National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

2nd reading
Monday 6th January 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, it is an interesting optic that I am following the contributions of 15 noble Lords from the Conservative Benches and, curiously, just three from the Government Benches. I am not sure how we should interpret that but, as an objective Cross-Bencher, I could not possibly comment.

Two months ago, many of us here today took part in the debate on the October Budget, and many of us warned of the consequences for a stuttering economy. Two months on and I am afraid that those concerns are growing, from employers, business owners, entrepreneurs and investors—in fact, from those who drive 70% of our nation’s GDP. That is what I will focus on today, and in so doing I declare my interests as an investor in SMEs, as set out in the register.

Momentum is critical for sustained economic growth. We did not have much of it in the first half of last year, but what little we had appears to have evaporated. As we have heard, GDP flatlined in Q3; worse still, GDP per capita fell by 0.2%. Q4 has brought a string of disturbing indicators, raising the prospect of a second consecutive quarter of zero, or even negative, growth.

As we have heard, the British Chambers of Commerce reports that business sentiment among its members has fallen to its lowest level for two years. The number of job vacancies in November fell at the fastest rate since the start of the pandemic and the spread between UK and German 10-year bonds has now eclipsed the peak triggered by Liz Truss’s mini-Budget two years ago. The spectre of stagflation is spooking the markets, meaning that interest rates may well remain higher than expected for much of 2025.

That is the macro. I turn to the micro, in particular the impact on our SMEs. I find it extraordinary that the Government devised an NIC regime that hits the vast majority of SMEs, which employ between five and 250 staff, particularly by dropping the threshold from £9,000 to £5,000. As we have heard, particularly from the noble Baroness, Lady Kramer, it is indiscriminate, falling as it does on all sorts of undeserving organisations, including charities, hospices, care homes and GP practices. Taking together the impact of NICs and the 6.7% increase in the minimum wage, will the Minister explain how raising the cost of employment by an average of £2,390 per employee this April is consistent with boosting economic growth?

For start-ups and our all-important scale-ups, it is a punitive tax on job creation and much-needed risk taking. While I accept the argument made by my noble friend Lord Macpherson and others that tax revenues had to be increased, there were plenty of fiscal alternatives that would have caused less damage to our economy—for instance, reversing the pre-election 2% cut in employees’ NICs brought in by Jeremy Hunt, indexing fuel duty, raising VAT selectively, and, last but not least, making modest adjustments to the bands and higher rates of income tax. But the Government could not do any of that, for they had tied themselves into knots with the tax pledges in their manifesto. Once again, politics trumps economics.

I was an entrepreneur for 30 years and in the last 10 years I have backed, chaired and advised a wide range of start-ups and scale-ups. I will finish by sharing how they are reacting to the increase in NI contributions. This comes from business owners, investors and management teams working at the coalface. In summary, some say they will reduce pay increases and bonuses; some will also reduce working hours, particularly for part-time staff in hard-hit sectors such as hospitality and retail; and some will slow the rate of job creation. Those that can will pass on the increased costs of employment to consumers and their clients, as their suppliers are already doing to them. Finally, and perhaps most worryingly for productivity, investment in new projects will be reduced or delayed in many cases. This is bad news for the worker and the employer, bad news for growth and inflation, and very bad news for our future competitiveness.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Committee stage
Tuesday 21st January 2025 Grand Committee

But also, as I understand it—the Minister will confirm —where the public sector is going to be reimbursed for increases in employers’ national insurance contribution payments, the payment to Scotland will be on the Barnett formula, which is based on population in Scotland and does not reflect the fact that the structure of the public sector is different there and is therefore proportionately bigger than the proportion reflected through population. In other words, whereas a public service agency in London, for example, would be fully reimbursed for the additional cost of employers’ NICs, its equivalent in Scotland is unlikely to be fully reimbursed because the reimbursement is tied to the Barnett formula. We have asked for a review here but really, there should be far more engagement between the two Governments to try to sort this out. I beg to move.

[Lord Londesborough (CB)]

My Lords, I will speak to Amendments 3, 12 and 59, to which I have added my name. I declare my interests as an investor in SMEs, including those employing part-time workers.

In the interests of economic growth and especially flexibility in the labour market, which is so crucial for sectors such as hospitality and retail, the time has come, to use the words of the noble Baroness, Lady Kramer, to aggressively restructure an employer’s NICs scheme rather than subject all employers to one set rate of contributions and, indeed, thresholds, on which I will speak later in group five. Indeed, by dropping the threshold from £9,100 to £5,000, Clause 2 is disproportionately hitting employers who, frankly, have no choice but to employ part-time workers, often on a shift basis. Without introducing a lower secondary percentage, such as the 7.5% proposed in Amendment 3, part-time work will be on the retreat, hitting those very workers who are dependent on such employment and who cannot work full-time, including students, parents and family carers.

As we have heard, the numbers published today of payrolled employees have dropped by 47,000 during December alone. That is the biggest fall since November 2020. It would be interesting to receive a breakdown of those figures and to see how many of those departing roles were part-time employees. It would be equally interesting to see whether the OBR will revise its forecast.

The NI threshold cliff edge discriminates against part-time jobs, raising costs disproportionately for sectors already having to absorb huge increases in the national minimum wage. It does not fit with the world of flexible, part-time or temporary labour. Remember, we are talking about 8.4 million people who are part-time employed. That is one quarter of our workforce. Amendments 3 and 12 would go some way to softening the blow of the new threshold cliff edge contained in Clause 2 and help protect these vital jobs, let alone the working people.

[Lord Ahmad of Wimbledon (Con)]

My Lords, briefly, I agree with much of what the noble Baroness, Lady Kramer, said. But again, to dwell on the coalition, she and I served in the same Government, so agreeing with her is not unusual for me.

I wanted to make a brief point. Both previous speakers highlighted the impact on the hospitality industry. The figures are quite startling. There will be an impact of about £1 billion on the industry itself, thereby impacting 750,000 workers. As we have just heard from the noble Lord, Lord Londesborough, the impacts of this are already being felt by an industry which is already challenged. We should look at this again. Perhaps in a later group when we talk about the importance of impact assessments it will again be underlined that we do not just need reviews. Doing the work beforehand, consulting and working with the industry is an essential prerequisite to ensure that these changes are not detrimental and lead to a depression of growth, which I know ultimately was not the intention of the Government, as they stated.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to move Amendment 6 in my name and to speak to my Amendments 23 and 48, all on small business—a subject dear to my heart, as noble Lords will recall from our debates on the Procurement Act in the last Parliament, mostly in this very Room.

