National Insurance Contributions (Secondary Class 1 Contributions) Bill

Neil Duncan-Jordan Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[Dame Caroline Dinenage]

That would be an excellent decision, and I am sure the Naomi House children’s hospice and Jacksplace, which do so much invaluable work to support families going through the most unspeakable difficulties in my area, would advocate for that.

I want to talk about childcare settings, which ensure that our smallest but most cherished family members are cared for and given the very best possible start in life. It is incomprehensible that the Government have taken this decision to imperil some of the businesses and services that our constituents most rely on—nursing homes, for example. The owner of one nursing home, with 35 years of service in the Gosport constituency, told me that the tax rises in the Budget will add £90,000 on top of its annual costs. This business is particularly vulnerable because a very large proportion of its bed spaces are occupied by local authority patients. Its costs are going to go up by 12% this year, driven mostly by changes to the minimum wage and this jobs tax—the national insurance contributions change—on his 75 members of staff. The council, which is having difficulties of its own, can provide only a 4% uplift to cover it. Quite simply, this an existential threat to his business, and he is not alone.

It is the elderly, the vulnerable, disabled people and their families who are going to pay the price, and we know that these costs will go to those having to foot the bill. If people are not privately funded, some nursing homes will be forced to hand back their local authority contracts and increase the proportion of beds commissioned privately. Since the Budget, I have received messages from individuals who have already seen the cost of care going through the roof. One wrote to me:

“Directly due to the increases in Employers National Insurance contributions the Chancellor has managed to cause an increase of 7.8% in my brother’s care home fees that are already north of £8000 a month… I shudder to think of the overall cost nationally of this increase across all those with relatives and loved ones in care.”

I also want to talk about early years settings. Early years providers are facing a squeeze that many just will not be able to stomach. Just as care settings have their revenue dictated by local government, nurseries are limited by childcare ratios and the fees they get from their local authority for their 30 hours’ free childcare. Hopscotch nursery, which looks after 1,900 children across my region, has told me that these changes will add £1 million to its overheads. It says that, in order to make up the shortfall, it is going to have to put its fees up by 10%, and that 10% will be passed on to my Gosport constituents. How can parents in Gosport face such an uptick in fees? What assessment have the Government made of the impact that will have on parents, on people dropping out of the jobs market or out of the workforce, and, most especially, on women? At the end of the day, we all know that when it comes to childcare, rightly or wrongly, the buck always stops with us. What will be the disproportionate impact of this on women?

I could mention so many other organisations that are facing the prospect of scaling back their activities. They include hair and beauty salons, which are warning that this will result in billions of pounds lost, and many will shut up shop or encourage staff to go freelance. They have previously taken on so many apprentices, but they warn that by 2027 there will be no apprenticeships left in this sector because they will be too expensive.

The common thread is that this national insurance change will hit businesses for which labour is the highest cost and there is no digital solution, and businesses that are unable to find efficiencies because of the nature of their overheads. The amendments passed in the Lords would go some way towards alleviating those cost pressures. In many cases, they would be a lifeline for the businesses and services that our constituents so desperately rely on, and those that by their very nature are reliant on the public sector for revenue. I urge the Minister to change his mind, to show some compassion, to show he cares, to listen to his constituents and to support these amendments.

[Neil Duncan-Jordan (Poole) (Lab)]

I am on record previously as calling for more support for hospices, but I have been contacted by a number of constituents about the issue of home-to-school transport for pupils with special educational needs and disabilities. That relates to Lords amendments 3, 6, 11 and 15, and I wish to consider those today.

For many children with SEND, their school transport is a lifeline to education, friendships and independence. Without it, these children risk being cut off, left behind and denied opportunities that they deserve. If these Lords amendments are rejected, local councils and transport providers will struggle, families will face uncertainty and, I believe, the fundamental right to education will be compromised. This is not just a technical change to national insurance rates and thresholds; it is a direct threat to the futures of vulnerable children and their families. These dry words on a page have a massive impact in the world outside this place.

