National Insurance Contributions (Secondary Class 1 Contributions) Bill

Mike Martin Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[Gareth Davies]

I will make some progress, if the hon. Gentleman will allow me, and then give way.

This tax, purely and simply, is a financial penalty on 940,000 businesses—that is how I look at it. The analysis shows that it is going to cost businesses an average of £26,000 per year per employer. Not content with ruining farmers’ futures through the immoral family farm tax, the Chancellor wants to hammer them with this Bill, too. She is going to make pubs, cafés and restaurants stump up more to cover her jobs tax, without regard for the impact on our high streets or the communities they serve. She is going to squeeze the creative industries, from theatres to film producers, in a desperate attempt to keep this circus on the road. It is crucial that we understand the impact that the Bill will have. That is why Lords amendment 21 requires the Chancellor to carry out a review within six months of the Bill’s impact on the sectors I have described as well as on farming, creative industries, hospitality, retail and universities.

[Mike Martin (Tunbridge Wells) (LD)]

The shadow Minister has mentioned cafés, and when we have been debating this point previously in the House, I have mentioned Basil’s café in Tunbridge Wells. It now informs me that it is having to put its prices up because of the NIC rises. Does the shadow Minister think that we are going to see a bump in the inflation figures as a result of this tax?

[Gareth Davies]

I remind the House that inflation has already gone from 2% to 3% under this Labour Government, and in fact, the OBR scored the Hallowe’en Budget as inflationary. The hon. Gentleman is right that when these tax rises hit, they will be passed on through higher prices. I hope that that will not put pressure on inflation, but it will inevitably do so.

The combination of factors and how they are affecting businesses, including cafés, is not always appreciated either. The national living wage is going up. Conservative Members have welcomed that—we implemented the national living wage—but it is about the context in which it is going up: national insurance is on the rise and business rates relief for hospitality businesses and high street businesses is being reduced from 70% to 40%. All those things are compounding the impact on cafés, such as the one in the constituency of the hon. Member for Tunbridge Wells (Mike Martin). They will be devastated, inevitably leading to job freezes or job losses, which I will come to.

From healthcare to charities and small and medium-sized enterprises, I have made the consequences of this Bill clear since it began its stages in the House. Today, the Government have one more chance to change course, because what many people across the country want to know is this. What is this Bill for? We were told that it was a one-off tax rise to fix the foundations of the economy. We were told that there would be no more tax rises after this, yet we find ourselves just a week away from an emergency Budget, with speculation rife that other taxes may have to rise because the Chancellor will not meet her own new fiscal rules. Some are suggesting that Labour will break another pre-election promise and not unfreeze the income tax thresholds in 2028, but will rather extend the freeze to pay down their new debts. That surely cannot be true—the Minister himself gave me his personal assurance in this House that income tax thresholds would be unfrozen from 2028. I would like him to reconfirm that promise to me today, in order to end the speculation.

This is vital context for Members as we consider the amendments before us today. If more tax rises will be needed—if the original justification for this Bill is now void—why should we stomach the Bill’s terrible consequences? Why should Labour MPs have to go out and defend this to their constituents? Why should we allow the Government to punish the sectors that the amendments before us seek to protect? In fact, why must we stand here and see this entire Bill implemented at all?

One impact that hits every sector of our economy is the impact on jobs. Just yesterday, we heard Labour talk about the importance of lifting people out of welfare and getting them back into work, and it is right to do that. As Conservatives, we know that the dignity of work and the security of a regular pay cheque is what lifts us up as a country and lifts families out of poverty. The tragedy is that this Bill has caused so much concern and so much uncertainty that employment is already declining in anticipation of its passing. The Office for Budget Responsibility tells us that the Bill will depress workforce participation for years to come.

Put simply, this Government are cutting welfare to boost employment, while at the same time boosting taxes, which will cut jobs. No wonder business confidence has completely and utterly nose-dived. It is inexplicable and entirely avoidable.