National Insurance Contributions (Secondary Class 1 Contributions) Bill

Nusrat Ghani Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I have just calculated how to get everybody in before we run out of time, and I will have to drop the time limit to four minutes.

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[Dan Tomlinson]

I will give way.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. The hon. Gentleman has already taken two interventions, and the clock will now continue to run for every subsequent intervention that he takes, just in case he was not aware of that and wants to take this intervention from Mr Hinds.

[Dan Tomlinson]

Maybe I will take further interventions when I speak in tomorrow’s debate, Madam Deputy Speaker, because I know that many Members still wish to speak.

In my final 13 seconds, let me conclude by saying that the risk for the Conservative party is that it forgets the importance of managing the public finances, which gives us the economic stability from which growth can come. By voting against the Government, Conservative Members will make that more difficult, and will signal that they do not wish to have economic stability and growth.

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[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

Government Members have talked about difficult choices. Not taking away the winter fuel payment from people, or voting to remove the two-child cap, might also have been difficult choices, but instead they have been easy targets. This Bill adds to those easy targets.

The Bill, presented under the guise of fiscal responsibility, is a thinly veiled austerity measure that will disproportionately burden Scotland and undermine our ability to deliver vital services to our citizens. The increase in employer national insurance contributions is touted by the Government as a necessary step to bolster public finances. However, closer examination reveals the stark reality: the increase will lead to a significant shortfall in Scotland’s public sector funding. We will be left grappling with the fact that the UK Government undervalued the cost of the measure by at least £200 million.

Scottish Government figures, corroborated by independent analysis from reputable institutions such as the Fraser of Allander Institute, paint a grim picture. The national insurance hike will cost Scotland more than £500 million, including a staggering £191 million burden on our already stretched NHS. That figure rises to an alarming £750 million when we factor in indirect employees in sectors such as childcare, GP practices and social care—sectors vital to the fabric of our society.

In Moray West, Nairn and Strathspey, a local firm with a number of care homes across the north of Scotland faces an £800,000 bill. It provides vital services to the community. To give another example, a local dentist has said that the increased cost of employment as a result of the Bill may force them to go private to recoup those costs. Finally, the Bill is a double whammy for GP practices. They face the national insurance hit, but by dint of being designated a public service, are not eligible for employment allowance.

The UK Government’s paltry offer of £300 million in Barnett consequentials is simply not enough to bridge the gap, and it fails to account for Scotland’s proportionally larger public sector, which employs 22% of the workforce, compared with 17% in the UK as a whole. Among other reasons, that is because in Scotland, we already have a publicly owned and managed rail service, and a publicly owned and managed water service. The funding disparity is a clear indication that the UK Government have given scant consideration to the unique needs and circumstances of Scotland. That includes the disregard demonstrated in the winter fuel payment debacle, which exposes a pattern of neglect, regardless of which party occupies the Government Benches. It is exactly this pattern of neglect and lack of understanding of Scotland by successive UK Governments that strengthens the case for Scottish independence, and for our ability to take decisions for ourselves, like every other normal country, on the delivery of public services and taxation that impacts us.

The impact of the Bill goes far beyond mere budgetary concerns. It will have a ripple effect across our economy, harming businesses, stifling growth and ultimately hurting the very workers it purports to protect. The Office for Budget Responsibility has cautioned that the increase will likely lead to lower wages and higher prices; effectively, the burden will be passed on to consumers, and the purchasing power of hard-working families will be eroded. We urge the UK Government to reconsider this damaging Bill, to fully fund the cost of this tax hike to public services in Scotland, and to engage in a meaningful dialogue with the Scottish Government, so that Scotland’s interests are protected.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

We have two remaining Back-Bench contributions. Colleagues who have contributed to the debate should consider making their way back to the Chamber before the wind-ups.

