PARLIAMENTARY DEBATE
National Insurance Contributions (Secondary Class 1 Contributions) Bill - 19 March 2025 (Commons/Commons Chamber)

I can confirm that Lords amendments 1 to 20 engage Commons financial privilege. Having given careful consideration to Lords amendment 20, I am satisfied that it would impose a charge on the public revenue that is not authorised by the money resolution passed by this House on 3 December 2024. In accordance with Standing Order No. 78(3), that Lords amendment will therefore be deemed to be disagreed to and is not available for debate.

Lords amendment 20 deemed to be disagreed to (Standing Order No. 78(3)).

Clause 1

Rate of secondary Class 1 contributions

With this it will be convenient to consider Lords amendments 2 to 19 and 21, and Government motions to disagree.

The Minister has talked about the growth mission, which is the Government’s raison d’être, but last week we found out that the economy had shrunk. Has he done any work to find out how much that 0.1% drop will cost the Government? It will have huge tax implications.

Will the Minister outline how many billions the Government will spend this year, what percentage £22 billion represents in that amount, and—if I may be so greedy as to ask an additional question, Mr Speaker—how much the flatlining of the economy has cost the Government compared with that £22 billion? I put it to the Minister that the impact of the national insurance contributions rise has been much greater than that of the mythical £22 billion alleged by the Government.

The Minister speaks about facts. Is he aware of the fact that when the Labour party won the election, the economy was growing, and is he aware of the fact that it is now shrinking?

Will the Minister give way?

One question raised regularly in my constituency relates to GP surgeries. The national insurance contributions will hit them immensely hard. GPs tell me that their only choice is to reduce staff and cut back appointments. The Minister mentions £22 billion extra for the NHS, but if GP surgeries and health clinics are reducing staff and reducing their capacity to deliver services, is that not a step down in what is delivered in my constituency and beyond? Will he reconsider the measures given the impact on GP surgeries?

Age UK in my constituency has told me that the employer NICs rise will cost it £50,000 a year. Does the Minister agree that it is impossible to improve the public sector by taxing the public sector?

Will the hon. Gentleman give way?

I am grateful to the hon. Gentleman for giving way yet again. The National Pharmacy Association announced for the first time ever, in 104 years, that it is planning action by reducing services because of the implications of the Budget. One of its requests is the release of an independent report commissioned by NHS England on the future funding of pharmacies. Now that the Government are in charge of NHS England, will the Minister ask his colleagues in the Department of Health and Social Care to release that report before the consultations finish, so that the public and the pharmacies can see exactly what the financial situation in that independent report will be?

The figures that the Minister is presenting, along with the answer that he gave to the hon. Member for Strangford (Jim Shannon), and similar to the Prime Minister, involve money going into sectors that will not mitigate the national insurance rise. Will he confirm that sectors such as hospices, social care, GPs and pharmacies will have some support, rather than tell us about money that is not going to help people with regard to the jobs tax that is coming in?

The hon. Gentleman makes an interesting point, but let us look at children’s hospices, which will be down £4.9 million. Most funding for children’s hospices does not come from the Government; it comes from communities and from people supporting them. Can the Minister, at the Dispatch Box, assure children’s hospices such as Acorns in the west midlands that they will not be down the money that they will be losing through extra NI contributions, and that that £4.9 million will be replaced by the Government for children’s hospices?

The point that Opposition Members are trying to emphasise is that the Government appear to be giving with one hand, but taking away with the other. The hospice sector is just one example of many sectors that have been adversely affected by the Government’s cruel tax.

Will the Minister give way on that point?

I thank the hon. Gentleman for giving way. Southern Area hospice, which is located just outside my constituency, has to raise £3.6 million per year, or £300,000 per month. It is not Government funded, as has been mentioned, so what reassurance can the Minister give to those currently using Southern Area hospice for end of life care that the Government will do the right thing and support our hospices by not including them in the increase to national insurance contributions?

It is an amazing point, and I hope that the hon. Gentleman will get it, because it was clear that the Prime Minister did not get it at Prime Minister’s questions. Let’s tell the real truth: the money that is being given by the Government—taxpayers’ money—to children’s hospices such as Shooting Star and Demelza hospices, is for buildings. The national insurance increase is directly hitting the people who do the work on which very sick children depend. Why is that imposition being made?

The Minister knows that that is funding for one year, and mainly for buildings, as he has admitted. This will be a cost on hospices every single year going forward. It will be cumulative and mean that hospices have to ask their communities for more and more, just to give that basic help. Will he commit to funding children’s hospices by the £4.9 million that the Government are taking off them every year, or not—yes or no?

As is evident to many hon. Members, the Minister has, for the first time, found himself unable to answer some very straightforward questions from Opposition Members about the difference between the allocation of funding for capital expenditure and for current expenditure, and the impact that that difference will have on our hospices, children’s hospices, GPs and others affected by Labour’s jobs tax.

I am sure Members of the House of Lords who brought these amendments back will also have noticed that the Minister has been unable to answer those questions. Prior to the Bill going back to the House of Lords, will the Minister agree to speak to the Chancellor or the Chief Secretary to the Treasury to get a clear answer to the questions that have been raised today about which money will be available for capital and which money will be available to offset the national insurance charge increase?

Will the Minister explain to the House how it is right for the Government to cover the extra national insurance contributions of those working in the public sector, for example in hospital provision, but it is not right to do that for those working in hospices, in end of life care? How can that circle be squared? Why will they cover the national insurance contributions for those working in hospitals that are treating people, but not for those working in hospices that deliver end of life care?

The Minister makes the point that this is secondary for primary care providers. However, he does not acknowledge that primary care providers still do not know how they will be compensated by the Government, as I hear from dentists, community pharmacies and social care providers in my constituency. We are very close to the start of the tax year and those small businesses are providing critical primary care services in our communities. How can they operate when the Minister obfuscates and says other people might talk to them at a later stage about the money that they might receive? Would it not be easier for the Minister to accept the Liberal Democrat amendment from the House of Lords and clear up this matter today?

What advice can the Minister give Thames hospice and Alexander Devine children’s hospice service in Maidenhead, which are looking at a £300,000 and £50,000 increase in bills respectively? Is he saying that they should cut services, or is he expecting residents in our constituencies to raise more money for them, for it to be given directly back to the Chancellor?

The Minister has a capital budget and revenue budgets. We are talking about a small amount of money—£4 million or £5 million—so will he consider switching £4 million or £5 million from the capital budget to the revenue budget? Opening up that opportunity would have merit, and would help these very vulnerable organisations.

After yesterday’s announcement about benefit changes and benefit cuts, the Government have said that they want more people to go into work. A lot of help to get people into work is delivered by charities, so we are expecting a greater need for such charities. How will they cope if they are being taxed through further NICs? They will have to reduce their services and their ability to provide support, so there will be a gap in the market. Will the Minister explain how the Government intend to bridge that gap?

The Minister is making a lengthy contribution; I am just waiting for a conclusion.

Order. This debate has to conclude within two hours of its start, so we will have a six-minute time limit, other than for Front-Bench Members. I call the shadow Minister.

I rise on behalf of the official Opposition in support of Lords amendments 1 to 4, 8, 10, 14 and 21.

