National Insurance Contributions (Secondary Class 1 Contributions) Bill: Second Reading

Parliament voted on 3 December 2024 to give a Second Reading (initial parliamentary approval) to the National Insurance Contributions (Secondary Class 1 Contributions) Bill, which would increase the rate of employer National Insurance contributions from 13.8% to 15% from April 2025, while simultaneously lowering the threshold at which employers begin paying the tax and doubling the employment allowance from £5,000 to £10,500. The bill passed by 332 votes to 189, with the government carrying the vote comfortably.

The bill is the legislative mechanism for one of the central tax measures announced in the October 2024 Budget. It raises revenue that the government says will fund an additional £22.6 billion in NHS resource spending, including 40,000 extra elective appointments per week, as well as supporting wider public service investment. The increase affects employers across the economy, though the government argues that the doubled employment allowance means over half of all employers will pay the same or less than before, and that 865,000 employers will pay no employer National Insurance at all in the following year. Critics argue the measure will suppress wages, cost jobs, and push some businesses, charities, hospices, and social care providers into financial difficulty.

The vote divided almost entirely along party lines. All 297 Labour MPs and 32 Labour and Co-operative MPs who voted supported the bill. Every Conservative, Liberal Democrat, SNP, Reform UK, Plaid Cymru, Green, and DUP member who voted opposed it. Three independents voted in favour and four against. The Conservatives moved a reasoned amendment declining to give the bill a Second Reading on the grounds that it broke Labour's manifesto commitment and would reduce growth, wages, and employment. The bill sits within a broader legislative programme that also included the Finance Bill, which subsequently passed its Third Reading in March 2025 by 339 votes to 172.