National Insurance Contributions (Secondary Class 1 Contributions) Bill

Yuan Yang Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

Let me conclude by repeating what I said earlier. This is not what people voted for. There is no mandate for this harm. I urge the Government to think again. They can start by backing our amendments at least to mitigate some of the impact of this damaging Bill.

[Yuan Yang (Earley and Woodley) (Lab)]

Today I stand proud to welcome the Budget, which takes long-term fiscal planning seriously. I welcome a Government who will take us away from the course the previous Government steered, away from austerity, and away from the chaos and confusion of the past few Budgets.

First, I want to make a brief point about tax simplification and the confusion across the Chamber in this debate and in the many amendments. The way to reform a tax system is not to argue for various exemptions, reliefs and get-out clauses for different subsectors, but to have a consistent approach to collecting tax applied across the whole economy and then to fund those sectors of the economy, such as healthcare, transport and so on, which we should be funding. That is the approach the Budget has taken. Many Members of successive previous Governments have said that we need to simplify our tax system. I suggest that asking for dozens of small amendments to a Bill is not a way to achieve that aim. As my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) pointed out, that is not the way to run any tax system, not even on local government level.

[Graham Stuart]

Will the hon. Lady give way?

[Dr Luke Evans]

Will the hon. Lady give way?

[Yuan Yang]

I will take two interventions. I will take one from the. Member for Hinckley and Bosworth (Dr Evans).

[Dr Luke Evans]

I am very grateful. The hon. Lady makes a fantastic point about wanting to set out the tax base. The difficulty is that the Government are also spending on the NHS. Fundamentally, GPs are private contractors to the NHS. Care providers are private contractors. Therefore, the Government have to make a choice: are they going to exempt them or will those private contractors have to pay? At the moment, the Government have done neither thing. That is the fundamental argument we are having on these amendments in trying to protect those contractors, because the Government have not made a choice. They have said that at some point there may be some payments along the way. That is the concern on the Opposition Benches. What is her answer to that?

[Yuan Yang]

I thank the hon. Member for his intervention and for highlighting the perilous state of GPs in my constituency of Earley and Woodley after 14 years of the previous Government stripping away the NHS. I am very confident in the announcements made by my right hon. Friend the Secretary of State for Health, which he has made several times in this Chamber, to take all funding decisions in the round. I very much look forward to seeing the quality of GPs improve. I also highlight the funding already announced for increasing the number of practitioners in GP surgeries. I expect to welcome them in my constituency, as well as across the UK.

I return to my point about long-term fiscal planning. The hon. Member for Hinckley and Bosworth (Dr Evans) made the point that we need to make choices. Over and over again on the doorstep I have been told that public services are broken, that crime too often goes unpunished on our high streets, and that mortgage rates, which have shot up wildly over the past few years, are too much of a burden on everyday families. All that creates uncertainty and it is that economic uncertainty that hurts businesses. That is why I welcome, for the first time in many years, a credible Budget that addresses the fundamental problems facing our society. Yes, we have to understand the current fiscal situation in the context of the bad decisions that were made before us. We all know about the tax giveaway mini-Budget under Liz Trust and the perilous effects it had on gilts, pension funds and, of course, mortgages, for which we are all now paying the price.

[Graham Stuart]

Will the hon. Lady give way?

[Yuan Yang]

I will give way in a moment.

I add to that the bad decisions made in the previous two Budgets under the right hon. Member for Godalming and Ash (Jeremy Hunt). Those decisions were not credible. It was not credible, on the March 2024 OBR forecast, that the next Government would do anything about schools, special educational needs and disabilities or the NHS. Those were not credible promises made in the last two Budgets. Those giveaways were made by Governments without a plan; Governments who literally cut and ran by calling an early summer election so they would not have to face the consequences of their bad fiscal choices. They left us with a bill to pay and this Government are now making that possible in a considered way.

[Graham Stuart]

I am extremely grateful to the hon. Lady. She rightly highlights interest rates and mortgage payments. Was she disappointed when the OBR’s assessment of the Budget suggested that interest rates were going to stay higher for longer as a result of these measures? I invite her to discuss the topic under discussion today, rather than the past Conservative Government. We can have debates on that, but what we are trying to drill into today are the actions of this Government and their real-world impact on those who can least afford it.

[Yuan Yang]

I thank the right hon. Gentleman for his point. I always welcome conversations with the OBR, whose representatives came before the Treasury Committee only a few weeks ago. In that Committee discussion, we had a full debate on its forecasts. It found that the long-term infrastructure and capital spending in the Budget, which is made possible by the different tax announcements the Government have set out, means that the economy will, in the long run, be 1.5% larger. I would add that the forecasts in the OBR’s assessment of the Budget have not yet taken into account all the various details of the measures that will be announced in the forthcoming months. I expect those forecasts to improve.