Before I dive into the detail, I want to get a little nostalgic. One year and six days ago, I opened Second Reading of the National Insurance Contributions (Reduction in Rates) Act 2024, which cut national insurance for some 29 million working people across the country. What a difference a year makes. At the end of my speech that day, I posed a simple question to the shadow Minister, now the Exchequer Secretary, which was really bugging me at the time: how will Labour pay for all its many spending commitments? I asked specifically what taxes Labour would put up, and called for Labour to just be straight with the British people. Alas, no straight answer was forthcoming, but now we know the answer, don’t we? It is just a shame that Labour gave it to us only after the general election.

Labour promised not to raise national insurance, and that it was on the side of British business. It said that it would deliver economic growth; how is that going? The fact is that the Chancellor is delivering a £25 billion tax rise on jobs across the country. That will stifle growth, hold back British business, and harm public services. This Labour national insurance Bill will, unbelievably, take the tax burden to its highest level in history on the backs of working people.

We are debating a series of amendments tabled and voted through in the other place with the aim of mitigating at least some of the damage to three vital parts of our economy and our communities: healthcare providers, charities and small businesses. Lords amendments 1, 3 and 4 seek to exempt from the measures care providers, NHS GP practices, NHS-commissioned dentists and pharmacists, providers of transport for children with special educational needs and disabilities and charitable providers of health and social care, such as hospices, as we have heard. That is because we have been warned that as a direct result of the national insurance tax hikes, we could see fewer GP appointments, reduced access to NHS dentistry, community pharmacies closing, adults and local authorities paying more for social care, and young working families being hit with even higher childcare costs. We have to avoid that.

Would the hon. Member reverse this national insurance tax change? What spending would he cut to do so?

If the hon. Gentleman looks back at the record of proceedings on earlier stages of the Bill, he will see that we voted against it. If he looks at our record in government, he will see that we cut national insurance for 29 million people across the country. As I have said so many times in this place, why are we not debating the Government’s creation of an £8 billion quango in Great British Energy? Why are they spending £7 billion on a rebrand of the UK Infrastructure Bank? Why are they spending £9 billion on giving up our sovereignty to Mauritius? Let us start with those discussions; we can then have a real debate.

Lords amendment 2 recognises the role that the voluntary sector plays in the provision of essential services by seeking to exempt charities with an annual revenue of less than £1 million from the national insurance rate rise. Charities with an income of less than £1 million make up some 95% of registered charities and undertake vital work in all our communities, yet this Chancellor will force charity staff and volunteers across the sector to raise £1.4 billion more to cover this tax rise next year alone. Supporting this Lords amendment would prevent so many services provided by the third sector from being reduced, or even removed altogether.

Lords amendments 8, 10 and 14 seek to exempt the smallest businesses—those with fewer than 25 full-time employees—from the proposed cut to the threshold at which an employer is required to pay secondary class 1 national insurance.

The hon. Member mentions small businesses. Local hairdressers in my constituency have been in touch with me to say that given the difficult economic picture, these NICs rises will mean that they cannot take on apprentices this year. Does he agree that this NICs rise is a tax not just on business, but on education?

Absolutely. To be fair, I do not think the profound impact of this tax is appreciated by Labour Front Benchers. The hon. Lady has pointed out yet another area in which it will have an impact—tax on education. I could talk about the impact on universities as well.

Does my hon. Friend think that the Government have assessed the loss of tax revenue that will result from this measure? In North Yorkshire, almost all of the jobs that would have been created in small businesses over the coming year are now being repressed, leading to a loss of income for the Exchequer.

To answer simply, I do not think the Government did that assessment before announcing this tax rise, but with plummeting business confidence, declining economic growth and forecasts for economic growth that are consistently downgraded, the profound impact on businesses and growth—as I was saying—is clear for all to see.

I listened carefully to your answer to the Minister’s question about what you would cut if this change were to be reversed. You have not been clear about whether you would reverse it, but I listened carefully to the answer, and what I heard you say—[Interruption.] I am so sorry, Madam Deputy Speaker. The shadow Minister referred to GB Energy and the National Wealth Fund. Will he clarify whether he is really saying that he wants to reverse record levels of investment in energy infrastructure and innovation jobs, and in jobs across this country, to stabilise our economy into the future?

I remind hon. Members that interventions should not be short speeches. The hon. Lady is absolutely right; looking at the Chair should hopefully prevent her from saying the word “you” repeatedly.

The problem with that intervention is that the chairman of GB Energy himself disagrees about the number of jobs that it will supposedly be creating. I have set out clearly some of the things that we would do differently, and the different choices we would make from the choices this Labour Government are making.

When we talk about small businesses, and about the impact of this national insurance tax increase on businesses as a whole, the Minister and other Labour Members incorrectly suggest that only the largest businesses will be forced to pay this jobs tax. As I have told them consistently in every debate we have had on this Bill, that is simply not the case. Village butchers, high street hair salons and community pharmacies are not what most people would regard as large businesses, yet businesses such as those will be hit. If the Government really want to ensure that our smallest businesses are exempt from at least part of this damaging tax, they should support the Lords amendments that are before us today.

We know that the Minister is having to defend the undefendable—he has got a certain Matt Hancock about him in how he does it with zeal. [Interruption.] Sorry, Madam Deputy Speaker. Does the shadow Minister agree that the people who are paying for these increases are taxpayers? They are people who are working hard. I was talking to a manufacturing business in my constituency that was going to give its employees a 4.5% pay increase, but can now only afford to give them a 2% increase. This money is coming out of the pockets of hard-working people.

I remind hon. Members that language should be respectful at all times.

The jungle awaits the Minister, clearly. My right hon. Friend is absolutely right; in fact, the OBR has clearly demonstrated in its analysis that 76% of this tax increase will be passed on to working people. That is a manifesto breach if ever I saw one. Not only that—the Institute for Fiscal Studies has made clear that this tax increase will not just have an impact on working people. It is the lowest-paid people in our country who will be paying for it, which is another under-appreciated and under-commented fact for the Labour party.

It is worse than that, is it not? The money that is being paid to bail out Demelza and Shooting Star children’s hospices is being generously donated by people who have already paid tax. Those working people are effectively being taxed twice on the money they are generously giving to support some of the most needy children in this country—needy in terms of health. Is that not absolutely appalling?

Yes, it is. My right hon. Friend is exactly right; the Government are giving a small amount with one hand and taking a larger amount with the other, but the bottom line is that it is all taxpayers’ money. It is a double tax on those people who now face the brunt of this tax increase.

Will the shadow Minister give way?

I will make some progress, if the hon. Gentleman will allow me, and then give way.

This tax, purely and simply, is a financial penalty on 940,000 businesses—that is how I look at it. The analysis shows that it is going to cost businesses an average of £26,000 per year per employer. Not content with ruining farmers’ futures through the immoral family farm tax, the Chancellor wants to hammer them with this Bill, too. She is going to make pubs, cafés and restaurants stump up more to cover her jobs tax, without regard for the impact on our high streets or the communities they serve. She is going to squeeze the creative industries, from theatres to film producers, in a desperate attempt to keep this circus on the road. It is crucial that we understand the impact that the Bill will have. That is why Lords amendment 21 requires the Chancellor to carry out a review within six months of the Bill’s impact on the sectors I have described as well as on farming, creative industries, hospitality, retail and universities.

