National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Nusrat Ghani and Liz Jarvis

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[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.