To return to the bill that the Government are now paying, we need to build back our economy and public services. That task requires at least a decade of national renewal. That is why in the Budget we set out credible long-term funding commitments and plans for where the money comes from.

On small businesses, I recently spent Small Business Saturday out and about visiting local employers across my constituency of Earley and Woodley. I agree very much that those small businesses are the backbone of our local economy; they bring character and jobs to our high streets. One such shop I visited is called UnderTwoK, a shopfront on Wokingham Road. I asked the owner, Mark, what the Government could do to help small businesses like his. He said:

“keep going with the focus on economic stability and clean energy. That’ll bring more people our way.”

Small businesses know that the Government are on their side. They know that, because the Chancellor increased the employment allowance from £5,000 to £10,500, ensuring that the rise in employers’ national insurance contributions will not hit the smallest businesses. Those employing four members of staff on the minimum wage will not be hit by the measure. That means that 865,000 employers will not pay any NICs at all next year and over 1 million will pay the same or less than they did previously. The changes have been very much welcomed by the Federation of Small Businesses.

The top concern I heard about from those retail businesses is not about NICs, but about shoplifting and crime on our high streets, which all too often goes unpunished. The funds raised in the Budget allow us to employ over 13,000 additional neighbourhood police officers, police community support officers and special constables by 2029. They will also fund 1,200 new police officers. Introducing the specific offence of assaulting a shop worker and attaching prison time to that offence is backed up by the commitment to put £2.3 billion towards prison builds over the next two years. That is an example of how we are helping small businesses: not just by talking the talk, but by walking the walk fiscally.

[Daisy Cooper]

Will the hon. Lady give way?

[Yuan Yang]

I have taken two interventions, which was the number I set for myself, and we do like sticking to numbers on the Government Benches.

I am proud that the Labour Government are asking the wealthiest individuals and largest businesses to pay a little more, so we can rebuild the foundations of our broken economy. That means: more money into the NHS, with £25 billion in NHS funding over the next two years, which is sorely needed in my constituency and across the country; and £7 billion for education in the next financial year, including £1 billion for SEND. Those are the kinds of decisions that would not be possible under the March 2024 forecast. Opposition Members may look at the OBR assessment of that forecast if they are in any doubt about that. Those decisions would not be possible if the Government were not taking important and serious decisions. That is why I stand, very happily, to support the Budget that we set out.

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

Let me begin by drawing attention to my entry in the Register of Members’ Financial Interests.

I support the amendment tabled by my hon. Friend the Member for Grantham and Bourne (Gareth Davies). Increasing employers’ national insurance contributions will be hugely detrimental not only to businesses, but to employees in my constituency. I have been contacted by many local businesses which have expressed disappointment about the Chancellor’s breaking of her manifesto promise not to raise national insurance contributions, anger that it has been done without a full realisation of the consequences for the wider economy, and fear that they may not be able to weather the impact of this decision. I want to take a few moments to share with the Committee some examples of organisations in my constituency that have reached out to me to explain why these amendments are so necessary.

Bradley Barns is a family-run nursery school in Malpas which provides full day care and early years education for nearly 80 families from the local community and surrounding areas. Access to quality childcare provision is vital for the many parents and carers who need to balance jobs with family life. Of course, Bradley Barns hugely values all its employees, and is keen to be the best employer it can be. It currently employs 24 staff whose skills, time and care are vital to children during their formative years. However, while the impact of the Bill might force some businesses to lose staff, in the nursery sector, where the child-to-staff ratio is so critical—indeed, it is a legal requirement—Bradley Barns cannot do that, and nor would it want to. Matt and Vicky, who run Bradley Barns, tell me that as a direct result of this policy, they will now need to find an additional £2,600 every year for each person whom they employ.

The Government made clear in their manifesto that they would not tax working people, so who exactly does the Chancellor think will be paying for her decision? It will be working people in Chester South and Eddisbury and across the country, and at many nursery schools like Bradley Barns they will be left with no option but to increase fees. For some families, the increase will not be affordable: that is the harsh reality of the Government’s choice.

I also want to highlight, as others have, the impact on the many hospices that provide vital support and care for people at the most vulnerable time in their lives. I recently visited St Luke’s Hospice and the Hospice of the Good Shepherd, two of the wonderful hospices caring for individuals and families throughout my constituency, and met their leaders and staff. We know about the funding challenges that such hospices already face. They rely on the good will and generosity of so many people who donate. This ill thought-through Bill will add substantially to their costs, and none of us wants to see them forced to cut services or reduce the level of care that they provide. I sincerely hope that hospices, and the people for whom they care so brilliantly, do not pay the price of this policy, and that the compromise suggested by my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) is considered.

So many business have contacted me to share their concerns about the detrimental impact of this decision. It will be felt by community pharmacies, by GPs who may be forced to compromise on the care they provide for their patients because they are not eligible for employment allowance, by care providers and by nurseries.