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[Liz Jarvis (Eastleigh) (LD)]

I am grateful for the opportunity to contribute to this important debate. I have previously raised in the Chamber the impact that increased employer national insurance contributions will have on GPs, dentists, pharmacies and care providers in my constituency of Eastleigh. I have also been contacted by many owners of small businesses who are hugely concerned about the impact that changes to employer national insurance contributions will have on their businesses. That includes the early years sector, which plays a crucial role in supporting working families and the wider economy. Providers who operate on tight margins and with a limited ability to adjust income face unique challenges. For a sector that is already under immense financial pressure, this added burden feels short-sighted and risks undermining the stability of a service that families rely on so heavily.

Crestwood pre-school in my constituency serves local families by providing care and education for children aged two to five. As a charity-run pre-school, it is already stretched to its limits, despite huge fundraising efforts. Clare, the manager of Crestwood, wrote to me explaining how the increase in employer national insurance contributions will add tens of thousands of pounds to its annual costs. Those are funds that it simply does not have.

I have also heard from Forest Footsteps Childcare in Chandler’s Ford, another early years provider in my constituency. Erin, who opened the centre in 2022, is worried about how she will manage the extra costs. She calculated that the new national insurance plans for employers’ contributions along with the rise in the national minimum wage will cost her approximately £13,000 a year more. While she is showing remarkable resilience, she told me that some providers have been less fortunate and already closed their doors.

The YMCA Eastleigh nursery and community centre has also shared its concerns. It told me that the combined impact of these changes will cost the nursery and community centre an extra £95,000 a year. This is a problem being acutely felt across the whole sector.

These stories are not unique. Across the country, nurseries, pre-schools and childminders are warning that rising employer national insurance contributions coupled with inadequate Government funding will lead to higher fees for parents, reductions in staff pay and closures in those essential early years settings, which would not only harm working families but risk deepening the staffing crisis in the sector. What reassurance can the Minister give early years and childcare providers in Eastleigh and across the country that they will not be adversely affected?

Raising employer national insurance is a tax on jobs that will hurt small businesses and essential services. The Government must reconsider their approach. The early years sector, primary care and small businesses are not staffed by those with the broadest shoulders. This weekend we have Small Business Saturday, a chance to celebrate the incredible work of small businesses, who do so much for our communities. They need our support. The Government must think again and support working families. They must rethink this unhelpful policy.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Nusrat Ghani Excerpts

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

[Sammy Wilson]

This is a mentality—

[The Chairman of Ways and Means (Ms Nusrat Ghani)]

Order. I, too, enjoy listening to the right hon. Gentleman, but it would really help if he could continue to speak to the Bill at hand, and not make broader comments.

[Sammy Wilson]

The mentality is that with these national insurance increases we are imposing more taxes on small businesses and on all the sectors I have spoken about. I would ask the hon. Gentleman what spending decreases could have been looked at—have any productivity impositions been put on the public sector, for example? That should be the answer, rather than asking, “Who should we tax to pay for the black hole?” Instead, we should be asking how we can reduce and reprioritise the things that we do; looking at some of the things the Government do at present that they do not need to do, or that they could do better, or that they could save money on.

I listened with bemusement to the hon. Member for Dartford (Jim Dickson), who was relieved by a survey in The Guardian in which more than 50% of those surveyed were quite happy with this tax. If there are so many Guardian readers happy to pay more taxes, I am sure the Scottish National party would love them all to move to Scotland, because it might solve some of the problems they have. These are the kinds of strained arguments that we have had from Government Members.

They know the impacts the Bill will have. I am sure they are having the same conversations with their constituents as I have had with the people who have spoken to me in my constituency office—the small businesses, those in the hospitality industry, the GPs and those in the care sector and the charitable sector, who have come to me and told me the impact it will have on their organisation. I do not believe we can run away from this, despite what will happen when we vote later today.

I do not share the optimism of the right hon. Member for Beverley and Holderness (Graham Stuart) that somehow little cabals will form on the Government Benches—that they will all start whispering, and maybe 10 of them will go to see the Chief Whip, and then next week it will be 20, and then, by the time there are 50 of them going to see the Chief Whip, this will all change. I do not share that optimism. What I do hope, however, is that the predictions that have been made about the Bill will finally resonate with the Chancellor, and we will see a change in policy.

