Lord Morse (CB)

My Lords, I will focus on employers’ national insurance exclusively in my three minutes of stardom. An employer’s national insurance has no direct relationship to that employer’s profitability and thus to that employer’s ability to pay more tax. If an employer happens to be in an industry that habitually has payroll costs at a relatively high proportion of its total expenditure, it will necessarily attract a higher cost from the increase in employers’ national insurance than if it had the same turnover but spent a lower percentage of its outgoing costs on payroll but, for example, a higher amount on technology, data and other non-labour costs. If a business has a very substantial turnover but relatively low margins, such as a lot of the major construction contractors—and, in the past, Carillion—then its ability to pay more national insurance may be much less than it would be in another more profitable sector. Not all big businesses have equally broad shoulders—I know that is a popular government expression—and some big businesses may find the additional NIC charge very much more damaging than others. It may even be the final straw that breaks the camel’s back in some cases. Different industries form larger or smaller proportions of economic activity in different areas of the UK, and they tend to be concentrated. If a high proportion of local business activity happens to be in a high-payroll model of business, this means that the local economy is likely to be disproportionately impacted. We are hearing examples of that in Northern Ireland, but it is not just there. What I am saying is not rocket science, I must admit, but I am not sure that HM Government have considered these points of differential damage. If not, they should do so.