National Insurance Contributions (Secondary Class 1 Contributions) Bill

Viscount Chandos Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, I echo some of the comments made by the noble and learned Lord, Lord Hope of Craighead, who identified some key Scottish voluntary organisations that play a vital role in supporting particularly vulnerable people.

I draw attention to CrossReach, the social care arm of the Church of Scotland. CrossReach employs something like 16,000 people. Over recent years it has been able to support its services by drawing on reserves to the extent of not thousands but millions of pounds. That sort of thing is not sustainable. It has 32,000 beneficiaries across Scotland. In my year as moderator of the General Assembly of the Church of Scotland, I remember visiting many of these facilities and seeing the valuable work done by CrossReach in supporting young children, many of whom had disabilities. It also supports drug and alcohol rehabilitation schemes, elderly care and care homes, and young people with learning difficulties moving from the school environment into the adult environment. The work being done was quite remarkable. I fear that you cannot continue to run down your reserves for ever.

I received representations from the Coalition of Care and Support Providers in Scotland, which surveyed its members. More than 50 members participated, with a combined expenditure of £850 million, employing around 28,000 staff and supporting 230,000 people across Scotland. In the responses, 57% of respondents were seriously considering handing contracts back to commissioners next year; 55% were considering reducing the amount of support available to beneficiaries in services they do not plan to continue next year; 92% said that if employers’ national insurance contribution changes are not fully reimbursed, it will negatively impact on pay awards; 88% said it will negatively impact on staff pay differentials; 67% are budgeting for 2025-26 on the basis that they expect to reach financial balance only through the use of reserves, and 91% of these said they will no longer be a going concern within four years if they continue to reach financial balance through drawing down reserves in this way.

I hear what the noble Lord, Lord Eatwell, says, but when CrossReach is spending millions of its own reserves, that is not exactly taxpayers’ money. I will not make the excuse that these are unintended consequences; one must assume the Government know what they are doing, even if that is a bit of a far stretch. I would like to know what impact assessment the Government have made of the cost to the public purse if these services are withdrawn. If it is not a cost to the public purse, it is a cost to vulnerable people the length and breadth of this country. That is a completely unacceptable position for the Government to take up. I would like the Minister to tell us the impact assessment of the consequences if some of these services have to be withdrawn.

In my exchanges with the Coalition of Care and Support Providers in Scotland, it flagged up to me, only at the very end of last week, a possible problem with some of the definitions. You have English organisations with legislation passed by this Parliament, Welsh ones with legislation passed by the Welsh Senedd and Scottish ones with legislation passed by the Scottish Parliament. But, for example, “domiciliary support service” in Amendment 1 is not a definition that is known to Scottish legislation. It was too late to table a manuscript amendment to try to address that. The coalition also wanted some time to try to see what precisely needed to be done to extend it to Scotland. I am sure the House would agree that if this amendment is carried, we would also like to make sure it is fully adequate for the entire United Kingdom, not just for some parts of it. I therefore propose to table an amendment at Third Reading, if my noble friend’s amendment is carried, to try to address the specific Scottish issue.

[Viscount Chandos (Lab)]

I shall speak briefly to support the arguments and analysis of my noble friend Lord Eatwell and to remind your Lordships of the comments at Second Reading of the noble Lord, Lord Macpherson, who said that if we aggregate the reductions in employee national insurance that were introduced in the last year of the last Government with the effects of this Bill, the effect is about net unchanged. As my noble friend Lord Eatwell has said, all the various causes and organisations that will be proposed as excepted have benefited as employers, in effect, from the employee national insurance cut. Therefore, if they have to moderate their future wage rises, the net income over that period of 12 or 18 months will essentially be the same. That seems to me another argument for treating all the 38 amendments to which my noble friend referred as a heartfelt cry for help that has already been given.

[Baroness Stedman-Scott (Con)]

My Lords, I have not spoken on the Bill so far, but I want to speak now on behalf of charities. Charities are not for profit and they are not for loss. The impact of the Bill’s proposals provides a fiscal challenge, whichever way we look at it. I understand that the increase proposed will impose on charities about £1.4 billion in additional annual costs, and 87% of charities are worried about absorbing these and other costs that are forthcoming. Charities are emotionally driven and business-led organisations; they give their heart and soul to the people they get up in the morning to serve, and we must make sure that the people who need their services are not impacted detrimentally in any way.

While people in the finance departments of organisations, not least the Government, are focused clinically on money, and I understand that, I ask that they look at the impact that the Bill will have on individuals. My dad used to say to me, “Debbie, measure twice and cut once”, and I would like that saying to be applied to decisions in the Bill.