Small business is at the entrepreneurial heart of the economy. We need a constant stream of start-ups for an economy that is dynamic. The amount of regulation on such businesses is already discouraging. My own findings are that the imposition of additional employer NICs is leading some businesses towards despair, with more closed shops on the high street and busy insolvency practitioners. Others are not setting up. Their customers are affected by the chill created by the Budget and the enormous NICs hit in particular, which has a multiplier effect on confidence.

I acknowledge that the increase in the employment allowance is helpful and I congratulate the Federation of Small Businesses on its work on this with the Treasury and DBT. However, more needs to be done to drive growth. I believe that easing the strain of NICs on SMEs could play an important part.

My Amendment 6 would exempt micro-businesses with an annual turnover of less than £1 million from this jobs tax. I have tabled this amendment because I want to understand whether the Government would consider an exemption that would have a relatively low impact on the revenue that the Treasury receives from this policy. To exempt such small businesses would not come at a great cost to the Treasury, yet it would have a big impact on the businesses that it would protect and on attitudes to the Government’s plans. The Financial Conduct Authority defines “small businesses” as companies with an annual turnover of less than £1 million—hence my choice for the threshold. I add that even many of these businesses may not survive recent tax rates. The Government will be failing in their promise, I fear, to be the most pro-business Government ever.

My proposal would be a modest step in the right direction and would reduce the negative knock-on effect of the NICs changes, in terms of jobs, shop and business closures and the higher prices that follow reduced competition. You see that effect, when a couple of coffee shops close, on the price of your latte.

I was interested to hear the Chancellor this morning saying that

“growth isn’t simply about lines on a graph. It’s about the pounds in people’s pockets. The vibrancy of our high streets”.

Chance would be a fine thing for the hard-working domestic SMEs that I am talking about.

Amendment 23 in my name seeks to increase the per-employer threshold at which employers begin paying national insurance on employees’ earnings, from £5,000 to £7,500—sort of halfway. We know that Clause 2 is the most punitive part of the Bill, hitting small businesses and social enterprises hardest. As the OBR acknowledges, this jobs tax will have the indirect effect of stifling wages, as employers look to offset these increased costs.

Amendment 48 would increase the employment allowance for small businesses to £20,000. The increase in the allowance is very welcome, as I have said, as is the lifting of the EU-based limit on eligibility—ironically, a new Brexit freedom, on which I congratulate the Minister. However, many small businesses have more than three or four people, or so, which means that the increase in the allowance will be less than the additional NICs charge. We should debate in Grand Committee, as we did on procurement, how to improve matters.

I would be delighted to be able to congratulate the Minister on an entrepreneurial step by increasing the allowance and removing the threat and hassle of NICs for more employers. I know that he shares my passion for easing barriers to growth and I see this as a new barrier that he could mitigate.

I very much look forward to hearing my noble friends Lady Noakes and Lord Londesborough and I am sorry that my noble friend Lord Ahmad of Wimbledon cannot be here this afternoon. We all feel the same way about the importance of cherishing the enterprise spirit and will welcome a constructive discussion on what more can be done to ease the pressure on small businesses. The Chancellor’s speech today and the long-term nature of most of her growth drivers strengthen the case for a concession on this now. I beg to move.

[Lord Londesborough (CB)]

My Lords, I shall speak to Amendments 22, 39 and 53 in my name in this group, to which the noble Baroness, Lady Kramer, and my noble friend Lady Neville-Rolfe have added their names. I shall also speak to Amendments 6 and 33, tabled by my noble friends Lady Neville-Rolfe and Lady Noakes respectively.

Rather than taking a sectoral approach, about which others spoke passionately last week, my three amendments focus on the size of businesses and organisations impacted by the measures in the Bill, specifically those categorised as small businesses, which means that they employ between 10 and 50 full-time staff. I should again declare my interests as set out in the register, as I advise and invest in a number of businesses of this size, predominantly start-ups and scale-ups. These are the companies that grow and create jobs at the fastest rate and, through their size and agility, seize the nettle of productivity. If I may mix my metaphors for a moment, these are the acorns that seek to become unicorns or, at the very least, sturdy oaks.

The Department for Business and Trade reports that there are some 220,000 businesses across the UK that employ between 10 and 50 staff—that is 4.3 million of the 28 million jobs in the private sector and they generate £780 billion in annual turnover. However, this group involves not just fast-growing early-stage start-ups but a huge swathe of family and local businesses spread across the country and, indeed, businesses that have been struggling to keep their heads above water in what have been five very difficult trading years.

While the Government have sought to protect the majority of our micro-businesses, those employing between one and nine staff, from rising NICs, they have left all other small businesses exposed to these sudden and dramatic increases. In terms of impact, the Government tell us that 250,000 employers will see their NICs decrease, 940,000 will see theirs increase, while about 800,000 employers will see no change. This has allowed the Government to claim that the majority of employers will see no increase. With respect, that is deeply misleading. The question that matters is what proportion of jobs will attract increased national insurance contributions. I ask the Minister that question. Can he confirm, if he does not have the numbers at hand, that in fact the number is close to 80%?

I turn to the financial impact of Clauses 1, 2 and 3 to small businesses. For businesses of 25 staff paying the national full-time median salary, which is put at £37,000 by the ONS, their NICs bill will rise from £90,000 to £110,000. That is an increase of more than 20%.

However, most small businesses, given their nature and stage of development, pay less than the median national average. For them, the increases get even steeper. For those employing 25 staff and paying an average salary of £25,000, as is common out in the regions, their NICs bill will rise by no less than 30%. For those employing 50 staff at that salary, they face an eye-watering 33% increase. As we know, the main culprit for those outsized increases is Clause 2: the brutal and, in my view, economically illiterate drop in the per-employee threshold from £9,100 to £5,000. Ironically, this hits the lowest-paid jobs the hardest. In short, it is a regressive tax.

Then we come to retail and hospitality, with thousands of outfits that rely on part-time shift workers. For those employing 20 part-timers, typically earning £300 per week, their NICs bill goes up by an extraordinary 70%. I will stop there with the examples but noble Lords, including the Minister, will be delighted to know that I have here all the spreadsheets to prove it; I will happily share them out later. In the interest of transparency, on the impact for 5 April, I strongly suggest that the Government have the honesty to publish these figures.

These increases are of course bad news for the working person, especially the 4 million of them who work in small businesses. They rather grate against Rachel Reeves’s statement this morning about kick-starting the economy. Let me turn to my Amendment 22, which seeks to address this in what I hope noble Lords will agree is a measured, proportionate way to help protect our small businesses. In short, the per-employee threshold would remain at £9,100 for those employing fewer than 25 staff, while those employing fewer than 50 but more than 25 staff would see their threshold reduced to £7,500. Somewhat reluctantly, I have left the £9,000 threshold for all businesses employing more than 50 staff.

