National Insurance Contributions (Employer Pensions Contributions) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 17th December 2025
(1 month, 2 weeks ago)
Commons ChamberNational Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 Read Hansard Text Watch Debate
18:45 - The House divided: - Ayes: 312 / Noes: 165 - Question accordingly agreed to.
This text is a record of ministerial contributions to a debate held as part of the National Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move, That the Bill be now read a Second time.
This is a short and simple Bill. It is a stocking filler to yesterday’s Finance Bill. [Interruption.] There are just three clauses for the chuntering Opposition Members to enjoy. They focus on amending the Social Security Contributions and Benefits Act 1992, and they do so to create a power to apply national insurance contributions to salary sacrifice pension contributions above £2,000 a year from April 2029.
I will focus my remarks on three areas: first, why Government action in this regard was inevitable; secondly, the case for the pragmatic, balanced approach that we propose to take; and thirdly, how this sits with wider, crucial questions about pension savings on which the House rightly focuses.
Jim Shannon (Strangford) (DUP)
My intervention will be very brief. The Federation of Small Businesses in Northern Ireland has told me of its concerns about national insurance contributions, but it has also told me that utility prices are up by 52.7%, labour costs by 51.5%, and taxes by 47.2%. I ask the Minister respectfully how he and the Government can expect small businesses to survive increases at that level.
Torsten Bell
I will come to the exact point that the hon. Gentleman raises. The main answer to his question is that we are introducing this change with a very long implementation period—it will not come in until 2029—in order to give businesses and others time to adjust. Businesses have welcomed that across the board, but I will come on to it shortly.
It is always important to keep the effectiveness and value for money of tax reliefs under review; after all, their cost is estimated to be over £500 billion a year. That is always true, but it is especially true when we see the cost explode. That is why we acted in the Budget to reform employee ownership trust capital gains tax relief, because the cost was set to reach more than 20 times what was intended at its introduction.
That is what we see happening in the case of pension salary sacrifice: its cost is on course to almost treble between 2017 and the end of this decade. That would take it to £8 billion a year. For some context, that is the equivalent of the cost of the Royal Air Force. I will repeat that: the cost of pension salary sacrifice was due to rise to the equivalent of our spending, in real terms, on the Royal Air Force. The growth has been fastest among higher earners, with additional rate payers tripling their pension salary sacrifice contributions since 2017. While those on higher salaries are most likely to take part, many others are unable to do so at all.
James Naish (Rushcliffe) (Lab)
I understand the justification for making changes to the salary sacrifice arrangements. The Minister mentions higher earners. Can he explain a bit more about the breakdown of those who are benefiting under the current system as a percentage of the whole? I do not know whether he has that data with him.
Torsten Bell
I will come on to some statistics that might answer my hon. Friend’s question.
While those on the highest salaries are most likely to take part in salary sacrifice, others are completely excluded. This goes to the question from the hon. Member for Strangford (Jim Shannon).
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the Minister give way?
Torsten Bell
I will make some progress before giving way again.
The majority of employers do not offer salary sacrifice at all, including many small businesses. Workers on the national living wage are excluded entirely, and so are the 4.4 million self-employed people across the UK. On grounds of cost and fairness, it is near impossible to defend the status quo.
Of course, a major part of the job of the Opposition is to oppose some things that the Government are doing. I do not want to prejudge the remarks that the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), will offer shortly, but I am confident that we will hear some opposition—maybe a word or two—to the Bill.
Dr Murrison
I am grateful to the Minister for arguing for more money for the Royal Air Force, and I very much hope that his colleagues in the Ministry of Defence and the Treasury are listening. We were told a little over a year ago that we had wiped the slate clean and that the Government would not be coming back to demand more money to fill various non-existent black holes. What has changed over the past several months that means he is now coming back to levy this very large sum of money?
Torsten Bell
I think I have already answered the right hon. Member’s question: it is important to keep tax reliefs under review. The cost of pension salary sacrifice is growing very fast indeed, so we have reviewed this tax relief and think it is important to bring in pragmatic changes, as I will come on to.
As I was saying, I am confidently looking forward—
Torsten Bell
I am going to make a bit of progress, and then I will give way to the hon. Member.
The truth is that reform was inevitable. Although Conservative Members are not saying it now, they know this is true, because it is what they said in government. In the 2015 summer Budget, they said:
“Salary sacrifice arrangements…are becoming increasingly popular and the cost to the taxpayer is rising”—
[Interruption.] I will come on to what the last Government wanted to do in the pensions space in a second. I am glad that the hon. Member for North Bedfordshire (Richard Fuller) is so keen to hear this; he is setting me up nicely for what is coming in a second.
The summer Budget of 2015 went on to say:
“The government will actively monitor the growth of these schemes and their effect on tax receipts”,
which is the same argument that I just made to the right hon. Member for South West Wiltshire (Dr Murrison). That monitoring led, a year later, to the then Chancellor—now Baron Hammond of Runnymede—announcing benefit-in-kind restrictions. He told this House:
“The majority of employees pay tax on a cash salary, but some are able to sacrifice salary…and pay much lower tax… That is unfair”.—[Official Report, 23 November 2016; Vol. 617, c. 907.]
He was right then, and the same argument holds today.
Former Conservative Ministers should certainly agree, because in government they were planning exactly the kind of change to pensions that we are now introducing. By way of proof, in 2023 the Conservatives commissioned research on restricting salary sacrifice arrangements for pensions, which is exactly the same measure they are opposing today. What was the proposed cap on pension salary sacrifice in that report? It was £2,000 a year, which is exactly the same cap they are opposing today.
Lincoln Jopp
The Minister seems to have co-opted the amount of money spent on the Royal Air Force into his argument. Is he aware that absent the defence investment plan—it was promised in the autumn, and the House rises tomorrow—we have no idea about the size, shape and cost of the Royal Air Force, because the Government are late with their homework?
Torsten Bell
I thank the hon. Gentleman, as I always do, because he always makes interesting points, but my larger point is this: if the Conservative party refuses ever to support any increases in taxation, increases in such spending—I think there is cross-party support for the Ministry of Defence, as the right hon. Member for South West Wiltshire mentioned—cannot be funded and cannot happen.
Almost every tax expert in the country has noted the need for change, and most have called for pension salary sacrifice to be ended entirely. However, we are taking a more pragmatic approach by recognising that change will affect many employers and employees. Our balanced approach has two key parts. The first is time. As I said to the hon. Member for Strangford, nothing will change overnight. We are providing over three years’ notice of the reform’s implementation. What did the previous Government provide to employers? One year’s notice of their reforms to salary sacrifice. This will give everybody involved time to prepare and adjust, which is widely welcomed by firms and business groups. Employers and payroll providers have already been working with His Majesty’s Revenue and Customs to ensure that this change operates in the most effective way, and that process will continue as we approach implementation.
The second key design choice is the cap of £2,000. This cap protects ordinary workers and limits the impact on employers, while ensuring that the system remains fiscally sustainable. The cap means that the majority of those currently using salary sacrifice will be unaffected. It means that almost all—95%—of those earning £30,000 or less, who work disproportionately for small businesses, will be entirely unaffected, and 87% of affected salary sacrifice contributions above the cap are forecast to be made by higher and additional rate taxpayers. This is a pragmatic and fair approach, as well as the fiscally responsible one.