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[The Chairman]

I know that colleagues read about how we manage the Chamber, so they will know that I cannot put speaking limits on individuals contributing in Committee of the whole House. However, if the last two Members speak for around five minutes each, the Minister will have time to respond before we have to conclude business, so please be mindful of that.

[Robin Swann (South Antrim) (UUP)]

I will shorten my speech on your guidance, Ms Ghani. I encourage all Members of the House to follow the example of the hon. Member for Newcastle-under-Lyme (Adam Jogee) and sign up to the Antrim Guardian—a very good local publication from my constituency that carries good articles.

I rise to come back to the topic of the debate, employers’ national insurance contributions, because we have covered many subjects this afternoon. I support the amendments that look to alleviate the punishing implementation of, and increases to, employers’ NICs, especially for our family health service and social care providers. Unlike other speakers on the Opposition Benches who have looked to blame the Government for the increases, I do not think the Government are to blame. I think this is more about the Treasury than the whole Government.

I want to pick up on a point raised, I think, by the hon. Member for Isle of Wight East (Joe Robertson). I have a lot of respect and sympathy for the Secretary of State for Health and Social Care, the right hon. Member for Ilford North (Wes Streeting). When he announced his 10-year plan for the national health service, there were three main platforms: to move from analogue to digital, to move from sickness to prevention, and to move from hospital to community. The increases to NICs for community-based health providers will put many of those services at risk and under pressure. This is where there is a disconnect between what the Government are trying to do and what they are actually going to do and achieve. I think that was the point described by the right hon. Member for Beverley and Holderness (Graham Stuart). If we put the additional charges on our GPs, community pharmacies, opticians, domiciliary care providers and social care providers, that will come back, in a circular route, in how we fund our health service.

On the specifics for Northern Ireland, we are looking to transform and modernise a health service that has been largely underfunded and under pressure for quite a number of years, and trying to exist on single-year budgets since 2016. We are doing that by introducing multidisciplinary teams, where a general practice has a psychologist and a social worker all within its practice. General practices are asking for that to be extended across Northern Ireland, but the increase in ENICs will increase wage bills and pressures on the pharmacies and general practices that have already taken that step.

The right hon. Member for Beverley and Holderness also made a point about the introduction of social care within the health service. We already have that in Northern Ireland, and 75% of the provision is done by the private sector. One thing this House needs to address, especially those on the Labour Benches, is that when we talk about private provision, they are not organisations making massive amounts of money. In my constituency they are often family-run social care practices that look after two or three homes. Nearly all nursing and residential care homes are privately owned too.

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[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

rose—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. May I ask the hon. Gentleman to keep his contribution to just a few minutes, so that the Minister has time to respond to all the Back Benchers?

[Iqbal Mohamed]

Everyone in my constituency, and indeed in the whole country, knows that the last Tory Government decimated public services after 14 years of austerity, mismanagement, negligence and a sole focus on the rich, at the expense and neglect of the poor working class and the public sector. I sympathise with the new Government, and I will try to provide constructive support.

I wholeheartedly welcome the Government’s announcements in the Budget of increased investment in education, the NHS, infrastructure projects and other public services, but, like many other people in the House and throughout the country, I do not agree with the approach taken to the funding of those investments. Members on both sides of the Committee have indicated today that failing to protect key sectors and services such as general practices, care homes, pharmacies, childcare providers and third sector providers may have been an oversight or a mistake on the Government’s part, but I am not so sure. On the basis of the Government’s other blanket policies on abolishing the winter fuel allowance, imposing VAT on all private schools including low-fee and charitable schools and removing business rates relief from all private schools and charities without any announcement of safeguarding or compensatory measures to protect these services and sectors, it appears to have been a deliberate, or negligent, decision.

