National Insurance Contributions (Employer Pensions Contributions) Bill

Monday 23rd March 2026 Commons Chamber

Consideration of Lords amendments

[Madam Deputy Speaker (Judith Cummins)]

I inform the House that Lords amendments 1 to 12 engage the Commons’ financial privilege. If any of these Lords amendments are agreed to, I will cause the customary entry waiving the Commons’ financial privilege to be entered in the Journal.

Clause 1

Employer pensions contributions pursuant to optional remuneration arrangements: Great Britain

00:00

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

I beg to move, That this House disagrees with Lords amendment 1.

[Madam Deputy Speaker]

With this it will be convenient to discuss Lords amendments 2 to 12, and Government motions to disagree.

[Torsten Bell]

I welcome the opportunity to consider the Lords amendments to the Bill. I thank Members of both Houses for their careful scrutiny of it, and I particularly thank the Financial Secretary, Lord Livermore, for leading the Bill so expertly through the other place. Before addressing the amendments directly and explaining the Government’s decision not to support them—I know that will be shocking—I turn briefly to the need for these reforms.

As the Chancellor set out at the Budget, we are taking action to make the tax system fairer and fit for the 21st century. That requires us to keep the effectiveness and value for money of the £500 billion of tax reliefs under review, and it is especially important to do so when costs are expected to increase significantly. The cost of national insurance contributions relief on salary sacrifice into pension schemes was due to almost treble, from £2.8 billion in 2017 to £8 billion by 2031, without reform, which would be equivalent to the cost of the Royal Air Force. This is not only an expensive tax relief, but one with a very uneven impact. The majority of employers do not offer salary sacrifice at all. The vast majority of salary sacrifice contributions are made by higher and additional-rate taxpayers. Salary sacrifice is unavailable entirely to those earning at or near the national living wage, or to the UK’s 4.4 million self-employed workers, and we know that both groups are more likely to be under-saving for retirement.

On this basis, the status quo is indefensible. Change was inevitable, but we have chosen to take a pragmatic approach, with no change until 2029, and a £2,000 cap to allow pension contributions via salary sacrifice to continue.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for bringing this Bill forward. He brings a good story to the House, but sometimes these decisions give rise to questions. My constituents believe that the Bill creates a financial disincentive for middle-income earners to save for their retirement. Does he not agree that this risks creating a pensions gap, with individuals becoming more dependent on the state in later life, which will cost the taxpayer more in the long run than the tax relief costs today? My constituents feel that, and I am asking the Minister the question. How would he answer it?

[Torsten Bell]

The hon. Member always raises questions brought up by his constituents, which we know is a valuable part of the work he does in this place. The direct answer to his constituents is that all of them have a very strong tax incentive to save for their pension, without salary sacrifice. We spend £70 billion a year to provide that incentive, whether via the lump sum or the national insurance exemption for employer contributions. I hope the main thing he says to any of his constituents who come through the door is that they have a very strong incentive to save, whatever their circumstances. On the pension gap, that is why we have revived the Pensions Commission. Its work is ongoing, and I am sure he will read in detail its interim report, which will be coming out in the coming months.

[Chris Vince (Harlow) (Lab/Co-op)]

I like to think I represent my constituents as well as the hon. Member for Strangford (Jim Shannon) does his, if anyone could. My constituents are really concerned about the pension gap, because the reality for many of them is that they do not earn enough money to begin to think about saving for a pension. Those are actually the things this Government should focus on, not tax reliefs for higher earners who can afford an additional small bit of tax. Personally, as a resident of Harlow, where a number of young people are in poverty, I will not have sleepless nights over this tax change.

[Torsten Bell]

As always, I thank my hon. Friend for his remarks. He was pretending that the competition is about who is the better MP, but we know it is really about the volume of speaking in this Chamber. The two of them are running it close, but never testing the patience of this House. It is amazing that you have allowed them both in this early in the debate, Madam Deputy Speaker, because that is what the closing minutes of every debate in this House should be about. It is important to have traditions, and they both deliver admirably, but I will make some progress before we get sidetracked entirely.