By my calculations, the nominal cost to the Treasury of this key amendment would be less than £2 billion—that is, to support and sustain 4 million jobs and almost £800 billion in turnover. I humbly suggest that this amendment would more than pay for itself in economic growth and increased revenues to the Exchequer. Commencing Clause 2 without undertaking a full impact assessment on small businesses—addressed by Amendment 33 in the name of the noble Baroness, Lady Noakes, which I fully support—strikes me as reckless.

I turn now, much more briefly, to my Amendment 53, which addresses the increase in the employment allowance. Clause 3 is designed to soften the increase in NICs from Clauses 1 and 2. It offsets the costs but, having crunched the numbers, it does so only for those employing seven staff or fewer. My Amendment 53 would raise the employment allowance from £10,500 to £15,000 for all small businesses employing fewer than 25 staff. This would help around 200,000 businesses across the country. I estimate that the cost to the Treasury would be less than £1 billion. Again, I argue that such an amendment would more than pay for itself in the medium term.

I hope that the Minister will carefully consider the amendments in this group, given the severity of these increases to SMEs and the potential damage to both jobs and economic growth. I have spoken to Amendments 22, 39 and 53.

[Baroness Noakes (Con)]

My Lords, I have Amendment 33 in this group; I thank my noble friends Lady Neville-Rolfe, Lord Ahmad of Wimbledon and Lord Howard of Rising for adding their names to it. As my noble friend Lady Neville-Rolfe said, my noble friend Lord Ahmad of Wimbledon is unfortunately unable to join us for the early part of this Committee. He very much regrets that he is not able to take part because he cares a lot about the fate of small and medium-sized businesses.

My amendment would delay the commencement of the Bill, and therefore the extra national insurance contributions, until the tax year after an impact assessment focusing on the impact of the Bill on smaller businesses has been published. My amendment is similar to Amendment 59, tabled by the noble Baroness, Lady Kramer, which was debated on our first day in Committee. Amendment 59 required an ex-post impact assessment, while mine is on an ex-ante basis. Amendment 59 also used a rather broad definition of SMEs, including those with employees of up to 250; my amendment is more granular and focuses on the smaller end of the SME spectrum, which is where most SMEs are.

--- Later in debate ---

[Lord Livermore (Lab)]

We have not changed the policy; we have made the policy easier to use. The policy is absolutely as it was at the Budget, as is the amount of revenue that we are scoring from it. An impact assessment was put out alongside that. My point is that what we are doing on impact assessments, on all the taxes that the noble Lord mentioned, is absolutely in line with what all previous Governments have done on impact assessments. We are content that that is a sufficient amount of information, and we do not intend to put out any further impact assessments.

Finally, I turn to the amendments tabled by the noble Lords, Lord Londesborough and Lord Altrincham, and the noble Baroness, Lady Neville-Rolfe, which seek to increase the employment allowance for small businesses. Again, the proposals in these amendments would create additional costs, necessitating either higher borrowing, lower spending or alternative revenue-raising measures.

The Bill already seeks to protect the smallest businesses and is significantly increasing the employment allowance from £5,000 to £10,500. This means that, next year, 865,000 employers will pay no national insurance at all, and more than half of employers will see no change, or gain overall, from this package. For the reasons I have set out, I respectfully ask noble Lords not to press their amendments.

[Lord Londesborough (CB)]

I thank the Minister for his comments, but I am disappointed and, frankly, baffled that the Treasury can tell us specifically—he repeated these figures—how many employers are impacted by the national insurance increase, yet there is a curious resistance to answering my specific and fair question: what percentage of jobs will attract an increase in national insurance contributions?

In October, the Department for Business and Trade helpfully provided a sectoral breakdown, by company size and number of jobs, under each category. It is fairly simple maths to come out with a reasonable estimate. This is in the interests of transparency; I am not trying to nail the Government here. Everyone should be able to understand across our economy, as we all share an interest in trying to generate economic growth, how many jobs are impacted. “Working people” is a favourite phrase that we keep hearing; how many of their jobs will be impacted?

If the Minister cannot produce the figures today, which I would respect, I request just a few minutes of research between the Treasury and the Department for Business and Trade. I believe that these figures could be produced very simply and that they would be very helpful in looking at the impact of this Bill. I cannot understand the resistance to it.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his follow-up points. As I have said, we are not able to provide him with those figures and that remains the position.

--- Later in debate ---

To conclude, part-time workers and entry-level juniors will lose their jobs because of the lower threshold, and new jobs that might have been created will not be. Entrepreneurs have talked about stopping and stalling new outlets that they were proposing; there are many stories about and accounts of this. All this suggests that the reduction in productivity output will be less than the 0.1% estimated by the Government. In short, if the Bill as it stands becomes law, working people, their families, jobseekers and entrepreneurs—indeed, the whole economy—will suffer. With a more revealing and detailed economic analysis before and after it takes effect, it is my hope that the Government will think again about this disastrous move on tax rates, which will put so many jobs at risk.

[Lord Londesborough (CB)]

My Lords, I will speak briefly as I put my name down in support of Amendment 62 in the name of the noble Baroness, Lady Neville-Rolfe. I could have—indeed, I should have—done so for Amendments 61, 63 and 64 as well.

I continue to use the word “baffled” about the Government’s apparent resistance to impact assessments, which are so crucial if you are to have joined-up thinking on the Government’s economic growth strategy. As we know, rather worryingly, we lost 47,000 people off the payroll last month. I just raise this point in relation to the Government’s White Paper, Get Britain Working, which has some ambitious and laudable aims. Specifically, the headline bullet is that the aim is to take 2 million people out of welfare and into work. Put another way, the aim is to reduce the economic inactivity rate of our working-age population from the current 25% to 20%. Of course, the question is: where will those 2 million jobs come from? Who will create them? The answer is the private sector; that is the assumption.

When you come back to impact assessments, you have to ask how private sector employment will be impacted by not just the rise in national insurance contributions but the increase in the national minimum wage and the upcoming anticipated restrictions being brought in by the new Employment Rights Bill. All these factors boil down to the importance of assessment. If we have a lack of assessment, we greatly reduce the chances of the Government achieving their aims. So, again, I ask the Government to embrace accountability through Amendments 61, 62, 63 and 64.

