Employer National Insurance Contributions

17:13:00

I beg to move, That this House regrets that increasing the rate of employers’ National Insurance contributions (NICs) to 15%, and reducing the per-employee threshold at which employers become liable to pay NICs on employees’ earnings to £5,000, will lead to increased costs for businesses and lower wages for employees, including in particular young people; will force companies to cut employment, leading to some 130,000 job losses according to Bloomberg Economics; will increase costs for retailers by £2.3 billion according to the British Retail Consortium, leading to higher prices for consumers; will create an annual additional bill of £1.4 billion for charitable service providers according to the National Council for Voluntary Organisations, so they will struggle to maintain support for vulnerable people; and will increase childcare costs for families; further regrets that the Government has not published its complete assessment of the effect this policy will have on the public and private sector, or indeed any impact assessment; and regrets also that, as a result of the Government’s economic policies, GDP forecasts are down, inflation is up and business confidence is down. “Growth” was the leitmotiv of the Labour party. Its members chuntered on about it during the run-up to the last general election, and in their manifesto, under the heading “Kickstart economic growth”, they said that they would secure the highest sustained growth in the G7. They also said—and I know that you like a good joke, Madam Deputy Speaker, but I would ask you to contain yourself—that they would forge a “new partnership with business to boost growth everywhere”. Given what has happened, those are fantastical statements. Reading Labour’s manifesto was somewhat like stepping through the looking glass. It had something of Lewis Carroll about it. This lot were less the Prime Minister and the Chancellor than the Walrus and the Carpenter, cruelly leading businesses to their demise. For all the fantasy in the manifesto, they might just as well have spoken “Of shoes—and ships—and sealing-wax— Of cabbages—and kings— And why the sea is boiling hot— And whether pigs have wings.” Because what happened to growth? The Office for Budget Responsibility tells us that the Budget will lead to less growth across the forecast period than was the case back in the spring under the last Government. The Office for National Statistics tells us in the third-quarter GDP data that the economy grew by 0.1%—one seventh of the growth in the United States. In the third month of that quarter, which was September, growth was actually negative. That is the record of this Government.

The right hon. Gentleman talks about the OBR figures, but he fails to mention that his party misled the OBR to the extent that it had to put the failure in writing. Given that he is talking about Lewis Carroll, is it not true to say that the figures that the OBR was working with were more likely to have been received from the Mad Hatter?

That is an amusing intervention, but it is thoroughly inaccurate, I am afraid. The OBR did indeed look into the suggestion that there was a black hole of £22 billion, and what did it conclude? It concluded that the fiscal pressure in that year was less than half that amount. The OBR readily accepted that had it had discussions with Treasury officials about that at the time, it may well have reduced the amount still further. Members from across the House know that it is not unusual for the Treasury to manage down in-year fiscal pressures as a matter of course, so the argument has been debunked. It is the dead parrot. It is pushing up the daisies. It is no more. The hon. Gentleman’s point is indicative of what this Government have done: they have talked down the UK economy. In turn, business confidence has slumped in a way seldom seen in our history, with purchasing managers index surveys falling through the floor. We have seen the Institute of Directors’ optimism tracker scoring minus 60 in November—one would have to go back to April 2020 to find a lower score than that. We also know that at the centre of the Budget is the biggest broken promise of all: the increase in employer’s national insurance contributions. That is weighing on growth. And what of jobs? Labour’s fantastical manifesto talks about job creation, which is mentioned several times, but the Government are destroying jobs by breaking a manifesto commitment. It was there in black and white in their manifesto that they would not raise national insurance. Do not take my word that they breached their manifesto; take that of Paul Johnson of the Institute for Fiscal Studies, who says precisely the same.

The right hon. Member refers to broken manifesto pledges. The Conservatives’ 2019 manifesto said they would not raise national insurance, yet three years later he and all his colleagues voted to raise national insurance—not just on employees, but on employers. Can he help us with that process of logic?

I think the hon. Gentleman might just be overlooking a little something called covid, which shrank the UK economy by over 10% overnight. What this Government have done is take us right back to the 1970s when it comes to the jaw-dropping level of tax increases and spending splurges. The impact on jobs is stark, and it is clear. The OBR says there will be 50,000 fewer full-time equivalent jobs as a result of the measures in the Budget. Bloomberg says that 130,000 jobs will be destroyed. The Confederation of British Industry, in a survey of its membership, says that 50% of businesses report that they will cut employment as a consequence of the Budget, and two thirds say that they will row back on the recruitment plans that they previously had. It is not just about the headline rate; the threshold is so pertinent and important here. It is bearing down on sectors where wages are lower, and on cohorts in the labour market who earn the least, because of the disproportionate impact of lowering the threshold. They include hospitality, leisure, retail and women. Some of the youngest people in our country will now see their jobs taken away from them as a consequence of what this Government are doing. We know that the Labour party has form when it comes to youth unemployment. Under the last Labour Government, youth unemployment increased by over 40%. Under the last Conservative Government, it reduced by over 40%. Labour said in this fantastical document that it would keep inflation as low as possible. It said the same of mortgages, and yet what has happened? This fiscal splurge, this £70 billion each year that the Government are now going to be spending, will mean higher inflation in every single year of the forecast, compared with the forecast back in the spring. What is that doing to people’s living standards? It is destroying them, and I will come to that momentarily. Part of the inflationary pressure is the national insurance increase itself, because while we know that, according to the Office for Budget Responsibility, about 80% of it will be transferred into lower employment rates and depressed wages, about 20% of it will go into higher prices. And what of living standards? This fantastical Lewis Carroll document said that Labour would be making everybody, not just the few, better off. However, the Joseph Rowntree Foundation—hardly a right-wing thinktank—says that by October 2029, the average family will be £770 worse off in real terms than they are today.

We on this side of the House will not take lectures on living standards from the party that left us with the worst squeeze on wages since Napoleon, the highest energy prices in the G7 and the highest inflation. The Conservatives left us with the worst-insulated homes and dependent on natural gas. That is why this party will invest in insulation to make us all better off in the long run.

I am surprised that the hon. Gentleman raises the inheritance that his party has received from the Conservatives. We had the highest rate of growth in the G7. We had brought inflation right down from 11.1% in October 2022 to 2%—bang on target—at the time of the general election. We had a near-record level of employment. We had a near-record low level of unemployment. We had real wages that had been increasing month after month for 13 or 14 months prior to the general election. That was not a bad inheritance.

I am grateful to the shadow Chancellor for giving way, even if I cannot quite believe what I am hearing. Anyone boasting about the economic record of the previous Government, particularly in the immediate run-up to the last election, should read this week’s release from the Office for National Statistics on the reweighted labour force survey. It shows that productivity in the year running up to the election fell by 0.9%. That was in just one year. That is what economic failure looks like.

No matter what points the hon. Gentleman may make, I am afraid he cannot get away from the fact that this Government are bearing down on growth, pressing up on unemployment, bearing down on employment and bearing down on living standards. The OBR also says that real household disposable income by 2029 will be 1.25% lower than it was back in the spring, at the time of that forecast. We know the impact that national insurance is going to have on wages. It will press them down and it will further diminish living standards.

Does my right hon. Friend the shadow Chancellor remember any Labour MP in the last general election standing on a fully costed manifesto that would mean economic growth was forecast to be lower than under the previous Government? Perhaps the hon. Member for Swansea West (Torsten Bell) should remember that Labour MPs stood on a manifesto that was apparently fully costed but then had different commitments. We had a faster rate of growth under the last Government than is projected under this Government.

The simple fact is that, at the time of the general election, we had the fastest-growing economy in the G7. The simple fact is that the Labour manifesto said it would deliver precisely that, yet we have heard very little about that commitment in recent days and weeks—I wonder why.

Does my right hon. Friend agree that it is important to set the facts right? It is important to reflect on the fact that, during our 14 years in government—despite the 2008–09 financial crisis, despite the pandemic and despite the energy crisis—more than 1 million jobs were created, and 4 million people were in employment who were not in employment when we took office.

My right hon. Friend is absolutely right. Our record on employment shows that we were a job-creating machine after 2010, and the statistics he cites are quite right. When it came to business—this is a killer worthy of a stand-up comedy routine—the manifesto said: “Labour will…support business through a stable policy environment”. Of course, we know that all sorts of businesses have been hit by this tax increase, including many that directly support our public services: our hospices, our GPs and our pharmacists. Marie Curie has said that it is about to get a tax bill for an additional £3 million. Just think of the impact that will have. The question that many are now feverishly and worriedly asking is whether there is more to come. Are the Government going to run out of road with their approach to our economy, and will they come back for more? Well, the Chancellor recently told the CBI that the Government will not be “coming back with more borrowing or more taxes.” Yet when the Leader of the Opposition put this assertion to the Prime Minister at Prime Minister’s questions today, we heard no answer. When I twice asked exactly that question of the Chancellor yesterday, we heard no response. Currently, these businesses do not know whether the Chancellor’s assertion that there will be no more borrowing and no more taxes is true or false.

