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National Insurance Contributions (Secondary Class 1 Contributions) Bill

My Lords, charities of every kind are seeing massive increases in demand for their services. Many provide essential support and vital services to all parts of our society—to the vulnerable, the elderly and the homeless, and for children’s services, medical research and many other needs. I declare my interest as a trustee of the Dartington Hall Trust.

The increases in employers’ national insurance contributions, the living wage and the cost of utilities, goods and services have added huge financial burdens to charities’ budgets. Many have had no option but to cut costs, which means that services will be cut. Today, I add my voice to their concerns.

Delivering almost £17 billion worth of public services every year, many charities also provide support when public services fall short, without receiving any public funding. According to the National Council for Voluntary Organisations, the NCVO, charities employ almost 1 million people and raise money to provide services that would otherwise need to be commissioned by government. The NCVO and the Association of Chief Executives of Voluntary Organisations, the ACEVO, recently issued a letter to the Chancellor outlining their concerns for a sector that was already under considerable strain. The NCVO’s initial estimates have found that the employer national insurance contribution increases will place an annual additional bill of £1.4 billion on charities. The letter goes on to say:

“The harsh reality is that many organisations may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support”.

By way of an example, and as my noble friend Lord Forsyth mentioned, Marie Curie needs to find an extra £3 million each year to meet the increase.

Essex & Herts Air Ambulance has reported that the change will cost it an additional £100,000 that would otherwise be directed towards other missions. Bridge Support, a charity devoted to providing essential mental health and recovery services, reported that its stretched budgets will have to absorb these additional costs, while its counterparts in the NHS and other statutory services will remain exempt.

These charities provide essential services: life-saving interventions that are not just nice-to-haves but must-haves. NCVO researchers have found that almost three out of four charities are withdrawing from public service delivery or are considering doing so, and most are reducing their services to reduce costs. It is a perfect storm of cost escalation while funding is in decline.

My noble friend Lady Fraser is extremely sorry not to be able to attend this important debate. She is CEO of the charity Cerebral Palsy Scotland and is having to deal with the practical implications of this policy at the coalface. She is conducting meetings about where and how to cut staff, and therefore services, to fund the increased tax burden. Anna Fowlie, the chief executive of the Scottish Council for Voluntary Organisations, wrote that many charities

“have already had to subsidise public services with their own funds, and increasingly we are hearing of organisations having to close their doors”.

I am very worried about the future, as to me it makes little sense for the Government to hamper the ability of those picking up the slack to do so. Have the Government made provision to fill the gaps in essential services that charities provide when they are unable to do so? How will the Government fund the services presently provided by the voluntary sector? As the NCVO and the ACEVO have asked, why can the Government not commit to reimbursing or exempting voluntary organisations’ increased employer national insurance contributions in the same way as they will for the public sector? After all, the biggest assets in charities are people, the largest costs are people, and employing people has just got significantly more expensive.

With all that in mind, I ask the Minister when the impact statement for the Bill will be published. I intend to seek an amendment to the Bill in Committee to ensure that the Government provide an impact statement, unless the Minister can tell us today when it will be published.

The Government have launched their civil society covenant, which talks about resetting their relationship with the voluntary sector. It talks of the essential role of working as partners with the sector, which is welcome, but the Bill does not strengthen the foundations of a stronger civil society. Rather than taxing, we should be supporting or, at the very least, exempting.

I know the Government and the Minister want our charities to thrive, but I fear that the Bill will hurt them. So many are feeling desperate. The Government must find a way to protect and support them. Doing so would demonstrate that they mean what they say and would illustrate that they truly want a productive relationship with the voluntary and charity sector.

5.57 pm