[Lord Blackwell (Con)]

My Lords, I will make a brief comment on these amendments. In the Committee’s discussions so far, the noble Lord, Lord Eatwell, has made great play of the fact that the OBR suggested that the overall Budget measures would increase employment. The noble Lord is not in his place but, if he were, I am sure that, as an economist, he would agree that it is important to have the right counterfactual. Of course, what the OBR was not looking at in the Budget was the exact impact of taking the £20-odd billion from the national insurance rise and spending that money. It was looking at spending a lot more money; the Government are raising expenditure by £142 billion over the next five years, in excess of what they are raising in additional taxation.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Committee stage
Tuesday 4th February 2025 Grand Committee

[Lord Londesborough (CB)]

My Lords, I rise to briefly support Amendments 31 and 49 in relation to the hospitality sector. As we have already learned in the two previous days of Committee, there is great resistance to having the full impact assessments we are calling for, specifically in relation to these national insurance contribution increases. Perhaps that is not surprising when you look at the impact on the hospitality sector.

I will simply share one anecdote on the experience of one independent publican, who is employing 20 part-time workers. They typically work 20 hours of shifts at £15 per hour, therefore earning £300 per week on average. This publican’s bill for national insurance contributions will increase by 73%. As we know, the real problem here is dropping the threshold so severely as to create not just a punishing but an excessively regressive tax, hitting hospitality and SMEs at the margin during their delicate stages of growth or survival.

In this case, how is the publican going to respond? These are his choices: reduce the headcount; reduce the number of hours worked by the part-time workers; reduce the number of hours that his pub can remain open; and, where possible, increase prices. All of those are very damaging to the Government’s No.1 economic mission of growth, and potentially damaging for inflation, but particularly damaging to jobs and part-time workers who rely on those jobs. Typically, we are talking about the young and the old. I again support others in saying that this is a reckless act. To push these measures through without conducting a proper assessment strikes me as economically ruinous.

[Baroness Neville-Rolfe (Con)]

My Lords, I shall speak to my Amendment 49, and I support Amendment 31 in the name of my noble friend Lady Monckton of Dallington Forest. The fact is that, as we have also heard from the noble Lord, Lord Londesborough, we need an impact assessment here as well so that we can assess where to make changes and what impact this jobs tax is having.

My Amendment 49, along with others that I have tabled, would increase the employment allowance from £10,500 to £20,000. This sector, which is so important to our day-to-day life and to our tourist industry, is full of part-time workers and the lowest paid will suffer a tsunami from the NICs changes. We need to find a way of alleviating the pain, and my amendment is one such proposal.

It is a particular pleasure to welcome the noble Baroness, Lady Fleet, to the Committee and to hear her evidence of the impact on the arts. She is right that the creative industries and hospitality are integrally linked, but I was equally concerned to hear about the impact on museums, theatres and other aspects of the creative arts. She is also right that, on this evidence, the Government are no friend of the arts; that should be of concern to the Committee.

My noble friend Lady Monckton was right to talk of the spiral of price increases, the diversionary pressure on management, the impact on capital investment and the effect on jobs, especially the lowest level jobs. They are particularly hit by the double whammy, as I have said already today, of the changes in NICs and the national minimum wage, which will particularly bite younger people. For good reasons, the national minimum wage for younger people has been increased, but that is making a particular difficulty in terms of hiring them, which I fear we shall see in the results in the coming months.

I have further evidence about hospitality, which I think some local papers may be interested in, so I will run through it because it is important. There have been calls from across the sector about how damaging the tax will be. Restaurateur Tom Kerridge, despite backing Labour at the election, has expressed concern that this tax raid will have “a catastrophic effect”. He said that it would cost,

“£850 extra per member of staff per year”

and have a reaction into a negative process in terms of employment. He also said:

“This is a very difficult time for hospitality, because the next few weeks are particularly busy. They give a false sense of feeling that everything is okay … it’s going to have a catastrophic effect, moving into the new year”.


He said that just before Christmas, and things have got worse.

On top of that, UKHospitality said that the national insurance increase at the Budget will lead to business closures and job losses within a year. It said that

“the changes to the NICs threshold are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely on. Unquestionably, they will lead to business closures and to job losses within a year”.

I was particularly pleased to hear from the noble Lord, Lord Londesborough, about his new evidence on pubs. The British Institute of Innkeeping, which has warned that the Budget will see 75% of pubs cut hours, thinks that 40% will reduce opening times and that one in three will make staff redundant. It said:

“The Budget, billed to support working people, will pull the rug out from under these already fragile small businesses and significantly reduce the employment opportunities they can provide. 75% will cut staff hours, 40% will reduce opening hours and 1-in-3 will make staff redundant”.


This will have an extraordinarily damaging impact on the sector and the economy.

More than 200 leading restaurant, pub and hotel companies including Stonegate, Greene King, Wetherspoons and Young’s wrote to the Chancellor warning that the Budget will cost the industry £3.4 billion a year. They said:

“As leaders of hospitality businesses, we are compelled to highlight our grave fears about the impact of the Budget, particularly relating to the Employer NICs threshold. Alongside the changes to the national minimum wage levels this will cost hospitality—at a conservative estimate—£3.4 billion a year”.


I would be grateful if the Minister would provide an actual number.

Finally, Simon Emeny, chief executive of Fuller’s, which owns about 400 pubs and hotels and employs almost 5,000 people, said he was “just utterly disappointed” by the Chancellor’s choices. He claimed they “disproportionately” impacted hospitality, which is a big employer of young people and part-time workers.

These are real impacts and the Government’s changes are disproportionately affecting mainly small and vibrant businesses such as these. The biggest hit is from the decrease in the threshold, which could be phased in. Alternatively, the Government could help smaller businesses by increasing the employment allowance, as I have also suggested. I simply urge the Government to act.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I start by thanking everybody who voted for the previous amendment. Such a powerful message is engaged with that statement.

I am here to move Amendment 2, which is different in character from Amendment 1. The amendments in this group are primarily mine. There are a couple there from the noble Lord, Lord Londesborough, which I also support and know that he will present very effectively. The amendments in my name and that of my noble friend Lord Bruce of Bennachie, in essence, deal with part-time workers.

While looking at the impact of the changes to employer NICs, we became conscious of the changed position of part-time workers as members of our workforce. There are now more than 8.4 million people engaged in part-time work, who are exceptionally hard hit by the changes proposed by the Government in the NICs Bill. People who typically worked 14 hours a week incurred employer NICs in the past; that now drops to individuals who work typically only eight hours a week. Suddenly, there is a huge group of part-time workers who have become far less attractive to the employers that have provided their opportunities in the past.