It sounds like the shadow Chancellor is unconvinced by the shrill chants of Labour Members that the Government will fix the foundations of the economy, and he has good reason for being suspicious. In October, when the Government had scarcely been in office for three months, they had more in-month borrowing than any UK Government since 1993, with the exception of one month during covid. Does that look like fixing the foundations to the shadow Chancellor?

I have heard the hon. Gentleman intervene in various debates, and I am coming to the conclusion that he is probably a rather sensible SNP Member, because he is absolutely right. [Interruption.] I did not opine on how sensible his party is. I just said that he is one of its most sensible Members. It is very clear that this Government will not create firm foundations for the economy. They will actually create a vulnerable economy, because there are risks around the central forecast and downside risks around growth, inflation, net migration, economic inactivity, energy prices, interest rates and so on. There will also be risks around the spending envelope after the first couple of years, particularly for a profligate Labour Government who may find that constraint unbearable. There are also external risks. We know that there will be a new Government in the United States, and there is talk of tariffs. It may be that the deficit financing of tax cuts leads to interest rates rising around the world as bond yields increase, and that could be imported to our shores. All these things mean that we need a good level of headroom against our fiscal targets, yet, on the stability target, it is quite possible that the headroom has already evaporated. Why? Because, to my earlier point, the Government talked down the UK economy and, partly as a result, are paying more to service the debt that this country carries.

I thank the shadow Chancellor for giving way; my interest was piqued by his talk of deficit financed tax cuts. Does he agree with his boss, the Leader of the Opposition, that the Liz Truss mini-Budget, which is the prime example of the thing he criticises, was the right package, but just with the wrong communication?

If the hon. Gentleman has a look at the history of that time, he will see that I was the Chair of the Treasury Committee, and I had a great deal to say about the economic policies that were pursued in the so-called mini-Budget, so I will leave it at that.

On that point, will my right hon. Friend give way?

How could I not?

My right hon. Friend is giving a powerful speech. Does he share my feeling of pity for the—in some cases, distinguished—new Members of Parliament on the Government Benches? They want to talk again and again about the past, and about what happened as we recovered from the pandemic and got through the energy crisis, but not a single one wants to defend the appalling employer NICs increase, which will take £26 billion out of the economy but ultimately provide only about £10 billion or £11 billion in revenue for public services. It is an extraordinary misstep, is it not?

My right hon. Friend is right. They avoid the present and run away from the future, and there is no surprise about why that is the case.

I will not give way now. For this Government, supporting business is like living in a world of fantasy. In “The Walrus and the Carpenter”, it was trusting oysters who were led to their early demise; with the Prime Minister and the Chancellor, it is businesses that were trusting. As Lewis Carroll might have written the final verse: “‘O businesses’, said the Chancellor, ‘You’ve had a pleasant run! Shall we be trotting home again?’ But answer came there none— And this was scarcely odd, because She’d finished off every one.” That leaves just the Conservative party standing up for businesses in this country. For the working men and women in this country, we are the party that understands the difference between fantasy and reality. We are the party that knows that businesses need lower taxes, not higher taxes; less regulation, not more regulation; and a Government who are on their side. That is not the Labour party.

17:32:00

The shadow Chancellor made a number of interesting points, and I will give him the courtesy of going through a number of them. He talked about how this Government are risking inflation, when his Government sent it spiralling to the highest level in a generation. He said that Labour Members are talking down the economy, when his Government crashed it. He said that Conservative Members disagreed with the measures in the Budget, specifically in relation to national insurance contributions, but not one alternative option was laid out in his speech. The public have a right to know what his choices would be: would the Conservatives want to increase income tax on workers or VAT in the shops, or would they like to increase corporation tax again on business? Would they like to cut tens of billions of pounds from public services or borrow more money every single day to pay the bills, or continue to make a black hole in the public finances? He suggested that the Labour party’s transparency with the country about the £22 billion black hole that the Conservatives left was not real, but they know that they created it. The sooner they say sorry to the country, the sooner the public might start listening to them once again. I will finish with a positive comment. The shadow Chancellor said that his party was a “job-creating machine”. I am very grateful for the number of former Conservative MPs they have released into the labour market, given how many vacancies we have filled. In her Budget statement on 30 October, the Chancellor set out the difficult decisions that the Government needed to take on welfare, spending and tax. Those decisions were not just difficult but necessary, given the fiscal irresponsibility and economic mismanagement of the Conservative party over the past 14 years. I welcome a debate on the choices, as I hear Members say from a sedentary position, “Choices, choices, choices.” What are yours? You should set that out to this House and you—[Interruption.] The party opposite should set them out to the public.

Order. The Chief Secretary might like to reflect that when he says, “What are yours?”, it means, “What are mine?” They are not my choices. Can he please be careful not to use “you” and “yours”?

Thank you, Madam Deputy Speaker. To be very clear and to correct the record, the Conservative party should tell the country what its choices are. I am all ears. The Labour party inherited a mess and we, as a responsible party of government, have needed to take measures to fix the public finances, fund the national health service and other public services, and deliver economic stability. We have been determined to take those decisions while protecting working people, which was our manifesto commitment. That is why the Budget made no changes to income tax, the rate of VAT or the amount of national insurance working people will pay. As a result of our Budget, people will not see a penny more in tax on their payslips. Yet keeping those promises while getting the country back on track meant tough decisions elsewhere in the tax system—choices and decisions that we are willing to take.

Perhaps with the assistance of the Exchequer Secretary to the Treasury behind him, the right hon. Gentleman might be able to answer a question that other Treasury Ministers have not been able to: why did the OBR make a correction in table 3.2 in chapter 3? It was originally suggested that £5.5 billion would be provided for compensation “to public sector employers and adult social care”. That was then corrected to remove any reference to social care and the number was cut by £800 million. Can the right hon. Gentleman explain what caused the OBR to make that correction and when it was decided that social care was not worth support?

The right hon. Gentleman might in future give me advance notice of specific references to documents so that I can refer to them. I cannot tell him about table 3.2 in the OBR document because it is not here, but we will of course get an answer to him. He may wish to consider why the OBR said that had the Conservative party been more transparent about its time in government, its forecast would have been materially different. The shadow Chancellor was unable to provide an answer to that in response to interventions from colleagues from around the House. That inheritance is why, at the Budget, we took the decision to increase national insurance contributions for employers while increasing protections for small businesses and charities. The Government increased the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%.

I will give way in a second. We have decreased the secondary threshold for employers, which is the threshold above which employers begin to pay employer national insurance contributions on their employees’ salaries, from £9,100 to £5,000. At the same time, we have increased protection for small businesses by more than doubling the employment allowance from £5,000 to £10,500.

The national insurance hike will impact on small businesses, which form the backbone of our local economies as fixtures on our high streets across London and across my Sutton and Cheam constituency, including in Worcester Park and North Cheam. Will the right hon. Gentleman join me in recognising that Small Business Saturday is this weekend? Does he agree that the Government might take this opportunity to rethink the national insurance hike and the impact on small businesses, which will be suffering this week and beyond?

We have factored small businesses into the design of our policy, in terms of both employer national insurance contributions and our commitment to permanent lower rates for business rates than were given under the previous Government, as well as other support for the high street. We are also expanding eligibility to the employment allowance by removing the £100,000 eligibility threshold to simplify and reform employer NICs so that all eligible employers can now benefit. Changes to the employment allowance mean that around 250,000 employers will see their national insurance contributions liability decrease, and more than 1 million will pay the same or less than they did previously. Overall, that means that more than half of businesses with NICs liabilities will either see no change or will gain overall from the package. That design was put in place specifically to protect the small businesses that the hon. Gentleman raises. That means that 865,000 employers will not pay national insurance at all, enabling them, for example, to employ up to four full-time workers on the national living wage and pay no employer NICs. Employers will also continue to benefit from employer NICs relief, including for hiring workers aged under 21 and apprentices aged under 25. To support veterans, the Government are extending the national insurance contributions relief for employers of qualifying veterans for one year to April 2026, and we have set aside funding to protect the spending power of the public sector, including the national health service, from the direct impacts of the changes. Even after accounting for the impact of this change, the OBR expects real wages to rise by 3% between now and the end of the forecast period, but we recognise that there will be impacts on employers. While many small businesses and charities will be protected through employment allowance, others will have to contribute more. There will also be impacts beyond business, as the Office for Budget Responsibility has acknowledged.

