National Insurance Contributions (Secondary Class 1 Contributions) Bill Debate

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Department: HM Treasury
Jeevun Sandher Portrait Dr Sandher
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I thank the right hon. Member for his incredibly kind words. For me, this is actually rather simple. I follow the Office for Budget Responsibility forecast, which goes through the Treasury policy costing and gets signed off. Those are the numbers I look at, and that is the money that will come in.

We are raising the money, as set out in those forecasts, in a fair way to invest in our future prosperity. We are using that money to build the homes that we need. In the mid-1990s, it took a young person around three years to save for a deposit. Now it is over 14 years, and in London it is nearly 30. That is why nearly half of young people are living at home with their parents, and why we are investing the tax revenue from the measures that we are discussing in the affordable homes programme. That means more homes for young people.

We are also using this money to create good jobs. The idea that someone could leave school and get a decent wage left our nation long ago. There are low-paid and insecure service jobs for some, but many are unable to get a job at all. Today, around 15% of young people are not in education, employment or training. Our warm homes plan, which will upgrade 300,000 homes, will also create tens of thousands of good jobs.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
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Analysis shows that this measure will hit the low paid and the young hardest. It will not help young people to get all the things that the hon. Gentleman describes, because they are the group who will find things most difficult as a result of it.

Jeevun Sandher Portrait Dr Sandher
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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.

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David Chadwick Portrait David Chadwick
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The Liberal Democrats agree that the country’s finances are in a mess thanks to the previous Conservative Government. However, we do not agree that increasing national insurance is the way to address the problem, as doing so will undermine efforts to improve public services across the United Kingdom. For example, last month Care Forum Wales issued a stark warning that the rise in national insurance could cause a collapse in the social care system in Wales, creating a £150 million funding gap. Social care in Wales is already on its knees. Over the past four years, 40 Welsh care homes have closed. If yet more are forced out of business due to increased costs, we will have even fewer social care spaces available. We know that the scenes of ambulances left queueing for hours outside our hospitals are the result of them being unable to discharge patients due to shortcomings in social care.

It is not just care homes that are affected, but primary care too. Our GPs, dentists and pharmacies will suffer from this tax rise. A local GP practice in my constituency told me that it will have to cut one day of practice nurse time and one day of GP time from April 2025. That is a direct result of the projected £30,000 increase in its national insurance bill, alongside an overall lack of funding for GPs. A second surgery is projected to have an increase in its NI bill greater than £100,000 in April 2025. Both are clear that without an exemption for health and social care providers, the NHS in Wales could face collapse. It already has the worst outcomes of any nation across the United Kingdom.

Charities and local authorities will suffer too from this decision. In my constituency, the chief executive officer of Powys Association of Voluntary Organisations has stated that the national insurance increase will

“place considerable financial pressure on voluntary sector organisations, many of whom are crucial partners in delivering essential services.”

That is the reality of the decision taken by the Government to use such a blunt tool to try to fix the nation’s finances. Many of my constituents are asking why Labour has chosen to go after the small businesses, charities, and health and social care providers rather than target the big banks, the oil and gas giants, or the social media giants. I urge the Government to reconsider their decision to raise income in this manner and to make exemptions for the health and social care sectors as well as for charities.

Sammy Wilson Portrait Sammy Wilson
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The outcome of the debate is of course inevitable: we know that when we go through the Lobby, we will be smashed by the overwhelming strength on the Government side, not because their arguments are strong but because of the parliamentary arithmetic. I suspect that even the hon. Member for Walthamstow (Ms Creasy), who indicated in her speech that this measure will hit especially labour-intensive services that employ low-paid people and are vital to the smooth running of the economy, will walk through the Lobby with the Government. Some people might say, “Is that not just the politics of despair?” It is important that the arguments made are at least challenged, despite the fact that, because of the parliamentary arithmetic, it may not come to anything.

I do not actually have a political point to score here, because the DUP will never be the alternative Government in this place—though the country is the worse for it. I therefore hope that all the predictions made here today and by independent bodies that have looked at the impact of the Budget are wrong. I hope that we do not find that small employers have to go out of business, that recruitment goes down, that the real wages of those who are employed—especially at the lower end of the wage spectrum—are cut, and that the services that are so vital to the health service are impacted on. I hope that all those things do not happen. I hope that economic growth is not impacted by it, but all the economic evidence, the economic logic and the forecasts made indicate that the arguments made against this measure by Opposition Members are correct.

Dan Tomlinson Portrait Dan Tomlinson
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My understanding is that the Office for Budget Responsibility says that growth will be higher in the short term, broadly unchanged over five years and higher in the long term.