The impact is especially great on the hospitality industry—an industry that we know is already on its knees. Some 37% of employees in hospitality are part time, and I think there is a view in the Treasury—I think that the noble Lord, Lord Macpherson, expressed it unwittingly in Committee—that part-time work is a sort of rich person’s luxury; it is people working for pin money. That, frankly, is a completely outdated attitude.

Today, part time is concentrated in the lowest pay bands. It is an entry point to work for many people in disadvantaged communities or with difficult histories. It is an economic lifeline for carers who can work part time but not full time, for students, for many with disabilities and for those who are economically inactive. We have a Government who say they want to take 2 million people off benefits and get them into work: part-time work is the entry point and the obvious first step.

We also want employers to see part-time work as exceedingly attractive, so that they start to add additional support, such as training and career opportunity, to part-time work because of this far more fundamental role that it can play. Instead, we have seen with this Bill that many employers are now openly saying that they intend to outsource abroad rather than employ part-time workers or that they will require part-time workers to become self-employed, with all the complexities of IR35.

As we looked at our concerns for hospitality and the high streets—many in those sectors are the backbones of communities—and because we looked at the nature of the part-time workforce, we made the call to go further in this amendment than in our others and seek not just to exempt part-time workers from the increase in employers’ NICs but to reduce the rate of employers’ NICs to 7.5%. As the noble Baroness, Lady Barker, said in the debate on the previous set of amendments, we had it in our manifesto and have since identified other tax opportunities that are available for fundraising. None of them is easy but, frankly, we would close loopholes in capital gains tax, we have talked about taxes on share buybacks and we would reinstate the surcharge on the major banks.

In the previous set of discussions we had a whole series of proposals from the noble Lord, Lord Clarke, who of all people is very aware of the range of possible choices. They may not be ideal, but they are certainly much better than the choice of employers’ NICs, with the impact that is happening. In this case we made that decision, and that is the characteristic of this amendment. The other amendments in the group in my name are all consequential. The noble Lord, Lord Londesborough, also has amendments in this group, and I am fully supportive of them. I beg to move.

[Lord Londesborough (CB)]

My Lords, I rise to speak to my manuscript Amendment 15A and its consequential Amendments 17 and 24, both of which are supported by the noble Baronesses, Lady Neville-Rolfe and Lady Kramer. I am very grateful for their support. I will also speak to consequential Amendments 30A, 31A and 32A in my name. For clarity’s sake, I will not be pressing Amendments 30, 31 or 32.

In short, these exemption amendments seek to protect all small businesses and organisations that employ fewer than 25 staff, including charities, from Clause 2’s steep and sudden drop in the NICs threshold from £9,100 to £5,000 per annum—or, on a monthly basis, from £758 to £417 and, for those who are paid weekly, from £175 to £96 per week. By maintaining these existing thresholds, these amendments would particularly protect part-time workers and smaller organisations including charities, hospitality and retail, which in some cases face increases in their NICs bill per employee as high as 50% to 70%. For this reason, I support the noble Baroness, Lady Kramer, with her Amendment 2.

I should quickly declare my interests as set out in the register, specifically as an adviser and investor to a range of small businesses in the UK, including a community-owned public house.

I will come on to the impact of these amendments shortly, particularly in relation to the challenging and interesting comments from the noble Lord, Lord Eatwell. I certainly do not agree that my amendments are designed to reduce government revenue, and I will come on to that in a moment. Surely, this is our role. This is the most important economic policy that this Government have yet to produce. We are where we are, and surely we should be scrutinising, particularly if we feel that poor decisions or poor structuring of these national insurance increases are doing damage to the economy.

On that theme, I will quickly share this: the latest survey from the Federation of Small Businesses reported that the proportion of its members facing contraction in the last quarter, Q4, jumped to 24%, its highest-ever level outside the pandemic. That is up from 14% in Q3. The FSB has also reported that confidence among its membership has fallen to its lowest point in 10 years. Meanwhile, the Chartered Institute of Personnel and Development has reported that over a third of the 2,000 firms that it interviewed plan to reduce their headcount in 2025 through redundancies or recruiting fewer workers. Rather than taking a sectoral approach, for which many others have spoken passionately already, my exemption amendment applies to all small businesses and organisations, including charities with fewer than 25 staff, which, as the Bill stands, face sudden and steep drops—in fact, 45% drops—in their per-employee threshold at which employers become liable to pay NICs.

Just to illustrate this, employee NICs on a salary of £30,000 are set to increase by 30%, from £2,884 to £3,750, for those employing more than three staff. For part-time workers earning, say, £15,000, the employer NICs can increase by more than 50% per job. These are not trivial increases. While I salute the Government for increasing the employment allowance in Clause 3, it is from £5,000 to £10,500, and this typically washes out increases only for micro-businesses, those employing fewer than three staff. All told, the larger the business in terms of employees and the higher the salaries paid, the lower the increase in percentage terms to its NICs.

Of course, I understand why the Government are raising tax revenues—I have no issue with that—but, by placing this burden so disproportionately on small employers, the Bill threatens to do significant damage to jobs, pay and economic growth. Anecdotal evidence suggests that this is already happening.

My amendments would help to protect the jobs of some 6 million workers employed by about 1 million businesses and organisations across the UK. Many of these are nascent companies that operate on low margins and are at critical stages of their development—yet they grow at the fastest rate, create jobs at the fastest rate and, through their size and agility, can be great innovators. They are a vital component of GDP and our growth, with annual turnover of some £900 billion. But this group also includes a huge swathe of family and local businesses spread across the country, struggling to keep their heads above water in what have been five very difficult trading years. A fall of just 2% to 3% in employment levels or hours worked in this small business sector could cost the Treasury more in lost tax revenues and increased benefit payments than it would gain from this measure.

Incentivising employment by restoring the NICs threshold would be accretive to GDP growth, the Government’s number one priority. It would help boost income tax revenues and employees’ NICs, and it would bolster VAT revenues and corporation tax. Above all, it would lift business sentiment and stimulate investment.

I listened with interest to the noble Lord, Lord Eatwell, describing all these amendments as wrecking amendments. Because we do not have a proper detailed impact assessment, that is an unfair charge and I challenge it on behalf of these amendments. I look forward to hearing from the Minister but, with respect, I expect to press these amendments when the time comes.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

Moved by

[Lord Londesborough]

15A: Clause 2, page 1, line 12, after “£96” insert “or,
(b) for businesses and organisations with fewer than 25 full-time employees, £175.”Member’s explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the secondary threshold at which employers become liable to pay national insurance contributions on employees’ earnings at £175 for businesses and organisations employing fewer than 25 staff.