I was talking about the pragmatic approach we are taking to this change. As I have said, there will be no change until 2029, and the £2,000 cap means that salary sacrifice contributions can continue. That recognises the fact that that has become an established process in several companies and for individuals, so we are giving people time to adjust. The hon. Member for Strangford (Jim Shannon) raised that, and I have responded by saying that this is pragmatic because pension tax relief continues in its entirety. It is important to remember that relief is available to all savers, not just to the minority who have salary sacrifice available to them.

With that in mind—and I am sure that the hon. Member for Wyre Forest (Mark Garnier) for the Conservatives will have decided to support the Bill in its entirety having listened to those powerful arguments—I turn first to Lords amendments 1 and 7, which would exempt basic rate taxpayers from the operation of the Bill, and Lords amendments 5 and 11, which would increase the contributions limit to £5,000. The Government’s balanced and pragmatic approach, with the £2,000 cap, means that 74% of basic taxpayers using salary sacrifice will be entirely unaffected. The small proportion of basic rate taxpayers with contributions above the cap will still be getting the national insurance contributions relief on the first £2,000 of contributions made via salary sacrifice, in addition to the full income tax relief that is available to all employee pension contributions.

Exempting basic rate taxpayers in the manner proposed would be incredibly difficult to operate. An individual’s tax band is not knowable until the end of the tax year, which means employers would be required to carry out complicated calculations at the end of the year to reconcile the figures, and they would need to know their employees’ other sources of income, which I do not think anyone would believe is a good idea.

[Sir Ashley Fox (Bridgwater) (Con)]

The Lords amendments might not be perfect, but do they not set out the principled objection to the Government taxing some basic rate taxpayers more for choosing to save for their pension and at the same time using that money to increase welfare spending?

[Torsten Bell]

No, that is not what is going on. What will happen is that everybody will still have a strong tax relief incentive to save for their pension, and by taking a sensible approach to reforming that, we will avoid seeing the cost of the tax relief rise to the same level as the cost of the RAF. I listen to Opposition Members day in, day out calling for more defence spending. There are consequences for that. One of them is that we have to do our job of looking carefully at the quality of our tax reliefs, and that is what we are doing today. Hon. Members should support us in doing that.

[Sir Ashley Fox]

Rather than raising taxes, could the Minister perhaps not send £36 billion to the Government of Mauritius to rent back an airbase that we already own?

[Torsten Bell]

That is a question the hon. Gentleman should put to his Front Benchers, who opened the negotiations with Mauritius in the first place. Opposition Members come to the House making cheap points, because they used to take seriously the job of government and they have given up entirely. I will make some progress now, having engaged with the hon. Member who obviously gave up on the job of serious government some time ago.

A world where 95% of those earning £30,000 or less and contributing via a salary sacrifice are unaffected makes the case for the £2,000 cap I have set out, but the Government agree with the sentiment raised in the Lords about keeping it under review. The Bill allows for that to take place in future.

That leads me to Lords amendments 2 and 8, which would exempt salary sacrifice pension contributions over the £2,000 cap from the calculation of student loan repayments. It is right that we focus on the outcomes for younger generations too often let down by the failures of the previous Government. I gently remind Conservative Members—there are only two of them here, but there are some Liberal Democrats who deserve some of the “credit” too—of their track record on this matter: trebling tuition fees, raising interest rates, scrapping maintenance grants and the rest. And that is before I get to not allowing anything to be built. That is what younger generations are being let down by.

On the specific proposal, it is worth noting that while salary sacrifice arrangements can reduce the student loan repayments made, they do not reduce the total amount due for repayment. Much more important is the fact that the £2,000 cap means that young graduates are broadly unaffected. In fact—these are new figures that were not available for the discussion in the Lords, but as this issue has been raised and brought to the Commons, I will provide them—the £2,000 cap means that 90% of graduates under the age of 30 repaying student loans who are saving into a pension will be unaffected, in the sense that 90% of them save less than £2,000 a year. I hope that provides some reassurance to Members who have raised that point.

