😕 Employer National Insurance Contributions: Charities

Westminster Hall

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The parliamentary session focused on the impact of increased employer National Insurance contributions on the charity sector following the government’s October Budget. MPs expressed concerns that the rise would force many charities to cut services or staff, with particular worries about the effects on hospices, homeless support, and violence against women services. Several Members urged the government to exempt charities from the increase or provide alternative financial relief to prevent the potential closure of vital community services. The debate highlighted widespread cross-party support for protecting charities from the financial strain imposed by the new tax policy.

Summary

  • The debate focused on the impact of increased employer National Insurance contributions on the charity sector, following changes announced in the October Budget by the Government.

  • Joe Robertson, MP for Isle of Wight East, highlighted that the rate increase to 15% and the lowered threshold to £5,000 would affect charities, which deliver around £17 billion in public services annually.

  • Charities expressed concerns that the £1.4 billion estimated cost to the sector would lead to drastic service cuts due to already stretched budgets.

  • MPs across various constituencies cited examples of how local charities would struggle with the increased financial burden, including the Balsam Centre, Midlands Air Ambulance, Shooting Star and Demelza House, and many others.

  • Several MPs suggested that the Government should reconsider the National Insurance changes, proposing exemptions for charities similar to those granted to the NHS.

  • The debate highlighted the critical role charities play in supporting the NHS, tackling poverty, addressing homelessness, and supporting vulnerable groups, warning that reduced charity capacity could increase pressure on public services.

  • Some MPs criticized the lack of an impact assessment on the charity sector and urged the Government to undertake one.

  • The Minister for Civil Society, Stephanie Peacock, acknowledged the challenges faced by charities but noted that the Government’s economic decisions were aimed at stabilizing public finances.

  • The Minister mentioned that the Government supports charities through various tax reliefs and funding schemes, such as the National Lottery Community Fund and the VCSE energy efficiency scheme.

  • The debate concluded with a call for the Government to reconsider its approach to taxing charities, emphasizing their essential contribution to society and the potential negative impacts of the current policy.

Divisiveness

The level of disagreement in the session was minimal, with Members across the House expressing a strong, unified message against the changes to employers’ National Insurance contributions affecting the charity sector. The debate was characterized by an overwhelming consensus on the negative impact of these changes on charities, with numerous speeches and interventions advocating for exemptions or relief for the sector. Even the Minister, Stephanie Peacock, acknowledged the concerns and committed to relaying the feedback to the Treasury, indicating a lack of disagreement on the issue at hand. The arguments were almost unanimously critical of the government’s policy, with calls for rethinking the approach and providing support to charities.