Employer National Insurance Contributions: Charities

Valerie Vaz Excerpts

Tuesday 7th January 2025 Westminster Hall

[Joe Robertson]

I agree, and the hon. Member perfectly illustrates the point that the Government’s stated aims are not backed up by their tax decisions. If the Government want better palliative care—I hope that they do—they should not be taking money away from hospices, or from charities, such as Marie Curie, that operate end-of-life care. He makes that point well; I thank him for it.

Before finishing, I will again quote the interim CEO of Refuge. She has said that the violence against women and girls sector

“is already under immense financial pressure”,

and that not only did the Budget

“fail to include detail about how much funding has been set aside to tackle violence against women and girls, the Government’s plans to increase National Insurance contributions for employers could have dire repercussions for charities.”

My ask of the Government is to extend to charities the exemption that they have given the NHS and public bodies. It is not difficult; there is no lack of clarity about what a charity is. Nobody will wish to beat the Government for making a sensible decision for charities. There are some alternative options, but that is plainly the only ask that will really deal with the problem. The alternative options are to provide some other form of relief, but that relief should be felt by all charities. If the Government cannot go as far as to relieve all charities, they should target relief to specific sectors. We have heard in this debate about those sectors, such as those operating in poverty and homelessness, and in health and social care, and those tackling violence against women and girls. At the very least, they should do an impact assessment. No impact assessment has been carried out of the impact of this tax increase on the charity sector. That must be the most basic ask: there can be no good reason not to have an impact assessment. Finally, the Government must go back and rethink their whole approach to taxation on charities, to help to deliver—not hinder—their stated aims.

[Valerie Vaz (in the Chair)]

Hon. Members can see the time now and we have to take wind-ups from about 5.8 pm. A number of people have put their names down to speak, so could Members stand if they want to speak and then we can work out timings?

[Several hon. Members rose—]

[Valerie Vaz (in the Chair)]

I am reliably informed that each person will have one minute in which to speak; I am afraid that I will have to stop people after one minute. Obviously, this is the debate of the Member in charge and therefore he could take as long as he liked; he also took quite a few interventions.

[Blake Stephenson (Mid Bedfordshire) (Con)]

I will be really quick, Madam Chair.

I thank my hon. Friend the Member for Isle of Wight East (Joe Robertson) for securing such an important debate. I am absolutely astonished that so few Government Members have attended. It was not so long ago that they were community champions seeking election.

In Mid Bedfordshire, our charities do absolutely fantastic work to help keep our area the special place that it is. In particular, I will talk about The Greensand Trust. I was pleased to visit the trust recently. It does some absolutely fantastic work in the community and in supporting environmental improvements within Mid Bedfordshire. However, I was deeply concerned to hear about the impact that this Government’s job tax will have on the trust. There will be £100,000 extra on its staffing costs next year. With no efficiencies that it can find and no extra income that it can raise, that means that next year the trust will have to cut staff to make ends meet, which means a reduced service for everyone, and a huge loss to our local environment and our green spaces—

[Valerie Vaz (in the Chair)]

Order. I am really sorry, but I have to stop you. Could Members bob each time, in between speeches, so that we can get a clearer idea of how many Members wish to speak?

[Abtisam Mohamed (Sheffield Central) (Lab)]

It is a pleasure to serve under you, Chair, and I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing today’s debate.

As the former chief executive of a community regeneration organisation, I speak from direct experience of working with charities on the ground. Although it is nice that today the Conservatives care about charities, that was not the case previously. The cuts started right at the beginning of the Conservatives’ time in office, with their “big society” policy, which in my experience was just an underhand means of implementing cuts. I know that because, like many organisations, the charity that I worked for spent year after year managing cuts after cuts. Vital local community services were forced to close or to reduce in size.

I welcome the Government’s commitment to resetting the relationship with the third sector and to rebuilding a new partnership through the civil society covenant. I am also pleased that the Government’s policy statement on local government finances will provide a multi-year financial settlement and adjust the funding formula to local Government to rebalance funding where it is most needed. These measures will be welcomed by charities.

However, I am concerned about the impact of the national insurance increase on organisations—

[Valerie Vaz (in the Chair)]

Order. I am really sorry; we are done.

[Marie Goldman (Chelmsford) (LD)]

I thank the hon. Member for Isle of Wight East (Joe Robertson) for bringing this really important topic to this place. It is a pleasure to serve under you today, Ms Vaz.

We are very short of time, so I will just highlight a couple of facts about charities that serve my constituency of Chelmsford. We have Farleigh hospice, which does what its name suggests. It does incredible work, but it has to fundraise most of its money, and it will need to cover an extra £250,000 in addition to the current deficit budget that it is operating under. That equates to the cost of five registered nurses or the direct running costs of its children’s bereavement service. I wonder which one the Government would prefer it to cut.

I could go on about loads of different charities. However, I have just 20 seconds left, so I will just say that I am so incredibly disappointed by the Government about this policy, because they must have known the impact that it was going to have on the charity sector, and to choose to ignore the sector and to implement the policy without any compensation and without talking to the sector first is just disgraceful. And I really want to know what the Government are going to do to—

[Valerie Vaz (in the Chair)]

Order. I call Patrick Hurley to speak.