Some will claim—I am sure we will hear this from the Opposition—that salary sacrifice arrangements drive aggregate levels of pension savings. That is simply wrong. After all, salary sacrifice arrangements existed through the 2000s and into the early 2010s, and what happened to pension savings during that period? There were not rises, but big falls in private sector participation in pension savings. The existence of salary sacrifice did nothing to prevent a situation in which, by 2012, only one in three private sector workers were saving into a pension.
What made the difference was not the complicated national insurance reliefs available to some employees, but automatic enrolment, the groundwork for which was laid under the last Labour Government and which was continued by Conservative and Liberal Democrat Ministers. That reversed the collapse in workplace pension saving, and it means that over 22 million workers are now saving each month.
We also see that contributions have risen in line with regulatory requirements, not with the growth of salary sacrifice. Pension salary sacrifice relief doubled between 2019 and 2023. Was that associated with a surge in average pension contribution levels? No, they have remained entirely stable as a proportion of pay, because all the evidence indicates that it is largely automatic enrolment that drives changes in pension savings. That should not surprise anybody, because the research commissioned by the Conservative party that I mentioned earlier pointed in the same direction. It found that the majority of employers reducing their tax bill by offering pension salary sacrifice did not use the savings to increase pension contributions.
More importantly for any member of the public listening—and it is important for all of us to be clear about this throughout this debate—pension saving will remain highly tax-advantaged after these changes. I have seen some deeply misleading comments in the media and otherwise on wider changes to pension tax relief, saying that people will not be saving as much as they previously were. The public should be clear that we are spending over £70 billion per year on pension tax relief, and that will be entirely unaffected by these changes. Employer contributions will continue to be the most tax-advantaged part of the pension tax system, being made entirely national insurance contribution-free.
These are necessary changes that everyone who has thought about this subject knew would be needed, and they are changes being implemented in a pragmatic and balanced way. They are also consistent with the longer-term approach to reforming the pension system that is now in train.
There is cross-party agreement that the work of the Pensions Commission is important as it examines questions of adequacy and fairness. We all know too many people are under-saving. Many commentators have called for higher minimum saving rates within automatic enrolment, including some on the Opposition Front Bench. The commission is crunching the numbers and talking to employers, trade unions and the pensions industry. We should not prejudge its work so I would now simply note that higher savings rates means pension tax relief costs rising further. If we combine that with the reality that if pension salary sacrifice remains unreformed, the end point could be all employee contributions being funnelled through this route, it implies costs at least doubling again to well over £15 billion a year, which means £15 billion in higher taxes elsewhere or cuts to public services. That is the logical conclusion of the arguments from those opposing today’s Bill.
Then we come to the real problem of some groups disproportionately under-saving, which, again, Members on both sides of this House have rightly raised in debates on pensions in recent months. The Pensions Commission is focused on groups we know are most exposed, including low earners, some ethnic minorities, women and the self-employed. This is a real challenge for our pension system but the data is entirely clear that today’s salary sacrifice is not the answer. That is true whichever group we look at. Let us take them in turn. The self-employed are a top concern, with only one in five saving into a pension, but they are entirely excluded from pension salary sacrifice. Low earners are most likely not to be saving, but it is higher earners who are most likely to be using salary sacrifice. And many more women are under-saving for retirement, but many more men use pension salary sacrifice.
These are fair and balanced reforms. They protect ordinary workers, they give employers many years to prepare, and they ensure both our pension system and the public finances are kept on a sustainable footing. Opposing them is not cost-free: the savings from this measure are equivalent to over 250,000 knee and hip operations every year. The truth is that they are inevitable, which is why at least one party opposite was planning to introduce them. I gently suggest to some Members that they can, of course, take the easy route of opposing this change, but the truth is that they will be doing so with their fingers crossed behind their backs, because many know this change needed to come one day, and I suspect not one of the parties opposite will promise to undo it in the years ahead—but we will see.
The Budget delivered badly needed tax reforms ducked for too long by previous Chancellors. Whether it is the pragmatic reform in front of us today or ensuring that everyone driving on the roads contributes to their upkeep, these reforms are what it takes to keep cutting waiting lists, cutting borrowing and cutting energy bills, and I commend them and this Bill to the House.
Mark Garnier
Indeed—our report, though it was published in May this year. It is a weighty tome. Even its title is pretty dry: “Understanding the attitudes and behaviours of employers towards salary sacrifice for pensions”. The Minister proudly told us that this document underscored the rationale for—[Interruption.] Oh—because it is important stuff. He told us that it underscored the rationale for capping salary sacrifice. However, having read the report, I can tell the House that it actually concludes that:
“All the hypothetical scenarios explored in this research”,
including the £2,000 cap, “were viewed negatively” by those interviewed. The changes would cause confusion, reduce benefits to employees and disincentivise pension savings. The report the Minister is using tells him not to do this.
The report also goes into why salary sacrifice for pensions is used by employers in addition to the incentive of paying into a pension, stating that extra benefits include: savings for employees, so that they have more to spend on essentials, tackling the cost of living crisis; savings for employers, which they can then invest back into their business and staff; and incentives for recruitment and retention. These are all good things—this is the stuff of delivering growth and the basis of creating a savings and investment culture. Why would this Government want to take it away?
The report came to the conclusion that of the three proposed options for change, the £2,000 cap is no more than the least terrible option. [Interruption.] The Minister talks about it being a secret plan—it is a published document. What is he talking about? It is the most extraordinary thing. He refers to it in terms that none of us recognises. But he has brought this in—this is the point. Is the Minister chuffed that his choice comes down to the least worst option for everyone? Here is the truth: it was the Chancellor’s choice to introduce this policy, and this Government are the ones implementing it—they are the ones who are in government.
Let us get to the measures and the impact of the Bill. To be fair, it is a very even Bill; there is something in it for everybody to hate. Take middle-income earners, who are typically in their 30s, and who earn on average a touch under £42,000 a year. This is the target area where the attack on savings starts. This is right at the point in life where people should be doing their very best for their future retirement. It is a perfect target market for the Government’s savings ambitions. However, it does not stop there. In total, at least 3.3 million savers will be affected, which is 44% of all people who use salary sacrifice for their pension. These are all people who work hard—people on whom the Chancellor promised not to raise taxes.
In fact, middle-income employees will be affected more than higher earners. According to the Financial Times, under the Bill, an employee who earns £50,000 and sacrifices 5% of that will pay the same amount in national insurance contributions as an employee on £80,000. If the contribution rate is doubled to 10% of their salary, the disparity grows even further, meaning that an employee earning £50,000 will pay the same amount in national insurance contributions as an employee on £140,000. How is that fair? The Government keep telling us that this policy will affect top earners, but the reality is that those on middle incomes will be disproportionately hit—the very people we should be encouraging to save more.