It is clear that the Government inherited a dire state of affairs that requires huge investment, which must be paid for in a responsible way. I am sorry to say that the way that has been chosen by this new Labour Government is not the right one. Viable and progressive alternatives are available to the Government to raise finances for the necessary investment rather than inflicting the increase in national insurance contributions on the impacted bodies. Let me suggest a couple of easy measures that would support the Government’s investment. One possible solution is the imposition of a 2% wealth tax on assets over £10 million, which would raise the amount predicted to be raised by national insurance contributions; another is the closing of corporation tax loopholes that allow corporations to save billions and to offshore profits.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Nusrat Ghani Excerpts

Consideration of Lords amendments
Wednesday 19th March 2025 Commons Chamber

[James Murray]

I thank the hon. Gentleman for drawing attention to the very important reforms that my right hon. Friend the Secretary of State for Work and Pensions set out in this House yesterday, which are a crucial part of getting people back into work. Further details on interventions to help people back into work will be set out. We recognise that charities may, in some cases, provide that support, which is why many of the elements of support for charities in the tax regime remain so generous. There was £6 billion for tax relief for charities and their donors in the tax year to April 2024 through features that will continue in the tax year that we are entering. The employment allowance is more than doubling from £5,000 to £10,500, which will benefit all charities in this country. Charities, particularly small charities, will benefit directly from changes that we have made to the employment allowance. [Interruption.] Sorry, Madam Deputy Speaker—I thought you were going to intervene on me.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

The Minister is making a lengthy contribution; I am just waiting for a conclusion.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. This debate has to conclude within two hours of its start, so we will have a six-minute time limit, other than for Front-Bench Members. I call the shadow Minister.

[Gareth Davies (Grantham and Bourne) (Con)]

I rise on behalf of the official Opposition in support of Lords amendments 1 to 4, 8, 10, 14 and 21.

Before I dive into the detail, I want to get a little nostalgic. One year and six days ago, I opened Second Reading of the National Insurance Contributions (Reduction in Rates) Act 2024, which cut national insurance for some 29 million working people across the country. What a difference a year makes. At the end of my speech that day, I posed a simple question to the shadow Minister, now the Exchequer Secretary, which was really bugging me at the time: how will Labour pay for all its many spending commitments? I asked specifically what taxes Labour would put up, and called for Labour to just be straight with the British people. Alas, no straight answer was forthcoming, but now we know the answer, don’t we? It is just a shame that Labour gave it to us only after the general election.

Labour promised not to raise national insurance, and that it was on the side of British business. It said that it would deliver economic growth; how is that going? The fact is that the Chancellor is delivering a £25 billion tax rise on jobs across the country. That will stifle growth, hold back British business, and harm public services. This Labour national insurance Bill will, unbelievably, take the tax burden to its highest level in history on the backs of working people.

We are debating a series of amendments tabled and voted through in the other place with the aim of mitigating at least some of the damage to three vital parts of our economy and our communities: healthcare providers, charities and small businesses. Lords amendments 1, 3 and 4 seek to exempt from the measures care providers, NHS GP practices, NHS-commissioned dentists and pharmacists, providers of transport for children with special educational needs and disabilities and charitable providers of health and social care, such as hospices, as we have heard. That is because we have been warned that as a direct result of the national insurance tax hikes, we could see fewer GP appointments, reduced access to NHS dentistry, community pharmacies closing, adults and local authorities paying more for social care, and young working families being hit with even higher childcare costs. We have to avoid that.

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[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I listened carefully to your answer to the Minister’s question about what you would cut if this change were to be reversed. You have not been clear about whether you would reverse it, but I listened carefully to the answer, and what I heard you say—[Interruption.] I am so sorry, Madam Deputy Speaker. The shadow Minister referred to GB Energy and the National Wealth Fund. Will he clarify whether he is really saying that he wants to reverse record levels of investment in energy infrastructure and innovation jobs, and in jobs across this country, to stabilise our economy into the future?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I remind hon. Members that interventions should not be short speeches. The hon. Lady is absolutely right; looking at the Chair should hopefully prevent her from saying the word “you” repeatedly.

[Gareth Davies]

The problem with that intervention is that the chairman of GB Energy himself disagrees about the number of jobs that it will supposedly be creating. I have set out clearly some of the things that we would do differently, and the different choices we would make from the choices this Labour Government are making.

