Peers demand tax hike safeguards as Government accused of ‘absence of humanity’

The Government has been accused of an “absence of humanity” as defiant peers maintained their stand-off over plans to hike employers’ national insurance, amid warnings over the impact on hospices.

The House of Lords inflicted a string of fresh defeats on the Labour frontbench as they demanded safeguards to be introduced alongside the controversial tax-raising measures.

The latest Government setbacks to the National Insurance Contributions (Secondary Class 1 Contributions) Bill means a continuation of the parliamentary tussle, known as “ping-pong”, where legislation is batted between the two Houses until agreement is reached.

Meanwhile, Care England, which represents many adult social care providers across the country, has said it is planning legal action over the “increases in national insurance contributions (which) will leave many organisations on the brink of bankruptcy”.

Provisions contained in the Bill include increasing the rate of employers’ National Insurance Contributions (Nics) by 1.2 percentage points to 15%, with payments starting when an employee earns £5,000, down from the current £9,100.

After MPs rejected earlier legislative changes made by the upper chamber, peers backed by 271 votes to 173, majority 98, a Lib Dem move that would allow ministers to introduce exemptions for the health and social care sector from the increase, including hospices, care homes, GP practices, dentists and pharmacies.

The Lords then voted by 276 to 165, majority 111, for a measure that would open the way for a carve out for small businesses and organisations from the lower earnings threshold at which employers start paying contributions.

In another heavy defeat for the Government, the Lords supported by 273 votes to 172, majority 101, a Tory amendment which would require the Chancellor to present a review of the impact of the tax rise on a range of sectors, including hospices, small charities and businesses, the hospitality industry and children’s nurseries.

Liberal Democrat Lord Scriven (pictured) said: “No one is denying the right of the Government to raise revenue. What my amendment does is give the Government a tool to act swiftly with the consequences of what may happen and probably what will happen in health and social care.

“Because it isn’t just the pharmacists, the GPs, the hospices and the dentist practices that will suffer, it’s people who require their services.”

He added: “It is disappointing that when the olive branch is given, the minister has decided to continue with the folly.”

Raising her concerns over the implications for hospices, Tory peer Baroness Monckton of Dallington Forest said: “It shows a lack of compassion and absence of humanity which is truly shocking. It leaves me speechless.”

Independent crossbencher Lord Cromwell said: “I really don’t understand why the Government is resistant to the Treasury having a practical route to act if there is a change of policy in due course.”

He added: “It seems to me rather obstinate not to accept these amendments which give that flexibility without overturning the nature of the Bill and agreeing to carveouts.”

On giving ministers the power to provide future exemptions for small businesses, independent crossbencher Lord Londesborough said: “Given the potential damage to employment, wages and growth, why would the Government not want this weapon in its armoury?”

Responding, Treasury minister Lord Livermore said the Government recognised the “vital role” played by hospices and highlighted the extra £100 million being provided to the sector, with a further £26 million in funding for the support of terminally ill children and young people.

Charities, including hospices, also benefit from the increased employment allowance that would reduce their national insurance bill, he argued.

He added: “The revenue raised from the measures in this Bill will play a critical role in repairing the public finances and rebuilding our public services.

“Any future changes which exempt certain groups would have cost implications necessitating wither higher borrowing, lower spending or alternative revenue raising measures.”

Speaking outside the chamber, Care England’s chief executive Professor Martin Green said: “It is clear that the Government is not listening to the sector and has not acknowledged the body of evidence that shows the enormous impact these charges will have on care providers, and their ability to deliver care and support to the citizens who desperately need it.”

He said that as the Government will also “not listen to the considered advice of the House of Lords”, the organisation has instructed solicitors as its “last resort is to call them to account through the courts”.

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