The shadow Minister has mentioned cafés, and when we have been debating this point previously in the House, I have mentioned Basil’s café in Tunbridge Wells. It now informs me that it is having to put its prices up because of the NIC rises. Does the shadow Minister think that we are going to see a bump in the inflation figures as a result of this tax?

I remind the House that inflation has already gone from 2% to 3% under this Labour Government, and in fact, the OBR scored the Hallowe’en Budget as inflationary. The hon. Gentleman is right that when these tax rises hit, they will be passed on through higher prices. I hope that that will not put pressure on inflation, but it will inevitably do so.

The combination of factors and how they are affecting businesses, including cafés, is not always appreciated either. The national living wage is going up. Conservative Members have welcomed that—we implemented the national living wage—but it is about the context in which it is going up: national insurance is on the rise and business rates relief for hospitality businesses and high street businesses is being reduced from 70% to 40%. All those things are compounding the impact on cafés, such as the one in the constituency of the hon. Member for Tunbridge Wells (Mike Martin). They will be devastated, inevitably leading to job freezes or job losses, which I will come to.

From healthcare to charities and small and medium-sized enterprises, I have made the consequences of this Bill clear since it began its stages in the House. Today, the Government have one more chance to change course, because what many people across the country want to know is this. What is this Bill for? We were told that it was a one-off tax rise to fix the foundations of the economy. We were told that there would be no more tax rises after this, yet we find ourselves just a week away from an emergency Budget, with speculation rife that other taxes may have to rise because the Chancellor will not meet her own new fiscal rules. Some are suggesting that Labour will break another pre-election promise and not unfreeze the income tax thresholds in 2028, but will rather extend the freeze to pay down their new debts. That surely cannot be true—the Minister himself gave me his personal assurance in this House that income tax thresholds would be unfrozen from 2028. I would like him to reconfirm that promise to me today, in order to end the speculation.

This is vital context for Members as we consider the amendments before us today. If more tax rises will be needed—if the original justification for this Bill is now void—why should we stomach the Bill’s terrible consequences? Why should Labour MPs have to go out and defend this to their constituents? Why should we allow the Government to punish the sectors that the amendments before us seek to protect? In fact, why must we stand here and see this entire Bill implemented at all?

One impact that hits every sector of our economy is the impact on jobs. Just yesterday, we heard Labour talk about the importance of lifting people out of welfare and getting them back into work, and it is right to do that. As Conservatives, we know that the dignity of work and the security of a regular pay cheque is what lifts us up as a country and lifts families out of poverty. The tragedy is that this Bill has caused so much concern and so much uncertainty that employment is already declining in anticipation of its passing. The Office for Budget Responsibility tells us that the Bill will depress workforce participation for years to come.

Put simply, this Government are cutting welfare to boost employment, while at the same time boosting taxes, which will cut jobs. No wonder business confidence has completely and utterly nose-dived. It is inexplicable and entirely avoidable.

The shadow Minister says it is inexplicable, and I agree that on the face of it, it is. However, is one possible explanation for fiscal misadventure on this scale not that the Government Benches are filled with people who have scarcely any understanding of the real economy, much less what it means to try to start, run and sustain a business?

That is right, and it is an important point, because the decisions made by this Government are having such a profound impact on people in the real economy. I simply say to the British public that if they are unhappy with the decisions being made, they have to change the people making them. [Interruption.] Unbelievably, I am getting heckled on that point. The hon. Member for Hamilton and Clyde Valley (Imogen Walker) should get out and talk to the average businessperson in her constituency. She might quieten down significantly.

The Minister implied that the Government had no choice, and he still seeks to ask me what the Conservatives would do differently. Others on the Government Benches are trying that, implying that there is no other alternative. The Minister should look at the £70 billion of wasteful spending commitments that I have already listed, including the quangos, such as GB Energy, the pay-offs to the unions without any reform or productivity gains, and the billions of pounds being surrendered as part of the surrender deal to Mauritius. We have growth on the decline and inflation, debt and unemployment on the rise. We have a Chancellor on the brink, and confidence crumbling. We may not be able to kill this Bill, but we have our chance now to dent the damage. I urge Ministers and Members across the House to do the right thing and to support these amendments.

Due to the length of Front-Bench contributions, Back Benchers are now limited to five minutes.

Thank you, Madam Deputy Speaker, for allowing me to rise to speak to Lords amendments 1 to 19. I want to speak about what makes a good tax system and, in particular, optimal tax theory, which is a topic that is as thrilling to me as it is no doubt to the entire Chamber.

A good tax system is defined by neutrality, simplicity and stability, as set out in the Mirrlees review. A tax system designed along those three principles will raise the maximum revenue with the minimum economic impact. Each of the amendments in isolation might seem reasonable, but together they introduce individual exemptions that make our tax system less neutral, less simple and less stable. The amendments would make our tax system worse.

Today, we are discussing raising national insurance contributions from the largest employers to fix our broken public services and invest in our prosperity. Three quarters of that £23 billion of investment is from the richest 2% of businesses, while we are reducing contributions from the 250,000 smallest businesses.

The hon. Member talks about simplicity. If that is the case, why is the Government splitting the NICs? They could have introduced an increase on employees at the same time as the increase on employers, but they have decided not to do that. That would have been a simple measure to raise taxes, without creating this complication. How does that tally with his theory?

It is a pretty well established introduction to the tax system to have both employee and employer NICs. The point about simplicity is about where the tax is levied. I will come to the specific point that the hon. Member raises later in my speech and hopefully provide some illumination.

The revenue we are raising will be used to invest in our nation’s prosperity: insulating our homes, rebuilding our crumbling schools and hiring more nurses to care for our loved ones. It is about getting costs down and creating good jobs. It is about rebuilding this country after, frankly, more than a decade of despondency and despair.

The amendments before us represent bad policy that puts that at risk. As I may have mentioned in this House once or twice before, I used to be an economist. I can tell the House that a good tax is one that raises revenue and does not introduce perverse incentives. A good tax ensures that resources go to activity because there are higher levels of productivity. A good tax system introduces three principles. The first is neutrality: it treats similar activities in similar ways. The second is simplicity: it is straightforward and easy to implement. The third is stability: it is predictable.

The hon. Member is talking about productivity and growth. How does he square that with the additional tax on early years care? That care allows parents to work. If parents cannot work and employers cannot afford to bring young people through, how are we going to get the nation working? Nurseries are on their knees and they cannot take on more children, because there are strict rules about ratios and the amount of space each child takes.

First, there is more funding going into the early years, but I will deal with the tax side as I speak to the specific amendments.

Each amendment seeks to carve out an exemption for something, and I am sure that Members across the House identify with and, indeed, support some of those individual exemptions. However, if we were to pass the amendments, they would give specified sectors advantages not enjoyed by others.

It seems to me that the hon. Member’s issue is not with some of the amendments, but with all of them taken together. Why does not he not back some of the amendments?

