CHARITIES will suffer the most as a consequence of the increase in employers’ National Insurance contribution, the House of Lords has been told.
During the Second Reading, on Monday, of the National Insurance Contributions National Insurance Contributions (Secondary Class 1 Contributions) Bill Bill, the Bishop of Southwark, the Rt Revd Christopher Chessun, was one of several speakers to predict its effect on hospice care — much of which originated in Christian foundations, he reminded the House. “Additional government help will not address the shortfall, despite the urgent need highlighted in the debate in another place on the Assisted Dying Bill,” he said.
But the Lords declined by 46 to 61 votes to accept an amendment to the Bill from the Liberal Democrat Baroness Kramer. The amendment said that the Bill risked worsening pressures in the NHS and the social-care sector, penalised part-time work, and put jobs and economic growth at risk.
The Bill increases the rate of Secondary Class One National Insurance contributions from 13.8 per cent to 15 per cent, and decreases the secondary threshold from £9100 to £5000. The Financial Secretary to the Treasury, Lord Livermore, said that “some impacts would be felt beyond businesses.”
Baroness Kramer said: “Hospices, which face a £30-million bill, have warned that they may have to withdraw beds. Research from the Nuffield Trust shows that the cost of adult social care alone would exceed £900 million next year.”
Bishop Chessun spoke of the 1976 Church of England agreement that meant that ministers of religion ceased to be classified as self-employed and embraced employer National Insurance. The annual national figure, including the clergy, was about £10 million, excluding large numbers of staff directly employed by parishes.
“For my diocese, the amount is around £390,000,” he said. “Our principal income source for paying all stipend-related costs comes from voluntary parish giving, which is restricted, and we have still not heard from the Treasury whether it would extend the Listed Places of Worship Grant Scheme, which gives VAT refunds for listed-church repairs.
“Our parishes and dioceses sustain extensive social outreach as well as support for other charities. Does His Majesty’s Government appreciate the risk of staff and clergy reductions and the closure of buildings as a consequence of these measures, in the worst-case scenario?”
He also drew attention to the expected impact of the proposed increase on the transport sector devoted specifically to serving children with special educational needs and disabilities (SEND).
Lord Scriven (Liberal Democrat) told the House: “Research has highlighted that the additional cost of the NIC hike will force hospices to scale back services if they cannot attract more public donations. The cost to the average hospice is likely to be in the region of £200,000 per year.”
Charities of every kind were experiencing large increases in demand for their services, Baroness Sater (Conservative) said. She described those services as “life-saving interventions that are not just nice-to-haves but must-haves”.
Baroness Porter (Conservative) also spoke of the impact on charities. The short-term costs would be felt most immediately by those involved directly with charities. “The downstream impacts, longer-term, will be even more far-reaching, affecting everyone, undermining social cohesion, and weaking our communities,” she said.
Lord Livermore defended the Government’s action and position, referring to a £100-million boost for adults’ and children’s hospices, and £26 million of revenue to support children and young people’s hospices. Tax relief for charities and their donors had been worth just over £6 billion in the past tax year, he said.
The outcome of the Listed Places of Worship Grant Scheme was currently being assessed by the Department for Culture, Media and Sport, he told Bishop Chessun. With reference to the SEND transport, the Government had announced £2 billion of new grant funding for local government in 2025-26.