When we talk about small businesses, and about the impact of this national insurance tax increase on businesses as a whole, the Minister and other Labour Members incorrectly suggest that only the largest businesses will be forced to pay this jobs tax. As I have told them consistently in every debate we have had on this Bill, that is simply not the case. Village butchers, high street hair salons and community pharmacies are not what most people would regard as large businesses, yet businesses such as those will be hit. If the Government really want to ensure that our smallest businesses are exempt from at least part of this damaging tax, they should support the Lords amendments that are before us today.

[Sir Gavin Williamson]

We know that the Minister is having to defend the undefendable—he has got a certain Matt Hancock about him in how he does it with zeal. [Interruption.] Sorry, Madam Deputy Speaker. Does the shadow Minister agree that the people who are paying for these increases are taxpayers? They are people who are working hard. I was talking to a manufacturing business in my constituency that was going to give its employees a 4.5% pay increase, but can now only afford to give them a 2% increase. This money is coming out of the pockets of hard-working people.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I remind hon. Members that language should be respectful at all times.

[Gareth Davies]

The jungle awaits the Minister, clearly. My right hon. Friend is absolutely right; in fact, the OBR has clearly demonstrated in its analysis that 76% of this tax increase will be passed on to working people. That is a manifesto breach if ever I saw one. Not only that—the Institute for Fiscal Studies has made clear that this tax increase will not just have an impact on working people. It is the lowest-paid people in our country who will be paying for it, which is another under-appreciated and under-commented fact for the Labour party.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Due to the length of Front-Bench contributions, Back Benchers are now limited to five minutes.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Thank you, Madam Deputy Speaker, for allowing me to rise to speak to Lords amendments 1 to 19. I want to speak about what makes a good tax system and, in particular, optimal tax theory, which is a topic that is as thrilling to me as it is no doubt to the entire Chamber.

A good tax system is defined by neutrality, simplicity and stability, as set out in the Mirrlees review. A tax system designed along those three principles will raise the maximum revenue with the minimum economic impact. Each of the amendments in isolation might seem reasonable, but together they introduce individual exemptions that make our tax system less neutral, less simple and less stable. The amendments would make our tax system worse.

Today, we are discussing raising national insurance contributions from the largest employers to fix our broken public services and invest in our prosperity. Three quarters of that £23 billion of investment is from the richest 2% of businesses, while we are reducing contributions from the 250,000 smallest businesses.

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[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Notwithstanding what was said by the hon. Member for Loughborough (Dr Sandher), the Lords amendments were clearly not designed with the aim of creating a simpler tax system. They have been sent to us to consider because they may create a fairer society, and that, in my view, should be a driving force in our consideration of them today and in the work of this House.

Such is the strength of feeling in the other place that it has sent us 21 amendments, and such is the strength of feeling on the Liberal Democrat Benches that we will support every single one. Taken together, they offer exemptions for health and care providers, for small charities with an annual revenue of less than £1 million, for transport providers, for children with special educational needs and disabilities, and for small businesses with fewer than 25 employees.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. We have three more speakers. If anyone intervenes, I will not be able to get all of them in.

[Caroline Voaden (South Devon) (LD)]

I rise to speak to Lords amendments 1, 2, 3 and 4. The Liberal Democrats are extremely concerned that this tax rise risks dire consequences for social care, primary care, the NHS, hospices and charities, many of which are delivering vital healthcare in the community. Thousands of care providers are already on the brink of bankruptcy, and this national insurance increase risks tipping them over the edge.

The OBR estimates that this hike will bring in £10 billion a year rather than the £25 billion estimated by the Government, once employers change their behaviour in response to the tax and once public sector employers are compensated. Yes, we know that finances are stretched, and that the Government inherited an incredibly difficult situation, but the Government could have raised that amount of money through much fairer tax changes, and we Liberal Democrats have come up with many suggestions. For example, they could have reversed Conservative cuts handed to the big banks; increased the digital services tax; doubled the rate of remote gaming duty; and introduced a fair reform of capital gains tax, so that the 0.1% of ultra-wealthy individuals pay their fair share. This may be something particular to Totnes, but many wealthy constituents have told me that they wish they were being asked to pay more tax.