I do not, because that would introduce exemptions and perverse incentives and make the tax system less clear. It would make the tax system as a whole less efficient. I will come to the specific ways shortly.

Let us start with non-neutrality. Lords amendments 7, 12 and 16 would create non-neutrality between small charities and non-charities. That would incentivise more social enterprises to be charities instead of businesses. Lords amendments 8, 10 and 14 would create an additional NICs band for small businesses, thereby disincentivising them from growing. Under those amendments, if a business saw its revenue go over £1 million or it employed more than 25 people, all of a sudden it would incur a NICs charge. That is a cliff edge. It would introduce a perverse incentive and reduce productivity and economic growth.

I am pleased that the hon. Member is talking about growth. He talks about perverse incentives. What possible kind of perverse incentive could he have in mind when removing a jobs tax from a children’s hospice, which cares for children and families going through the most unspeakable heartbreak? Where is the perverse incentive in that?

As I think I have set out, the question is not about carving out an exemption for this establishment or that establishment; it is about how we create a tax system overall that is simple and efficient. It is about ensuring that businesses and other organisations are operating more efficiently. I say this to the hon. Member: when the Conservatives were in government, they did not propose abolishing national insurance for all hospices. They should follow their arguments to the end of the line. I will move on, as I am conscious of the time.

The amendments would also reduce simplicity in the tax system. We are not exempting specific sectors or, indeed, specific establishments from this tax. Overall, Lords amendments 1 to 19 would complicate the tax system and reduce stability. Raising rates is accepted policy; introducing special rates for specific sectors or establishments is not. It would make for a less efficient tax system that is complicated to govern, expensive to enforce and more prone to fraud. This is not a predictable way of making tax policy. It is not neutral, it is not simple, and it is not stable. It is bad policy that all of us in the House should oppose.

All this may sound dry, but it matters to our constituents. Bad taxes do not just harm economic growth, but bring in less revenue. That means fewer appointments in the NHS, it means fewer new teachers, and it means less insulation in our homes. We are elected to this place as legislators. We have a duty to make policy that works, and that involves distinguishing the whole from its parts, ensuring we do not introduce loopholes and carve-outs that weaken our tax system, and governing responsibly.

I call the Liberal Democrat spokesperson.

Notwithstanding what was said by the hon. Member for Loughborough (Dr Sandher), the Lords amendments were clearly not designed with the aim of creating a simpler tax system. They have been sent to us to consider because they may create a fairer society, and that, in my view, should be a driving force in our consideration of them today and in the work of this House.

Such is the strength of feeling in the other place that it has sent us 21 amendments, and such is the strength of feeling on the Liberal Democrat Benches that we will support every single one. Taken together, they offer exemptions for health and care providers, for small charities with an annual revenue of less than £1 million, for transport providers, for children with special educational needs and disabilities, and for small businesses with fewer than 25 employees.

Rowcroft hospice in my constituency is impacted greatly by the Bill, as is Bay Care, an excellent social care provider. Both those organisations are having to make challenging and difficult decisions about how many people they can employ and how they can support people in their communities. Does my hon. Friend share my fear that this will result in the shunting of costs on to our core NHS services?

I agree wholeheartedly with my hon. Friend. One of the main problems with this particular measure is that it is so self-defeating. It is effectively robbing Peter to pay Paul. I have said it once and I will say it again: this jobs tax is damaging to growth, and self-defeating for our health and care services. We Liberal Democrats have opposed it, and throughout the debate on the Bill we have suggested alternative ways—fairer ways—in which the Government could raise the same amount of revenue. We have also asked the Government, if they are indeed pursuing this measure, at the very least to exempt health and care providers.

The Government will not get hospitals out of a financial hole by taxing the GPs, dentists, pharmacies and care providers who prevent people from needing to go to hospital in the first place. The Government will not alleviate the pressure on hospitals by taxing hospices, which will now be forced to withdraw services from people who are trying to die with independence and dignity in a setting of their choosing, rather than in a cramped hospital corridor or a sterile ward. The Government will not keep people out of hospitals by levying a tax on the very health and care charities that provide vital services for those who are vulnerable—warm spaces, friendship for the isolated, financial advice, welfare support and social care. The Minister said that extra money would go into social care, but we know that the money allocated to it in the Budget is dwarfed by the increase in national insurance contributions. We cannot save the NHS unless we fix social care.

There are many similar examples, but Quantum Care in Hertfordshire, a not-for-profit social care business, says that its costs will rise by £1.7 million in national insurance contributions alone, which will also have an impact on council and social services. That is certainly not solving our health and social care problem.

As a fellow Hertfordshire Member, I have met representatives of Quantum Care a number of times and have heard the same reports as my hon. Friend. This is extremely worrying for our social care providers, who are very clear about the impact that this measure will have. They will have to put up their costs, they will have to hand back contracts to local authorities, and they will not be able to provide the level of care that many vulnerable people require.

The measure will also have a huge impact on small businesses and high streets. As I have said before, high streets are the most visual and visceral indicators of whether the economy is working in their area. If small businesses see their local high street going down the pan, they will lose confidence in their local economy. Pubs, hospitality companies, retailers, beauty salons and day centres are the glue that holds our communities together, but they are also the engines of local growth. Small businesses are crying out for assistance. What makes them feel so overwhelmed is the cumulative impact of all the measures that we are seeing from this Government: the national insurance increase, the rise in business rate bills, and the new obligations that are imposed by the Employment Rights Bill without the resources to manage them.

Throughout the passage of the Bill before us, we Liberal Democrats have set out alternative ways for the Government to raise funds. The Government say that this measure will raise £25 billion for the NHS, but the Office for Budget Responsibility says that when behaviour change and reimbursement in the public sector are taken into account, it will raise just £10 billion. We believe that that money could be raised from different sources, from the digital services tax to the gaming tax to reforming capital gains tax so that it is fairer and raises more money than it can currently raise because of the way in which the Government have addressed it.

This measure will destroy growth, decimate parts of our high streets, and cause vulnerable people to lose out on vital services. That is why we Liberal Democrats have opposed the increase in the jobs tax, and it is why we ask for, at the very least, an exemption for our valuable health and care providers.

Lords amendment 21 calls for a review of this policy. I will come to the practical reasons for my opposition to it shortly, but first I want to focus on the cause of the problem and the cause of today’s debate.

The last Government presided over economic chaos, scaring businesses away from long-term investment. The last Government failed to invest in the skills that are required in the vital sectors about which we have been hearing today. The last Government left the NHS on its knees, in desperate need of long-term investment. It will be hard to take the serious steps that will put the country back on its feet, but I believe that the measures we are debating today are necessary. What a contrast we see now: a Government laser-focused on economic stability, a Government determined to invest in skills for the future, a Government who are already reducing the NHS waiting list thanks to a £23 billion investment. That is the outcome of this policy, which is part of a package of measures to stabilise our economy and enable us to invest in public services.

I have to admit that I have been struck by the passion and commitment of Members on both sides of the House who have spoken about important public services. I talk to representatives of those services regularly myself, and I firmly believe that the investment that this Government will be able to make in childcare, in early years, in breakfast clubs, in the NHS and back into local government, where it needs to be, will in the round create the more sustainable public services that we so desperately need.