--- Later in debate ---

[Lord Londesborough (CB)]

I will not make another speech, but I thank all noble Lords for their thoughtful and supportive contributions when we debated this amendment. I welcomed the challenges, particularly from the noble Lord, Lord Eatwell, who is not in his place, which I listened to with great respect. However, I disagree with his analysis. The cliff edge threshold is there in the Bill for all to see, and Clause 2 has moved it in the wrong direction, to the detriment of small businesses, economic growth and jobs.

I thank the Minister for his patient and construction interactions, but I wish to test the opinion of the House. I beg to move.

--- Later in debate ---

Moved by

[Lord Londesborough]

17: Clause 2, page 1, line 14, after “substitute” insert—
“(i) for businesses and organisations with fewer than 25 full-time employees, £758, and(ii) in all other cases,”Member's explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the monthly per-employee threshold at which employers become liable to pay national insurance contributions on employees’ earnings at £758 for businesses and organisations employing fewer than 25 staff.

--- Later in debate ---

Moved by

[Lord Londesborough]

24: Clause 2, page 1, line 15, after “substitute” insert—
“(i) for businesses and organisations with fewer than 25 full-time employees, £9,100, and(ii) in all other cases,”Member's explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the annual per-employee threshold at which employers become liable to pay national insurance contributions on employees’ earnings at £9,100 for businesses and organisations employing fewer than 25 staff

--- Later in debate ---

Moved by

[Lord Londesborough]

30A: Clause 2, page 1, line 15, at end insert—
“(c) in sub-paragraph (c), leave out “the figure in sub-paragraph (b)” and insert—“(i) for businesses or organisations with 25 or more full-time employees, £5,000, or(ii) for businesses or organisations with fewer than 25 full-time employees, £9,100,”.”Member's explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the existing £9,1000 annual per-employee threshold at which employers become liable to pay national insurance contributions on employees’ earnings for businesses and organisations employing fewer than 25 staff. This amendment applies to earnings periods which are multiples of a week.

--- Later in debate ---

Moved by

[Lord Londesborough]

31A: Clause 2, page 1, line 15, at end insert—
“(c) in sub-paragraph (d), leave out “the figure in sub-paragraph (b)” and insert—“(i) for businesses or organisations with 25 or more full-time employees, £5,000, or(ii) for businesses or organisations with fewer than 25 full-time employees, £9,100,”.”Member's explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the existing £9,1000 annual per-employee threshold at which employers become liable to pay national insurance contributions on employees’ earnings for businesses and organisations employing fewer than 25 staff. This amendment applies to earnings periods which are multiples of a month.

--- Later in debate ---

Moved by

[Lord Londesborough]

32A: Clause 2, page 1, line 15, at end insert—
“(c) in sub-paragraph (e), leave out “the figure in sub-paragraph (b)” and insert—“(i) for businesses or organisations with 25 or more full-time employees, £5,000, or(ii) for businesses or organisations with fewer than 25 full-time employees, £9,100,”.”Member's explanatory statement
This amendment is linked to others in the name of Lord Londesborough. It seeks to maintain the existing £9,1000 annual per-employee threshold at which employers become liable to pay national insurance contributions on employees’ earnings for businesses and organisations employing fewer than 25 staff. This amendment applies to earnings periods which are multiples of a day.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, the number of times that I have heard debates in this House calling for a greater degree of post-legislative scrutiny—seeing whether we got what we thought we were going to get—is legion. Any effort to try to make sure that our judgment of what the Government of the day were proposing is worth having because it starts to increase the sum of human knowledge.

I am sorry that the noble Lord, Lord Eatwell, took such a dim view of it all, and I rather regret he sullied his comments with an attack on the previous Conservative Government’s economic policy, but so be it. I was not clear whether he was saying that it is a bad thing to do in principle or that the drafting is defective in practice. I am sure that if he felt that, in principle, it was a good idea to do it, our Front Bench would be happy to work with him to make sure that the drafting reached the economic standards that he felt would make it useful and worth while. However, it is a mistake just to discard, without further thought, an attempt to see what happens after the event.

Therefore, which of these amendments is the best? I am not sure, but “there’s gold in them thar hills”, and we should be mining it.

[Lord Londesborough (CB)]

My Lords, I will briefly speak in support of Amendment 38, in the names of the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, to which I have put my name.

Given the enormity of the Bill, with its intention to raise £25 billion in NICs, and given the current broad-brush, macro impact note that came with it, it is surely incumbent on the Government to carry out sector-by-sector reviews and within six months. In particular, the impact on employment levels and hours worked in each of these sectors needs to be looked at, and there will be huge variations—anecdotally, we are getting evidence that variations are already there.

These reviews would also help the Government in shaping their industrial and sector strategies. I do not agree with the noble Lord, Lord Eatwell, that these studies are, in his words, “econometrically impossible”; yes, they are challenging, but not impossible. With the right will, suitable frameworks can be established for each of these sectors, and it is vital that this analysis is carried out.

[Baroness Kramer (LD)]

My Lords, I will be brief. I have some sympathy for the Minister, because, in providing the impact note—which, as the noble Lord, Lord Londesborough, said, had very thin content and was very high-level in general—he is merely following in Treasury tradition, which the previous Government, when in power, also pursued.

The time has come for us to make a stand and to say that we need detailed impact assessments of policy. As the noble Lord, Lord Londesborough, said, in a Bill as complex as this, and which affects many sectors, the impact note has to be far more granular than the kinds of documents we have received in the past. This is also valuable to the Government themselves, because I greatly fear that, within the Treasury, there is very limited understanding of what the consequences are for a wide range of sectors. This is a start in the right direction, making sure that both Parliament and the relevant government departments are informed and can act properly. We will support this.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

3rd reading
Tuesday 4th March 2025 Lords Chamber

[Baroness Kramer (LD)]

I am sorry to disrupt the House, but it is common to use do now pass to say thank you and I certainly have thank yous to say.

I thank the House for passing a number of amendments that will substantially reduce the damage and harm being done by this Bill. The noble Lord, Lord Londesborough, took the lead on small businesses, the Conservative Benches took the lead on charities and transport for special needs children, and my own party took the lead on community health and social care. Those are all exceedingly important and I hope the Government will take the issues very seriously. I do not think we have ever heard better debates, frankly, than those in this House that talked about real-life experience to convey the significance of the impact of the original Bill.

I thank the Minister. He and his team were unable to give us any concessions but they said no in the nicest of ways. I thank all the other Benches. We worked closely together—Cross Benches, Conservatives and our party—because we all felt in an almost non-political way that it was really necessary to try to come to the rescue of the damage that we could see was going to occur.