The Bill will also potentially hit low earners. Somebody who is lucky enough to get a Christmas bonus will not be able to add it to their salary sacrifice, taking advantage of any headroom, because the accounting looks at regular payments, not one-offs. [Interruption.] I am slightly worried, Madam Deputy Speaker, that the pairing Whip has a rather bad cough; I hope he gets better. This will potentially hit the 75% of basic rate taxpayers the cap supposedly protects.
Finally, the Bill hits employers. In the previous Budget, the Government absolutely hammered business. They increased employer national insurance contributions to 15% and, at the same time, reduced the starting threshold to £5,000. Businesses reacted and adapted. They were reassured by the Chancellor’s promise that she would not come back for more, yet here we are discussing further tax rises on businesses.
Let us look at the actual impact this raid on pensions will have on employers. According to the Government’s own impact assessment, it will hit 290,000 employers. A business highlighted in the 2025 report that
“If salary sacrifice were to go away, it would be additional cost of £600,000 to £700,000 per annum to the company in national insurance”.
While the Government are not abolishing it altogether, 44% of people currently using salary sacrifice—[Interruption.] I am worried; the pairing Whip is coughing. Anyway, there is going to be a cost, and that money will be taken away from businesses. This is going to be—[Interruption.] The Minister is chuntering from a sedentary position; he is obviously proud of what he is doing to the pensions industry.
Furthermore, the change will create administrative burdens for employers. With the current system, there are few administrative issues; the only thing that businesses have to bear in mind is ensuring that their employees’ pay does not fall below the national living wage—that is it. So what do the Government do? They go for the most complicated option that the report considered. That was explicitly stated by those involved in the research. As a pensions administration manager for a large manufacturing employer said,
“We’d have to reconfigure all our payroll systems and all our documentation. It would be a big job.”
The National Audit Office estimates that the annual cost on business just to comply with this Government’s tax system is £15.4 billion, yet the Government feel that the time is right to put more costs on businesses. I have to ask, what happened to the Chancellor’s pledge to cut red tape by a quarter?
I think I will move on to my conclusion in order to save people. [Laughter.] There was some great stuff in this speech, but I understand that people want to get away and wrap their Christmas stockings—particularly the Pensions Minister who, like the Grinch, is taking a lot of money away. To conclude, the Government should think again on this policy. People are simply not saving enough for their retirement. We need to do more to encourage them to save for their retirement. I know that the Minister would agree with that, so I hope that he hears the genuine concerns I have raised on behalf of a lot of people. Many people and businesses and are very worried about this policy, and he needs to take it away and think carefully about it.
Fundamentally, we are taking away something that is beneficial to the individual while also being tax efficient for business. Instead of encouraging the creation of incentives such as salary sacrifice or pensions, we are reducing the number. It is the wrong policy, and it sends the wrong message at the wrong time. All it does is add to the ongoing narrative that, “If you work hard to make a decent income, you will lose out. If you work hard as an employer to grow your business, you will lose out. If you try to save towards dignity and retirement, you will lose out.” It is the wrong policy to pursue and we will definitely vote against it tonight.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
It strikes me that it should not be particularly controversial that a Government should be encouraging people to save for their retirement, to take responsibility for their future and to feel secure in later life. Therefore, although we are dealing with a short Bill that appears to be purely procedural in nature, its practical consequences are profound, because it takes us in precisely the wrong direction.
Beneath the layer of technical language lies a troubling choice. It is a choice to tax aspiration, penalise prudence and chip away at the very habits that ensure financial security in our later years. The Government have sought to assure us that this only affects high earners and that most will not be affected, but that is not how it will feel to the majority of people in the real world. One in five people—approximately 20%—rely on salary sacrifice. Those are people who are doing the right thing; they are choosing long-term security over short-term consumption. Yet under the Bill, to save means to pay more. That is not positive pension reform; it is a stealth national insurance rise, dressed up in the cloak of technicality.
At a time when businesses are struggling under huge wage bills, regulatory uncertainty and sluggish growth, the Bill quietly imposes on them yet another burden. I remind Government Members that fairness cuts both ways. It is not fair to tell people to save for their future and then tax them more for doing so, it is not fair to talk of fiscal responsibility when penalising prudence, and it is not fair to build long-term public finances on short-term revenue grabs.
There is a moral component to this, because women will be disproportionately affected. Many women, on returning from maternity leave, increase their contributions to cover for that career break. The proposals as drafted will result in those who plan responsibly being encumbered with higher additional national insurance charges.
Torsten Bell
I am reluctant to intervene, but I just want to pick up on two points that the hon. Member has just made. Men are much more likely to use salary sacrifice than women, so I offer him the chance to reconsider his last point about women being disproportionately affected. Before that, he said that the Bill meant that people were being encouraged to save but that they would be penalised if they did so. Given that there are members of the public listening who will make choices about their savings, I invite him to remind everyone that saving into their pension is still a very tax-advantaged thing to do. All Members on both sides of the House should encourage people to save into their pension, as the tax system will continue to do.
Dr Shastri-Hurst
The Minister is right that people should be putting into their pensions and we should encourage them to do so, but we should not put forward legislation that disincentivises that. In respect of women, it is a fact that they are more likely to take career breaks and, by virtue of that, they may want to make up their contributions. This legislation will disadvantage those individuals.
The salary sacrifice scheme has become the bedrock of the modern pension system in the workplace. By decreasing gross pay, it decreases employer national insurance contributions and allows firms to invest more in their people. That is a positive step. My fear is that, as a consequence of this piece of legislation, many employers may scale back those contributions, cut other benefits associated with work or even discontinue schemes entirely. If we want a country that values responsibility and rewards work, and in which people make long-term plans for their economic security, I am afraid that the Bill takes us in entirely the wrong direction.
The Exchequer Secretary to the Treasury (Dan Tomlinson)
Thank you, Madam Deputy Speaker, for bringing the Front Benchers on both sides to heel at just the right time, before I make the closing remarks. It is a pleasure to close this Second Reading debate, and I thank all Members on both sides of the House for their contributions. I thank my hon. Friend the Member for Dartford (Jim Dickson) for his contribution and his brief foray—and it was brief—into broader points around the Budget, which I did appreciate. I will try to minimise doing so in my remarks.
The shadow Minister, the hon. Member for North Bedfordshire (Richard Fuller), raised a few points. While he is whispering over there, I will confirm to him that the costing provided by the OBR accounts for the dynamic effects of this policy. The costing itself has been certified by the OBR. The reason why the change does not come in for a number of years is because it will give businesses time to plan, which we think is an important thing to do when we are making significant changes to the pension system.
This is an important Bill, if small. This is an important debate to have, although it has felt somewhat rushed given that it has come after the many final-week statements and urgent questions today. But that has given me a bit more time to prepare some remarks, which I have hastily cut down from the 30 minutes I was planning; we will see whether we can make faster progress than that for the sake of all concerned.
In my extra time this afternoon, I thought I would attempt to shoehorn a Christmas theme into my closing remarks, given that this will be the last time the House divides before Christmas. Very briefly, I present “The Twelve Numbers of Christmas: the Salary Sacrifice Edition”. I start with 12 words from Baron Hammond of Runnymede on how some employees are, in his words,
“able to sacrifice salary…and pay much lower tax….That is unfair”.—[Official Report, 23 November 2016; Vol. 617, c. 907.]
