government also provide wider support for charities, including hospices, via a tax regime. This tax regime is among the most generous in the world, with tax reliefs for charities and their donors that are worth just over £6 billion for the year to April 2024.

I recognise that some hon. Members have shown an interest in the impact of this Bill on childcare settings, as highlighted in the amendments tabled by the hon. Members for St Albans, for Grantham and Bourne, and for Lagan Valley, and in the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy). Early years providers have a crucial role to play in driving economic growth and breaking down barriers to opportunity. We are committed to making childcare more affordable and accessible, which is why the Government committed in our manifesto to deliver the expansion of Government-funded childcare for working parents, and to open 3,000 new or expanded nurseries, by upgrading space in primary schools to support the expansion of the sector. Despite the very challenging circumstances that the Government inherited, the Chancellor announced in her Budget in October significant increases to the funding that early years providers are paid to deliver Government-funded childcare places. This means that the total funding will rise to over £8 billion in 2025-26.

New clause 4, tabled by my hon. Friend the Member for Walthamstow, specifically refers to the eligibility criteria for employment allowance. I can assure her that they have not changed, except for the removal of the £100,000 threshold, which will mean that more organisations are able to access employment allowance. The eligibility of a particular organisation will depend on the make-up of an individual business’s work, which can be determined following detailed guidance from His Majesty’s Revenue and Customs. While every organisation will need to check its eligibility for the employment allowance, it is likely that many childcare providers will be able to access it.

Finally, I will turn to the amendments to exclude universities from the new rate and thresholds for employer national insurance. We greatly value UK higher education in creating opportunity, being an engine for growth in our economy and supporting local communities. The Budget provided £6.1 billion of support for core research and confirmed the Government’s commitment to the lifelong learning entitlement. The Secretary of State for Education has confirmed that the maximum fees in the academic year 2025-26 will rise, for the first time since 2017, from £9,250 to £9,535. This was a difficult decision, which demonstrates that the Government are serious about the need to put our world-leading higher education sector on a secure footing. I would like to continue, Madam Chair, but I should stop now—