There is a genuine fear that the cost of removing these Lords amendments, which will ultimately see more children kept out of school, will actually be greater than the additional revenue raised through the national insurance changes. In reality, to exempt SEND school transport from the national insurance rise is not going to bankrupt the UK. We know that local councils, even with additional funding, are already struggling with the impact of 14 years of austerity. I believe that we could certainly raise the money we need if we had a wealth tax and introduced other changes to capital gains tax. I would appreciate it if the Minister explained why we are unable to compromise on this issue and find a way to exempt SEND school transport from the changes he proposes.

[Dave Doogan]

It is almost three months to the day since we were here in this Chamber on Third Reading. The SNP and other parties warned at that stage of the very real, dire consequences for organisations, businesses, charities, hospices and so on. It certainly does not give me, or anybody else on the Opposition side of the House, any pleasure that those threats have come to pass. There is no pleasure in that whatsoever.

The British Chambers of Commerce spoke last month of a “powder keg of costs” for businesses, with 82% of firms surveyed saying that they faced the potential of staff lay-offs, wage freezes or cancelled promotions in the workforce, which will be a terrible drag on the economy. Last month saw vacancies in the UK contract at the second-fastest rate in nearly five years, while wage growth has slumped to an almost four-year low. If we want the evidence of what business thinks of this change, it is there in the figures: 300,000 small business owners surveyed last month said they intend to lay off employees in order to cope with Labour’s national insurance increase.

The economic impact is now becoming absolutely clear. Last week’s GDP figures show the UK economy shrinking in January. On Monday this week, the OECD downgraded the UK growth forecast for both this year and the next. The reality under Labour is that economic growth has fallen in four of the past seven months. The national insurance grab represents an extraordinary and unforced error in fiscal policy. If Labour genuinely has confidence in this move, then it should have no issue whatsoever in agreeing to Lords amendment 21 and publishing an impact assessment of its national insurance increase. What the Minister detailed as an impact assessment was in fact an analysis. An impact assessment deals not with the numbers, but with output in the real economy—the effect on business. The Minister knows fine that that is not what he is talking about.

On GPs and Lords amendments 1, 4, 5, 9 and 13, the Scottish Government will be investing—or compensating, rather—£13.6 million in general practice this financial year to support GPs in Scotland alone, obviously, to retain and recruit staff in the face of the change. But Scotland’s GPs, any more than England’s, Wales’s or Northern Ireland’s, should not be paying the price for UK Government decisions. Labour’s decision to increase national insurance contributions is a catastrophe for GP practices and for charities across Scotland—the relevant Lords amendments are 2, 7, 12 and 16.

There are 7,000 charities in Scotland at risk from this Labour Government. Marie Curie faces a £2.9 million inflation to its costs, with £75 million across the charitable sector in Scotland. The Scottish Society for the Prevention of Cruelty to Animals alone is exposed to a £400,000 recurring pressure from this Labour Government. Scotland’s public sector faces a £700 million recurring pressure, which, with the Government’s compensation, still leaves a £200 million shortfall. Scotland is again being punished for choosing to invest more in its public services and paying people who deliver those services better.

The Government regularly attack us by saying, “What would you do?” I will tell them what I would do: £30 billion by rejoining the single market; £16 billion by introducing Scottish income tax rates; and £43 billion from a wealth tax of 1% on assets over £10 million. But this Labour Government will not go after multimillionaires. They would far rather go after the disabled, hospices, family businesses, GPs, farmers, councils and charities. That is what these so-called socialists are intent on doing.

In conclusion, Labour’s fiscal bonfire is what my colleagues in the Scottish Government have had to deal with to try to ameliorate and protect communities from Labour’s economic ineptitude. But even fiscally incompetent Unionists—a cadre in whose number I include the Minister—must realise that the Scottish Parliament cannot exist simply to ameliorate and protect Scottish public services from the United Kingdom’s decisions. Devolution can only ever be a temporary face-lift for the crumbling foundations of Unionism. As the Union crumbles, I shed no tears, but I wish it was not ripping the economic heart out of Scotland on its way down.