Lords amendments 3, 4, 9 and 10 would make the regulation-making powers in the Bill subject to the affirmative procedure, except for those which solely increase the contributions limit. The Government agree on the importance of maintaining strong parliamentary scrutiny, particularly where changes could affect individuals’ national insurance liabilities. However, the Bill already contains a series of safeguards and the legislative approach taken follows long-standing precedence for national insurance legislation. In addition, the Delegated Powers and Regulatory Reform Committee has carefully scrutinised the powers in the Bill, including the proposed level of parliamentary scrutiny, and concluded that there is nothing in the Bill that it wishes to draw to the special attention of the House.

Lords amendments 6 and 12 seek to exempt small and medium-sized enterprises, alongside smaller charities and social enterprises, from the Bill’s provisions. Again, the Government agree on the importance of supporting small businesses—I am sure that that is a matter of cross-party support—but small businesses are much less likely to use salary sacrifice than larger businesses. Furthermore, the £2,000 cap means that 90% of employees in SMEs making pension contributions through salary sacrifice will be entirely unaffected. Indeed, the largest benefits from uncapped salary sacrifice accrue to larger businesses, not smaller ones. In practice, the changes in the Bill will help to level the playing field between small businesses and their larger competitors. Those wanting to see support for small businesses should support the measures in the Bill. The Government are engaging with employers, payroll professionals and software developers to ensure that the changes are implemented in the least burdensome way possible for employers of all sizes.

I hope that right hon. and hon. Members will understand why it would not be right to support the amendments from the other place, even though we recognise the valuable objectives that have in many cases motivated them. As I said, the Government spend over £500 billion each year on various tax reliefs within the tax system. That is more than double the entire annual NHS budget. The size of the spend means that the Government must always keep the effectiveness and the value for money of those reliefs under review. These are necessary, pragmatic and fair reforms that protect ordinary workers while ensuring that public finances are kept on a sustainable footing. I respectfully propose that this House disagrees with the amendments.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

I would also like to start by thanking the Lords for their very hard work. I do not think the Government won a single vote during the Bill’s passage in the other place.

Over the past few months, we have seen how enthusiastic the Government are to raid savings. In particular, they are very keen to raid pension pots. Whether by taking powers to mandate private pension funds to invest in Government white elephants or through the Bill we are debating tonight, the Government have established beyond any doubt that they have no interest whatsoever in savers and strivers.

Pensions are important. They provide for security in retirement. The pact that has been established between the state and the pension saver, which goes back to the 1920s, is all about not just helping savers but taking the strain off the state: encourage saving now and there will not be a burden on the state of an impoverished pension in the future. Under the previous Government, we saw the roll-out of auto-enrolment, bringing 10 million people into the savings culture, and we introduced the triple lock to reverse the decline in the value of the state pension under the previous Labour Government.

Despite those positive steps, we recognise that people are still not saving enough for their retirement. As the Government’s own analysis shows, 50% of savers are projected to miss their retirement income targets set by the 2005 Pensions Commission, so we need to do better. I know there is cross-party consensus on that point, if nothing else, so let us be honest: the changes to salary sacrifice arrangements will do the complete opposite. As the Association of British Insurers and Pensions UK have outlined, we should be improving our current offering and providing new opportunities. Instead, the Government are making the situation worse in a desperate attempt to balance the Government’s books, conveniently in three years’ time. Frankly, it makes little sense and that is why we oppose this legislation.

