THE House of Lords has voted to exempt the health and social care sector from the national insurance hike set to come into force from April.
Peers inflicted a heavy defeat on the Government, supporting by 305 votes to 175, majority 130, a Liberal Democrat amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill.
The amendments would ensure care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care would continue to pay current contributions.
Tabling the amendment, Liberal Democrat peer Baroness Barker said: “In the health and social care sector, the sudden imposition of these changes to national insurance, along with the increases in the minimum wage, are going to threaten the existence of large numbers of providers.
“The Government has come forward with some of its public sector exemptions, because it realises the effect this is likely to have, but those exemptions will not apply across the board.
“And in particular they will not apply to these organisations: dentists, pharmacists, providers of care services and hospices – all of which are central to the Government’s other stated policy objective of improving health and improving the health service.”
She added that social care takes up a huge proportion of local authority budgets, and that they have no means to mitigate this increase in expenditure.
Peers inflicted a further defeat on the Government in calling for a more detailed impact assessment of the changes to national insurance.
The House of Lords supported by 182 votes to 144, majority 38, a Conservative frontbench amendment that would require the Government to review the impact of the hike of employers’ national insurance on certain sectors within six months.
These sectors are: charities, creative industries, dentists, early year providers, farms, GPs, hospices, hospitality, pharmacies, retail, social care, small businesses and universities.
In further Government defeats:
- Peers called for, 189 votes to 151, majority 38, steps to offset the burden of the national insurance hike on children’s nurseries and playgroups by increasing the amount they can reduce their bill by from £10,500 to £20,000 through the employment allowance.
- Peers backed by 199 votes to 149, majority 50, an exemption from the tax hike for small businesses and organisations with fewer than 25 staff.
- Peers supported by 235 votes to 152, majority 83, an exemption for employers providing transport for children with special needs and disabilities.
- Peers backed by 235 votes to 149, majority 86, an exemption for small charities from the national insurance hike.
Fellow Liberal Democrat peer Baroness Kramer, who added her name to the amendments, warned that national insurance increases would result in two million GP appointments being cancelled, dental practices cutting back their services, pharmacies cutting their hours and services and hospices laying off staff.
She said: “We are trying to stop a disaster… The NHS does not work in isolation, its part of a much more holistic, complex landscape, and if you undermine the private elements of both social care and community healthcare, you undermine the NHS.”
The Liberal Democrats were supported by 200 Conservatives, including former opposition leader Lord Howard of Lympne and former chancellor of the exchequer Ken Clarke (below).
Lord Howard, who is vice president of Hospice UK, highlighted the “devastating effect” the increase would have on hospice care.
He accused the Government of being “short-sighted”, because hospice care helps alleviate the problem of bed blocking in the NHS, and that increasing national insurance will diminish their capacity to help.
Treasury minister Lord Livermore highlighted the Government’s increased funding for the NHS, GP services and hospices, as well as an increase in local government spending power for social care and the employment allowance available for charities.
He said: “This Bill is necessary to fund public services and the proposals contained in these amendments put much of this funding at risk.
“They would require either higher borrowing, lower spending or alternative revenue raising measures.”
A short time later, the Government saw off a Liberal Democrat bid to reduce employers’ national insurance contributions for part-time workers by 169 votes to 97, majority 72..
Labour peer Lord Eatwell argued that 38 out of the 44 amendments tabled at report stage of the Bill are for various exemptions and threshold changes, branding them “wrecking amendments”.
He said: “The 38 amendments all propose exemptions to the changes proposed in the Bill or variations in the various thresholds at which employers’ national insurance is charged. All the amendments have the same internal logic: they are designed to reduce revenue… “The 38 amendments – with identical intent – add up to a set of wrecking amendments, since they wreck the Chancellor’s budget judgment.”
The economist added: “Every exemption, every adjustment to diminish revenue is an expenditure of taxpayers’ money.
“Are the proposers of the 38 amendments really prepared to endorse this scattergun, blunderbuss approach to public spending?
“All the proposals in 37 of the 38 amendments involve commendable, valuable public services and contributions to the economy and society, but this wild scattering of public funds is not a serious way to determine the structure of public expenditure.”
He told peers that simplicity in taxation is important to “make compliance easier and administration more efficient” and to “reduce the opportunities to avoidance”.
Branding the amendments a “charter for avoidance” ripe for exploitation, he insisted that complexity should be introduced through decisions on public spending, not taxation.