My right hon. Friend and I spent many years in opposition, and have spoken in many Opposition day debates. Does he agree that when the Opposition move a motion like today’s, which says that the Government should not do something without making any alternative suggestion about what they should do, it is a sign that the Opposition have not worked out their answer to the question? At some point, I hope that the Opposition will be able to help the country and the Government by having some policies, but does he agree that, until they do, the Government will just have to crack on as best they can on their own?

I agree with my hon. Friend, and I encourage Opposition Members to put forward proposals. I am all ears. I am willing to listen to them, but so far all we have is opposition and no policies. Maybe that will change in the future. The motion claims that the Government have not set out any impact assessment of the policy change, but the Government published a tax information and impact note on 13 November that explained the Government’s assessment of the policy, including its impact on businesses and the economy more widely. This was a difficult choice, and it is not one that we have taken lightly, but it is the right choice given the dire economic inheritance that the Government faced upon taking office, and the need to fix our broken public services. As the Chancellor set out in the Budget, healthy businesses depend on a healthy NHS, and a strong economy depends on strong public finances.

On the NHS and choices, does the right hon. Gentleman not accept that the Government have chosen to clobber organisations and charities such as air ambulances and the hospice movement—the very organisations whose help the Government will need to improve services for the general public? As we asked yesterday, will he consider an exemption?

As my right hon. Friend the Health Secretary has made very clear, when the Labour party came into government the NHS was broken. Why? Because of actions taken by the Conservative party over the last 14 years. That is why the Government have to take decisions to get a grip of the public finances and our public services. The changes are necessary in order to draw a line under instability, so that businesses can plan for the future, and to ensure that the NHS will receive an extra £22.6 billion to deliver 40,000 extra elective appointments a week. That vital new funding will create an NHS that is there when we need it, and the Government will achieve that within our tough fiscal rules—rules that will bring an end to borrowing for day-to-day spending, which was completely out of control when the Conservative party was in government. Madam Deputy Speaker, you might think that, having called for higher NHS spending over the weekend, the Opposition would recognise the need to take tough but necessary decisions on the public finances in order to pay for it, but it seemed from the speech of the shadow Chancellor that that is not the case. Perhaps the Opposition might take the opportunity today to explain how they will raise the £25 billion that the changes provide for, but which they will not support. How else do they intend to pay for the new appointments and better services that the funding offers? What tough decisions would they make to repair the public finances and put our economy on a sustainable footing? The Opposition’s double standards on this issue only go to show why they are not trusted on the economy: they have given up any pretence of fiscal responsibility. We recognise that the decision to increase employer national insurance will have impacts. Although the changes to employment allowance will help to protect small businesses and charities, other measures mean that larger businesses and organisations will have to make difficult decisions. However, as the Chancellor set out, this was a once-in-a-generation Budget. The difficult decisions we took meant that we were able to wipe the slate clean from the previous Government’s economic and fiscal mismanagement. Public services will now need to live within their means on the budgets we have set for them for the rest of this Parliament. The Budget delivered economic stability and fiscal responsibility so that we can take the steps necessary to boost investment, fix our public services and grow the economy. That fiscal responsibility is only possible when Governments are willing to take tough decisions. This Government will not shy away from those tough decisions and will do what is right to fix the foundations of our economy, despite the dire inheritance left by the Conservatives. The shadow Chancellor said we were hiding in the past and not facing the future. I say to him: we are running to the future, dealing with the challenges and delivering for the British people.

Order. There will be a five-minute time limit from the outset—obviously not including the Liberal Democrat spokesperson. I call Daisy Cooper.

17:45:00

On 23 October, at Deputy Prime Minister’s questions, I warned the Government that an increase in national insurance contributions would impact not only millions of small businesses but social care providers. That was a week before the Budget. Here we are, six weeks on from that exchange, and we are still talking about the impact of those changes. The reason is that the unintended consequences are huge. We all know the Government have received a terrible inheritance from the Conservatives. The Conservatives flatlined our economy, blew a hole in the public finances and left public services on their knees. In the wake of the Conservative Government, there is a litany of broken promises. They promised to recruit 6,000 GPs, and they did not. They promised to fix social care for good, and they did not. Every single year since 2015, they failed to meet their 62-day cancer treatment target. I have huge sympathy for the fact that the Labour Government need and want to invest in our NHS and care. However, I am concerned about the indiscriminate impact of the changes to national insurance contributions. [Hon. Members: “Ah!”] You’ve heard this before—come on. Not only will the changes undermine growth, they will undermine the efforts to get the NHS and care back on their feet. Over the past six weeks, all of us have heard concerns about the impact the changes will have on GPs, dentists, pharmacists and social care providers—all critical organisations to getting the NHS and care services back on their feet. We have heard about the impact on the early years sector. I am concerned the changes will drive up the cost of childcare when we should be driving it down to help parents get back to work. Over the past few weeks, I have raised examples from my constituency of the impact the changes will have, including on Citizens Advice, which gives advice to some of the most vulnerable people; Hightown Housing Association providing social homes; Quantum Care, a social care provider; Rennie Grove Peace Hospice Care; the Bedfordshire and Hertfordshire local medical committee representing GPs; DJs Play; and Ye Olde Fighting Cocks, the oldest pub in England. We know small businesses are the engine of our economy and backbone of our communities.

I am glad to hear that Liberal Democrats support the extra money for the health service, special needs education and social care. I apologise for my impatience, because I am sure the hon. Member is just about to get there, but can she tell us where the £25 billion should come from if not from this national insurance rise?

I welcome that intervention. In the debate on the National Insurance Contributions (Secondary Class 1 Contributions) Bill yesterday, I addressed that question head on. I will try to remember my notes, which are sitting with Hansard. The hon. Gentleman will be aware that the OBR has said the £26 billion is actually reduced to £10 billion when behavioural changes and rebates to the NHS and care are factored in. On raising that £10 billion, we have said we would reverse the tax cuts that the Conservatives gave to the big banks, raising £4 billion. We could raise a further £3 billion by increasing the remote gaming duty and the digital services bill. We set out proposals in our manifesto to reform capital gains tax in a different way from the Government. Our measures would have raised about £5 billion, so unlike the Conservatives—who did not set out the impact of the £10 billion to £20 billion of cuts that, based on their manifesto, would have been inevitable—we as a constructive Opposition have set out suggestions. I urge Labour Members to take up our ideas, if not in this Budget then certainly in the next. We are approaching Small Business Saturday, when I am sure we will all be in our constituencies talking to small business owners. We know that small businesses are the engine of our economy and the backbone of our communities, and in many cases, they make our high streets what they are. When it comes to health and care businesses, though, I am concerned that this measure takes with one hand and gives back with another, but with no guarantee that the money that comes back will cover the costs. As such, I urge the Government to rethink these changes to national insurance contributions, but if they do not, I urge them at the very least to exclude health and care providers from these measures.

17:50:00

The economic arguments in this debate will be well covered by other Members, so I would like to make a brief point about choices and political leadership—about having arguments, rather than ducking them. For a decade, as low growth placed an ever-greater burden on the public finances, Conservative Members fiddled and fudged, choosing stealth taxes such as fiscal drag that they hoped nobody would notice. Between 2010 and 2021, Conservative Governments introduced 1,651 tax changes. They changed vehicle excise duty 258 times and alcohol duty 125 times. The last Parliament saw the largest set of tax rises since the second world war, leaving the tax burden at a third of national income. When a Government are frightened of their own shadow, as well as their own divided Back Benches, it is easier to fudge and fiddle than to face up to hard choices. Conservative Members lacked the courage and unity to tackle the great problem this great nation faced, but not us—not this Government. When we see something fundamental that requires courage and leadership to address, we square up to it and confront it. That is why we immediately undid the fiddles and fudges, ending the freeze on income tax that has burdened working people in this country. It is why we ended the hidden theft of money from working people and fixed the injustice of the mineworkers’ pension scheme, and it is why we boosted HMRC compliance, because there is no point in creating a tax behemoth that cannot be enforced. It is also why we made a big, clear choice to close the gaping hole in the public finances left by Conservative Members. Britain’s economy has run a tight labour market alongside stagnant productivity growth for decades. In that context, national insurance rises are a sensible, balanced and transparent way to incentivise business investment that will boost productivity while filling the £22 billion black hole. That is what courage looks like: squaring up to the challenges our country faces, instead of running scared and leaving working people to pay the price. We have fronted up to set this great country back on a secure path. If the Opposition wish to show the nation that they are a responsible party ready to govern this great country, they must have the courage to tell us whether they would scrap this measure, and if not, which of the challenges we face they wish to ignore. Do they want to cut off the electrification of the Wigan-Bolton train line? Do they want to get rid of the experts working with the Wrightington, Wigan and Leigh NHS trust in my constituency to bring down waiting lists? Perhaps they want to cut back once again on the neighbourhood police officers who we are getting back on our streets, or perhaps they want to cut the £150 million investment in Border Security Command. I do not think so.