The point of salary sacrifice arrangements is that they incentivise certain behaviours. That is why people are allowed to use these schemes to put money towards not just pensions but workplace nurseries, childcare vouchers and cycle-to-work schemes. Those are all good things. However, in this case the Government have singled out pensions and are attacking one of the most important things that people should be saving towards—their pensions. This is hard-earned taxpayers’ money that could be going towards a good thing. Instead, the Bill will remove an avenue that 7.7 million employees are currently using. The Bill will add even more cost to the 290,000 businesses and charities that use it. It will pile more cost on to students already saddled with student loans. It will harm pensions adequacy and force more people to rely on the state, pushing more costs on to the next generation. I am proud that my colleagues in the Lords, as well as Liberal Democrat and Cross-Bench peers, understand those concerns. The Opposition remain opposed to the Bill, but the amendments do go some way to address those issues and support the stated objectives of this policy, even though we disagree with the fundamental policy.

Lords amendments 1 and 7 would make basic rate taxpayers exempt from this policy. That would protect a group who typically under-save and allow them to continue to put savings into their pensions. The hon. Member for Harlow (Chris Vince) may be interested in listening to this, because he raised a very important point about lower rate taxpayers. The amendments are identical to the amendment we tabled in the Commons and that Labour MPs decided to vote down. As the Government’s own impact assessment clearly states, they are trying to target higher earners or those making larger contributions. While that might be the stated purpose and the political justification, in reality that is not the case for two reasons.

First, the cap will still affect 858,000 basic rate taxpayers, according to the Society of Pension Professionals. In fact, reporting from the Financial Times has highlighted how the Bill will disproportionately affect those people, compared to those on a higher rate of tax. Those on the basic rate of tax pay 8% national insurance contributions, while those on the higher rate of tax pay 2% NICs. That means that on national insurance contributions alone, lower earners are being hit four times as hard by this policy—four times. On Second Reading, I asked the Minister how that could be fair. He did not answer my question then, but I hope he will be able to answer it when he winds up. Maybe he can tell us how the policy is fair for those hard-working people, or whether they are just casualties of rushed policymaking.

Secondly, a behavioural outcome may be that employers will remove salary sacrifice as an option for all their employees. We already recognise that salary sacrifice is mutually beneficial for employees and employers. It is also more attractive to both sides, as it is simple to understand. By enforcing the cap, it will change not only the viability of salary sacrifice arrangements, but employers’ perception of them.This may result in many employers removing them as an option altogether, meaning that 4.4 million people who are supposedly protected may be affected. If this Government were really serious about their policy objective, they would exempt basic rate taxpayers altogether. These amendments give them the chance to do just that and to back hard-working people.

19:29

The Government could also show support for hard-working people by backing Lords amendments 5 and 11, which would set the cap at £5,000, rather than £2,000. We support this proposal as we remain concerned that the £2,000 cap is too low and will quickly become valueless through inflation. Indeed, from following the debate in the Lords, it seems that the Government could not provide any rationale for the cap being set at £2,000 in the first place. This House deserves clarity. The Minister should, at the very least, clarify why the Government set the cap at £2,000, and not at a higher level.

By setting the cap at £5,000, as the amendments propose, we could give more value to these arrangements in the future, meaning we will have to tinker less with the cap after years of dilution as a result of inflation. It would also protect lower to middle-income earners and ensure that salary sacrifice arrangements remain viable for them. I hope that the Government will think again here and see these amendments as the practical proposals they are intended to be.

However, while we support this group of amendments, we fundamentally believe that the cap should be indexed and should increase in line with inflation. Given that inflation sits at 3.2%—up from 2%, where it was when the Government came to office—and will likely increase due to events in the middle east, this cap will become valueless in a shorter period of time. It would therefore be logical for the Government to accept this proposal.

Lords amendments 2 and 8, which were moved by my noble Friend Baron Leigh of Hurley, would exempt salary sacrifice pension contributions over the cap from being included in student loan repayment definitions. Colleagues will have seen the growing media coverage of student loans in recent months, particularly relating to plan 2 loans. The Conservatives have accepted that this is an issue that needs to be addressed and that change is needed. As the Leader of the Opposition said,

“Policies that may have been fine for 2012, with low interest rates, are not fine for 2026.”—[Official Report, 25 February 2026; Vol. 781, c. 327.]

