Contribution
My Lords, I am very grateful to all noble Lords who have spoken in this debate. I will address first the amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Bruce of Bennachie, which seeks to set a reduced rate of employer national insurance for part-time workers at 7.5%. As I have said before, the difficult decisions contained in this Bill were necessary both to repair the public finances and rebuild our public services. This amendment would reduce the revenue raised from this Bill, and therefore would reduce the Government’s ability to achieve these objectives. Reducing the rate of employer national insurance for part-time workers only would also create additional complexity in the tax system and, as my noble friend Lord Eatwell said, create distortions in the labour market. The Government have taken action to support those on lower pay by increasing the national living wage. Employers will also continue to benefit from employer national insurance reliefs, including for hiring under-21s and under-25 apprentices, where eligible.
I turn to the amendments tabled by the noble Lord, Lord Londesborough, and the noble Baronesses, Lady Kramer and Lady Neville-Rolfe, which together seek to maintain the current rates and thresholds for businesses employing fewer than 25 staff. These amendments would also have cost implications, again necessitating higher borrowing, lower spending or alternative revenue-raising measures. I stress that the Government are taking action as part of this Bill to protect the smallest businesses by increasing the employment allowance from £5,000 to £10,500. This means that, next year, 865,000 employers will pay no national insurance. More than half of employers will see no change or will gain overall from this package, and employers will be able to employ up to four full-time workers on the national living wage and pay no employer national insurance.
The Government have also taken steps to strengthen small businesses’ ability to invest and grow. This includes freezing the small business multiplier, permanently reducing business tax rates for retail, hospitality and leisure properties from 2026-27 and publishing the Corporate Tax Roadmap to provide stability and certainty within the tax system for businesses across the economy.
The new clause tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Bruce of Bennachie, would require the Government to produce an impact assessment on the effect of the Bill on SMEs, hospitality, tourism and seasonal workers. The Government of course consider the impacts of all policies, including the changes to employer national insurance. As we discussed at length in Committee, an assessment of the policy has already been published by HMRC in a tax information and impact note.
The OBR’s Economic and Fiscal Outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment growth and inflation. The Government and the OBR have therefore already set out the impacts of this policy change. The information provided is in line with the approach taken for other similar changes, and the Government do not intend to publish additional assessments.
Finally, I turn to the amendment tabled by the noble Baroness, Lady Neville-Rolfe, that seeks to increase the employment allowance for farms. This amendment would again reduce the revenue raised from the Bill, necessitating either higher borrowing, lower public spending or new revenue-raising measures. The Government of course recognise and greatly appreciate the vitally important role of the farming sector. Despite the Government’s challenging fiscal inheritance, the farming and countryside programme budget has been protected at £5 billion across the next two years. This includes the largest ever proportion of the budget directed at sustainable food production and nature recovery in our country’s history. This will accelerate the transition to a more resilient and sustainable farming sector, supporting investment in farm businesses and boosting Britain’s food security.
Ultimately, this Bill is necessary to fix the public finances and to fund the public services. Many of the amendments in this group would reduce the Government’s ability to do these things, so I respectfully ask noble Lords not to press their amendments.