The Whips can count, and I can see that they have counted that as 12 words—very good. It is clear that even 10 years ago the Conservative party was aware of issues with salary sacrifice schemes. They knew that we must ensure that significant tax reliefs totalling £75 billion a year are properly targeted. That is why we are capping pension salary sacrifice contributions at £2,000.
Let us be clear: we are not removing pension tax relief, just the ability for unlimited relief via salary sacrifice, which many people cannot access in any case. That brings me to my No. 11. Those earning £11, £12 or £13 an hour at the national minimum wage or the national living wage cannot make use of salary sacrifice schemes because if they sacrificed their salary, they would be paid less than the minimum. It is the richest who benefit the most from these schemes.
Chris Vince
It’s Christmas! I have been here the whole time, by the way, Madam Deputy Speaker.
The Minister talks about the impact on different earners. The Parliamentary Secretary to the Treasury mentioned that only one in five self-employed people actually gets a pension, and there was another statistic about low earners. Can the Minister reflect on that? We need to get more people signing up for a pension.
Dan Tomlinson
Some 4.4 million of the self-employed are also not able to save into salary sacrifice schemes; it is right that we make the scheme fairer for all.
Let me continue to run through my numbers. Some 10 million people have signed up to a pension since auto-enrolment, which has limited the need for salary sacrifice. There are more than 900 tax reliefs; this is one of a number that we are reducing to raise revenue fairly at this Budget. Without intervention, salary sacrifice would have cost £8 billion a year by the end of the decade. Instead, we will now raise £7 billion from this change over the course of the scorecard.
The change will affect those on higher earnings more: 60% of the contributions come from the top fifth of employees and just 5% of those earning less than £30,000 will be affected. We will give businesses time to plan—this is not coming in for a bit less than four calendar years.
Dan Tomlinson
We should make progress.
I step back for my final three numbers. Let me briefly set out how some of the long-term decisions the Government are taking are paying off. Figures today show that inflation has fallen to nearly 3%, with wages up more under this Government than in the first decade under the Conservatives. In the past two Budgets, the Government have made the right decisions for the good of the British people. We have focused on improving public services because we know that we were elected to put them right. We have focused on getting living standards up because we were elected to end decline. We have focused on making the right decisions for the long term because we were elected to put to bed the short-term chaos of years gone by.
To conclude, my final number is not a partridge in a pear tree but this fantastic country—my No. 1. We are all here to represent and improve this one great country of ours. It is a land full of hope and wonder, particularly at this time of year, with families and friends looking forward to seeing each other over the coming weeks, neighbours who look out for one another, communities who come together at Christmas—which we all want to get to in good time—and people who work hard and who want the state and the economy to work for them in return.
Although we disagree on much, I know that right hon. and hon. Members from across the House care deeply about this country of ours, and it deserves our best. Although the Bill is short and has only a few clauses, it is part of a bigger story about a Government who love this country and its people and want the best for it, a Government who are making the right decisions for the national interest, and a Government who are working every day to help everyday Brits get a fairer deal, in every way that we can. With that, I commend the Bill to the House.
Question put, That the Bill be now read a Second time.
National Insurance Contributions (Employer Pensions Contributions) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 21st January 2026
(2 weeks, 2 days ago)
Commons ChamberNational Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 21 January 2026 - (21 Jan 2026)
15:24 - The Committee divided: - Ayes: 191 / Noes: 326 - Question accordingly negatived.
15:39 - The Committee divided: - Ayes: 195 / Noes: 317 - Question accordingly negatived.
16:01 - The House divided: - Ayes: 316 / Noes: 194 - Question accordingly agreed to.
This text is a record of ministerial contributions to a debate held as part of the National Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mark Garnier
I completely agree. That is a fundamental problem. We are doing completely the wrong thing for people who want to do the right thing. We are disincentivising people taking responsibility for their future at a time when the state pension is coming under a lot of pressure. It is expected in 11 or 12 years, I think, that less money will be paid into the pension schemes pot than is withdrawn by those of us who are approaching retirement—I declare an interest, in my own case.
The Parliamentary Secretary to the Treasury (Torsten Bell)
You have years to go.
Torsten Bell
I thank the hon. Member for Wyre Forest (Mark Garnier) for the reminder of the excellent debate we had before the Christmas break. I thank him and the hon. Member for Witney (Charlie Maynard) for their contributions. I will briefly reiterate the case for the three short and perfectly formed clauses of this Bill before focusing my remarks on the hon. Members’ amendments.
As hon. Members know, this reform was inevitable. We have had a detailed discussion of the last Government’s secret plan to implement a very similar proposal—the “secret plan” label came from the Conservative party, not Government Front Benchers—and the cost of pensions salary sacrifice was due to almost treble, from £2.8 billion in 2017 to £8 billion by 2030. That is the equivalent of the cost of the Royal Air Force. The status quo is also hard to defend when low earners and the 4.4 million self-employed people across the UK are entirely excluded, reinforcing the point made by my hon. Friend the Member for Harlow (Chris Vince).
Steve Darling (Torbay) (LD)
The Minister will recall our many happy hours together in Committee on the Pension Schemes Bill. One of the issues that the Liberal Democrats raised was the need for an MOT for people as they approach pension age, to see how their pension is going and test its adequacy. Does the Minister accept that putting these stark restrictions in place will significantly restrict the ability of somebody who realises that they are running out of time to make additional contributions to their pension to get to a better place? Would he consider extra flexibility, so that people could perhaps use 10-year allowances in three years?
The Second Deputy Chairman
Order. I remind Members that the scope of this Bill is very narrow indeed, and we really ought not to be bringing in new concepts.
Torsten Bell
Thank you, Ms Nokes. I will follow your advice, but will try to respond to some of the hon. Member’s points when I address the question of how we have gone about making the changes that this Bill introduces.
As I have said, change is inevitable, but it is important to take a pragmatic approach, which is my answer to the hon. Member for Torbay (Steve Darling). The Bill is pragmatic in that it continues to allow £2,000 to be salary sacrificed free of any NICs charge, ensuring that 95% of those earning £30,000 or less will be entirely unaffected. It is pragmatic in that it gives employers and the industry four years to prepare.
Chris Vince
The Minister has said that the cost to the Exchequer of the salary sacrifice scheme is going to triple by the end of this decade. Does he agree that that is unsustainable for the Treasury, and also that we in this Chamber have to get real? The reason why people in my constituency of Harlow cannot even begin to think about pensions or savings is that they are living day to day. What this Government need to do is tackle the cost of living crisis, and that is what they are doing.
Torsten Bell
In a shock move, I entirely agree with my hon. Friend. Members of those parties who have said that they intend to vote against this Bill today cannot keep coming to this Chamber, day after day, calling for additional spending in more areas, while opposing any means of raising taxes. [Interruption.] Well, you have raised the welfare budget, and without trying—
The Second Deputy Chairman
Order. First, I have not raised anything. Secondly, we are not here to debate the welfare budget. This is a very narrow Bill with limited scope. The Minister can listen to the same strictures I have given to other Members.