Student loans have become a debt trap. It is time for all of us—all of us, Madam Deputy Speaker—to do something about it.

We are trying to back students, which is why last week we tabled a motion that would have set a fairer interest rate, stopped the freeze on repayment thresholds and created more apprenticeships for 18 to 21-year-olds. Unfortunately, every single Government Member voted against it. Tonight, they have an opportunity to make up for their mistake last week. By voting in favour of Lords amendments 2 and 8, they could make a real difference for our young people.

Take the example of a graduate earning £45,000 a year. Prior to this legislation, if they sacrificed £5,000 of that salary, they would save £1,000 in income tax, £400 in national insurance contributions and £450 in student loans—[Interruption.] Of course it is made up! The Minister is chuntering from a sedentary position, Madam Deputy Speaker. We cannot quite shut him up, but we will do our best. This is an important point. The Minister is not that good at maths, although I know he is keen on trying to look good at maths.

Any salary sacrifice above the £2,000 cap will be treated as earnings. If a young graduate originally sacrificed £5,000, under the proposed new cap, £3,000 of that would be subject to student loan repayment contributions, as well as national insurance contributions. The effect of that will be severe: that graduate would now pay an extra £240 in national insurance contributions and an extra £270 in student loans. In total, that graduate would be worse off by £430 a year, as well as having a smaller pension pot.

This is just another example of this Government picking on students. That is money that could be going towards their pensions, money that could be injected into local economies and money that could be used to improve their quality of life. Instead, this policy will take their money so that the Chancellor can plug the holes in her economic credibility. I do not think that the Government intended for this policy to make things worse for students—I genuinely hope not. It seems as though they have not thought about it, however, because the reality is that it will make things worse for students. We have an opportunity to address that and to keep salary sacrifice arrangements viable for our young people paying off their student debts. I would have thought that Labour MPs of all people would be able to support that.

Lords amendments 3, 4, 9 and 10, which relate to the use of the affirmative procedure in the Bill, are common sense. Under the Bill as drafted, the Government would have to use the affirmative procedure if they decreased the level of the cap. That is important, and we are not seeking to change that. However, it was evident during the passage of the Bill through the Lords that there is a lack of clarity on how the Bill will work.

It was very kind of the Minister to send his “Dear colleague”, although I think he neglected to sign it, strangely—it is a small detail, but one worth thinking about. While the letter answered some questions, such as whether the cap applies per job, many questions remain. He admitted in the letter, for instance, that there is an outstanding policy decision on whether this per-job cap will follow the NICs status quo by operating on a pay period basis or operate on a different basis, such as an annualised basis.

These are all serious questions that will not be fully answered until further regulations come forward. Indeed, they are so important that we should be given the opportunity to scrutinise them when they are presented. There should be proper oversight, due process and scrutiny of a policy that will affect millions of people, but under the Government’s proposals we would not get that opportunity and would have to automatically accept the Government’s decisions. We do not believe that that is right. We are simply asking for a minimum level of oversight without imposing a cost on the Exchequer or undermining the Government’s objectives. I cannot see how that would be disagreeable.

Finally, I turn to Lords amendments 6 and 12, which would exempt SMEs and charities. Throughout the passage of the Bill, many have warned about the cumulative burden that this Government are placing on smaller employers. Just listen to their record so far—it is the record of a Government burdening our economy. There is the compliance and regulatory obligations mandated by the Employment Rights Act 2025; an increase in employer NICs of 15%—the jobs tax; the uncertainty around the national minimum wage being equalised for young people under 21; the heightened anxiety around business rates; and, worst of all, the constant U-turns and endless drama from this Government. Altogether, this is making it incredibly difficult for SMEs and charities to thrive.

I think about the many businesses on my high streets in Kidderminster, Stourport and Bewdley and the charities that support people across the whole of Wyre Forest. They all work hard, as businesses and charities do in all our constituencies, in bringing our communities together. The last thing they need is another under-the-radar tax increase.