Sammy Wilson Portrait Sammy Wilson
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We have seen over the last five months that growth has already been impacted. Of course, the OBR has indicated that in two and three years’ time, growth will be impacted negatively as well. I do not think that one can hide behind those arguments. As I said, I hope that I am wrong, but I suspect that all the economic logic on the impact of this measure and what we are already hearing from employers indicate that that is not the case.

Jim Shannon Portrait Jim Shannon (Strangford) (DUP)
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The reality is that those who own businesses in my constituency tell me that they will have to look at reducing wages and reducing numbers. Because of the Government’s policy, those working in doctors’ surgeries will have to look at a reduction in numbers as well. Whether Government Members like it or not, this measure will impact on small and medium-sized businesses and on GP surgeries. That is the reality. The Government are to blame for a recession—there really is talk about it. If a recession comes, the Labour party will be responsible.

Sammy Wilson Portrait Sammy Wilson
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I thank my hon. Friend for his short speech to back up the points I have been making.

Let me look at some of the arguments presented today. The first is that the Bill will help to fix the NHS. I will not go into the arguments already made, but Members have made it clear that the NHS depends on primary services and, once people have gone through hospital, being able to discharge them into the community. The businesses that provide those services will be impacted by these tax changes. I am sure that there is not a Member here who does not already see that hospital beds are being blocked because there is insufficient capacity. People go into hospital and get mended but still need some respite before they go home, but the NHS cannot find places for them. If that is true now, then the situation will be even worse once these tax increases impact those businesses.

A&E is inundated with people who cannot get GP appointments. If the Government hit GPs, as has been outlined eloquently today, those services will be blocked and not available. Where do people go? They go to A&E. The Bill is meant to help the NHS, yet all the evidence from the people who support it and are part of the supply line say otherwise.

The Minister previously indicated that the people whose services are commissioned from the NHS can renegotiate those services and the payments for them. The very fact that the NHS is in difficulty and is having to be exempt from these national insurance changes is an indication that when they go with the bowl, they will be told that the cupboard is bare and no support will be given.

The second argument made today is that we need these changes to restore trust in politics, even though it was promised that working people would not be impacted. When evidence was given to the Treasury Committee, what did the representative from the Institute for Fiscal Studies say? They said that these changes will affect every working person. We cannot hide behind the argument that it is being done for the good of trust in politics. In fact, it will undermine trust in politics.

Another argument that was made is that we have no choice. The Government already made choices, even before this Budget. They chose to spend money even when they knew there was a black hole. They were spending the money that they want to raise from these national insurance contributions on wage increases, quangos and other things. Recently, they will not even tell us how much they are spending. The Energy Secretary went to COP and came back and told us of a £300 billion bill coming down the road for our sin of industrialising in the past, and he will not tell us how much we will have to pay. We gave away the Chagos islands, and we are going to pay for that but it is secret.

Adam Jogee Portrait Adam Jogee (Newcastle-under-Lyme) (Lab)
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I am enjoying listening to the right hon. Member. He is an esteemed former Finance Minister in the Northern Ireland Executive, so I defer to his experience. He is setting out his opposition to the measures in the Bill. Now that he has referenced the black hole, can he tell us what he would do to address the legacy of the previous Government?

Sammy Wilson Portrait Sammy Wilson
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This is a mentality—

Nusrat Ghani Portrait The Chairman of Ways and Means (Ms Nusrat Ghani)
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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 Portrait Sammy Wilson
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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.

Carla Lockhart Portrait Carla Lockhart
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In my constituency and that of my right hon. Friend, agrifood manufacturing is a big business base and a big sector. As he will know, many agrifood businesses are saying that these changes will increase their bill by £50,000, £60,000 or £100,000. On top of the death tax for family farms, that will absolutely decimate our agrifood sector. I urge the Government to pull back from this measure; otherwise, we will see the cornerstone of our economy destroyed.

Sammy Wilson Portrait Sammy Wilson
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Of course, agrifood is another sector that I had not mentioned, along with hospitality, food processing, all the charitable sectors and some that are supporting the health industry—all are affected by it; they cannot escape it. I believe the impact will be far worse than what the Government are hoping for. Of course, as a result of the side effects of this measure, the revenue that is hoped for might not even be obtained.

Adam Jogee Portrait Adam Jogee
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For accuracy, I want to point out to the right hon. Gentleman that I am far more likely to be seen reading the Antrim Guardian than The Guardian.

Sammy Wilson Portrait Sammy Wilson
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I am pleased to hear it. I certainly do not read The Guardian, and I certainly do not share the view, held by some of its readers, that we should pay more taxes.

In closing, the Government have a huge responsibility to tax wisely and to spend wisely, and I do not think they have got that equation right. In fact, they are spending recklessly in many areas, and taxing recklessly as well. That will impact on their long-term objectives, but it will also impact on the lives of our constituents day to day.