Employer National Insurance Contributions: Charities

Saqib Bhatti Excerpts

Tuesday 7th January 2025 Westminster Hall

[Saqib Bhatti (Meriden and Solihull East) (Con)]

It is a pleasure to serve under your chairmanship, Ms Vaz. I congratulate my hon. Friend the Member for Isle of Wight East (Joe Robertson) on securing this important debate. He made an impassioned speech, and may I be the first to say on record that I think he will have a long and fruitful career in this House? I hope I have not just given him the kiss of death. As my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, the strength of feeling on this issue is demonstrated by the turnout for this debate. I thank every Member who has contributed.

Charities play a huge part in our lives, providing critical support to individuals who face poverty, illness and injustice. One of my many privileges as the Member of Parliament for Meriden and Solihull East is to have many fantastic charities in the local area. It is always inspiring to meet the volunteers who do so much to support people, year in, year out, wherever those volunteers come from.

In my constituency, I have the Colebridge Trust, which strives to get more people into work, improve health and tackle the effects of loneliness. I have the Lily Mae Foundation, which was set up to help support parents who suffer the unimaginable trauma of baby loss—I had the privilege of jumping out of a plane for it not so long ago. I also have the fantastic Lily’s Tea Parlour in Chelmsley Wood, which helps struggling people by offering warm food, drink and a safe space.

Alongside the great local charities in my constituency, like many Members, I also have Age UK and Marie Curie. My hon. Friend the Member for Isle of Wight East made the case for the challenges that they face and will be facing as a result of this Budget. Supported by an army of volunteers, these organisations are enormously important features of our high streets, towns and our society.

On a national level, the UK is one of the most generous nations for charitable giving. Our charities are a huge source of pride for people in this country, and Members across the House must always continue to come to Parliament to do all they can to stand up for the UK’s charitable sector.

The country’s charitable spirit can be seen by the fact that the British public donated an estimated £13.9 billion to charity in the last year. In our communities, local people gather regularly to take part in charity bake sales and sports fixtures and watch performances where ticket costs are donated to local charities. In some respects, some of the nation’s favourite cultural pastimes are deeply intertwined with supporting our charities, and there is no doubt that these charities bring all of us together.

But in spite of that, our charities are under threat. I have been contacted by a number of charities about the impact of this Budget. Local mental health charity Birmingham Mind told me that

“the rise, combined with current financial pressures, presents serious challenges for charities like ours”.

The brain injury charity Headway contacted me estimating that the proposed changes will push up its costs by tens of thousands of pounds, forcing it to “reduce services” and potentially putting employees at

“risk of redundancy or reduced days”.

Birmingham-based Services for Education, run by its formidable chief executive, Sharon Bell, wrote to me to say that

“the impact of national insurance changes will hit”

it “hardest—unfairly so.” She paints a very concerning picture about how the charity will be forced to limit the fantastic services it offers because of this unprecedented cost.

When the Chancellor delivered her Budget of broken promises, she did exactly what she promised during the election that she would not do: she significantly raised employer national insurance. What is even more concerning is the devastating effect that this has had on the charity sector. Just a day after the Budget, more than 7,000 charities came together to sign an open letter co-ordinated by the National Council for Voluntary Organisations, warning that the sector’s increased national insurance costs would amount to £1.4 billion a year. They all called on the Chancellor to either exempt or reimburse charities for these additional costs.

Let me tell the Minister that the impact is already being felt, and it is dire. Over Christmas, the chief executives of five domestic abuse charities made it clear that increased national insurance would force them to cut services, run down reserves and even make redundancies. This will have a catastrophic impact on the safety of vulnerable women and girls. Has the Minister had discussions with the Minister for Women and Equalities about the possible impact on women in this country? Has she spoken to the Chancellor? And where is the impact assessment?

More than 110 chief executives of homelessness charities in England have warned that these changes could cost the sector between £50 million and £60 million. Can the Minister give cast-iron assurances that homeless people will not lose vital support, especially over this cold and wet winter, because of the unprecedented rise in NI contributions?

The Opposition voted to exempt charities from the additional costs of NI increases. I regret that a staggering 348 Labour Members voted against that amendment, which will have a far-reaching impact on charities that provide essential services. Will the Minister give certainty that the Chancellor’s job tax will not have a negative impact on charities? And can she be certain that the Chancellor will not be coming back for more?