17:53:00

It is a pleasure to follow the hon. Member for Makerfield (Josh Simons). I rise to speak in favour of the motion on the Order Paper in the name of the Leader of the Opposition. I do not rise to speak in this House because I think the Labour party’s Budget is vindictive, but I do think that the national insurance rise we are debating today is a proposal that runs right through the Labour party’s DNA. Labour drives down growth, when growth should be the No. 1 priority for public services. It taxes the wealth creators and the small businesses, it borrows and makes the economic situation worse, and it is always the Conservative party that has to pick up the pieces after Labour has targeted the poorest people and smallest businesses in our society and made them suffer. Ultimately, the lack of growth that the Labour party and every Labour Member have signed up to means that public services will suffer, fewer jobs will be created and more businesses will close. I gently say to the Chief Secretary that he challenged us repeatedly to outline what we would do instead of this measure to make sure that we can fund public services, and I will tell him a few things that we would not do. [Interruption.] Well, I will tell him in a minute, and he can intervene and elaborate, and I will get an extra minute. As he asked me what we would do, I will tell him: we would increase growth, as was outlined by the OBR. We would have growth, and higher growth than this Government are proposing. However, what we would not be doing is borrowing as much as him and spending £9 billion on public sector pay rises for his trade union paymasters, funded from borrowing. Those are the things we would not do.

The hon. Member tells the House that he would go for growth. How did that go when his party tried it last time?

I simply say—and the Chief Secretary should know this because he supposedly wrote the Budget that we voted on a couple of weeks ago—that growth forecasts were higher under the last Government than those of the Government for whom he is now leading in the Treasury. I say to the Government that business confidence is at the lowest it has been for years.

The hon. Member has raised the issue of business confidence, which I have heard a few times from Opposition Members. That leaves me pondering why, if businesses were so confident under the previous Government, we had the lowest private sector business investment in the entire G7, and the only country in the OECD that saw lower levels of private investment was Greece.

I know the hon. Gentleman liked to pride himself on being the oracle of economics when he led a think-tank, but if he looks at the bare facts of business confidence out there, he will see that it has been lower under the five months of the Labour Government than it ever was under the 14 years of the Conservative Government. I want to mention some of the impacts that this measure will have on my constituency of Hamble Valley. There are 4,000 people employed in the hospitality sector in my constituency. Just last night, a business leader—a small business leader who owns three local venues—outlined to me that, because of the measures this Government have brought forward, he now has to find 5% extra of his total turnover to pay his taxes. That leads to a number of options: he can reduce staff count, meaning higher unemployment in my constituency and nationally; he can close venues, which again means lower employment and the death of our town centres—in every constituency, I remind Members—or he has to choose between not hiring local staff and stopping expansion, as every extra person he wants to take on will cost the business an extra £800 because of this national insurance contributions rise. That choice is facing businesses up and down the country, with lower growth, higher bureaucracy and higher taxes on the people who create jobs and wealth in every constituency in this country and drive the economy that we need to fund public services. What is most damaging about the Government’s proposal is the catastrophic impact it will have on charities across this country. I defy any Labour MP to stand up in this Chamber and say that they are willing to bring in and happy to vote for a measure that will mean frontline services delivered through our charitable sector are cut. There are other options the Government can take, and they have chosen not to.

I am not giving way. [Interruption.] Well, I do not have time. Let us look at the hospice sector. Many Labour Members probably hoped that the parachute leads had been cut, but I raised £10,000 by jumping out of an aeroplane for the Mountbatten hospice in my constituency. Some 70% of its income is from charitable donations, and 24% of its income is delivered by the national health service. At no time when this Minister or any other Minister has stood up in this House have they apologised to the hospice sector for the cuts in services that will have to be delivered because of this measure. Mountbatten will have to find an extra £1 million in income just because of this measure, and that means more hospital beds being used by people who are unable to access hospice services. Ultimately, the NHS will be in further crisis because of the short-term measure this Government are taking through.

Will the hon. Gentleman give way?

I like the hon. Gentleman, so I will give way.

I thank the hon. Gentleman. I was looking at some research the other day that shows that parachute jumps end up costing the NHS more money because of the risk of injury than they raise for the charities concerned. Does he agree that, rather than parachute jumps, what our NHS needs is the £22.6 billion investment that has been raised by the Budget?

The last Government gave the highest amount of investment into the national health service ever. I happened to jump out of a plane because I was very keen to do so, as I am a bit of a thrill seeker but also because I wanted to raise money for a good charity. If the hon. Gentleman votes for the Government measure or against the motion this evening, he will be ensuring that hospices across this country are unable to deliver the services they want to deliver and, as homelessness charities have said, that £50 million to £60 million will be taken out of frontline services. That will be the impact of this measure. Charities across this country are going to suffer under this Government’s proposal, as will hospitals and wealth creators, and I say to every Member who votes against this motion to protect frontline services that their constituents will be watching. We should not be surprised that, five months after taking office, the Labour party has reverted to type: tax the most vulnerable, tax small businesses and borrow on the public purse; with poorer public services out there and lower growth going forward. I cannot wait for its defeat at the next election and us fixing the problems.

18:01:00

After inheriting the ruins of 14 years of Conservative failure, this Government have had to make tough decisions to balance the books.

I love the originality.

And I will keep it coming until the right hon. Gentleman gets the message. After 14 years of working people footing the Bill, this Government are choosing to spread the load in as fair a way as possible. In the spirit of building an economy driven by collaboration between productive workers and thriving businesses, a balance has to be struck. While we are asking employers to contribute more, this does of course come with protections for small businesses. While employer national insurance contributions will increase by 1.2%, this Government are choosing to protect the smallest businesses by increasing the employment allowance to £10,500 and expanding this to all eligible employers. Let us therefore stop the politically expedient outrage and check the real-life impact. Changes to the employment allowance mean that the Office for Budget Responsibility expects that 250,000 employers will gain and an additional 820,000 will see no change. We have also committed to provide support for public sector employers for additional employer cost. This also means that, unlike the previous Government, who gave us the highest tax burden since the second world war, Labour are able not to ask for a penny more out of workers’ pay packets. While we must listen to the genuine concerns from businesses, which, like the rest of society, are feeling the brunt of 14 years of Tory austerity and decline, I am in no doubt that these decisions are the right and necessary ones that will fix the foundations of our economy and unlock the funding to rebuild our public services.

My hon. Friend is talking about fixing the foundations and that point was also made by the now absent hon. Member for Angus and Perthshire Glens (Dave Doogan) earlier in the debate. Today was Budget day in the Scottish Parliament, where of course the Scottish Government had a record amount of funding to spend. I just want to share with the House what was said about that Budget by the Fraser of Allander Institute. It said—

Order. We simply cannot have interventions of that length. Only nine Members are going to get to speak this evening and the hon. Lady is on the list, but those who choose to make long interventions might find themselves removed from it.

I totally agree with my hon. Friend that this Government are supporting people across the whole country, including Scotland today, and I really hope the Scottish Government use the money they have been given well. Returning to the Opposition motion, were they also opposed to our country being left a £22 billion black hole by the last Government? Where they also opposed to the disastrous Liz Truss mini-Budget, which included £45 billion of unfunded tax cuts, and which shocked the markets, crashed the pound and skyrocketed mortgage rates? Were they also opposed to the last Government’s spring Budget, which included myriad damaging unfunded promises in an attempt to flash the cash at the public ahead of an election? If they do now oppose all the above, they must agree with me that we have to restore economic stability by funding our pledges. That means finding money, and if it is not through this measure, would they tax working people or make another black hole? We have to face down the reality of these choices for what they are. It is overwhelmingly clear that the shadow Cabinet, who were exiled into opposition this summer, have not learned a single thing. They have made £6.7 billion in unfunded spending commitments in just four weeks. At least we can be grateful that they are not in the position to do more damage at the moment. Turning to what the funds raised from this measure will do, are the Opposition opposed to investing an extra £25.6 billion to fix the foundations of our NHS or cutting waiting times with 40,000 extra elective appointments a week?

The hon. Gentleman talks about the NHS. What does he have to say to pharmacies, which report that his Government’s measures will cost pharmacists £50 million, even after taking into account the employment allowance?