Torsten Bell
I am listening to every word of your strictures, Ms Nokes. This Bill is also pragmatic by providing time to adjust and by ensuring that saving into a pension remains hugely tax-advantaged. I say gently to Members who do not agree with the detail of this Bill that they should be careful not to give the impression to savers or those not saving that there is not already a strong financial incentive to continue pension saving in exactly the way people have been doing. Clause 1 provides for that pragmatic approach in Great Britain. Clause 2 does the same for Northern Ireland, and clause 3 provides for the territorial extent and start date of these measures.
I will turn more substantively to the amendments tabled by the shadow Minister and the hon. Member for Witney. At one level, I was glad to see amendments 5 and 6 tabled by the shadow Minister, which aim to exempt basic rate taxpayers. It shows the Opposition, as part of the secret plan that I mentioned earlier, accepting the inevitability of change and instead grappling with what the right pragmatic version of that looks like. In many ways, the amendments aim to deliver the same objective as the £2,000 cap, which, as I said, will mean that 95% of those earning less than £30,000 are unaffected, as are the vast majority of basic rate taxpayers.
Sir Ashley Fox (Bridgwater) (Con)
Can the Minister explain what is pragmatic about withdrawing a 2p in the pound tax relief from a higher rate taxpayer without a student loan, while withdrawing a 17p in the pound tax relief from a basic rate taxpayer who happens to have a student loan?
Torsten Bell
The pragmatic approach is to allow people to continue with salary sacrifice up to £2,000 and to not bring in the measure for four years, so that people have time to adjust. Opposition Members will need to justify wanting to spend more than is being spent on the Royal Air Force on that—I sat through Prime Minister’s questions today, and I heard people calling for more defence spending—while not being able to live up to what that requires, which is taking seriously that we spend tax reliefs effectively. For everybody, there will still be a strong tax incentive to save into their pension.
Taking the approach that the Opposition propose, rather than our proposed cap, would likely be impossible to implement in practice and add unnecessary complexity. That is not least because employers would in many cases not know which employees would end up being basic rate taxpayers. They certainly would not know for sure until the end of the financial year, or at least late on into it.
Amendments 7 and 8 would uprate the cap by inflation. The Government have set out our policy intent for a £2,000 cap to be introduced in April 2029, with the timing driven by the desire to give everyone time to adjust. In that context, it does not make sense to index that cap ahead of 2029. Our view is that the future level of the cap in the next decade and beyond is for Budgets in those decades—or at least significantly closer to them. I know that Members are keen to start debating the 2031 Budget, but having heard from Ms Nokes, I think we should leave that for another day.
Our approach is consistent with the one that this House has taken under Governments of all three main parties, which is to have key elements of the pension tax system that are not routinely indexed, including the annual allowance. It is of course right that this and all Governments will want to keep the cap under review to ensure that it continues to meet the objectives we have set out today.
Several of the new clauses probe at the impact of the changes. The Government have published a tax information and impact note alongside the Bill. It sets out the impact of the policy on the Exchequer, the economy and individuals and businesses. It also provides an overview of the equality impacts.
New clauses 1 and 2 focus on SMEs. I have heard suggestions—this has been gently hinted at today—that SMEs are more likely to be affected. The opposite is true. Only 39% of employers offer pension salary sacrifices, and small businesses are less likely to do so than larger businesses. Indeed, the status quo puts SMEs at a disadvantage relative to their larger competitors, which is the opposite of the point that the hon. Member for Witney wanted to make.
New clause 3 focuses on marginal tax rates, but the changes in the Bill do not directly affect a person’s marginal tax. Those wanting to make pension contributions to keep their taxable income below a certain level can continue to do so, and I have read much misleading commentary on that point.
New clause 4 proposes an impact assessment of the changes before they take effect and five years after. I again commend the hon. Member for Wyre Forest, who is showing admirable zeal for supporting the argument that I made on Second Reading that any responsible Government should keep the £500 billion of tax reliefs under review to ensure that they are delivering efficiently on their objectives. That is the exact thought pattern that identified this relief as needing reform. I look forward to the shadow Minister changing his mind and supporting our measures. The Government should and will continue to keep this and all taxes and tax reliefs under review, rather than singling this particular relief out via primary legislation.
I turn briefly to new clauses 5 and 6, which focus on the impact on pension savings. I can reassure the Committee that the Office for Budget Responsibility has set out that it does not expect any material impact on savings as a result of the Budget 2025 tax changes. I hope that these remarks reassure Members on the points that their amendments have raised. I commend the Bill to the Committee.
Question put, That the amendment be made.
Torsten Bell
I beg to move, That the Bill be now read the Third time.
The Bill amends the Social Security Contributions and Benefits Act 1992, creating a power to apply employer and employee national insurance contributions on salary sacrifice pension contributions above £2,000 a year from April 2029. Reform of this type, as I have said, was inevitable. The cost to the Exchequer of salary sacrifice pension schemes was due to almost treble by 2030 without reform. The Government are taking a pragmatic and balanced approach to that reform: first, by introducing a cap so that ordinary workers are, in the vast majority of cases, unaffected; secondly, by giving employers, employees and providers a long lead-in time, so that everybody has plenty of time to prepare; and thirdly, by ensuring that saving into a pension, including via salary sacrifice, remains hugely tax-advantageous. The Government continue to provide over £70 billion of income tax and national insurance relief on pension contributions each year. Employer pension contributions will remain the most tax-advantaged part of the system.
In this debate and others on pensions, we have heard strong cross-party consensus that greater pension adequacy is important. We all look at the forecasts for private pension income and see that they show lower private pension income on average for those retiring in 2050 relative to those retiring today. That is not an acceptable place to be. Answering that question is the job of the Pensions Commission, which we have put in place with cross-party support. It is rightly examining the question of retirement income adequacy and fairness. I gently note that those groups that we all agree are under-saving for retirement, such as low earners and the self-employed, are precluded from using salary sacrifice or are much less likely to use it than other groups.
Part of what we are doing through the Bill is delivering badly needed reforms to the tax system alongside other measures from the Budget. These measures are what it takes to keep waiting lists falling, cut borrowing and cut energy bills in the years ahead. Those who do not wish to support changes like these cannot have it both ways and call for additional spending, additional support on energy bills and the rest.
More generally, it is important that we all consider the effectiveness of tax reliefs in the system, which cost a cumulative £500 billion a year. If we defend the status quo, even in the face of tax reliefs, which are hard to justify and whose costs are rising significantly, that means that higher taxes for everybody else. We are not prepared to see that happen.
Indeed, I am sure that in their hearts the Opposition parties also believe that these reforms are necessary. As a test of that, I invite the shadow Minister to stand up and commit to reversing the changes if—though it is very unlikely—the Conservatives ever happen to form a Government again. I am 100% sure that he will not do that, because he knows that these changes need to be made. On the basis of what should be cross-party support, I commend the Bill to the House.