--- Later in debate ---

[Edward Morello (West Dorset) (LD)]

I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this debate. I want to highlight the impact of the national insurance rise on just two West Dorset charities. Weldmar Hospicecare already subsidises 60% of its NHS-commissioned care through fundraising. It will have to raise an additional £600,000 next year. Julia’s House, which provides end-of-life care to sick children, gets just 8% of its income from state funding. It will have to raise nearly £250,000 next year as a result of these changes. Charities such as Weldmar and Julia’s House play a critical role in alleviating pressure on the NHS. They provide care in the community, reduce avoidable hospital admissions and support families in their darkest hours. Their work aligns with the Government’s priorities of shifting care out of hospitals into community settings, yet this policy actively undermines their abilities to do so. Weldmar and Julia embody selflessness and service. By exempting hospices from national insurance rises, we can protect their critical work and ensure they continue to provide comfort.

[Valerie Vaz (in the Chair)]

Last but not least, I call Tom Gordon.

[Tom Gordon (Harrogate and Knaresborough) (LD)]

I thank the hon. Member for Isle of Wight East (Joe Robertson) for bringing this debate forward. I want to mention two charities that I have interacted with in my constituency of Harrogate and Knaresborough. The first provides support to unpaid carers, who are now facing £90,000 in additional employer national insurance contributions. That will completely pull the rug out from underneath them and have a massive impact on people providing those services to their loved ones.

Secondly, Harrogate is home to one of the two police treatment centres in the UK. They help to rehabilitate police who have been injured in the course of their duties, and we know that every pound spent saves the taxpayer £3.80 in rehabilitation and mental health and wellbeing provision. Obviously, the impact of NICs on them is going to be huge—£160,000 of employer NICs will be passed on to them. It is really clear that, although the Government are hoping to raise some tax in the process, the additional costs are going to end up costing them a lot more in the long run. They need to rethink this.

[Valerie Vaz (in the Chair)]

I think we can squeeze one more Back-Bench speaker in. I call Clive Jones.

[Clive Jones (Wokingham) (LD)]

It is a pleasure to serve under your chairmanship, Ms Vaz. I thank the hon. Member for Isle of Wight East (Joe Robertson) for securing the debate. A number of charities in my constituency of Wokingham, including The Cowshed, First Days and Citizens Advice, have been really disadvantaged by these national insurance charges, one of them by up to £16,000 a year. The Government could have been bold by taxing banks, online gambling and social media giants to raise more money.

Can the Minister answer this simple question? Is she content with putting bankers’ bonuses first instead of debt advisers and support for people facing evictions, homelessness and genuine need?

[Valerie Vaz (in the Chair)]

I thank hon. Members. Everyone who wanted to speak has done. I now call the Liberal Democrat spokesperson, Daisy Cooper.

[Daisy Cooper (St Albans) (LD)]

It is a pleasure to serve under your chairship, Ms Vaz. I congratulate the hon. Member for Isle of Wight East (Joe Robertson) on securing this important debate. I believe I have up to five minutes to make some remarks, which feels positively luxurious in the context of the canter we have just had. I will kick back as I think about what to say.

I have been struck by the examples colleagues have given. We have heard a number of charities named from different constituencies: Age UK branches, charities that support survivors of domestic violence, those supporting women and children, ambulances, Mencap, Mind, physical rehabilitation and various volunteer and advice centres. But the one type of charity that has been mentioned more than any other has been hospices. Almost every hon. Member who spoke or made an intervention referred to a hospice in their area. That should surely send a strong message to the Government about the amount of cross-party support in this House for the hospice sector, and why we want to see more from the Government in that regard.

As the MP for St Albans, I have heard, as others have, about charities in my area. One hospice, Rennie Grove, says that the changes will potentially increase costs by around £250,000. A doctor working in palliative care in another hospice that serves my constituents says that the decision not to exempt hospices is “nothing short of devastating.” A trustee from a local mental health charity says that the cuts that need to be made may result in an increase in demand for NHS services. National Age UK has also said that this will put an intolerable strain on its organisation.

We know the Government have a terrible inheritance from the previous Government, but different choices could have been made. The Government say that the national insurance hike will result in additional tax revenue of around £25 billion per year, but the Office for Budget Responsibility clearly states that, after allowing for behaviour changes in response to the tax, such as reducing pay, and once public sector employers are compensated, it will only raise revenue closer to £10 billion.

Instead of raising national insurance contributions on small businesses, health and care providers and charities, the Government could have raised that same amount of money through much fairer tax changes. For example, the Liberal Democrats have proposed reversing the Conservative cuts handed to the big banks; increasing the digital services tax to 6%; doubling the rate of remote gaming duty paid by online gambling companies; and introducing a fairer reform of capital gains tax, so that the 0.1% of ultra-wealthy individuals would pay their fair share, while keeping things the same or cutting tax for other capital gains tax payers. Those other choices could have been made.

Like other hon. Members in this debate, I urge the Government to think again about what they can do to restrict the impact on our charity sector. The national insurance contribution rise is unnecessary when alternative tax-raising avenues are available, as I have just set out. It is self-defeating, because in many cases it will put more pressure on the NHS, and it is fundamentally unfair. It will hit charities that are supporting some of the most vulnerable in our society. Those charities are the glue that hold our societies together and, unfortunately, we are going to see their services slashed.

[Valerie Vaz (in the Chair)]

Order. We are expecting a vote but I will call the Opposition spokesperson, Saqib Bhatti.