On the practical reasons why I oppose Lords amendment 21, the OBR has already considered the implications of this policy—

Will the hon. Lady give way?

I will not give way.

Jobs data is already publicly available that will enable everybody to analyse the impact of this policy, and there has been a detailed assessment of it by HMRC. I firmly believe that this amendment will not deliver on the objectives that our country needs.

I rise to speak in support of the Lords amendments, and I direct the House to my entry in the Register of Members’ Financial Interests.

I want to talk about the services that are so integral to our communities, because they are the ones on which our constituents rely. I am talking about GP surgeries, dental practices and pharmacies. I am also talking about our community hospices; the charity hospices that care for our loved ones through the most difficult and heartbreaking of times; the hospices that our constituents work so hard to raise funds to keep going. including our children’s hospices.

I listened very hard to what the Minister said, and he talked really dispassionately about difficult decisions. Has he no shame? This is a choice, and the Government have chosen to impose this jobs tax on children’s hospices and the services that support families going through the most unimaginably difficult and painful of times.

My hon. Friend speaks with so much knowledge and passion, and she is a real advocate for her constituents. When we look across the Chamber, we see that the Labour Benches are threadbare. Is that not testament to the fact that Labour is actually trying to defend the indefensible?

That is absolutely right. There are over 400 Labour MPs, but just four of them are sitting there to try to defend this indefensible jobs tax on our most vulnerable. They should be utterly ashamed of themselves. Do they not have children’s hospices in their constituencies? Do they not have hospices and other settings that their constituents work so hard to raise funds for? They should be absolutely ashamed of themselves.

Perhaps I may suggest an easy decision, rather than a difficult one? The Government, instead of giving £9 billion away to Mauritius, should use some of that to support social care and charities.

That would be an excellent decision, and I am sure the Naomi House children’s hospice and Jacksplace, which do so much invaluable work to support families going through the most unspeakable difficulties in my area, would advocate for that.

I want to talk about childcare settings, which ensure that our smallest but most cherished family members are cared for and given the very best possible start in life. It is incomprehensible that the Government have taken this decision to imperil some of the businesses and services that our constituents most rely on—nursing homes, for example. The owner of one nursing home, with 35 years of service in the Gosport constituency, told me that the tax rises in the Budget will add £90,000 on top of its annual costs. This business is particularly vulnerable because a very large proportion of its bed spaces are occupied by local authority patients. Its costs are going to go up by 12% this year, driven mostly by changes to the minimum wage and this jobs tax—the national insurance contributions change—on his 75 members of staff. The council, which is having difficulties of its own, can provide only a 4% uplift to cover it. Quite simply, this an existential threat to his business, and he is not alone.

It is the elderly, the vulnerable, disabled people and their families who are going to pay the price, and we know that these costs will go to those having to foot the bill. If people are not privately funded, some nursing homes will be forced to hand back their local authority contracts and increase the proportion of beds commissioned privately. Since the Budget, I have received messages from individuals who have already seen the cost of care going through the roof. One wrote to me:

“Directly due to the increases in Employers National Insurance contributions the Chancellor has managed to cause an increase of 7.8% in my brother’s care home fees that are already north of £8000 a month… I shudder to think of the overall cost nationally of this increase across all those with relatives and loved ones in care.”

I also want to talk about early years settings. Early years providers are facing a squeeze that many just will not be able to stomach. Just as care settings have their revenue dictated by local government, nurseries are limited by childcare ratios and the fees they get from their local authority for their 30 hours’ free childcare. Hopscotch nursery, which looks after 1,900 children across my region, has told me that these changes will add £1 million to its overheads. It says that, in order to make up the shortfall, it is going to have to put its fees up by 10%, and that 10% will be passed on to my Gosport constituents. How can parents in Gosport face such an uptick in fees? What assessment have the Government made of the impact that will have on parents, on people dropping out of the jobs market or out of the workforce, and, most especially, on women? At the end of the day, we all know that when it comes to childcare, rightly or wrongly, the buck always stops with us. What will be the disproportionate impact of this on women?

I could mention so many other organisations that are facing the prospect of scaling back their activities. They include hair and beauty salons, which are warning that this will result in billions of pounds lost, and many will shut up shop or encourage staff to go freelance. They have previously taken on so many apprentices, but they warn that by 2027 there will be no apprenticeships left in this sector because they will be too expensive.

The common thread is that this national insurance change will hit businesses for which labour is the highest cost and there is no digital solution, and businesses that are unable to find efficiencies because of the nature of their overheads. The amendments passed in the Lords would go some way towards alleviating those cost pressures. In many cases, they would be a lifeline for the businesses and services that our constituents so desperately rely on, and those that by their very nature are reliant on the public sector for revenue. I urge the Minister to change his mind, to show some compassion, to show he cares, to listen to his constituents and to support these amendments.

I am on record previously as calling for more support for hospices, but I have been contacted by a number of constituents about the issue of home-to-school transport for pupils with special educational needs and disabilities. That relates to Lords amendments 3, 6, 11 and 15, and I wish to consider those today.

For many children with SEND, their school transport is a lifeline to education, friendships and independence. Without it, these children risk being cut off, left behind and denied opportunities that they deserve. If these Lords amendments are rejected, local councils and transport providers will struggle, families will face uncertainty and, I believe, the fundamental right to education will be compromised. This is not just a technical change to national insurance rates and thresholds; it is a direct threat to the futures of vulnerable children and their families. These dry words on a page have a massive impact in the world outside this place.

There is a genuine fear that the cost of removing these Lords amendments, which will ultimately see more children kept out of school, will actually be greater than the additional revenue raised through the national insurance changes. In reality, to exempt SEND school transport from the national insurance rise is not going to bankrupt the UK. We know that local councils, even with additional funding, are already struggling with the impact of 14 years of austerity. I believe that we could certainly raise the money we need if we had a wealth tax and introduced other changes to capital gains tax. I would appreciate it if the Minister explained why we are unable to compromise on this issue and find a way to exempt SEND school transport from the changes he proposes.

It is almost three months to the day since we were here in this Chamber on Third Reading. The SNP and other parties warned at that stage of the very real, dire consequences for organisations, businesses, charities, hospices and so on. It certainly does not give me, or anybody else on the Opposition side of the House, any pleasure that those threats have come to pass. There is no pleasure in that whatsoever.

The British Chambers of Commerce spoke last month of a “powder keg of costs” for businesses, with 82% of firms surveyed saying that they faced the potential of staff lay-offs, wage freezes or cancelled promotions in the workforce, which will be a terrible drag on the economy. Last month saw vacancies in the UK contract at the second-fastest rate in nearly five years, while wage growth has slumped to an almost four-year low. If we want the evidence of what business thinks of this change, it is there in the figures: 300,000 small business owners surveyed last month said they intend to lay off employees in order to cope with Labour’s national insurance increase.