Wednesday 4th February 2026
(2 days, 18 hours ago)
Lords ChamberNational Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 21 January 2026 - (21 Jan 2026)
This text is a record of ministerial contributions to a debate held as part of the National Insurance Contributions (Employer Pensions Contributions) Bill 2024-26 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
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Baroness Merron
That the Bill be now read a second time.
Northern Ireland, Scottish and Welsh legislative consent sought.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, it is essential that the changes we hope to make in this Bill resolve some of the existing workforce issues within our NHS. I say at the outset that the Bill will not be a silver bullet, and I do not wish to present it as such, but the changes it introduces for foundation and specialty training will lead to a more sustainable medical workforce that can better meet the health needs of our population.
I am most grateful to all those who have engaged with us, including the devolved Governments, to recognise the shared challenges that we face across the United Kingdom. My thanks are also due to noble Lords from across the House for their constructive contributions, time and interest in meeting me and officials. I am also most grateful for the cross-party support that has been demonstrated, both in the other place and in my discussions with the Front Benches in this House. A number of organisations have also expressed their support, including: the BMA, the Academy of Medical Royal Colleges, the Royal College of Physicians, and the Royal College of Surgeons of Edinburgh.
The NHS is beginning to show signs of recovery, following a period of unprecedented strain. Nothing in the NHS functions without its workforce and I am grateful for the dedication and professionalism of our workforce. Supporting, valuing and planning for that workforce is fundamental and, I know, something that your Lordships’ House takes a great interest in—and rightly so. Because the NHS depends on its workforce, we are developing a long-term approach to workforce planning, aligned with the ambitions set out in the 10-year health plan published in July, which set out the intent of this Bill.
That work will culminate in the publication of a 10-year workforce plan in the spring, setting out how we intend to ensure that the NHS has the right people in the right places with the right skills. Staff have been clear for some time that they want change, not only in absolute numbers but in how they are trained, supported and treated at work. We have heard from many who have been exceptionally frustrated by the current application process. There are challenges within medical training that cannot be addressed without legislative change, and that is why we are taking action with this Bill. I am absolutely delighted that my noble friends Lord Duvall and Lord Roe have chosen to make their maiden speeches in this important debate. I, like all noble Lords, very much look forward to hearing from them.
One of the most pressing of those challenges is the severe bottleneck in postgraduate medical training. For several years now, the number of applicants for foundation and specialty training places has grown far more rapidly than the number of available posts. In 2019, there were around 12,000 applicants for 9,000 specialty training places. In 2020, visa restrictions were lifted, and we find this year that this has soared to nearly 40,000 applicants for 10,000 places, with significantly more overseas-trained applicants than UK-trained ones.
This has created intense competition, uncertainty and frustration for many at the start of their careers. At the same time our NHS has become increasingly reliant on international recruitment. This Government deeply value the contribution made by doctors from all around the world, many of whom have played and continue to play a vital role in patient care, and nothing in in this Bill diminishes that contribution. However, it is neither sustainable nor ethically comfortable for the UK to depend so heavily on recruiting doctors from countries that themselves face serious workforce challenges while a growing number of UK-trained doctors struggle to access training posts. Competition for medical staff has never been fiercer. The World Health Organization estimates a shortfall of 11 million health workers by 2030. Shoring up our own workforce will limit our exposure to such global pressures without depriving other countries of their homegrown talent, and this Bill seeks to address that imbalance.
Let me turn to the Bill itself. The Medical Training (Prioritisation) Bill gives effect to the Government’s commitment to place UK-trained doctors and other defined priority groups at the front of the queue for medical training posts. It does so while continuing to allow internationally trained doctors to apply for and contribute to the NHS. Let me emphasise that the Bill is about prioritisation. It is not about excluding people, but it is unashamedly about prioritisation. For the UK foundation programme, the Bill requires that places are allocated to UK medical graduates and those in priority groups before being offered to other eligible applicants. For specialty training, it introduces prioritisation initially at the offer stage for 2026 and from 2027 at both the short-listing and offer stages. That will significantly reduce the level of competition being faced by UK-trained applicants, and it will provide greater certainty at a critical point in their career.
Internationally trained doctors with significant NHS experience will continue to be prioritised for specialty training, recognising the service that they have given. This year, immigration status will be used as a practical proxy for NHS experience in order to allow prioritisation to begin swiftly. For following years, we have taken powers in regulations to enable us to refine this approach in consultation with key partners. I have been asked by noble Lords what this means for those with refugee status. This status is not a stand-alone priority group, although refugees will be prioritised for specialty training in 2026 if they fall within another priority category, such as holding indefinite leave to remain or having completed the foundation programme. Refugees who do not fall within a prioritised group may still apply for specialty training posts and the Bill will not change their eligibility to apply for locally employed doctors’ roles.
I am seeking to address up front some of the concerns that will quite rightly be raised in the course of the debate. One of those is a concern I have heard about why British citizens who have graduated from medical schools outside the UK will not be in the priority group, including some doctors who would be eligible only for provisional GMC registration. I understand the reasons why this is being raised, and I have heard how some would prefer all British citizens, in a blanket sense, to be prioritised. The problem with that is that it would undermine the very intent of the legislation, which is to enable effective workforce planning and the development of our future medical workforce.
The principle is to create a sustainable domestic workforce. It is not about where a student is born; it is about where they are trained, and the fact is that UK-trained doctors are more likely to work in the NHS for longer. In addition, the Government set UK medical school places based on future health system needs. Student intakes and graduate outputs of overseas medical schools are not included in our domestic workforce planning. If we prioritised British citizens in a blanket sense for foundation training places regardless of where they studied, that would undermine our key aim to build UK-trained capacity while ensuring that we do not provide more foundation programme places than we need. I reiterate that this Bill is about prioritisation and not exclusion. All eligible applicants will still be able to apply and will be offered places if vacancies remain after prioritised applicants have received offers, which we expect to be the case on the basis of our long experience.
I have also listened to colleagues expressing concerns around the treatment of applicants graduating in Malta. The UK’s long-standing partnership with Malta on healthcare is valued and will continue. Doctors training in Malta will still be able to come to the UK to gain NHS experience to support their training, for example through fellowship schemes. These arrangements are not affected by the Bill. However, as I stated earlier, for recruitment to specialty training places in the UK, the Government assess that it is important to prioritise to ensure a sustainable workforce that meets health needs.
I turn to the matter of public health specialists, who are particularly identified in the Bill. Public health is a unique medical specialty that draws applicants from medicine and other professional backgrounds who all undergo the same rigorous training. All public health specialists, regardless of professional background, complete the same rigorous medical specialty training programme and are subject to the same high professional standards. The Bill excludes from prioritisation any specialty programmes wholly in the field of public health, as it would undermine the multidisciplinary public health specialist workforce. The Government will monitor the impact on the public health specialist training programme, which currently accepts very small numbers of international medical graduates.
I am aware that there are concerns relating to terms and conditions and mobility for some specialists. We have set out the actions we will take to make the NHS a better and great employer. However, a focus on the NHS alone will not support the whole health workforce, as many public health specialists work outside the NHS with differing employment arrangements. But we are committed to working with the BMA, employers and professional bodies to make public health careers more attractive.
