Lords vote to exempt health and social care from national insurance hike

The House of Lords has voted to exempt the health and social care sector from the employers’ national insurance hike set to come into force from April.

Peers inflicted a heavy defeat on the Uk 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.”

Expenditure

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.

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.

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.”

National insurance contributions

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.

More amendments will be voted on later today.

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.