The economic impact is now becoming absolutely clear. Last week’s GDP figures show the UK economy shrinking in January. On Monday this week, the OECD downgraded the UK growth forecast for both this year and the next. The reality under Labour is that economic growth has fallen in four of the past seven months. The national insurance grab represents an extraordinary and unforced error in fiscal policy. If Labour genuinely has confidence in this move, then it should have no issue whatsoever in agreeing to Lords amendment 21 and publishing an impact assessment of its national insurance increase. What the Minister detailed as an impact assessment was in fact an analysis. An impact assessment deals not with the numbers, but with output in the real economy—the effect on business. The Minister knows fine that that is not what he is talking about.

On GPs and Lords amendments 1, 4, 5, 9 and 13, the Scottish Government will be investing—or compensating, rather—£13.6 million in general practice this financial year to support GPs in Scotland alone, obviously, to retain and recruit staff in the face of the change. But Scotland’s GPs, any more than England’s, Wales’s or Northern Ireland’s, should not be paying the price for UK Government decisions. Labour’s decision to increase national insurance contributions is a catastrophe for GP practices and for charities across Scotland—the relevant Lords amendments are 2, 7, 12 and 16.

There are 7,000 charities in Scotland at risk from this Labour Government. Marie Curie faces a £2.9 million inflation to its costs, with £75 million across the charitable sector in Scotland. The Scottish Society for the Prevention of Cruelty to Animals alone is exposed to a £400,000 recurring pressure from this Labour Government. Scotland’s public sector faces a £700 million recurring pressure, which, with the Government’s compensation, still leaves a £200 million shortfall. Scotland is again being punished for choosing to invest more in its public services and paying people who deliver those services better.

The Government regularly attack us by saying, “What would you do?” I will tell them what I would do: £30 billion by rejoining the single market; £16 billion by introducing Scottish income tax rates; and £43 billion from a wealth tax of 1% on assets over £10 million. But this Labour Government will not go after multimillionaires. They would far rather go after the disabled, hospices, family businesses, GPs, farmers, councils and charities. That is what these so-called socialists are intent on doing.

In conclusion, Labour’s fiscal bonfire is what my colleagues in the Scottish Government have had to deal with to try to ameliorate and protect communities from Labour’s economic ineptitude. But even fiscally incompetent Unionists—a cadre in whose number I include the Minister—must realise that the Scottish Parliament cannot exist simply to ameliorate and protect Scottish public services from the United Kingdom’s decisions. Devolution can only ever be a temporary face-lift for the crumbling foundations of Unionism. As the Union crumbles, I shed no tears, but I wish it was not ripping the economic heart out of Scotland on its way down.

I would like to start with a gentle reminder, if it is needed, that Labour promised in its manifesto not to raise national insurance. Yet we are here today because Labour broke that promise. We are here today because right hon. and hon. Members in the other place tabled some very important amendments to the Bill, which are, rightly, now here for us to consider. Let us also not forget that Labour colleagues voted against protecting small family businesses; against protecting hospices; against protecting GPs; against protecting care providers; against protecting small charities, including air ambulances; against protecting providers of school transport for children with SEND; and against protecting nurseries. Now they all face the jobs tax.

My right hon. Friend will recall that the hon. Member for Loughborough (Dr Sandher) referred in his speech to perverse incentives. Is it not perverse that the Government should, while exempting the health service, be taxing doctors, dentists, hospices and children’s hospices, which are, effectively, all part of that same health service?

My right hon. Friend is absolutely spot on. I find it hard to believe that we are listening to those arguments being made by Labour Members. The unintended consequences of the Labour Government’s choices are not just disappointing but callous. They are so harsh on some of the most vulnerable communities and vulnerable people in society.

My right hon. Friend is making some excellent points. Does she agree that it also shows a deep lack of understanding by the Labour party of the way our communities are constructed and the organisations we rely on so much to keep them going?

That is exactly the point. What we see instead is Labour Members continuing to blame their economic inheritance. That is simply not correct. The chair of the Office for Budget Responsibility said:

“Nothing in our review was a legitimisation of that £22 billion”.

I wonder what the former Governor of the Bank of England, Mark Carney, makes of all this. In the run-up to the 2024 general election, he endorsed Labour.

What many people now see is a Government who do not really understand the role that so many charities play in supporting the NHS, communities, older people, young people, families, and patients—people who are sick and sometimes terminally ill. For example, why would they protect the public sector and the rest of the NHS from the national insurance tax, but not general practice? Analysis from the Institute of General Practice Management estimates that it will cost each practice an average of £20,000 a year. How many staff hours is that equivalent to? How many hours of a GP’s time or a practice nurse’s time is that?

I have spoken to a number of local charities, and we have heard from others today. Every pound that the Labour Government squeeze out of them through the jobs tax is an extra pound that cannot be spent on frontline services—an extra pound that they have to find just to stand still. I find it so hard to believe that this Labour Government are also taxing those who provide vital hospice care. How can they talk of helping palliative care with one hand, while clobbering hospices and care providers with extra taxes with the other?

I can be cynical at times but I see a complete lack of business expertise, knowledge or experience among those on the Labour Benches. Just visiting businesses is not enough to understand how a business operates. I speak to them in my constituency on a weekly basis. The chair of the CBI has stated that

“business has been milked as the cash cow”.

We simply cannot expect small businesses, or indeed any business, to just be squeezed and squeezed, thinking, “Well, they’ll just increase their costs and pass them on to the end user.” The end user cannot afford them, as we have heard this afternoon. Ultimately, something will have to give: hours, training, development and jobs.

Just yesterday, we were in this Chamber debating the Government’s welfare reform. At the heart of the issue, I really believe people want to get back into work. They need support to do that, but they also need employers and businesses to have vacancies so that they can support them back into work. What I, like others, see in this legislation is the Government taxing businesses out of creating the vital jobs that this country so needs to get the growth that we do not have at the moment.

As I mentioned, attendance on the Government Benches is somewhat threadbare, giving the appearance that the Government do not care. We have heard from Labour Members who do care, just like we on the Opposition Benches care. I draw my remarks to a conclusion by urging Members on the Government Benches and those listening outside to reflect very carefully. We all have the opportunity today to do the right thing—to protect and help charities and hospices and, by virtue of that, to protect and help some of the most vulnerable in our country and society. We have the opportunity to protect jobs and help businesses to create opportunities and, by virtue of that, to help working people who aspire to a better life. I end quite simply by urging those on the Government Benches to think again and to do the right thing.

I wish to express my deep concerns about the Government’s national insurance changes and the devastating impact they are having on essential services in my constituency. The amendments put forward by the Liberal Democrats in the Lords are crucial to preventing this policy from inflicting serious harm on GP practices, care providers and the wider health system.

Take our GP surgeries, which are vital to healthcare in Lewes and beyond. I have been speaking to local healthcare providers in my community over the past week. Unlike private businesses, GP surgeries cannot pass their costs on to their patients. Every extra pound spent on national insurance is a pound less spent on patient care, staffing and appointments. The Government’s failure to exempt them will mean fewer face-to-face consultations and longer waiting times, contrary to the Government’s claimed objectives. The Liberal Democrats’ Lords amendments 1, 4, 5, 9 and 13 would protect GP surgeries, NHS-commissioned dentists and pharmacists by keeping their national insurance costs at a sustainable level.

Social care providers are facing the same predicament. A domiciliary care provider in my constituency is already struggling to recruit and retain staff due to rising costs.

