Clause 5

Part of National Insurance Contributions Bill – in a Public Bill Committee at 4:45 pm on 7th December 2010.

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Photo of Stella Creasy Stella Creasy Labour, Walthamstow 4:45 pm, 7th December 2010

I wanted to speak on this amendment as someone with quite a lot of experience of the charitable and voluntary sector both locally and nationally. I know I am not alone among Members on either side of the House in being involved in this and not necessarily sharing the view that the hon. Member for Watford takes. My concern about the amendment, and the reason why I think it is important, goes to the heart of the Bill and what it is there to do.

If we are talking about a job creation scheme, we need to look at where jobs are created within our economy. My contention is that the Government are missing a trick by excluding any sector that we know has a capacity for job creation. In fact, over the past seven or eight years, the sector in question has shown a tremendous capacity for job creation. That is why, going back to my earlier comments, it is so important to get the evidence on which the proposals have been put together and why I am so disappointed that today we have not had the evidence on how the modelling of behaviour was undertaken. Behaviour varies in different sectors of the economy, and any other economist doing modelling on behavioural work would agree. My professional background is in psychology, which is why I am particularly interested in behaviour models. There are further complexities that Governments could and should look at when dealing with such technical policies.

There is also the question of the model of take-up. I would like to point out to the Minister that on Thursday I was given the commitment that I would get more details on the background of the model relating to the 400,000 businesses that he thought the policy would affect. I have looked at the impact assessment and the information I requested is not in there. Although it will have to be done after the debate today, I again ask for that information to be supplied. All of us want good evidence-based policy making, rather than policy-based evidence making; that has perhaps been a critique of policies in the past.

The charitable sector is important because charities in Britain have done a tremendous amount over the past 10 years to grow. Members said earlier that they were unsure about the issue, so it will be helpful in making the case for not ignoring the voluntary sector to look at some of the evidence. Evidence from the “UK Civil Society Almanac” tells us that nearly 700,000 people work as paid employees in the voluntary sector, so it clearly creates jobs. The sector accounts for two out of every 100 employees. If we compare that with the 7 million employees in the public sector and the 21 million in the private sector, it is a comparatively smaller amount of people, but it is no less important an area at which to look. It has also grown tremendously; the almanac tells  us that between 1999 and 2008, the voluntary sector work force increased by 124,000, which is higher than the increase in the public or the private sector over the same period. That is why it is so important that we do not say that employment costs are a secondary concern. For any industry with that many people working in it, employment costs will obviously be a consideration when starting up or expanding.

The almanac also tells us that staff are 20% of the costs of small charities, which are comparable with the businesses that we are talking about in the Bill. Those costs include national insurance. Critically for the provisions of the Bill, the average wage of those working in the voluntary sector is around £22,000, so any changes to national insurance contributions would make a substantial impact.