National Insurance Contributions: Healthcare

(Urgent Question): To ask the Secretary of State for Health and Social Care if he will make a statement on the impact of changes to employer national insurance contributions on primary care providers, hospices and care homes.

I am grateful to the hon. Member for asking this important question. It gives me the opportunity to say to GPs, dentists, hospices and every part of the health and care system that will be affected by changes to employer national insurance contributions that this Government understand the pressures they face and take their representations seriously. The Chancellor took into account the impact of changes to national insurance when she allocated an extra £26 billion to the Department of Health and Social Care. There are well-established processes for agreeing funding allocations across the system, and we are going through those processes now with this issue in mind.

This Government inherited a £22 billion black hole in the public finances, broken public services and a stagnant economy. Upon taking office we were told that the deficit the previous Government recklessly ran up in my Department alone would mean delivering 20,000 fewer appointments a week instead of the 40,000 more we promised. The Chancellor and my right hon. Friend the Secretary of State were not prepared to see further decline in our NHS. That is why we put in an extra £1.8 billion to stop the NHS going into reverse this year.

We built on that at the Budget, delivering the significant investment that the NHS needs to get back on its feet, backing staff with investment in modern technology, new scanners and new surgical hubs, and rebuilding our crumbling primary and secondary care estate. Alongside that, we delivered a real-terms increase in core local government spending power of around 3.2%, which will help to address the range of pressures facing the adult social care sector, including £600 million in new grant funding for social care. We are now working through exactly how that money will be allocated, as per normal processes. As the Secretary of State set out yesterday, we will ensure that every pound is invested wisely to deliver the Government’s priorities and provide value to taxpayers.

The Department will set out further details on the allocation of funding in due course, including through NHS planning guidance and the usual consultations, including on the general practice contract. As part of these processes, we will consider the impact of changes announced to employer national insurance contributions in a fair and open way over the next five months, before the changes come into force in April 2025.

I draw the House’s attention to my declaration of interests.

Many in the health sector will have been pleased to hear the announcement of the extra funding for the NHS, only for their joy to be struck down by the realisation that a manifesto promise not to raise national insurance contributions had been broken. That was compounded further by the discovery that a raft of frontline care providers—care homes, hospices, care charities, pharmacies and GPs, to name but a few—will not be exempt from the NI rise, leaving them with crippling staff bills and the threat of closures and redundancies. The hospice sector expects the cost to be £30 million—closures and redundancies. The initial assessment of the cost to GPs is £260 million—closures and redundancies, at the expense of 2.2 million appointments. For the care sector, the changes will cost £2.4 billion, dwarfing the £600 million in social care support that was announced. Does the Minister accept that it is inevitable that council tax will have to rise to support the increase in NICs?

For the first time, the National Pharmacy Association has announced collective action. Its chair said:

“The sense of anger among pharmacy owners has been intensified exponentially by the Budget, with its hike in national insurance employers’ contributions and the unfunded national living wage increase, which has tipped even more pharmacies to the brink.”

Will the Minister clarify who is exempt from NI? Will the Government admit that they got it wrong and make a change? The Prime Minister, Health Secretary and Chancellor have all said that allocations will be made “in the usual way”. Will the Minister clarify what the usual way is? Will mitigations be put in black and white to the House and the public? Is this part of the £20 billion, or new funding?

More importantly, will the Minister lay out a concrete timetable for hospices, care homes, GPs, pharmacists and all other allied health professionals, who are making decisions now? This seems to be another example of a big headline from the Labour party but no detail.

Well, really. I am quite dumbfounded by the hon. Gentleman’s response. I respect him for his professional practice, and he knows the state of the NHS that we inherited from the previous Government, as reported in Lord Darzi’s report. He talks about joy, but there was no joy when we inherited the mess they left back in July. He talks about people being tipped to the brink, and they absolutely were, as Lord Darzi made clear.

As I said, we will go through the allocation of additional funding in the normal process, which will be faster than under the previous Government because we are committed to giving the sector much more certainty. The normal process, as the hon. Gentleman should know from his time in government, is to go through the mandate and the planning guidance and to talk to the sector about the allocations due next April, as I said in my opening statement.

Does my hon. Friend join me in welcoming the Opposition’s new interest in social care? Does she further agree that the problems that social care faces owe more to the previous Government’s failure to do anything with Andrew Dilnot’s 2011 report than they do to anything that is happening now with national insurance?

My hon. Friend makes an excellent point. When I joined this House in 2015, I remember that the first act of the new, non-coalition Conservative Government was to take the legs from underneath that social care commitment by postponing the Care Act 2014. They cynically said at the time that they would bring it forward by 2020, which they thought would coincide with the next general election. We all saw how that went.

I call the Liberal Democrat spokesperson.

The increase in employer national insurance contributions will erode the very investment in the NHS that the Budget sought to prioritise. Katie, a GP from Lindfield in Mid Sussex, wrote to me saying that the NICs increases

“serve to directly undermine access and patient care.”

The Government have promised to recruit more GPs, but hiking national insurance puts that pledge in jeopardy. Surgeries are set to see eye-watering increases in staff costs, equivalent to 26,786 appointments in West Sussex alone. GPs will have no choice but to cut services and staff numbers, and patients will pay the price.

Does the Minister agree that stronger primary care, with faster appointments and fewer people having to go to hospital, is better for both the NHS and patients? If so, will she protect services and press the Chancellor to end this GP penalty?

The hon. Lady makes an excellent point about the importance of GPs and primary care to the wider sector. Immediately after taking office this summer, we freed up the system to employ 1,000 extra GPs through the additional roles reimbursement scheme—which the previous Government refused to implement—because we recognised the need for that extra capacity. We will be talking to general practice as part of the contract reforms over the next few months, following the normal process, to determine allocations for next year.

If this Government’s ambition, stemming from Lord Darzi’s report, is to be realised, significant investment is required not only in primary care but in third sector organisations. However, these organisations are concerned about the increased cost pressures on their services. Will the Minister ensure that there is sufficient support within the trickle-down approach, which the Department will now have to apply, to maintain current service levels and facilitate the urgently needed transition across health services?

I respect my hon. Friend’s expertise in this area. She is right, and we understand that the pressures are real, which is why we have committed to supporting the NHS and the social care system with the additional funding that my right hon. Friend the Secretary of State for Health and Social Care secured as part of the Budget settlement.

We are also working closely with the NHS, in a new relationship, to understand its needs. That is a dynamic conversation, because we want to understand what is happening in local systems as we continue to invest in them.

I call the Father of the House.

We all know that a lot of the debate on assisted dying revolves around the lack of hospice places to help people pass in the best way possible. Similarly, much of the debate on the NHS is about the lack of care home spaces. Leaving aside the cross-party name-calling, may I beg the Minister to consider exempting hospices and care homes from this national insurance increase?

I understand the right hon. Gentleman’s point. As I have said, we will continue our conversations with all affected providers in the normal way.

Does the Minister agree that the support that we will put in place for general practice and, in particular, the community health hubs that were recently announced, will be crucial to the improvement in the health service that we urgently need?

I respect my hon. Friend’s expertise and service to the national health service. He will understand the need to make the shift into neighbourhood health services. We have been clear that we will ensure the NHS spends all its allocations in the most effective way to enable that shift, as part of our 10-year plan.