There is one amendment that I did not mention and which I think is important because it may survive some of this process and that is from the Conservatives on an impact assessment. That is becoming a recognised vehicle for important assessment of Bills such as this and has historically not been adequate. Perhaps we could now change that for the future.

Lastly, I thank my own Benches. I thank my noble friends Lady Barker and Lord Scriven and the others who led on various areas within this. I also thank Elizabeth Plummer of our Whips’ Office who did so much of the heavy lifting. She will have my eternal thanks. It is so good to have somebody covering one’s back when trying to deal with complex issues. I thank the House in general for taking this issue so seriously and recognising its significance to so many people.

[Lord Londesborough (CB)]

I too have some thanks to give. I thank all noble Lords from across the House who voted for my exemption amendment on the 45% reduction in Clause 2’s secondary threshold for all organisations employing fewer than 25 staff. I particularly thank my supporters, the noble Baronesses, Lady Neville-Rolfe and Lady Kramer. I was delighted to have the support of both the Conservatives and the Liberal Democrats and, indeed, the majority of Cross-Benchers who were able to vote at that late hour.

I also thank the Public Bill Office for helping to draft an amendment that turned out to require five consequential amendments, the staff of the Whips’ Offices, and the Minister for at least listening and for his patient approach. I appreciate that he has a lot on his plate, but I hope that he and the Treasury appreciate that my amendment sits right behind their number one priority, which is to generate sustainable economic growth. That is why I tabled the amendment and I trust it will be given the full consideration and scrutiny it merits.

[Baroness Neville-Rolfe (Con)]

My Lords, in concluding for the Opposition, I thank the many Peers on my Benches who have made valuable contributions during the Bill’s passage. I cannot thank them all today as the list is too long but I thank particularly my noble friend Lord Altrincham—my comrade in arms—and our opposition research team.

I also thank noble Lords from across the House, because this has been a cross-party effort, reflecting the widespread damage this Bill will cause. I particularly thank the noble Lord, Lord Londesborough, for his amendments to protect small business, the noble Baroness, Lady Barker, for her amendments on health and social care, and the noble Baroness, Lady Kramer, for her support across the board, including for the amendment calling for a review of the impact of the Bill.

I will say a couple of things. We have consistently heard that this is a job tax, plain and simple. It is the most important economic measure the Government have introduced so far, and it will have wide-reaching damaging impacts across the whole economy. It is being brought in on a tight timescale, creating a cliff edge on 6 April with no staggering for those who may be hurt. It has not been accompanied by an adequate impact note. It has led to businesses losing confidence in the Government, and that, I believe, is very bad for growth, of which I am very supportive. Despite the Minister’s protests, Peers from all Benches have agreed that the short document the Government call an impact note is an affront to the House, and that the Government have failed to provide sufficient sectoral information to allow for the effective scrutiny we try to bring. That is why we must have the review of the impact on affected sectors.

Despite the importance of these measures, the Government have made no effort to engage constructively. This House therefore voted to exempt small charities, transport providers for children with special educational needs and disabilities, early years providers and, as I have already said, small businesses and health and social care providers that provide public services in the private sector.

Of course we understand that taxes should be simple, as the noble Lord, Lord Eatwell, has explained, but when the Government fail to recognise the egregious impact this Bill will have on real people, we believe that some rethinking is necessary. Some of our changes would be modest in cost terms, but I know they would earn the thanks of many right across society.

I end by encouraging the noble Lord to use all his charms to persuade the Chancellor to think again.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Consideration of Commons amendments and / or reasons
Monday 24th March 2025 Lords Chamber

[Lord Scriven (LD)]

My Lords, on Report, this House passed Lords Amendment 1 and a number of consequential amendments to exempt NHS services and social care from the Government’s hike in employer national insurance contributions. I am grateful that the House agreed with these Benches that such a rise will have potentially devastating consequences for those that form the backbone of community healthcare and the people they serve. Despite the immense financial pressure that these vital services already face, and despite the clearly expressed views by this House, the Government have chosen to overturn our amendments in the Commons. We accept the Commons reasons that these amendments engage Commons financial privilege, and we will not seek to break with convention today by asking the House to look at alternative amendments that would produce the same response.

This brings me to Motion A1 in my name, which seeks to introduce Amendment 1B in lieu, and Motion E1, which seeks to introduce Amendment 5B in lieu. They look complicated, but they really are very simple. These amendments would introduce a regulation-making power to allow the Government, at a later stage, to exempt social care, pharmacists and other NHS services included in my original amendment. Noble Lords will know that I do not propose this lightly. We on these Benches are naturally suspicious of giving any Government such powers without full scrutiny provided in primary legislation, but we are so profoundly worried about the impact of the Bill on the NHS and social care.

My amendment seeks to address the deeply concerning implications of the national insurance contribution increases for our vital health and social care providers, NHS dentists, community pharmacists, hospices, GPs and social care organisations. The Government’s current approach to reimbursement, embedded in next year’s financial contract negotiations, will not solve the financial cliff edge and cash-flow issues many providers face. It is a damaging policy that will only exacerbate the existing financial crisis these sectors already face.

I will not dwell at length on the consequences of the national insurance increases as we have already explored them thoroughly. However, it is essential to reiterate the stark realities. The national insurance contribution increase imposes an immediate and substantial financial burden that will force some NHS dentists, community pharmacists, hospices, GPs and social care providers to make difficult choices, potentially reducing services and care packages, cutting staff, reducing access and indirectly impacting the most vulnerable in society. This will also add pressure on the NHS, as hospital beds will be blocked by keeping medically fit individuals in hospital because they cannot access appropriate social care packages.

The Government’s proposed solution—reimbursing these costs through next year’s contract negotiation—is fundamentally flawed. It amounts to a system of taking money away from those struggling organisations, with no guarantee of its full return. This will create significant cash-flow problems, particularly for those already operating on tight budgets. It could be the very issue that pushes some community pharmacists, social care providers and dentists over the edge, rendering them unable to continue to provide essential NHS services and care.

Furthermore, the NHS contracting cycle is notoriously complex. I know this as a former NHS manager. The reality is very different from being in a Whitehall office. It is complex and opaque. Contract negotiations bundle in various factors, including inflation and other cost pressures. There is no guarantee that the full amount of the national insurance increase will be reimbursed. Too often, initial drafts appear to include all necessary provisions, only for providers to discover mid-year that the additional activity requirements and other tricks that funders put in have effectively negated the promised increase.