I say to all Members of this House that people have to see these measures in the round. This Budget will support all our businesses in the long run. Are the Opposition now opposed to protecting the triple lock, increasing carer’s allowance, freezing fuel duty, paying workers properly and supporting local councils? Are they opposed to boosting education funding by £6.7 billion and hiring 6,500 extra teachers, who our children desperately need to secure their future? If they are opposed to those things, they are not listening to the British public who, in my constituency of Stevenage and in hundreds of other seats, voted at the last election for a change from years of Conservative chaos. Change with Labour will bring a decade of national renewal to fix our public services from the ground up. Businesses can only have the confidence to invest in the UK if we bring stability to the economy, put money into the pockets of customers and develop thriving public services for the workforce that will in turn improve productivity for businesses. Business confidence was demonstrated by the record-breaking £63 billion in investment secured for the UK economy at the international investment summit. Under Labour, Britain is open for business. Today, the Conservative Opposition are asking us to pretend that we can grow our economy and rebuild our public services without saying how it would all be paid for. This Tory Opposition, with their motion today, show that they have learned nothing from 14 years of Tory fantasy economics. The shadow Chancellor brought up fantasy economics, and his party delivered that for 14 years in government. Today we have a Labour Government. The country voted against fantasy economics in July, and today I will vote against it too.

18:08:00

I will talk in particular about two organisations in my constituency that have contacted me about the subject we are debating. For context, we know that small businesses have had a tough time for a number of years. They have been struggling with rising prices, interest rates and input costs going up. They were absolutely hammered by the previous Conservative Government, who broke their promise to reform business rates, trapped them under a mountain of red tape and made it much harder and more expensive to trade internationally. Making things harder for small businesses and their workers just is not right. They are the lifeblood of our economy and are exactly where we should be looking for the growth we all need. When we are talking about small businesses, we are also talking about community pharmacies, hospices and GP practices, all of which will be impacted by this tax rise. We on the Liberal Democrat Benches are particularly worried, as the House would imagine, about the impact of these tax rises on our health and social care sector. We are worried about what it means for social care providers, for the families who depend on them and for the local councils that have to find the funding for many of them. Raising the employment allowance will shield only the very smallest, leaving thousands of small organisations still negatively affected. In the Chief Secretary’s opening remarks, he asked for ideas about where else he might find some tax revenue. I really encourage him, and indeed all Government Members, to reread the 2024 Lib Dem manifesto—I am sure they have read it at least once. As my hon. Friend the Member for St Albans (Daisy Cooper) laid out from our Front Bench, the Government could reverse the tax cuts that the previous Government gave to the big banks, reform capital gains tax so that it is applied in a much fairer way, and charge the gambling giants more so that they pay their fair share. I turn to the two organisations in my constituency. A childcare company got in touch because, like many early years settings, it allocates 70% of its revenue to staff wages, and annual increases to the national living wage combined with the increase in NICs will make it impossible to pay for rent, staff improvement and training. That will just make the staffing crisis worse, which is the exact opposite of what the Government say they want.

Does my hon. Friend agree that businesses such as Sheppy’s cider farm in my constituency, to which I invite all Members to come to enjoy a pint of cider, will be affected not just by the national insurance rises but by the change in business rates and the family farm tax?

I thank my hon. Friend for his intervention. Sadly, I have not yet tried the wares of Sheppy’s cider farm, but I would welcome the opportunity to visit, try those wares and support it as we all need to do in the face of these changes, which affect everyone. The second organisation is one of my GP practices, which emailed me. It operates as a legal partnership, as it has done since the inception of the NHS, but as it is a GP practice it lacks flexibility to absorb the increased costs. It cannot raise prices and it cannot do more than it is already doing and drive up activity levels. As it is designated as a public authority but does not get an employment allowance exemption, it will bear the full cost of the impact. It tells me that the rise in national insurance and the lowering of the thresholds will force it into reductions in clinical staffing, adversely impact patient care and increase waiting times. That is exactly the opposite of what the Government say they want.

The hon. Lady made that point powerfully. I have spoken to a GP surgery in my constituency that will have to cut seven members of staff, including a GP, a nurse, a social prescriber, a pharmacist and others providing ancillary services. These changes will affect not just her constituents and my constituents but every single constituency in the country, because every single GP practice will have the same problem.

I completely agree with the hon. Member’s point. All Members across the House want to see our NHS thrive and to see the healthcare and social care that our constituents deserve. I urge the Government to think again about their plans.

In Harpenden and Berkhamsted we have the Elms medical practice, which has said it is dedicated to the NHS and wants to serve people but is facing these difficulties. It is asking the Government to rethink their choice on national insurance. This is about those who want to serve and our constituents who need them.

I very much agree with my hon. Friend. We will all have had constituents and organisations contact us because they are really worried about the impact that these changes will have. I do not think that the Government intentionally set out to make life more difficult for GPs, and I do not think that they intentionally set out with their Budget to make life more difficult for pharmacies, for hospices or for dental practices, but we need to speak up for constituents who contact us to say that if the Government want to keep the cost of childcare from rising and constituents to be able to access a GP appointment in a timely manner, they need to think again about this rise. I urge them to do so.

18:14:00

A former Conservative leader once had the famous phrase, “There is no magic money tree.” Sadly, that is a lesson that Opposition Members have yet to learn. Let us be clear about the economic situation that we are facing. In July, when the Conservatives left office, the tax burden was at a 70-year high, and they left us with a £22 billion black hole in our public finances. This is their legacy and they must live with it: confidence in public services is at an all-time low, and the tax burden at an all-time high. They could not even deliver on their promises in my constituency. If they had chosen to invest the money needed into our NHS, they would have seen the benefits. If they had invested the money in our schools, they would have seen the benefits. If they had funded our armed services to take on the challenges of tomorrow, we would all see the benefits. Instead, when I look at the primary care centre in Clay Cross, I see hard-working health staff let down by the former Government. When I look at Killamarsh junior school, again, I see hard-working staff and young children let down by this former Government. As I speak to my former Army colleagues, I see no improvement in the situation there either, thanks to the former Government. We must take action. It is our duty as a Government to take the hard choices necessary. I believe that in the long run, this is a positive and necessary step for our UK economy, public services and workforce. National insurance contributions are the backbone of funding for our essential services such as healthcare and pensions, and my voters chose that.

The Vale of Glamorgan, and Wales more broadly, is full of small and micro businesses. The Office for National Statistics and the OBR have both told us that most small businesses and micro businesses will be better off or the same as before. The Vale’s businesses get not only better public services but a good tax set-up. Does my hon. Friend agree that this is a great Budget and a great proposition for small businesses in the Vale?

I could not agree more. I have heard from so many small business owners in North East Derbyshire who are so thankful for the changes that we are making to support them. If we fail to make these decisions today, we risk the prospect of cuts to crucial services or an increased burden on future generations, which would fall on the most vulnerable in society.

The hon. Member talks about cuts to vital services. Does she agree that no one would think less of the Government if they were to take £3 billion or £4 billion out of the £22 billion for the NHS and ensure that social care, hospices, GP surgeries and the like do not lose out, to have a holistic and positive input into the health service rather than the disjointed one that we are at risk of right now?

I am sure that the health team will listen to all and any contributions, and will make a decision. The Labour Government refuse to balance the books on the backs of the poor, workers or people striving for a better life.

Will the hon. Member give way?

I am going to make progress, as I know other Back Benchers would like to speak. Instead of austerity mark II, we choose to invest in our services, our children and the people who fight every day to keep us safe. These increases will strengthen our public services, promote economic stability and invest in the future of our workforce. They are an investment in our long-term prosperity, and I fully support them.

18:17:00

The Budget forced businesses to compromise on growth—those are the words of the CEO of the Confederation of British Industry. The OBR has said that the jobs tax will reduce wages by £7.5 billion and increase inflation. Both the OBR and the CBI say that it will result in higher prices, so it is no surprise that, over the past few weeks, my inbox has been full of local organisations that are gravely concerned about this £25 billion stealth tax. We are shocked, and they are heartbroken, because Labour promised not to raise national insurance. Indeed, the then shadow Chancellor called it a jobs tax, and said that Labour would never pursue such a thing. Of the organisations that have written to me, which are the most worried? St Barnabas Lincolnshire, Lincolnshire and Nottinghamshire air ambulance, Uppingham GP practice and Stamford GP practice—the Royal College of GPs has said that it will cost 2.2 million appointments to service these increases—as well as the Vista (The Royal Leicestershire Rutland and Wycliffe Society for the Blind), local nurseries, my local citizens advice, and my care agencies and hospitality businesses have all written to me. As we approached Small Business Saturday, I had my independent shop competition, where around 100,000 votes were cast for the favourite local independent businesses, but those businesses are writing to me to tell me how worried they are. Family businesses are particularly worried. The tax will affect rural communities most of all, because they have smaller margins—they are already worried about farmers going out of business, on whom they are reliant—and we have small, symbiotic communities who support one another.

