Chancellor of the Exchequer Rachel Reeves (Image: Getty)
Labour's jobs tax will have “catastrophic consequences” for charities when it comes into effect on Sunday, Conservatives have warned. Charities and voluntary groups say the Government’s increase in employer National Insurance contributions will cost them ￡1.4 billion but Chancellor Rachel Reeves has rejected pleas for them to be exempted from the rise.
Shadow Culture Secretary Stuart Andrew, a former manager at a Yorkshire hospice, said he feared terminally ill children would be among those suffering as a result. He said: “This reckless and irresponsible Jobs Tax will have catastrophic consequences for our charities, who provide critical support to individuals who are facing poverty, illness, and injustice.”
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Ms Reeves has announced hospices will receive ￡100 million in additional funding to help them cope with the increase, but Mr Andrew said: “Voices in the sector have warned that Labour’s investment will not cover the additional cost of employer National Insurance contributions. The truth is, Labour’s jobs tax will wreck their ability to function effectively, ultimately affecting the range of offers that hospices can provide to vulnerable people, and shamefully, even terminally ill children.”
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He added: “The last thing charities need is a jobs tax which pushes them into the corner.
The MP was a manager at Martin House Children’s Hospice in Wetherby before becoming an MP in 2010.
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The National Council for Voluntary Organisations has warned the National Insurance increase will cost charities ￡1.4 billion every year and said organisations “may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support”.
Marie Curie, which provides care for people who are dying, said it will have to pay ￡2.92 million a year and said “the only option left will be reduce services”.
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Homelessness charities including Crisis, St Mungos and Homeless Link have warned they will lose up to ￡60 million and wrote to the Chancellor saying this would have “an immediate detrimental impact on the lives of the thousands of people”.
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The Carers Trust, which helps unpaid carers including children caring for siblings or sick parents said its services will lose ￡3 million.
Ministers have met charity managers to discuss their concerns, said Culture Minister Stephanie Peacock. Responding to a question in Parliament, she said: “Ministers have met with representatives from the voluntary, community and social enterprise sector to discuss this issue and are aware of their concerns about the impacts of the increase to employer National Insurance Contributions (NICs).
“The government recognises the need to protect the smallest businesses and charities, which is why we have more than doubled the Employment Allowance to ￡10,500. This means that more than half of businesses (including charities) with NICs liabilities will either gain or see no change next year.”