Also, delays in finalising contracts are commonplace, leaving many sectors with months of accumulated pressures and unresolved cash-flow and debt issues. For example, community pharmacists are currently operating under a contract that ended in March last year. With only two weeks remaining in this financial year, a new agreement is still outstanding and they have not been reimbursed for the cost pressures of this financial year.

The uncertainty and delay create immense financial instability. The current system lacks the flexibility needed to address the immediate crisis that the national insurance increase will impose on some NHS and social care providers. A more agile and realistic approach is urgently required. Therefore, my amendment proposes that the Government can be granted the power to utilise a statutory instrument if necessary. This would allow for targeted and timely support to ensure that these vital services are not destabilised and pushed to the brink. The Government must abandon their rigid adherence to self-imposed rules and listen to the concerns raised about the impact of the national insurance increase. They must not continue marching forward blindly with this act of folly.

My amendment makes this offer to the Minister: give yourself some flexibility. Allow yourself to act quickly to reverse this damaging national insurance contribution rise for our health and social care systems. It would give the Government a way to get off the hook once they see how this increase will jeopardise community health, social care and other essential services. If the Minister will not listen, he will leave me no option but to test the opinion of the House. This is a generous offer. I urge him to accept my amendments. I beg to move.

[Lord Londesborough (CB)]

My Lords, it is with some regret that I do not insist on my Amendment 8 and its consequential amendments. I am disappointed that financial privilege has been invoked to prevent a full and proper debate in the other place on the potential damaging impact that reducing the class 2 secondary threshold by a brutal 45% will have on jobs and growth for small businesses and organisations employing fewer than 25 staff. I fear the Government will look back on 6 April, the day the new NICs regime kicks in, as a day of economic self-harm—a second April Fools’ Day, if you like.

I do propose to move Amendment 8B in lieu. In the spirit of pragmatism, my amendment, like that from the noble Lord, Lord Scriven, would simply bestow on the Treasury the power—through statutory instrument—to specify exemptions on the lowering of secondary class 1 thresholds for businesses, charities and, indeed, all organisations employing fewer than 25 people. We are talking about 10 million jobs across the UK that are not protected by Clause 3’s increase in the employment allowance, which offsets the NICs increases but, typically, only for those employing three or fewer staff. Given the potential damage to employment, wages and growth, why would the Government not want this weapon in their armoury in what will be a very difficult year ahead for small employers, who also face close to 7% increases in the national minimum wage and added compliance costs with the new Employment Rights Bill?

I support Amendments 1B and 5B in the name of the noble Lord, Lord Scriven, which strike me as an entirely sensible and pragmatic exemption tool to give to the Treasury given the very challenging circumstances facing care homes, hospices, pharmacies and other primary care providers.

Finally, I also support Amendment 21B in the name of the noble Baroness, Lady Neville-Rolfe, which seeks a review of the impact of NICs increases by sector. The impact note that came with the Bill was extraordinarily light on detail, especially when you consider that the Bill commits employers across these sectors to more than £5 billion per annum in additional NICs and impacts more than 10 million jobs.

I asked the Minister in Committee how many jobs in each sector would be impacted by the increase in NICs—a fairly basic question, one could argue, and yet no answer has been forthcoming. We heard on Report that such assessments would be

“econometrically impossible”.—[Official Report, 25/2/25; col. 1672.]

I respectfully disagree. We are asking for sectoral impact assessments that cover such key issues as the number of jobs impacted and the impact on vacancies, job creation, redundancies, labour activity and output, and wages. It was an entirely reasonable request and one the Treasury should readily embrace.

[Baroness Neville-Rolfe (Con)]

My Lords, the amendments in this group, including my Amendment 21B, address the very real negative impact of this jobs tax that the Government refuse to acknowledge. The Bill is the most important economic measure they have put forward so far and it makes significant changes to millions of businesses and social enterprises on a very short timescale. These businesses have raised concerns that are reflected in a flat-lining of growth, as worried owners seek to anticipate such a brutal change. Noble Lords from across the House have raised the consequences a number of times, yet the Government remain unreceptive.

At every stage of this Bill’s progression, we have raised the concerns of the healthcare sector about the effects on care homes, pharmacies, dentists, GP surgeries and hospices. It will have a real impact on people’s lives. I am particularly concerned about the hospice sector. The recent extra funding provided is capital funding and will not support day-to-day functions. Hospice UK has reported that the burden of the increase in employer NICs will be £44.3 million a year, which will not be covered by the £26 million of revenue funding for children and young people’s hospices, previously mentioned by the Minister. Last year, children’s hospices were provided with £25 million through the children and young people’s hospice grant. Can the Minister tell us how much of his £26 million is additional funding and how much is in fact recurring?

--- Later in debate ---

Moved by

[Lord Londesborough]

At end insert “, and do propose Amendment 8B in lieu—

8B: Clause 2, page 1, line 15, at end insert—
“(3A) The Treasury may by regulations made by statutory instrument specify that businesses or organisations with fewer than 25 full-time employees are exempted from the changes to secondary Class 1 thresholds made by this section.
(3B) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””

[Lord Londesborough (CB)]

My Lords, I beg to move Motion H1 and wish to test the opinion of the House.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Londesborough Excerpts

Consideration of Commons amendments and / or reasons
Monday 31st March 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I too thank the Minister for his comments. It is with regret that I will neither insist on my Amendment 8B nor plan to add any further amendments. The other place has played its financial privilege card for the second time, even though this amendment had been radically and pragmatically modified to simply provide the Treasury with the option of a statutory instrument to reverse the big drop in the NICs thresholds for small businesses. It will discover this in the economic damage that this Bill will potentially do to employment and growth.

In the meantime, I simply thank noble Lords—almost 300 of them—for voting for my amendments. I especially thank the noble Baronesses, Lady Kramer and Lady Neville-Rolfe, for their unflagging and invaluable support. I thank the Minister for his patience and for at least listening; I appreciate that he had little or perhaps no room for manoeuvre. I support the Government wholeheartedly on their overriding mission of economic growth, but I remain baffled, bemused and bewildered by their policies.

[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have spoken today and all noble Lords who have taken part in all stages of this Bill for their careful scrutiny; I thank them for their thoughtful contributions. I thank the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, specifically for indicating that they will not be insisting on their amendments today.

As I have set out, the other place has disagreed with Lords Amendments 1B, 5B and 8B, as they interfere with public revenue. They did not offer any further reason, trusting that this reason is deemed sufficient. The other place also disagreed with Amendment 21B for the reasons I have set out. On this basis, I hope noble Lords are content not to insist on these amendments.