On timing, the Bill includes provisions to allow prioritisation to apply to the current application cycle, with posts commencing this August. That requires Royal Assent by 5 March. It is therefore important to seek timely passage for this Bill to avoid disruption for trainees who need sufficient time to find somewhere to live, sort out childcare and arrange any other aspects of their lives before their posts start, and for NHS trusts that are planning the front-line services. I hear the concerns of some noble Lords about the impact on those applying in the current application cycle, particularly where applicants report that they did not know how prioritisation might affect them. As I said earlier, these concerns are understandable, and they have been carefully considered. However, delaying action would only prolong the current problem by further entrenching the existing imbalance in training competition and it would weaken our ability to plan a sustainable workforce.
The commencement provisions provide necessary flexibility, ensuring that implementation can be carried out in an orderly and workable way, taking account of operational realities. On that point, there is a material consideration, which I am sure will be raised and understandably so, about whether it is possible to proceed if strike action is ongoing. The disruption strikes cause, and the pressure they put on resources, would undoubtedly make it a lot harder operationally to deliver the important measures in this Bill. It is our intention to commence as soon as we can, subject to the Bill’s passage through Parliament, but it is vital to have a safeguard to ensure that the systems planning and operational capacity required for successful implementation are firmly in place.
I conclude by saying that the Bill will not solve every workforce challenge, but it is a very important step towards a more coherent, ethical and sustainable approach to medical training and workforce planning: something that has been called for for many years.
It is estimated that four resident doctors will be competing for every specialty training post in 2026. With the delivery of this Bill, this number can reduce to two resident doctors per place. British taxpayers spend £4 billion training medics every single year. It will be by better aligning public investment, training capacity and long-term service needs that the Bill will give UK-trained doctors a fair chance to serve in the health service they train to support, and to do so in a way that benefits us, the public, across the country. I beg to move.
Baroness Merron (Lab)
My Lords, I am most grateful to all noble Lords who contributed to this debate for the support given, including just now by the noble Earl, Lord Effingham, to working with us, because I think there is general recognition that we have a problem that needs to be dealt with. I am very glad, as I said at the outset, to have been the Minister at the Dispatch Box when my noble friends Lord Duvall and Lord Roe made their moving maiden speeches. They both have many years of distinction in public service, and I know that that will continue as they bring their own unique experiences and views on the world to your Lordships’ House, which will be much enriched by their presence.
A strong and consistent theme has come through today’s debate: a shared concern for the well-being of NHS staff, recognition of the importance of workforce planning and the need for a sustainable health service. I am grateful for the thoughtful questions, and I will endeavour to answer as many as possible—I have already referred to some in my opening remarks. I will of course review the debate, as always, and I will be pleased to write to noble Lords on those matters I was not able to get to.
This legislation is about giving future generations of doctors trained in the UK a clearer and more secure pathway into NHS careers. It is about sustainable workforce planning and, as the noble Earl, Lord Howe, referred to, about fairness—to those who train here, to taxpayers who fund that training and to patients. As many noble Lords acknowledged, significant public investment goes into medical education every year, so it is right that we ask ourselves how that investment can be best aligned to what we need.
I have listened closely to the concerns raised today, particularly about the Bill’s impact on those who will not be prioritised. To reiterate, the way I look at this is that the Bill is about prioritisation, not exclusion. I assure your Lordships’ House that all eligible applicants will still be able to apply, and they will be offered places if vacancies remain after prioritised applicants have received theirs. We absolutely expect that to be the case; that is our experience. To be more specific, there are likely to be opportunities in specialties such as general practice, core psychiatry and internal medicine, which historically attract fewer applicants than the groups we are prioritising for 2026. We still need those people.
The noble Baroness, Lady Hollins, asked about possible unintended consequences for the UK’s international reputation. I believe our proud history of welcoming colleagues from across the world will continue and, as I have just said, international colleagues can, of course, continue to apply after prioritisation has taken place and there are vacancies.
On new specialty training posts, we have committed to creating 1,000 of these new posts over the next three years, focusing on specialties where there is greatest need. This is on top of creating 250 additional GP training places each year. The noble Earl, Lord Howe, raised questions about the availability of training places. Expansion will be matched with training capacity. We have not yet confirmed which specialties will receive the new posts, but we will ensure that expansion is targeted where patient demand and workforce pressures are the most acute.
I am glad that the noble Lord, Lord Stevens, made reference to the cancer plan. It was a bright spot in today’s news—I am sure all noble Lords will understand —and has not had the airtime it ought to have had, so I am most grateful to him. What I can tell the noble Lord about the creation of new specialty training posts is that there will be a focus on those with greatest need. We will set out steps in due course and I look forward to keeping the noble Lord informed. Non-prioritised graduates will also continue to have routes into NHS careers through locally employed doctor roles, gaining experience that can support future progression and prioritisation.
Let me turn to some of the specific points that were raised by noble Lords. The noble Lord, Lord Patel, asked about British citizens who have graduated from medical schools outside the UK and will not be in the priority group. I understand why these concerns are being raised but, going back to the core of the Bill, to prioritise them would undermine our aim to build UK-trained capacity while ensuring we do not provide any more foundation programme places than we need. To reiterate, UK-trained doctors are more likely to work in the NHS for longer, and retention is an issue that is much discussed in your Lordships’ House. They will be better equipped to deliver tailored healthcare that suits the UK’s population because of what they understand. Reference was made to the provision extending also to the Republic of Ireland graduates. Their inclusion ensures consistency in workforce planning across both jurisdictions, which reflects the long-standing protocol rights for movement and employment. That was something in which the noble Lord, Lord Clement-Jones, was particularly interested.
On specialty training places starting in 2026, British citizens will be prioritised, because that is one of the prioritised immigration statuses being used as a proxy to indicate someone who is likely to have significant experience of the NHS. Why? Because applications for posts starting in 2026 have already been made. Prioritisation is only at offer stage because shortlisting is under way, so it is a timing matter about implementation. From 2027, immigration status will no longer automatically determine priority, but we have the ability to set out in regulations the persons who will be prioritised based on criteria which indicate they are likely to have significant NHS experience, or based on their immigration status. As I said earlier, we will be engaging with our partners to work out how best to define that.
On the point made by a number of noble Lords, including the noble Earl, Lord Howe, and the noble Lords, Lord Clement-Jones and Lord Stevens, about graduates of overseas campuses, including Malta, which I will turn to presently, having heard the noble Baroness, Lady Gerada, the UK foundation programme applications for 2026 show that there are almost 300 applicants from these overseas campuses, of whom 152 are UK nationals. This is a substantial number and, if we were to do what is being asked—to prioritise graduates of UK overseas campuses—our estimation is that this could encourage universities to establish further international partnerships which would simply increase pressure still further. It also risks creating a loophole that would encourage new overseas partnerships to seek preferential access to the foundation programme across the UK. The noble Lord, Lord Clement-Jones, picked out Liechtenstein in particular, but, as the noble Baroness, Lady Coffey, referred to, we are talking about the EFTA countries, which include Liechtenstein, and they are prioritised simply because of existing international agreements that we are obliged to honour. However, in practice, not all these countries are going to have eligible applicants.