I have a similar situation in my constituency with Strada Care, which is under immense strain, having already closed four care homes over the past seven years due to chronic underfunding. Thousands of care providers are on the brink of collapse, and many more may follow if these Lords amendments are disagreed to. With social care services already struggling, more vulnerable individuals will be forced into hospitals and be bed blocking. Does my hon. Friend agree that increasing costs for social care providers will have a devastating knock-on effect for the NHS?

I absolutely agree. The care provider in my constituency faces a 9.4% increase in employer’s costs, which it simply cannot absorb. These are the very people keeping elderly and disabled residents safe in their homes, preventing hospital admissions and easing NHS pressures, yet the Government have chosen to burden them rather than support them. The Lords amendments I mentioned would ensure that care providers can continue to deliver essential services without being driven into financial crisis.

The £615 cost per person reported to me by care providers in my constituency will mean that one constituent, who is paying £1,500 a week for care for her 94-year-old mother, will no longer have the money to pay for the care of her disabled brother as well, after the fees go up as a result of this jobs tax. Does my hon. Friend agree that that is a shockingly unacceptable result of these changes, and that the Lords amendments introduced by the Liberal Democrats should be accepted?

I thank my hon. Friend for providing such a concrete example of the real suffering these changes will cause. This is not an abstract thing; it is about real people’s lives, and there are people who will suffer as a result, as in the example given by my hon. Friend.

I will move on to nurseries and early years providers, an issue very close to my heart. In my constituency, they are facing the same impossible squeeze. The rise in national insurance contributions, combined with the increased statutory wage costs, is pushing many to the very brink. The National Day Nurseries Association has warned that the average nursery will see an additional £47,000 in costs, which the Government’s funding increase does not come even close to covering. If nurseries are forced to close, it will leave working parents, who are already struggling with the cost of living, without the childcare they need. If schools are exempt from this tax hike, as they should be, the nurseries that provide the very foundation of a child’s education should be, too.

What makes this even worse is that the Government are not just undermining essential services, but forcing more people towards them by stripping away other forms of support. At the same time as these tax hikes, Ministers are cutting vital benefits such as personal independence payment, leaving thousands of vulnerable people struggling to afford the basics, meaning that more people will have no choice but to turn to the very care providers and community health services that are now being hit financially by these national insurance changes. The Government cannot claim to support essential services while actively driving them towards collapse. They are giving with one hand, while taking much more with the other.

I find that a gauge of the level of enthusiasm and pride that a Government have in a policy they have put forward is often the number of their representatives who turn up to support it and be associated with it. Notwithstanding the heroic contribution of the hon. Member for Loughborough (Dr Sandher), the emptiness of the Government Benches speaks volumes.

The Liberal Democrat Lords amendments before us today would help to prevent irreparable damage to GP practices, care providers and the wider healthcare system. I urge the Minister to back them, because failing to do so will cost not just money, but lives.

I draw attention to my entry in the Register of Members’ Financial Interests.

The Bill is yet another example of legislation from this Government that breaks their manifesto promises, harms local business, negatively impacts our constituents and limits the prospects of growth in my local economy of Chester South and Eddisbury and, indeed, the country.

Fundamentally, these changes will hit working people the hardest—the very people the Chancellor said would be shielded from the impacts of the Bill will be the most affected. It will mean lower wages, higher unemployment and increased costs for businesses, resulting in higher prices in the shops. Do not just take my word for it: the Office for Budget Responsibility has stated that

“additional payroll costs for employers are passed through into lower wages.”

When I speak with business owners in my constituency, they say they feel like they are swimming against the tide, from the NIC increases to the reduction in business rates relief. The recurring message from every company I speak to is that confidence in the economy is down. I must ask the Minister: how is that conducive to growth?

I will speak to two of the amendments. Exempting hospices from this damaging increase in employer national insurance contributions is the right thing to do. I have had the pleasure of visiting both the hospice of the Good Shepherd in Backford and St Luke’s hospice in Winsford, which provide a vital service to the most vulnerable of my constituents at the most difficult time in their lives. They provide the very best care and support, and I encourage the Minister to visit and see for himself the warm, compassionate and welcoming environment that they offer, which reflects the attitude of the doctors, nurses and, indeed, all the staff who go above and beyond in their work.

The financial implications of an increase in national insurance contributions and the resulting consequences for services and staff will be hugely damaging. Those hospices have shared with me their challenges with recruitment and their deep concern that these tax rises will make paying their staff in line with what their colleagues receive in the NHS even harder than it already is.

My hon. Friend talks passionately about hospices. Does she agree that taxing hospices but providing tax relief to hospitals through the relief to the NHS actually disincentivises moving people out of hospitals, which the Secretary of State for Health says is his intention?

I completely agree with that excellent intervention. The frustration that hospices have is that in order to recruit staff, they need to pay wages comparable to what NHS staff receive, and this change is making that virtually impossible to do. Hospices requires a highly specialised workforce to provide the levels of care and dignity that they offer to patients. Without the proposed exemptions, I am unsure as to the sustainability of the hospices that serve my constituents.

The second issue I would like to mention briefly is the impact on transport for children with special educational needs. As we know, the complex needs and challenges of SEN children varies from case to case; some will need specialist transport to and from school, for appointments, or just for everyday tasks. Many of these young people are vulnerable children, to whom process and routine matter. They might have a driver with whom they have built a bond and who understands their needs; they might be a highly anxious child, or perhaps a non-verbal child who has a driver who can use British Sign Language.

For my constituents in Chester South and Eddisbury, specialist transport is of the utmost importance. Our communities are isolated and rural, and parents and children rely on this vital service. There are no transport alternatives in many areas. People cannot get a bus—not even one without a specialist driver—leaving many of my villages cut off with no public transport options at all.

In my constituency of St Albans, which is not particularly rural, many children with special educational needs have to travel a great distance, because we do not have enough special school places. Does the hon. Member agree that this is an issue that affects children right up and down the country?

The hon. Member makes an important point. It does not matter whether we are talking about a rural or an urban community, these young people often have to travel large distances, and we really need to think about their welfare. In my constituency, they literally have no other option. If we make this service effectively unaffordable, we are just taking away that option from SEN children.

In conclusion, I simply say to the Minister and to Government Members that they should consider the real people behind these decisions, the support that will be taken away from vulnerable people and the vital services that will no longer be affordable because of this inexcusable tax increase.

Order. We have three more speakers. If anyone intervenes, I will not be able to get all of them in.

I rise to speak to Lords amendments 1, 2, 3 and 4. The Liberal Democrats are extremely concerned that this tax rise risks dire consequences for social care, primary care, the NHS, hospices and charities, many of which are delivering vital healthcare in the community. Thousands of care providers are already on the brink of bankruptcy, and this national insurance increase risks tipping them over the edge.

The OBR estimates that this hike will bring in £10 billion a year rather than the £25 billion estimated by the Government, once employers change their behaviour in response to the tax and once public sector employers are compensated. Yes, we know that finances are stretched, and that the Government inherited an incredibly difficult situation, but the Government could have raised that amount of money through much fairer tax changes, and we Liberal Democrats have come up with many suggestions. For example, they could have reversed Conservative cuts handed to the big banks; increased the digital services tax; doubled the rate of remote gaming duty; and introduced a fair reform of capital gains tax, so that the 0.1% of ultra-wealthy individuals pay their fair share. This may be something particular to Totnes, but many wealthy constituents have told me that they wish they were being asked to pay more tax.

