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

MPs voted on 17 December 2024 to pass the National Insurance Contributions (Secondary Class 1 Contributions) Bill at its Third Reading, approving the legislation by 354 votes to 202. The bill raises the rate of employer National Insurance contributions from 13.8% to 15%, cuts the per-employee earnings threshold at which employers become liable from £9,100 to £5,000, and doubles the Employment Allowance from £5,000 to £10,500. All three changes take effect from 6 April 2025. The vote gives legal force to one of the largest payroll tax increases in recent memory. Employers across every sector face higher costs from spring 2025. The reduction in the secondary threshold is particularly significant because it widens the range of earnings on which contributions are due, meaning employers pay more even before the rate rise takes effect. The doubling of the Employment Allowance is designed to shield smaller employers, but critics focused on sectors that cannot easily absorb the extra costs: GP surgeries operating under NHS contracts, independent care homes, hospices reliant on charitable fundraising, and small businesses in sectors such as life sciences. Labour MPs voted unanimously in favour, with 312 Labour and 37 Labour and Co-operative members backing the bill and none opposing it. Conservatives (99), Liberal Democrats (70), the SNP (8), the DUP (5), the Greens (4), Plaid Cymru (3), and Reform UK (3) all voted against. The Lib Dems were particularly vocal in debate, arguing the rise would damage the very primary care and social care infrastructure the government says it wants to protect. Three independents voted aye and six voted no. The scale of the government's Commons majority meant the result was never in doubt; the bill passed comfortably despite near-total opposition from smaller parties.