Lord Clement-Jones (LD)
I hope the Minister does not mind. Does the Minister think that the agreement with Malta should be honoured as well?
Baroness Merron (Lab)
I am coming on to this, but the agreement in respect of Malta that I would refer to is a reciprocal health agreement. It does not apply in this area. It is about the reciprocal provision of healthcare. I will turn to Malta, however, after saying a brief word about overseas campuses generally.
Just to re-emphasise, overseas campus students are not part of the numbers that the Government are setting. We do not have that control. If we prioritised those graduates as well, that would eat away at the very core of the Bill and the things people actually want us to do.
The noble Baroness, Lady Finlay, and the noble Lord, Lord Clement-Jones, wanted an indication of how this would all align with the international education strategy. The Bill does not conflict with this, because the international education strategy supports universities expanding internationally. It does not prevent UK universities delivering medical degrees overseas. That strategy stays in place.
I turn to Malta for the noble Baroness, Lady Gerada—
Baroness Hollins (CB)
Can I just a question? The Minister has suggested that these students could come and work in non-training posts. But the problem, as I understand it—do correct me if I am wrong—is that, for example, St George’s students must complete their foundation year in the UK to be eligible to apply for full registration. Therefore, it means that they cannot complete their medical education without being eligible to apply for the foundation training. While a different contract could potentially be negotiated for future students at an overseas campus, the current students who have this contract and expectation in place need to have that honoured. I do not feel that the Minister has responded to the concerns that have been raised eloquently around the House.
Baroness Merron (Lab)
As I said at the outset, I will endeavour to answer all questions, but where I do not have an answer, particularly where I want to look at them in closer detail, I will be very pleased to write, of course, as always.
Still turning to Malta—which is a pleasure—let me say straight away that we do have a long-standing partnership with Malta on healthcare. It is valued and it will continue. Doctors who are training in Malta will still come to the UK, as they do now, to gain NHS experience to support their training, for example through fellowship schemes. This is not affected by the Bill.
As I discussed with the noble Baroness just yesterday, senior officials in my department have met with the High Commissioner of Malta to the United Kingdom in order to assure him of this. But it is important to prioritise in order to ensure a sustainable workforce that meets its health needs. Again, that is at the core of the Bill. Malta has its own foundation school. This is not part of the UK foundation programme: it is affiliated with the UK foundation programme office which administers the UK programme. That means—this point has been made to me—the Malta Foundation School delivers the same curriculum and offers the same education and training as the UK foundation programme. The Bill will not impact this affiliation or the other ways in which work carries on closely with the Government of Malta when it comes to health.
The noble Earl, Lord Howe, also made the point that he believed small numbers of students were impacted. I have referred to the 300 applicants from overseas campuses. I hope it is understood that that is why there is a significance there.
If there are other matters that I have not addressed to the satisfaction of the noble Baroness, Lady Gerada, I will be very pleased to review this, because I suspect there were some more points to address. I will be very pleased to write to her to give her comfort in this regard.
I move on now to the impact on doctors who were part way through the application process—a point spoken to by noble Lords, Lord Patel, Lord Mohammed, Lord Clement-Jones, and other noble Lords. As I stated earlier, delaying implementation of the Bill until next year, which would be required if we were to respond as requested, would mean another full year where we are not tackling the issue of bottlenecks in medical training. It seemed to me that the feeling in the House was that we did need to do that.
I understand the discomfort of noble Lords around this. It is important that I recognise that, but it is also important to recognise when introducing legislation that sometimes it will not work perfectly for everybody. This is about prioritisation, not about exclusion.
Following that point, the noble Lord, Lord Stevens, the noble Baroness, Lady Coffey, and the noble Earl, Lord Effingham, asked about emergency legislation. They asked: why now? As the Health Secretary set out in the other place, he has listened to resident doctors and their concerns about a system that does not work for them. He agreed to bring forward that emergency legislation as quickly as possible, rather than wait—this is key for a number of the points raised—another year to do so.
The noble Earl, Lord Howe, and the noble Baroness, Lady Coffey, asked about the Bill’s commencement and why it will not commence at Royal Assent—that is a very fair question. We are introducing reforms for a large-scale recruitment process. I know that noble Lords will understand what a major undertaking this is. We do not want to create errors or more uncertainty. To make sure that it is effective in commencement, we must have clear processes for delivery across the health system, and I am sure that all noble Lords appreciate that these elements cannot be switched on overnight. As the Secretary of State said in the other place, there is a material consideration about whether it is even possible to proceed if the strikes are ongoing. He is concerned—I share this concern, as I am sure all noble Lords do—about the disruption that strikes cause and the pressure they put on resources, which would make it so much harder operationally to deliver the measures in the Bill.
Lord Mohammed of Tinsley (LD)
I will press the point I made earlier about uncertainty. Not having a commencement date creates a lot of uncertainty for the current batch of students, who are really worried about whether they will they gain a place and, more importantly, where. I want to impress this issue on the Minister; it was raised by the Russell group medical school admissions head with me personally.
Baroness Merron (Lab)
I completely understand the point about uncertainty. Uncertainty exists in the current system, and uncertainty may transfer for different reasons. We are keen to get on with this. I am just indicating some of the circumstances—strike action—that would cause difficulty for us in terms of commencement. I hope we can proceed. I think the noble Lord will understand exactly what I am saying.
The noble Baroness, Lady Coffey, asked about the release of more granular detail. I draw noble Lords’ attention to the fact that NHS England already publishes a wide range of recruitment data, including data on country of qualification and nationality groups. It will publish further granular data when possible and monitor the implementation of the Bill, should it pass—that, for me, is the most important point. If the noble Baroness is referring to other information, she is very welcome to raise that with me.
I am of course very happy to meet with my noble friend Lord Stevenson. In general, the 10-year health plan commits to working with professional regulators and educational institutions over the next three years to overhaul education and training curricula.
To answer the question from the noble Baroness, Lady Coffey, on prioritisation, if I can put it in my language: you either are or are not prioritised. There are no tiers of priorities within priorities; it is as it is written in the Bill.
The noble Lord, Lord Mohammed, asked about the impact of prioritisation on harder-to-fill specialties. This approach will not negatively impact recruitment. In fact, it will ensure that priority groups are considered first, while keeping the door open for when we need people. I think it will help get people into the areas in which we need them, because it will direct people to where we do not have sufficient applicants.
At its heart, the Bill is about the UK-trained medical graduates on whom the NHS heavily relies. We are grateful for their skill, commitment and professionalism. It is our responsibility to ensure they are trained, supported and treated well at work. This is a more sustainable and considered approach to the allocation of medical training places. A number of noble Lords said that this is a problem that has been around for years. We are grasping the proverbial nettle. The Bill is a measured step towards the goals of clarity, fairness and opportunity. It will not, on its own, resolve everything—I am fully aware of that—but it will help us with a pressing problem. With that, I beg to move.