TFN contacted all MPs in Scotland to ask their thoughts on the NI hike looming over the sector
Labour MPs from Scotland blanked questions on the impact of the UK Government’s planned National Insurance (NI) hike as opposition parties raised concerns about the policy.
TFN contacted all 57 MPs representing constituencies north of the border, asking whether they agreed with Rachel Reeves’ planned increase to employers’ NI contributions.
The politicians were all also asked what they would like to see the UK Government do to better support charities and the third sector, and whether they had concerns about services being lost as a result of the proposed rises in NI.
Labour’s cohort of 37 Scottish MPs all ignored the email, with their own chancellor facing significant pressure from the third sector in Scotland and across the UK.
The Labour chancellor confirmed last week that there will be no mitigations provided to deal with the increased cost of NI contributions.
She was accused of a “lack of understanding of our essential sector”, with an open letter signed by more than 7,000 organisations calling for action to combat the impact of the move, which will see employers start to pay NI contributions on any employee's earnings over £5,000 instead of the current £9,100 threshold.
The rate of NI will increase from 13.8% to 15%, with an increase in the Employment Allowance that employers can claim, rising from up to £5,000 to up to £10,500 - which the Scottish Council for Voluntary Organisations estimates will cost the voluntary sector in Scotland as a whole around £75 million.
While none of Labour’s MPs in Scotland responded, representatives from each of the other parties with Scottish MPs shared their worries about the impact of the policy.
Liberal Democrat MP for Mid Dunbartonshire, Susan Murray, said she had great concerns about services being lost in her area as a result of the NI hike.
She said the “combination of reduced funding plus increased costs, of which NI is simply the latest in a long line” of rising costs, such as utilities and rent.
The politician, first elected in July, told TFN: “This is shifting costs back into the statutory sector. When third sector organisations fail it is not only bad for their service users, it is also bad for their volunteers.
“This comes on top of a serious reduction in funding for the sector – and it affects the organisations with the best outcomes.
“Governments need to better understand the true value of the third sector in keeping people away from the statutory sector – GPs, hospitals, prisons and the cost prevention this represents.
“This lack of understanding is really important. The third sector is hugely undervalued for the cost it prevents to the ‘system’ overall. We have the Social Return on Investment but, and I am not an economist, we really need to understand the equivalent of Gross Value Added that the sector delivers.
“Jobs are already going with the shift in cost, potentially to the benefit system, NHS, that will bring.”
Tory MP for Dumfries and Galloway, John Cooper, told TFN he has sympathy for organisations affected, but that he could not “in all conscience argue for extensive carve-outs”.
He added: “I think the chancellor’s employer NIC uplift is a damaging and blunt tool which hits all sorts of businesses, and risks the very thing the budget was supposed the engender: growth.
“The burden of Labour’s changes cannot fall entirely on the private sector. The more other sectors are insulted, the more the private sector – without which there is no public or, arguably, third sector – is exposed.
“I have had many businesses in Dumfries & Galloway contact me to say expansion plans are on hold as a result of the chancellor’s decisions, and I fear this will make it harder for young people especially. Many will, I fear, now struggle to get that all-important first job.”
SNP MP Seamus Logan, who won the Aberdeenshire North and Moray East seat in July, raised the impact of the NI hike on hospices - many of which are run by third sector organisations - in Westminster on Wednesday.
He cited a bill of around £3m facing hospices, asking Labour ministers what could be done to support those struggling, and why the Labour government are targeting “organisations that play a crucial role in this sector”.
Logan told TFN: “I think it is quite extraordinary that the chancellor has targeted the charity and voluntary sector with rises in national insurance employer contributions.
“In a parliamentary debate on National Insurance Contributions relating to Healthcare this past November, I called on the Minister of State at the Department of Health and Social Care, Karin Smyth, to consider an exemption from national insurance employer contributions for charities, hospices and GP practices. Her reply was unsatisfactory and tried to deflect the blame to Scotland when it is quite clear that NI is a reserved issue and that these rises are a direct result of a deliberate choice made by her party.
“I believe the budget should not be balanced on the back of Scotland’s charities and hospices who are now facing a £75m bill as a result.
“It is no surprise to me that the new Labour government is being hounded over this decision and I am pleased to see that at least the Health Secretary, Wes Streeting, has agreed to look carefully at the pressures on hospices and to take these pressures into account when deciding allocations for the year ahead.
“If they fail to do this then I don’t really see how they can explain how hospices and charities will continue to provide the vital care and essential services to people needing support.
“It seems incredible that a Labour government is not looking at more progressive forms of taxation to fill the £22 billion black hole left by the previous Tory government. Instead, since taking office, Labour have pursued pensioners with their Winter Fuel Payment reforms and now charities, hospices, and GPs as a way of plugging the gap. It makes a mockery of any claims to be the party of ‘change’.”
