National Insurance Contributions (Secondary Class 1 Contributions) Bill

The reasoned amendment in the name of Mel Stride has been selected.

I beg to move, That the Bill be now read a Second time.

In her Budget statement on 30 October, the Chancellor set out the difficult decisions that we as a Government have been prepared to make on welfare, spending and tax. Those decisions were not just difficult but necessary, given the fiscal irresponsibility and economic mismanagement that had become hallmarks of the previous Government. We inherited a mess, so those decisions were needed to fix the public finances, fund the NHS and other public services and deliver economic stability. We have been determined to take those decisions while protecting working people. That is why our Budget made no changes to income tax, the rate of VAT, or the amount of national insurance that working people pay. As a result of our Budget, people will not see a penny more tax on their payslips.

Is the Minister seriously suggesting that, with the best brains in the Treasury on hand, he does not understand that it is a moot point whether someone has a higher national insurance contribution in their payslip, or whether their wages are suppressed and the job that they were going for is not there anymore, because the employer cannot afford to increase their payroll due to this national insurance increase?

We recognise that we are asking businesses to contribute more, and that this will have impacts, but it will be up to individual businesses to decide how to respond to these changes. The one thing that we know for certain is that if we had chosen a different path—if we had followed the previous Government and increased income tax or national insurance—that would have led to a tax on people’s payslips. It would have led to the amount of money in people’s pockets going down, which would have broken our manifesto promise.

I apologise for intervening so early in the debate, but a number of my small businesses, charities and voluntary sector organisations have raised concerns and asked for clarity. Can the Minister outline what safety nets and other measures for support are available to small businesses, charities and voluntary sector organisations?

I thank my hon. Friend for his question. I will get to the detail of the Bill in a moment, but I can briefly reassure him that the Bill doubles the employment allowance, which will go from £5,000 to £10,500. That means that small businesses and charities are protected; they can employ up to four people on the national living wage without paying a penny in national insurance. In the context of the tough decisions that we had to take in this Bill, that is important protection for small businesses and charities.

Does the hon. Gentleman not accept that in the UK, the definition of a small business is one that employs fewer than 50 employees and has an annual turnover of less than £10 million? Thanks to his changes and political choices, thousands of small businesses across the country will face the decision of whether to keep staff on or lay them off.

We know that the tough decision that we have had to take will have impacts—we have been up front with people about that—but we also know that over half of all employers will pay no more or less national insurance than they did before. We acknowledge that this decision will have an impact, but we believe that it is the right decision. I will explain why that is.

It is clear that the Government are working hard to get this right, but may I press the Minister on the point about the employment allowance? What he says about doubling the threshold is welcome, particularly when it comes to childcare provision, and we all want an expansion of childcare places. He will be aware that the employment allowance doubling that he is talking about will apply to state-provided childcare places, but not to private and co-operative nurseries. Some 85% of places are in private and co-operative nurseries, so will he look at extending the employment allowance that he is giving to state nurseries to private and co-operative nurseries, so we can support the expansion of childcare?

I thank my hon. Friend for her question, but eligibility for the employment allowance is not changing. It is the same as it was before, and we are maintaining that provision. On protecting small businesses and charities, the crucial thing for us is the doubling of the employment allowance. In individual cases, I would recommend that organisations get the right advice, but the eligibility criteria for the employment allowance will not change as a result of the Bill.

Will the Minister give way?

I will, one more time, and then I will make progress.

Is not the fact of the matter, despite what the Chancellor has said, that businesses have been abandoned? There is no safety net for them. To use the words of the Chancellor,

“What we have done with the increase in employer national insurance is leave it to the business to work out”.

Businesses are bearing the brunt of this, and it is really too bad. As far as the Chancellor is concerned, they will have to grin and bear it.

I am sorry, but there are tough decisions that we have to take, and there are difficult decisions that businesses will have to take. The only people to have abandoned businesses were the Conservatives when they were in government. They abandoned any pretence of economic stability, fiscal responsibility, and supporting businesses to invest and grow. That is the difference between the Opposition and the Government.