The hon. Lady is making an important point about the impact the changes will have on small businesses. In 2021, she voted for the Health and Social Care Levy Act 2021. I have checked Hansard, and she mentioned none of these concerns in 2021. That Act introduced an increase of 1.25 percentage points in national insurance for employers and employees. This is a smaller rise, and it protects employees. Can the hon. Lady say why all of a sudden she is now concerned, when three years ago she was not?

The hon. Gentleman may not realise, but at that point we were just coming out of something called the pandemic, and it was a health and social care vote, so yes, I absolutely voted to do what we needed to do at that point in time. It was a specific levy to raise specific funds for our health and social care. I will happily stand behind that vote. It is interesting, because this tax will make it harder for businesses to recruit; indeed, it will cost three times the price, at about £800 per employee. That is not how to get growth. It is how to lose staff as employers let people go; how to see increased demands on our welfare budgets; how to kill off our town centres; how to see hospices closed; and how to see local authorities ending up reducing services.

No, I will not give way. It will be how charities end up redirecting their Christmas appeals, so that people give the pennies they have spare to pay the Exchequer, rather than to support those who are most desperate—those on whom charities should be spending their money. This change is the largest tax grab of Labour’s Budget, and it will impact women and young people most of all. Yet there is an absence of speeches from the Government Benches about its impact on those who will be most affected. Employers are the growth makers, and they are begging Labour to reverse this tax, but working people will be those worst affected. There is still time for Labour to reverse course—to listen and to recognise that the ideology it is pursuing is going to harm our communities. It is time for Labour to think about the impact and reconsider what it is doing, particularly to our GP practices and others—I look forward to hearing from the Minister when I share the letters with him. It is not too late. Labour must reverse course and fundamentally change its ways.

18:22:00

The issue at the crux of the debate is one of economic responsibility. It is about a choice whether to invest or to let further decline take place in our public services. They say a week is a long time in politics. Well, four months is clearly still not long enough for the Conservatives to have learned any lessons from the last general election about why they might be sitting on the Opposition Benches and we might be sitting on the Government Benches. They crashed the economy, wasted billions of pounds of taxpayers’ hard-earned money and ran the NHS into the ground. They then called an early election to run away from the mess that they knew this Government would inherit. As legislators, we need to be honest with the electorate about the trade-offs and challenges this country faces, and we cannot simultaneously rebuild our public services and cut taxes at the same time. As has been said, there is no magic money tree—we saw with the disastrous Liz Truss mini-Budget the impacts of a Government who do not understand those facts.

I recognise there are political differences across the House, but the hon. Gentleman surely has to be concerned about the overall impact of the decision on national insurance on the ability and inclination of those who invest in the real economy to generate the wealth and tax revenues that will sustain the economy going forward. Surely he can recognise that the decisions made by his Government are having a negative effect on growth, which will mean more taxes and more borrowing.

I thank the right hon. Gentleman for that rather long intervention. I must say that the Conservatives do not understand the economy. If someone cannot get a train to work, they cannot work; if they cannot get a hospital appointment, they cannot work. Time and again, I hear from employers that they want investment, stability, and for their employees to be able to contribute in the workplace. To separate public services and the private sector into two diametrically opposed parts of the economy is what the Conservatives did for 14 years. They cut public services time and again, and we all face longer-term costs because of that fact. The Labour Government understand that. Sadly, the Conservative party still does not. The choice we are still hearing is for continuing austerity. No one in this country voted for that and no one on the Labour Benches, at least, wants that. We want NHS waiting lists to fall. We want crumbling schools rebuilt, and investment in our vital public services and armed forces.

The hon. Gentleman and I are members of the Health Committee, so I ask him this with all seriousness and genuineness. Does he not see the risk of this tax rise for GP surgeries, the hospice sector and the voluntary sector, which supports a lot of what the NHS does?

I thank the hon. Gentleman for that intervention. What we have both heard on the Health Committee is that the NHS has been left on its knees after 14 years. All sectors of the health service are crying out for investment. I hear in my constituency from doctors and nurses who are thankful that, finally, they are being recognised with decent pay. Opposition Members declare them to be trade union barons. No. They are nurses, doctors, teachers and police officers. As I said, we need to invest. Ministry of Defence homes in my constituency must be invested in. My old primary school, Deanesfield, with its crumbling classrooms needs to be invested in. The Labour party has a plan to make that happen and it is vital that we fund those measures—measures that any responsible Government would take. Therefore, we do have to make difficult but necessary decisions and ask the largest businesses to pay slightly more to help fund those vital public services. I understand the concerns that have been raised, but as the Minister put forward, half of businesses will not pay the extra contributions and some, the smallest, will pay even less.

Will the hon. Gentleman give way?

I have given way a number of times already and I want to make some more progress, if the right hon. Gentleman will allow. It is a bit rich for the Conservative party to suddenly discover the charity sector and claim to be the party of the third sector. Having worked in the third sector for 10 years, I remember nothing but the Conservative party slamming the charity sector year after year after year. The charities I meet want us to fix the NHS, to fix homelessness, and to fix the social and economic problems we inherited from the previous Government. Locally in Hillingdon, the Conservative council has not been a champion; it has cut them to the bone. Most of the charities I meet have a handful of employees left, at best. Under this Government’s measures, they are likely to see support. Fundamentally, in this Budget we face a choice and we have chosen to protect the most vulnerable in society. However, it appears that the Conservatives still fail to understand basic economics. They want all the benefits of the Budget—at least, they do this week—but they do not seem to know how they will pay for them. They drove our public services into crisis and now oppose the very measures we are taking in the Budget to rebuild them. Nothing has changed. They are not a serious, responsible party of government. They are still addicted to endless cuts to public services, paying more and getting less, constantly taking the short-term, easy approach. It would be immensely irresponsible for any Government to just ignore the crisis in our public services, and to return to austerity, instability and decline. We choose investment over decline. That is what my constituents voted for: more doctors, more nurses, fair pay and investment, not decline.

On that point, how can the hon. Gentleman say we will see more doctors when our GP surgeries are telling us that they will have to cut doctors, cut staff and cut appointments as a result of the national insurance increase? What would he say to them?

I would say £25 billion for the NHS, a record level of investment since the last Labour Government. I ask the Opposition: what would they do? Would they prefer to let NHS waiting lists grow, and inequalities widen between state and private education? Would they reverse our investment in neighbourhood policing, or our increased funding for social care? If not, what taxes would they raise instead to pay for those measures? They cannot continue to have it both ways. It is clear that the Opposition have not learnt any lessons. Their position continues to be founded on an economic fiction. They are the same old Conservative party that crashed our economy in 2022, and they would do it again. Well, this Budget and this Government will not. We choose investment, we choose our NHS, and we choose to balance our budget.

Order. There will now be a four-minute time limit. A reminder about interventions: Members are using up the time that others could have had.

18:30:00

Paul and Melissa Johnson, the directors of Home Instead, are local business owners of an adult social care provider based near Twyford, in my constituency. They predict that the national insurance increase will be in the region of £45,000 a year on the basis of their current payroll, and that the increase in the minimum wage and other costs will add a further £55,000 a year. Some similar businesses may have to scale back their plans for growth or their existing operations, or may even face the prospect of closing down. Inevitably, that will have a significant impact on their elderly clients, along with the local authorities with which they work. Nationally, it is the same story, because the Government’s job tax will be the tipping point for thousands of care providers. This could have been avoided if the Government had instead chosen to increase taxes on big banks, online gambling companies and social media giants, all of which need to pay their fair share of tax. The Conservatives allowed those banks and social media giants to get off the hook; why are Labour doing the same? Let me ask the Minister this: will the Government commit themselves to exempting social care from the increase in employers’ national insurance contributions, and if not, how will they protect those who are affected by the potential closures of social care providers? The concerns do not end there. I recently visited Twyford surgery and spoke to its fantastic GP partners about the impact that the increase will have on their ability to deliver primary care effectively. It is the same story that we hear all over the country: they are looking at, in effect, a 4% reduction in funding, which will have an impact on the services they are able to offer, including joint injections and contraception. The Chancellor will compensate the NHS for the cost of the tax increase, but that support will not be available to GPs or to the vast majority of care providers that are in the private sector, which will lead to even greater pressures on our health and care services. At a time when the GP-patient ratio for my area is rising, with 2,101 patients for every GP compared with England’s national average of 1,664, this is simply unacceptable—and it is happening at the worst possible time, because general practices are already in crisis. Patient lists are soaring, and we simply do not have enough GPs. The Government must provide assurances, as a matter of urgency, that general practices will be given the same protection as the rest of the NHS, and will receive the necessary funding to cover these additional costs. I am sure that millions of people across the country will agree that it is simply common sense to protect GPs at a time of crisis.

