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.