The Liberal Democrats have called on the Government to exempt social care providers and GPs from the employer national insurance tax rise. On average, the tax rise will cost each GP practice an estimated £20,000 a year. The Government have announced an additional £889 million in the 2025-26 GP contract, but have failed to spell out how much of that they believe practices will need to use to pay the additional tax burden, and how much will be left to meet unmet patient needs. What is clear is that the national insurance rise will mean that the uplift to the GP contract is in fact far smaller than it appears, because a proportion will need to be returned directly to the Treasury—robbing Peter to pay Paul, as many Members have said.

What assessment have the Government made of how much of the recent uplift in the GP contract will practices need to use to offset the rise in national insurance? Rowcroft hospice, which is in the constituency next door, but which serves us, says the NIC rise is expected to add £225,000 to annual costs. One of my GP surgeries says that its costs will go up by £187,000, and the Devon Mental Health Alliance estimates the cost increase at £375,000, potentially resulting in a loss of 25,167 staffing hours.

One GP said to us:

“I have been a GP for 10 years and a doctor for 15. It is exhausting and, frankly, I just feel like giving up. This is not an attractive or stable job for training doctors.”

The Devon Mental Health Alliance, which is a strategic partnership, uniting five leading charitable organisations in Devon, said:

“As a sector, we play a critical role in easing the burden on the NHS by preventing thousands of people from needing GP appointments, hospital care, or sitting on waiting lists for treatment. By addressing health issues at their root and offering early intervention and prevention, this sector acts as a frontline defence, reducing demand on overstretched NHS services.”

It cannot fill the black hole by increasing revenue efficiencies or risk management. The organisation estimates costs of £375,000 next year and, as I have said, that could mean losing 25,000 staffing hours. That would mean that more people in Devon with complex needs will not be able to access its services.

Minister, at a time when we have a mental health crisis across all ages and communities, this extra financial impact on voluntary sector services is short-sighted and will only heap more pressure on the NHS. If we do not value the work done in primary care, particularly by GPs, we are putting the health of our constituents across the country at risk, putting more pressure on GPs who are already working at full capacity and threatening reforms to the NHS, which has already been brought to its knees by chronic underfunding over the past decade. I strongly urge the Government to reconsider the NICs rise for GPs, social care providers and all of those working to support health and wellbeing in the communities that we represent.

Just to finish, I would like to echo what others have said about the total absence of Government Back Benchers who have felt able to come in and speak in support of their hospices, their social care providers and their voluntary sector organisations, because they could not come in here and defend a Government policy that they know is indefensible.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Nusrat Ghani Excerpts

Consideration of Lords message
Tuesday 25th March 2025 Commons Chamber

Consideration of Lords message

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 1B, 5B and 8B. If the House agrees to any of those amendments, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal.

After Clause 1

Exemptions from the changes made by section 1: NHS and social care

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

I beg to move, That this House disagrees with Lords amendment 1B.

[Madam Deputy Speaker]

With this it will be convenient to consider the Government motions to disagree with Lords amendments 5B, 8B and 21B.

[James Murray]

I welcome the opportunity to consider the new Lords amendments to the National Insurance Contributions (Secondary Class 1 Contributions) Bill. I start by repeating my thanks to Members of both Houses for their careful scrutiny and consideration of the Bill. Four new amendments have been made during consideration of the Bill in the other place, which we will seek to address today.

As I reminded hon. Members last week, when we entered government, we inherited a fiscal situation that was completely unsustainable, and we have had to take difficult but necessary decisions to repair the public finances and rebuild our public services. The measures in the Bill represent some of the toughest of those decisions, but they, along with other measures in the Budget, have enabled us to restore fiscal responsibility and get public services back on their feet. The amendments from the other place before us today put at risk the funding that the Bill seeks to raise. Let me be clear again: to support the amendments is to support higher borrowing, lower spending or other tax rises.

