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National Insurance Contributions Bill

My Lords, as ever, I am grateful to my noble friend Lord Newby for pointing out some of the logic of what the Government are proposing. But in this case it is not principally to accommodate up to 10 employees that we have put the limit where it is. We recognise, as the noble Lord, Lord Davies, says, that the average number of employees that businesses typically hire in their first year is around two. Yes, it would be nice if a business, such as that which my noble friend Lord Newby may be starting, pushes up against the limit. We would welcome lots of that. We have set the limit at 10 rather than five for two reasons. It would enable more flexibility to accommodate staff turnover, so that although most new businesses employ only two employees in their first year, those two employees may often be different and come and go on a temporary basis. This is a way of accommodating a rolling number even if at any one time there might be only two, three or four employees. Nevertheless, within the period of the holiday, we allow 10 within the Bill. On a similar point, we need to think about part-time employees, a point to which we will come later. Certainly, it might have been helpful if a number of these amendments had been grouped. This is the Government’s proposed way of addressing the issue of part-time employees without the need to introduce potentially complex definitions of eligible employees based on full-time equivalents. For example, some employers do not remunerate their staff by reference to the number of hours they work, but they might be remunerated according to the amount of work that they produce—piecework. Again, providing for up to 10 qualifying employees ensures that employers with part-time staff or with staff whose hours are not predictable are not disadvantaged and that such employers can take full advantage of the holiday. As I anticipated, the noble Lord, Lord Davies, is thinking about where savings might be made in order to extend the scope of the scheme in other directions. It is perhaps worth saying that because of the distribution of new employers’ staff numbers, restricting the number of eligible employees from 10 to five would make a disproportionately small reduction in the cost of the scheme. That is not the main reason, as I have explained, for resisting the amendment. The benefit of the amendment would not be anything like what it might seem on the face of it—relevant to the headline numbers. On that basis, I would ask the noble Lord to withdraw this amendment.