Will my hon. Friend give way?

Okay, yes.

I thank my hon. Friend for that reluctant acceptance, and I congratulate him on his speech. Does he agree with me, and with those in Lightwater surgery in my constituency, that in an average general practice such as Lightwater the national insurance rise equates to the salary of a fully qualified nurse, and that, whether by accident or design, it will have a significant impact on our constituents and their receipt of healthcare?

My hon. Friend is 100% right. GP surgeries have told me that they spend a disproportionate amount of time seeking out different funding pots, which requires time and resources—time that could be spent on patient care. Will the Minister commit to simplifying the process of funding for GPs?

18:34:00

The new intake of youngish—I use that description carefully—Members on this side of the House might be forgiven for having shorter memories than other, more long-suffering Members, but this is not the first time a Labour Chancellor has made difficult decisions on tax to invest in the future of public services, particularly our NHS. Twenty-two years ago, a Labour Chancellor told this House that the NHS was in need of reform and modernisation, and that investment was needed not only to deliver better services but to, in the inimitable style of Gordon Brown, “define the character of our country.”—[Official Report, 17 April 2002; Vol. 383, c. 589.] That decision to raise national insurance contributions, combined with far-sighted reforms, delivered the shortest waiting times, and the highest public satisfaction with the NHS, in our country’s history. Now, after 14 years of Tory Government, history has repeated itself. Once again, a Labour Government are fixing the mess made by the Tories, and our NHS is facing questions over its future and quality. Indeed, the choices are more stark today. The challenge before us is not simply to improve standards and resources in the NHS, but to save the very idea itself. Back in 2002, the Tories opposed making difficult decisions on tax to support our NHS. Their then leader, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), used precisely the same slogans as the current Leader of the Opposition—the politics of protest, not government. A year later, he was out of his job; his own party lacked confidence in him and got rid of him. We are not able to gamble on political events, but what are the odds of history repeating itself here, too? The Opposition crow about the Budget, but what is their alternative? Do they oppose the £22 billion investment in our NHS? From which magic money tree will they fund their ever-spiralling spending commitments? Fixing our public finances, without compromising our belief in a strong NHS, is at the heart of this Government’s agenda. That is so important, because I have had countless conversations with constituents who face agonising waits over years for basic operations, and with those who dread the 8 am rush to book an appointment at the local GP, knowing full well that they will often be disappointed. They know that the NHS needs urgent investment, but they also know that the NHS must change. That is why the investment by this Government has been said to be a down payment on reform. We must transform the way in which our NHS operates; otherwise, the investment will be wasted. The NHS serves a wholly different population in a wholly different context from when the Labour party created it in 1947. We are living longer, our health issues are more structural, technology can transform our interactions with healthcare provision, and patients can feel more empowered, but we need to get funding into the NHS now. The Tories want all the benefits of investment, but they have no idea how they would pay for it. We can look to history again to tell us what happens when Conservatives make promises without a clue about how they would fund them. Look at the 40 hospitals that have not been built. Look at the £6 billion black hole in our asylum system. Look at the mini-Budget.

The hon. Gentleman rightly points out the need to invest in the NHS. Does he recognise that imposing NICs on primary healthcare providers such as my constituency’s Weldmar Hospicecare, which provides vital end of life care to residents and must raise £26,000 a day to fund its service, will result—

Order. That was perfectly long enough.

That point has been made over and over again in interventions, and the Health Secretary has been very clear that funding allocations for primary care services and other services will be set out in due course. As a result of this Labour Government’s actions, there will be more money available than there would have been. This debate shows the Opposition to be mere opportunists who are incapable, or perhaps unwilling, to face up to the difficult decisions that we face as a country. We have seen the path that takes us down, and we cannot do that again.

18:39:00

The Chancellor’s Budget has created a right mess. No matter how regularly the Prime Minister bleats that he is fixing the foundations, it is a mess of Labour’s own making, date stamped 30 October 2024. The OBR has forensically dismantled the Government’s pathetic fallacy of a £22 billion black hole, but even if it had not, my constituents are not stupid. If the Chancellor was as worried by the state of the public finances as she said she was, why would she increase borrowing by £32 billion annually, undermining our financial resilience? Why would she make the choice to splurge cash on union pay rises with no productivity commitments? Why would she make a series of decisions that would lead the OBR to downgrade its growth forecasts since our April Budget?

I welcome the extra pay for our teachers and our doctors. Even if the hon. Lady does not think that our public sector heroes deserve that pay rise, does she accept that lost school days cost the economy £900 million and that the NHS has had to spend £9.3 billion on temporary staffing?

I was interested by the train drivers’ pay deal, where the Government actually went back to the deal that we had made and undid the productivity commitments that we put in. Why would the Chancellor front-load spending on the NHS before the Health Secretary even has a plan for how he will use that precious cash, therefore risking billions being wasted? It makes no sense, and everyone outside this place and all those inside it, apart from the Labour Members who are gleefully wafting their Order Papers around, can see that. The Chancellor is asking for an extra £40 billion in taxes from the British people, and it is largely being taken from some of the most productive, entrepreneurial people in the country: the people who provide jobs and who do the right thing. I worry deeply that their good money is going to be poured into the public sector and benefits without any noticeable improvement in public services, and that when that happens, the Chancellor is going to come back for more. The incentive for anyone in this country to be entrepreneurial, to stick their neck out, to take the risk of employing people or to build true wealth for this nation will diminish. We will then find ourselves in a downward spiral, ever more unable to withstand external shocks and ever less appealing as a country in which our young people will want to stay to create, to innovate and to build. As we know, a big chunk of that £40 billion is coming from the sneaky rise in employer national insurance—something the Government obscured from their plans in July—but let us start with the pain that the Chancellor’s choice on NI is causing her own Cabinet colleagues. She has blown holes in the budgets of every major Government Department. The Health Secretary now has problems with GPs, pharmacies, social care and hospices. The Deputy Prime Minister has councils telling her that they have to find over £1 billion extra to pay providers for their services. The Culture Secretary has charities, tourism businesses and cultural venues telling her that they have major problems. The Education Secretary has had to raise tuition fees by £400 million because universities are telling her that they now have a hole in their budgets of exactly the same size. It goes on. I want to talk about the pain that this policy is causing to my constituents, particularly the lowering of the NI threshold, which is whacking the kind of businesses that employ a lot of young lower-wage workers, parents getting back into the workplace and people who are picking up extra jobs to make ends meet. Let me give some examples. The first is a local after-school club provider employing 34 people and offering wraparound clubs that help out hundreds of Havering families. It is the kind of club that makes that work/family juggle survivable. Because of the NICs hike and the lowering of the threshold, its bill is going to rise from £10,851 to £26,040 annually. The last thing it wants to do is to lose staff or hike fees for local families, but it cannot see a way around that. Another example is an outdoor activities business that gives young people across London the most amazing opportunities. Its costs next year are going to increase by £70,000 as a direct result of the Budget, and it now worries that it will not be able to fund the young people’s bursary that is providing over 1,300 disadvantaged kids in the region with outdoor experiences. A third is a home care business that looks after older people in Havering. Its branch in Hornchurch faces paying an extra £100,000 a year, making it loss-making from April. That is absolutely crazy.

Will the hon. Lady give way?

No, I am afraid there is simply not enough time. Finally, I want to mention a small private school in my constituency. Its pupils are some of the most vulnerable and deprived in our capital, as it is an alternative provision school. First, the Labour Government hit it with VAT. Now they are going to hit it with NICs and wage increases. Either it absorbs that cost or it passes it on to the local council. Those are four businesses from Harold Hill to Hornchurch providing critical services to my constituents, employing young people and giving working families opportunities. Now they are going to be hit by tens of thousands in extra costs, and that is before I even talk about the GPs, the pharmacists, the dentists, the charities, the shops, the restaurants and the pubs. It is for them that I am going to wholeheartedly—

Order. That brings us to the Front-Bench contributions.