The Chancellor promised them that she would not come back for more, and yet that is exactly what this Government are doing. It cannot be a surprise, therefore, that we are seeing insolvency rates rise, business confidence plummeting, unemployment continuing to rise and growth stagnating—and that is all before this Bill and their latest Budget come into effect.

The Government’s own impact assessment suggests that 290,000 employers will be affected, but it is even worse than that. As the Lords Minister admitted during scrutiny, 33% of small businesses offer salary sacrifice arrangements, and therefore one in three of those businesses will potentially be exposed to the new costs and complexity that this Bill introduces. These businesses are already struggling to stay afloat—they cannot afford much more. At the same time, the Government cannot afford to keep sending the same message. These amendments give them the chance to change that messaging and to back our small businesses and charities.

To conclude, I want to state clearly that the Conservatives remain opposed to this policy and that the Government should not be bringing it forward. People are not doing enough to save for their retirement, and we should be encouraging them to save more. Instead, the Government want to take away something that is beneficial to all parties simply to cover for their economic incompetence. If we could, we would stop this Bill proceeding any further; however, as we all know, that is unlikely. I therefore ask Labour MPs to look closely and to help to make a bad Bill better.

The amendments the Lords have sent us are not about making the policy unworkable, but about making it practical. Voting for these amendments will allow Labour MPs to back their rhetoric with their actions, to back their constituents and to say, “I back hard-working people. I back small businesses. I back local charities. I back graduates. I back people who save responsibly.” By voting against these amendments, Labour MPs will send a different message to their constituents: “If you work hard to make a decent income, we will tax you more. If you work hard to grow your business, we will tax you more. If you save towards dignity in retirement, we will tax you more.” There is a clear choice tonight, Madam Deputy Speaker. I hope that Labour MPs will make the right one.

[Madam Deputy Speaker (Judith Cummins)]

I call the Liberal Democrat spokesperson.

[Charlie Maynard (Witney) (LD)]

The Liberal Democrats have been clear throughout the Bill’s stages that we think the Government would be misguided to make this change. While it may raise some tax revenue in the medium term, in the longer term it discourages pension saving. It also puts an extra cost and admin burden on small businesses at the worst possible time. For that reason, we support Lords amendments 6 and 12, which would exempt small and medium-sized businesses and charities.

I would like to note again, as I did on Second Reading, that I am sceptical of the timing of this change. It will, very conveniently for the Government, only kick in during the likely election year of 2029-30, and not in 2026-27 or 2027-28. It seems as if the Government are motivated more by a wish to fix their numbers nominally to meet their fiscal rules than by a genuine belief that this change is the right thing to do. [Interruption.] I am asking the Minister to give us a reason why it is deferred and to explain that logic.

Lords amendment 5, tabled by my colleague Baroness Kramer, would raise the proposed threshold from £2,000 to £5,000 on NICs-exempt savings. That would at least mitigate the impact on many lower and middle earners. This would be a sensible way to ensure that it is genuinely those who can afford to pay more who are impacted by this change. The proposed threshold of £2,000 will undoubtedly hit people on relatively modest incomes who are simply trying to do the right and sensible thing and plan for their future. The CBI has also expressed its strong support for a threshold at £5,000.

[Mr Joshua Reynolds (Maidenhead) (LD)]

Does my hon. Friend agree that at times like these, we want the Government to be encouraging those on low and medium incomes to invest in their pensions and their futures—and increasing the threshold would help people to do that—rather than disincentivising people from doing so, as they seem to be doing at the moment?

[Charlie Maynard]

I completely agree. It sends the wrong message and puts in place the wrong incentives, and that is a real problem.