It is with that in mind that I turn to the first group of amendments: Lords amendments 1B, 5B and 8B. These amendments seek to create powers as part of the Bill to exempt certain groups from the changes to employer national insurance rates and threshold in the future, including exemptions for care providers, NHS GP practices, NHS-commissioned dentists and pharmacists, charitable providers of health and care and those providing hospice care. It also includes powers to exempt businesses or organisations with fewer than 25 full-time employees from the changes to the employer national insurance threshold.

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[James Murray]

The right hon. Gentleman raised the question of hospices during last week’s debate on amendments from the other place. As I made clear at the time, although hospices do not receive support to meet the changes in employer national insurance contributions, we greatly value the work they do. I pointed to the wider support that the Government are giving the hospice sector—namely, the £100 million boost for adult and children’s hospices to ensure they have the best physical environment for care, and the £26 million revenue to support children and young people’s hospices.

The right hon. Gentleman also referred to people giving to hospices, which are established as charities. Of course, the Government provide support for charities, including hospices, through the tax regime, which is among the most generous in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.

Lords amendment 21B would require the Government to conduct assessments on the economic and sectoral impacts of the Bill. As we have discussed previously, the Government have already published an assessment of this policy in a tax information and impact note published by His Majesty’s Revenue and Customs. That note sets out that, as a result of measures in the Bill, around 250,000 employers will see their secondary class 1 national insurance contributions liability decrease, and around 940,000 employers will see it increase. Around 820,000 employers will see no change. The Office for Budget Responsibility’s economic and fiscal outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment, growth and inflation. The Government and the OBR have therefore already set out the impacts of this policy change. The information provided is in line with other tax changes, and the Government do not intend to publish further assessments. However, we will of course continue to monitor the impact of these policies in the usual way.

I hope that right hon. and hon. Members will understand why we are not supporting these amendments from the other place. The measures in the Bill will play a crucial role in fixing the public finances and getting public services back on their feet. The amendments require information that has already been provided, do not recognise other policies the Government have in place or, most seriously, seek to undermine the funding that the Bill will secure. I therefore respectfully propose that this House disagrees with these amendments, and urge all hon. and right hon. Members to support the Government on that disagreement.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

[Gareth Davies (Grantham and Bourne) (Con)]

I rise on behalf of the official Opposition to support Lords amendments 1B, 5B, 8B and 21B. It feels like only last week that we were all here, but it is clear that our colleagues in the other place feel as strongly as the Opposition do about these amendments, as they have returned them to us with a similar aim once again.

Lords amendments 1B, 5B and 8B seek to address two of the most serious consequences of the Bill that should concern and unite us all: that a rise in secondary class 1 national insurance could lead to a significant reduction in health and social care services, including our hospices, hitting the most vulnerable in our society; and could represent a complete hammer blow to the future aspirations and very survival of small businesses throughout the country.

We all know that the Chancellor has an addiction to creating fiscal black holes. First she used a fictional black hole, discredited by the Office for Budget Responsibility, as an excuse for her manifesto-breaking tax rises. This has led to more black holes, only this time they are very real because they are being felt out there in the real economy. The Bill before us today will create black holes in the finances of hospices, GP practices, farms, fruit shops, butchers, bakeries and businesses of all shapes and sizes, but especially the very smallest.

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[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I rise to speak to Lords amendments 1B, 5B, 8B and 21B. Even before the Budget, there were rumours that the Government were thinking of introducing a hike to national insurance contributions. We Liberal Democrats issued a stark warning to the Government. We challenged them at Prime Minister’s questions and in questions to the Deputy Prime Minister, saying that if they went ahead and introduced these changes, social care providers up and down the land would be hit incredibly hard. The Government cannot say that they were not warned. We warned them, even before they made the announcement.

