Autumn Budget 2025

Lord Davies of Brixton Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

I strongly welcome this Budget, particularly the removal of the two-child limit. The remarks made by the noble Lord, Lord Bailey of Paddington, failed to change my mind on the issue. I took them as being the latest iteration of the age-old tactic of the immiseration of those who deserve social support.

Most of my remarks are devoted to the issue of pensions. I agree with my noble friend Lady Nichols of Selby, who is not in her place, about the action on the British Coal Staff Superannuation Scheme and the fact that members will get the full value of the contributions that have been paid on their behalf. I welcome the action being taken in relation to the Pension Protection Fund and the financial assistance scheme, where credit will be given for the increases that were guaranteed before 1997.

I welcome the action on salary sacrifice. The concern that has been expressed about the change is extraordinary. Private pensions get massive tax advantages, which, broadly speaking, I support. Perhaps there should be a proper review of how they work, but taking away less than 1/20th of those advantages in a way that targets that removal of support for those on higher incomes seems an entirely appropriate and reasonable measure.

I also welcome the action on the problems that arise when there are index-linked benefits and frozen tax thresholds. There is a clear potential problem, which I have been warning of since I entered the House about five years ago. This is the first time that any Government have formally acknowledged that this is an issue that needs to be tackled.

First, it is not that it becomes a problem when the new state pension overtakes the tax threshold. It is already a problem, because many pensioners have larger than that standard level of pension, on which they are already having to pay tax. That is entirely right; I am in favour of pensioners paying tax. However, at the moment, because the state pension is not included within the PAYE system, it creates difficulties. People get a brown envelope in the post saying that they must pay a certain amount of money, or their tax codes are adjusted in ways that cause them considerable problems. So this is already an issue and will increasingly become one; action was definitely needed.

My Government have not explained in detail how this simple assessment will work. I have some fears, because whenever a system is introduced as being a simplification, it all too often ends up making things a lot more complicated. So I welcome an assurance from my noble friend the Minister that this will be taken into account when we see what the appropriate solution should be.