Ministers will have seen the analysis produced by the Office for Budget Responsibility in response to the former Lib Dem Pensions Minister, Steve Webb, highlighting the flaws in the Government’s claim that these changes will not impact most lower and middle earners—that is, those not saving more than the £2,000 threshold in any case. The OBR’s new analysis highlights three main ways that the Bill could affect the wider workforce. First, employers may move away from salary sacrifice altogether by increasing ordinary employer pension contributions in place of wage growth, all by reducing contractual pay in exchange for higher contributions. The OBR’s analysis makes it clear that any change of this kind would necessarily have to be applied across all of the workforce and could not be limited to higher earners, so the impact of these changes could indeed see lower pay rises or reduce base pay for employees who contribute less than £2,000.

Secondly, the new analysis spells out that some employees may move to make standard pension contributions, including through relief at source schemes, thereby losing the NICs advantages of salary sacrifice and increasing their NICs bill, even if they contribute small amounts. Thirdly, OBR modelling shows that employers would pass down around three quarters of the additional NICs cost to employees, mainly through lower wages, which again would likely hit all workers regardless of the amount they save through salary sacrifice.

Not only does this OBR analysis indicate that the Government have been wrong to frame these changes as something that will impact only those with broader shoulders, but, crucially, when the OBR assumed a significant behavioural response from employers and employees, the estimated amount this policy will raise fell by almost half, from £4.7 billion in 2029-30 to £2.6 billion in 2030-31, as these impacts feed through. I am interested to understand whether or not the Minister agrees with that point. Raising the threshold from £2,000 to £5,000 will not solve these issues entirely, but it would mitigate them by exempting a larger number of people on lower and middle incomes from the key change in the Bill. That would, in turn, reduce the number of employees impacted.

Lords amendment 2 relates to the repayment of student loans. This issue was also explored in the Lords, but I think it should be reiterated here, because although it is probably an inadvertent effect, it is none the less a significant issue. I appreciate the Minister’s words, but the fact remains that for any graduate who saves above the threshold, not only will their NICs payments go up, but so will their student loan repayments. This Bill is a double whammy on a group who are already struggling with high interest payments, escalating debt and a very challenging jobs market.

To conclude, with four in 10 people in the country, whether in my Witney constituency or any other Member’s, already not saving enough for retirement, and with the pressures on the state pension and social care system well known, it is counterproductive to reduce the incentives for those who can afford to do so to save towards their retirement. Once again, the measures in the Bill are short-sighted, and the Government’s justifications for them do not add up. I support the Lords amendments, which seek to iron out problems and mitigate the negative impacts. Overall, my party and I cannot support the Bill.

19:45

[Torsten Bell]

I am grateful to the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), and the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard), for their contributions. I will not reiterate the arguments for the Bill as a whole, but I will try to respond directly to the points that they have made.

The hon. Member for Wyre Forest explained that the Conservatives are opposed entirely to these changes, but of course he did not explain at all which bits of the NHS services they would cut, since they obviously do not support the revenue being raised from this sensible—[Interruption.] Which bit of the benefits system would they like to change then?

[Sir Ashley Fox]

The two-child benefit cap. [Hon. Members: “Hear, hear.”]

[Torsten Bell]

Here we have it again: when the Conservatives are faced with any difficult choice, the answer is higher child poverty. It is the answer to every question they are ever faced with. They stand up day in, day out and say that what they want to see is higher child poverty—and they cheered enthusiastically for it just then.

I will move on. Not only can the hon. Member for Wyre Forest not say which bit of the NHS he would like to cut because he opposes these changes, but he cannot even explain why the Conservatives were planning to implement exactly these kinds of changes when they were in government—before their whole giving up on being serious people thing.

[Sammy Wilson (East Antrim) (DUP)]

Will the Minister accept that if these changes go through and people save less for their future, we will have pensioner poverty? That is the impact of these measures.

[Torsten Bell]

Absolute nonsense. Members of the House should be reminding everybody in this country that they have a strong incentive to save for their pension, not misleading them by implying that they will somehow lose out by saving for their pension. That is not the case, and it is really important that we are consistent in our messaging to the public about that. I will come back to the wider point about the levels of saving in society.