In the many long debates that we have had in the Chamber since the Budget, we have consistently made the case that health and care providers should be exempted from this change. The Government say that they want to make the national health service a neighbourhood health service; we heard this just an hour ago from the Secretary of State for Health and Social Care. They also say that they want to take services out of hospitals and on to the high street, but this tax hammers the very providers of the neighbourhood community services on which the NHS relies. It is GPs, dentists, pharmacists, hospices and care providers who hold up our community care, and prop up our NHS, so that it does not fall over.

Government Ministers have said on many occasions that they have increased funding to social care, but the additional funding announced in the Budget is dwarfed by the rise in national insurance contributions. As other Members have highlighted, the Government have said that they have given more funding to hospices, but that funding is for capital projects. There is no point having another hospice building or hospice bed if there are no staff to look after the people lying in them. We know that we have to fix the front door to the NHS—our GPs and dentists—but we have to fix the back door to our NHS too, which is social care.

On hospices, there is nowhere else for the people in them to go. People look for support from hospices so that they can die in dignity, with independence, in a setting of their choice, surrounded by their loved ones—not in the sterile environment of a hospital ward or, worse, a busy corridor or ambulance parked outside. We need our GPs, dentists, hospices, pharmacists and care providers to survive and thrive if we are to end the crisis in our NHS.

The Lords in their wisdom have not sent back an amendment that simply asks for an exemption. They have put in a very clever tweak that asks that the Government to adopt a Henry VIII power. That is not something the Liberal Democrats would normally support, but on this occasion it would give Ministers the power to choose if and when they want to exempt health and care providers from the rise. That way, when we get this enormous growth booming in our economy—when we see the success that we all hope to see—a Minister could choose to exempt health and care providers and give them the cash injection that they need. I urge the Government to support this measure.

Amendment 8B provides a power to exempt small businesses from the changes. Small businesses are the engine of our economy and of growth. They are the very organisations that prop up our high streets. They are the glue that hold our communities together. The Government have raised the employment allowance for microbusinesses, but they have not put other provisions in place to support small businesses. While our small businesses can be the engine of growth, they are screaming out about the number of obligations being put on them, with the NICs changes, business rates bills going up and the new obligations under the Employment Rights Bill. It is all happening at once, and they say that they are overwhelmed. I support amendment 8B, which would give the Government the power to exempt small businesses.

I am also in favour of Lords amendment 21B on an impact assessment. As Ministers remind us, there is a tax and spend announcement coming, but looking at the impact of the provisions, this is less about tax and spend and more about the overwhelming impact on small businesses, which are really struggling right now. Many of them still have covid loans, and many are struggling with access to finance. Many owners are remortgaging their homes to prop up a new business. This change has come out of the blue. Small businesses have not been able to plan ahead for it, and many of them are fearful about what will happen. I fear that if the measures go ahead, in a matter of days, we will start to see shop fronts boarded up on high streets up and down the land.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I was going to call Sir Roger Gale, but he is no longer bobbing—ah, I call him now.

[Sir Roger Gale]

Thank you, Madam Deputy Speaker. I naively assumed that, having already been called twice today, I had to take my place in the pecking order.

I want to come back briefly to hospices. This is a very serious issue, and I do not think that the Minister or the Government understand the deleterious effect of the change on care for some of the sickest people in the land, both in adult hospices and children’s hospices. I have listened very carefully—twice now—to the Minister’s response about giving this and giving that, but they are giving with one hand and taking away more with the other. The net result will be a reduction in staff. This is a straightforward tax on jobs.

Without dedicated, caring staff, who do jobs that frankly most of us would not begin to know how to do, the health service will not function. There are children living in and being serviced by Demelza House, Shooting Star and all the other children’s hospices. The Pilgrims Hospices in Thanet and Canterbury will not be able to afford to recruit and or pay the staff that they need.

Hospice care is an integral part of the health service. The point was made by my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) and others that hospice care is part of the health service and should be treated as part of the NHS. [Interruption.] My right hon. Friend asks from a sedentary position, “Where are all the Labour Members?” The answer is that they will be in the Lobby, voting against these measures, but they are not here listening to the debate. It saddens me to have to say it, but in this instance, their absence speaks volumes. Quite simply, they do not care.