Peers Battle National Insurance Hike Impacts on Health and Social Care Workers

The House of Lords has stepped up efforts to protect health and social care workers from a proposed increase in employers’ National Insurance Contributions (NICs), raising concerns about the financial impact on critical sectors. Over the past month, peers have successfully challenged the government’s plan to boost NICs from 13.8% to 15% while lowering the earnings threshold from £9,100 to £5,000. These proposals, seen as burdensome on hospices, care homes, GP practices, and pharmacies, were presented in a bill that remains in a state of ‘ping-pong’ between the Commons and the Lords as negotiations continue.

Liberal Democrat peer Lord Scriven introduced amendments aimed at providing exemptions for affected sectors, suggesting they act as an “olive branch” to resolve the current deadlock. This approach is intended to not oppose the government’s revenue-raising efforts but to equip ministers with flexibility to address potential negative outcomes in health and social care, should the bill pass unchanged.

Labour Treasury minister Lord Livermore responded by highlighting the financial implications of such exemptions, arguing they could necessitate increased borrowing or reduced governmental support elsewhere. Nonetheless, he acknowledged the crucial role of hospices and announced additional funds: £100 million for the sector and £26 million targeted at supporting terminally ill children.

The Lords also included two significant amendments in this session, allowing potential exemptions for small businesses from the lowered earnings threshold for NICs, and mandating the Chancellor to assess the tax increase’s impact across various sectors, including hospices, charities, small businesses, hospitality, and nurseries. As discussions persist, the future of National Insurance contributions remains uncertain, with parliamentarians keenly aware of their implications.