The hon. Member for Wyre Forest also asked questions about savings gaps, and he was right to do so. Unfortunately, however, he talked nonsense about that. He talked about the self-employed, low earners, women and those working for SMEs, all of whom do have lower pension savings rates, but all those groups who are under-saving are those least likely to use salary sacrifice. He talked about those on lower incomes, but as I said, 95% of those earning under £30,000 and contributing to a pension via salary sacrifice are completely unaffected. He claimed that the impact was largest on those on low earnings. That is nonsense, because 86% of contributions over £2,000 are from additional rate taxpayers. Those are the facts.

The hon. Member for Wyre Forest went on to invent a brilliant story of a young graduate struggling to get by who was somehow putting £5,000 into their pension every year. As I mentioned earlier, 90% of young graduates are saving £2,000 or less into their pensions. Why are they not saving more? Because their wages did not rise under the Conservative party. Why are they not saving more? Because that party did not build enough houses to help them get on to the property ladder. He asked—[Interruption.] I am glad to hear that all Conservative Members will stop opposing the building of homes in their constituencies in the years ahead.

The hon. Member asked about the implementation. As he mentioned, I have set out that it will operate on a per-job basis. He also asked about how it will operate over a pay period basis. As he knows, national insurance broadly operates on a pay period basis, but we are consulting with employers and payroll providers to ensure that we get that right. As is normal with national insurance legislation, we will set that out in the regulations.

I turn to the hon. Member for Witney (Charlie Maynard). It is not surprising that he, as a Liberal Democrat, opposes these measures but set out absolutely no ideas for how to pay for that. I look forward to him calling for more spending later this week—again with absolutely no idea how to pay for it. He raised timing. Directly to his two questions, we think it is pragmatic to give employers and individuals time to adjust—that is the basis for the pragmatic point that he raised. He also raised the scoring of that, which is a technical issue reflecting how the national accounts deal with the claiming back of tax relief for some pensions. He also mentioned the OBR. If he looks at its report, he will find that it set out that the Budget measures will have no material impact on savings levels.

To end on a point of wide cross-party consensus, both hon. Members raised the case that people do need to save more for their pensions—the right hon. Member for East Antrim (Sammy Wilson) just did so, too—and we all agree on that, and particularly those 45% of working-age adults who are currently saving nothing. As I said, that includes in particular groups such as low earners and the self-employed, for neither of whom is salary sacrifice available. The answer to that is the work of the pensions commission, which I hope will continue to operate on a cross-party basis. Its interim report will be coming forward soon, and I will commend its work to the House. For today, I am afraid that the Government will oppose the Lords amendments.

Question put, That this House disagrees with Lords amendment 1.

19:50

Division 454

Question accordingly agreed to.

Ayes: 280

Noes: 161

Lords amendment 1 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 2.—(Christian Wakeford.)

20:04

Division 455

Question accordingly agreed to.

Ayes: 279

Noes: 167

Lords amendment 2 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 3.—(Christian Wakeford.)

20:15

Division 456

Question accordingly agreed to.

Ayes: 280

Noes: 164

Lords amendment 3 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 4.—(Christian Wakeford.)

A Division was called.

[Madam Deputy Speaker (Caroline Nokes)]

Division off.

Question agreed to.

Lords amendment 4 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 5.—(Christian Wakeford.)

20:29

Division 457

Question accordingly agreed to.

Ayes: 281

Noes: 167

Lords amendment 5 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 6.—(Christian Wakeford.)

20:43

Division 458

Question accordingly agreed to.

Ayes: 278

Noes: 164

Lords amendment 6 disagreed to.

Lords amendments 7 to 12 disagreed to.

Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 1 to 12;

That Torsten Bell, Mark Ferguson, Alistair Strathern, Kirith Entwistle, Chris Vince, Mark Garnier and Charlotte Cane be members of the Committee;

That Torsten Bell be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Imogen Walker.)

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.