The Liberal Democrats have called on the Government to exempt social care providers and GPs from the employer national insurance tax rise. On average, the tax rise will cost each GP practice an estimated £20,000 a year. The Government have announced an additional £889 million in the 2025-26 GP contract, but have failed to spell out how much of that they believe practices will need to use to pay the additional tax burden, and how much will be left to meet unmet patient needs. What is clear is that the national insurance rise will mean that the uplift to the GP contract is in fact far smaller than it appears, because a proportion will need to be returned directly to the Treasury—robbing Peter to pay Paul, as many Members have said.

What assessment have the Government made of how much of the recent uplift in the GP contract will practices need to use to offset the rise in national insurance? Rowcroft hospice, which is in the constituency next door, but which serves us, says the NIC rise is expected to add £225,000 to annual costs. One of my GP surgeries says that its costs will go up by £187,000, and the Devon Mental Health Alliance estimates the cost increase at £375,000, potentially resulting in a loss of 25,167 staffing hours.

One GP said to us:

“I have been a GP for 10 years and a doctor for 15. It is exhausting and, frankly, I just feel like giving up. This is not an attractive or stable job for training doctors.”

The Devon Mental Health Alliance, which is a strategic partnership, uniting five leading charitable organisations in Devon, said:

“As a sector, we play a critical role in easing the burden on the NHS by preventing thousands of people from needing GP appointments, hospital care, or sitting on waiting lists for treatment. By addressing health issues at their root and offering early intervention and prevention, this sector acts as a frontline defence, reducing demand on overstretched NHS services.”

It cannot fill the black hole by increasing revenue efficiencies or risk management. The organisation estimates costs of £375,000 next year and, as I have said, that could mean losing 25,000 staffing hours. That would mean that more people in Devon with complex needs will not be able to access its services.

Minister, at a time when we have a mental health crisis across all ages and communities, this extra financial impact on voluntary sector services is short-sighted and will only heap more pressure on the NHS. If we do not value the work done in primary care, particularly by GPs, we are putting the health of our constituents across the country at risk, putting more pressure on GPs who are already working at full capacity and threatening reforms to the NHS, which has already been brought to its knees by chronic underfunding over the past decade. I strongly urge the Government to reconsider the NICs rise for GPs, social care providers and all of those working to support health and wellbeing in the communities that we represent.

Just to finish, I would like to echo what others have said about the total absence of Government Back Benchers who have felt able to come in and speak in support of their hospices, their social care providers and their voluntary sector organisations, because they could not come in here and defend a Government policy that they know is indefensible.

I rise to speak in support of these Lords amendments, and I will speak today on those that would protect small businesses with up to 25 employees.

In Wales, more than 99% of all businesses are small or medium-sized enterprises. Of those, nearly 95% are micro-sized, meaning that they employ between one and nine people. For all the protections that the Government say they have put in place for small businesses, the increase to employer national insurance contributions will still hit these enterprises hard.

There is a lack of home-grown Welsh businesses developing beyond the micro-enterprise level and becoming larger businesses themselves. We need a Government who will step up and support local businesses to grow. Unfortunately, this Government are doing the exact opposite, as it is estimated that an employer of 40 people on an average salary is about £29,000 worse off a year under the national insurance changes. Why would Welsh businesses now be incentivised to grow and take on more staff given this extra cost? It is worth noting, too, that the OBR forecasts that 76% of the cost of the national insurance contributions increase will be passed on to workers through higher prices and lower pay rises.

The Government have said that small businesses will be shielded from the national insurance increases through the changes to employment allowances. However, when asked specifically how many businesses in Wales will benefit, the Government responded by saying that they did not know. This Government like to talk about growth as their central mission, but can they explain how this policy is good for growth for our small businesses in Wales? All I can see is that it is bad for Welsh business, bad for Welsh workers, and bad for the Welsh economy.

I urge the Government to support these Lords amendments to at least protect more businesses from the damage that the national insurance hike will cause. I have raised concerns previously in this Chamber that this Labour Government are not considering the needs of small and local businesses in their decisions, and these damaging national insurance hikes are only further proof that that is the case.

I rise to speak to Lords amendments 1, 4, 5, 9 and 13. These amendments tabled by the Liberal Democrats in the other place would ensure that care providers, NHS GP practices, NHS-commissioned dentists, NHS-commissioned pharmacies, charitable providers of health and social care, and hospice care continue to pay secondary class 1 contributions at the rate of 13.8%.

With healthcare in such a dire state in Glastonbury and Somerton, it is essential that providers are not put into further financial difficulties due to increases in employer national insurance contributions. Like so many Members, my inbox has been brimming with correspondence on this matter from organisations across my constituency. The measure will disproportionately impact businesses run by women. For example, early years provider Acorn Day Nursery in Somerton has told me that it believes that the employer national insurance contribution increases, in combination with other recent funding announcements, could be the final nail in the coffin for its business, leaving families without crucial early years care provision. I have heard from hospice care providers such as Dorothy House, which provides crucial end of life care for my constituents. It will be hard hit by the rise in employer national insurance contributions, which will impact care provision for people who live in rural areas.

Vine GP surgery in Street shared with me its concerns about the impact of the changes to employer national insurance contributions, stating that it will undermine access to patient care following years of neglect from the previous Conservative Government. A constituent from Langport recently wrote to me to raise their concerns about the negative impact of the rise in national insurance on care homes. Already stretched care homes could see an increase of around £650 per employee for anyone working more than eight hours a week. That will have a knock-on impact on the cost of care provision.

Community pharmacies play an essential role in providing care in the community, in line with the Government’s strategic agenda. However, if the rise in national insurance contributions goes ahead, pharmacies such as Bruton, Castle Cary, Stoke-sub-Hamdon and Martock could all be put at risk. If they go, vital frontline services for rural communities will be lost. The National Pharmacy Association has predicted that around 1,000 will close by 2027. The combined effect of changes to the national insurance contributions and the national living wage could add an extra £25,000 to each pharmacy in rural Somerset, affecting their viability. Given the rate of pharmacy closures in Glastonbury and Somerton is nearly double the national average, my constituents will be hard hit by this tax hike.

In rural areas we simply cannot afford to lose any more pharmacies or our critical frontline services. I fear that these measures will only increase the pressure on GPs and other services that will be badly impacted by this decision. I urge colleagues to back the Liberal Democrats’ amendments so that we can protect frontline health providers, who, shockingly, are not included in the Government’s exemption. Without it, health and early years provision across the country will be drastically reduced.

As the House was informed earlier, Mr Speaker is satisfied that Lords amendment 20 would impose a charge on the public revenue that is not authorised by the money resolution passed by this House on 3 December 2024. In accordance with Standing Order No. 78(3), Lords amendment 20 is therefore deemed to be disagreed to.

After Clause 3

Review of effect on certain sectors

Motion made, and Question put, That this House disagrees with Lords amendment 21.—(James Murray.)