18:44:00

It is a pleasure to close this debate on behalf of His Majesty’s loyal Opposition. I recognise that many Members have not been able to speak because of the level of concern in the earlier debate about Labour’s family farm tax. In this debate, we have heard talk of difficult decisions, but Labour Members seem to be in denial about the real-world impact of those decisions on the organisations in their constituencies that have to make difficult decisions about wages or jobs. Today, Labour Members have an opportunity to stand with their constituents. This debate is fundamentally about trust and the promises made by the Labour party. At the election, Labour’s manifesto promised: “Labour will not increase taxes on working people, which is why we will not increase National Insurance”. It was clear to everyone what that meant. The IFS said that this measure would be a “straightforward breach” of the Labour manifesto, but Labour then chose to break its promise by introducing this £25 billion a year jobs tax. Once again, we have heard the tired claims blaming a fantasy £22 billion black hole—claims debunked by the independent OBR, as well as by my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez), who pointed out that the Government’s £1 billion pay deals for their union paymasters created a lot of that hole. The voters are not fooled, and they know what Labour said and did: it broke its promise to the British people. What has been the impact of this £25 billion jobs tax? Business confidence is plummeting, and output has already reduced for the first time in over a year. The Chief Secretary to the Treasury and Labour Members have again claimed that the impact of this measure is limited, but even in the very limited impact assessment he referred to, HMRC estimates that 940,000 businesses will lose out in net terms, with an average annual tax increase of £800 per employee. The average employer losing out will see its liabilities increase by £26,000 a year, and it is working people who will pay the price with lower wages, higher prices and fewer jobs. Many hon. Members have spoken about the impact on charities and organisations in their constituencies. My thrill-seeking hon. Friend the Member for Hamble Valley (Paul Holmes), who I am glad is still in one piece, spoke about the hit to hospices that provide vital care, which will see higher costs amounting to tens of millions of pounds. Charities will face a bill that is £1.4 billion higher. Marie Curie alone will have a £3 million hit to its costs. The Royal College of General Practitioners has warned that the extra costs could force surgeries to make redundancies or close altogether. Adult social care providers will see a £2.8 billion hit in the next financial year. Despite the warnings from hospices, care homes, dentists, nurseries, pharmacies and others, there has been cold comfort from the Minister. There has been no clarity on whether support will be provided—no clarity on when support might come, how much it might amount to or if it will come at all. As my hon. Friend the Member for Rutland and Stamford (Alicia Kearns) said, given the impacts on these groups, the Government should rethink their proposals. Although 800 jobs a day were created under the Conservatives from 2010, Labour’s jobs tax is expected to see jobs lost and fewer jobs created. Bloomberg estimates that as many as 130,000 jobs could be lost, but perhaps most concerning is the impact on the lowest paid. The OBR estimates that 80% of the cost of these measures will be paid by reducing wages. Lowering the level at which employer NICs are levied, from £9,100 a year to £5,000 a year, will hurt part-time, female and younger workers in particular. The OBR expects this measure to raise £17.7 billion a year on average. No wonder the CBI has warned that two thirds of its members are reducing their plans to take on staff. The British Retail Consortium has also warned of a £2.3 billion hit, meaning that job losses are inevitable. Of course, this tax will also push up inflation. Tesco, Lidl and all the major retailers have said so—a more expensive weekly shop is the price of this measure. We have heard today about the need for investment in public services, on which all Opposition Members agree. I am happy to highlight our record of record investment in the NHS and climbing up the international education league tables. That progress is now under threat from the Government’s proposals. We would have made different choices from this tax-raising Budget. Our plans would have grown the economy faster—the OBR downgraded growth after the Budget. Our plans would have delivered £12 billion of welfare savings, but those plans were put in the deep freeze by the Labour party. We would have improved productivity in the public sector by getting back to pre-covid levels, saving £20 billion a year. Labour Members asked for our ideas, so there they are. Some 4 million jobs were created under Conservative Governments from 2010 on. Youth unemployment was cut by 40%, 1 million more disabled people got into work and we had the fastest growing economy in the G7. By contrast, Labour is breaking promises made only a few months ago and choosing to put up taxes, despite the damage to the economy and to working people. The Chancellor’s pledge not to raise further taxes has dropped like a stone; we have seen this movie—they will be back for more. I urge hon. Members to support our motion.

18:50:00

I thank all right hon. and hon. Members for their contributions during the course of the debate. This Government were elected with an immediate and critical need to draw a line under the fiscal irresponsibility and economic mismanagement of the Conservatives. Since day one in office, we have been determined to deliver economic stability, and we have done so by fixing the public finances, introducing tough new fiscal rules, and getting the NHS and other public services back on their feet. It is on those foundations that we will boost investment and drive long-term economic growth to make people better off. This is not an easy task, as the Chancellor has said, but fixing those foundations is what underpins all the difficult but necessary decisions we have taken. It is the goal of fixing the foundations of our public finances and the NHS that has driven our decision to make the changes to employer national insurance contributions that we have been discussing today. In taking the difficult decisions at the Budget, the Chancellor has been determined to protect working people. That is why our Budget made no changes to income tax, rates of VAT or the amount of national insurance that working people pay. As a result of our Budget, people will not see a penny more on their payslips. However, a £22 billion black hole in the public finances cannot be fixed without taking any difficult decisions at all. The Conservatives in government hid their heads in the sand and ignored the fiscal realities. Now, both they and other Opposition parties are desperate to have it both ways. They say that they support extra money for the NHS, but they refuse to back the measures to fund it.

On that point, will the Minister give way?

I have been very generous over the past 48 hours in giving way in this Chamber, but I will not. My time is very limited, although I would like to hear more about the plane the hon. Gentleman spoke about earlier. We have made the tough but necessary choices that this set of circumstances requires, which is why we have decided to raise employer national insurance contributions. The changes broadly return national insurance revenues as a proportion of GDP to the levels they were at before the previous Government’s cuts to employee and self-employed NICs, but they do so in a way that does not result in higher taxes in people’s payslips. They also do so in a way that increases protection for small businesses and charities, because we have decided to more than double the employment allowance to £10,500 and remove the business size threshold. That means that from April 2025, all eligible organisations will be able to employ up to four people on the national living wage without paying a penny of employer’s national insurance. Over half of all employers will pay the same or less national insurance than they did before, but we acknowledge that the decision will have an impact for other employers. Employers will have a choice about how they respond to the changes, and some of those choices will be hard. I do not have enough time to respond to all the points raised by hon. Members directly, but I will briefly respond to the right hon. Member for Beverley and Holderness (Graham Stuart)—he has been intervening all afternoon but he is no longer in his place. He asked about table 3.2 in the OBR report. I am sorry to disappoint him, but my answer is nowhere near as interesting as I suspect he thought it might be; the table was simply published in error and has now been corrected. The Government provide support for Departments and other public sector employees with the additional employer national insurance contributions liability, and separately we have provided an additional 3.2% increase to local government spending power, including £600 million of new grant funding for social care. I thank all the other hon. Members who made contributions: my hon. Friends the Members for Makerfield (Josh Simons), for Stevenage (Kevin Bonavia), for North East Derbyshire (Louise Jones), for Uxbridge and South Ruislip (Danny Beales) and for Rother Valley (Jake Richards), and the hon. Members for Hamble Valley (Paul Holmes), for Hazel Grove (Lisa Smart), for Rutland and Stamford (Alicia Kearns), for Wokingham (Clive Jones) and for Hornchurch and Upminster (Julia Lopez). I want to briefly respond to the point of order made earlier by the hon. Member for South Shropshire (Stuart Anderson) because I welcome the chance to repeat the fact that the OBR said in October that its March forecast would have been “materially different” had it known what the previous Government did not share with it at the time of the March forecast. I am confident that the Hansard record is correct. It specifically includes “materially different” in quotations and not the rest of my statement. I am grateful to have had the chance to respond on behalf of the Government to the questions that have been raised today. The decision to make changes to employer national insurance was not taken lightly. It was a tough decision for us to take. I recognise that while half of businesses and organisations will pay the same or less than before, others will face difficult decisions of their own. We have asked employers to make a greater contribution, and while we do not expect those affected to welcome that, I hope the majority will understand why we have done it. The simple fact of the matter is that our country needed a Government prepared to fix the public finances, get public services back on their feet and restore economic stability. It is only through an ambitious and fiscally responsible approach that we can boost investment in growth, laying the path towards the brighter days ahead. The previous Government had completely lost sight of that. My office in the Treasury building used to be that of Nigel Lawson. He once said: “To govern is to choose. To appear to be unable to choose is to appear to be unable to govern.” That very neatly reflects where the Conservative party has ended up now. Before, as the Government, the Conservatives had given up on effective governing, and since then they have given up on effective opposition. This vote today comes down to a choice: between irresponsibility on the Opposition Benches and a Government prepared to do what is needed to build a better future. It is this Labour party in government that is taking the tough but necessary decisions, with a once-in-a-generation Budget to wipe the slate clean and put our country on a better path. It is this Government that have restored economic stability, fixed the public finances and hardwired fiscal responsibility into the Budget-making process. It is this Government that are putting the NHS back on its feet, raising the national living wage and protecting people’s payslips, and it is this Government that will invest in our country, create wealth in every nation and region and make people across Britain better off. That is the choice today and that is why we reject the Opposition’s motion. Question put.

56|18:57|165|334|The House divided:|Question accordingly negatived.||0|0