National Insurance Contributions (Employer Pensions Contributions) Bill

Baroness Maclean of Redditch Excerpts

Wednesday 4th February 2026 Lords Chamber

[Baroness Maclean of Redditch (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord de Clifford, who spoke about his personal experience of running a small business, which I also share.

When the Bill was introduced, the Treasury Minister in another place said:

“It is the richest who benefit from these schemes ... it is right that we make the scheme fairer for all”.—[Official Report, Commons, 17/12/25; col. 1023.]


It is a weird definition of “fair” when someone earning £45,000—a basic rate taxpayer—is penalised for saving too much for their pension.

I reject the notion that fairness means endless redistribution from those who contribute to those who do not. A truly fair society recognises that those who work hardest, take the most risk and contribute the most deserve to be rewarded, because it is their success, and the wealth they create, that make it possible to help people who genuinely need the help. You do not lift up the poor by bringing down the rich; you do not make anyone richer by arguing about slices of the pie. Your Lordships do not need me to remind the House that it was Mrs Thatcher who said that. This progressive instinct—to take ever more from those who contribute and redistribute it endlessly—is yet another thing that sounds compassionate but is the opposite.

However, it is not just on values that I differ from the Government. I also differ from them in the practical outcomes. It actually would not matter if we had different values if the evidence showed that their policy was going to be successful and help people and society; but, as we have heard from all across the Chamber, these policies are not successful: they are economically illiterate and self-defeating. You just cannot tax your way to prosperity. Societies around the globe have tried it over and over again and it never works.

Your Lordships should consider this: the top 1% of earners in the country pay approximately 29% of all income tax. The top 10% pay roughly 60%. These are not bad, greedy or selfish people. They are working damn hard and are carrying the entire system on their backs. And what is their reward? To be told they are not paying their “fair share”. To face ever-higher taxes. To see their pension arrangements restricted, and to be demonised while people who choose not to work or who have only recently arrived in this country and never paid in, get benefits paid for by these very taxpayers.

The Government have claimed that this measure targets higher earners who benefit disproportionately from salary sacrifice, but that is just not the case, as we have heard in many other remarks. The Chartered Institute of Taxation found that limiting salary sacrifice will affect basic rate taxpayers more, pound for pound, than higher and additional rate taxpayers. Moreover, this change is likely to cause some employers to withdraw pension salary sacrifice as an option.

I started my business with my husband in a small flat above a former garage in Acocks Green, which is a suburb in inner-city Birmingham. We could not compete with large employers—established large companies—for the kinds of graduates we were trying to hire. We barely even had a flushing toilet in the first years we were starting, so we had to offer something to get people to actually come and work for us. We were able to offer salary sacrifice and pensions: that was one thing that we could do. We could not offer any other fancy perks, but at least we could offer that, and we knew that we were doing the right thing for people.

It is not surprising, unfortunately, that the Government take this approach, because—with a couple of honourable exceptions sitting here tonight—barely anybody in the Government has actually ever started a business or knows what it is like or has even worked in the private sector. Unfortunately, the Treasury’s own figures show that approximately 85,000 basic rate taxpayers will be affected by this. These could be people earning about £45,000 after 20 years in the workforce. The Treasury Minister talks about the rich, but these are not millionaires or billionaires: they are not Elon Musk. They are people who have just worked very hard in ordinary jobs for 20 or 30 years. They are the backbone of our country. They are saving for the future and they do not ask anything from the state. Yet their taxes are going up on absolutely everything and they do not get any of the benefits available to people on lower incomes. They cannot use those benefits and they do not use those services.

This is another restriction on these people’s ability to save, while the Government are subsidising many others who make lifestyle choices not to work and have unlimited numbers of children, while claiming benefits and not working. We are seeing that balloon now, with the two-child benefit cap going. We are providing housing and support for record numbers of illegal migrants at taxpayers’ expense. This is the absolute madness of this system now. The Bill is yet another punch in the guts for exactly the kind of country that we want to encourage and the people who keep this country going.

The Department for Work and Pensions estimates that two-fifths of people are not on track to achieve their retirement incomes, so the solution is to encourage more saving. I am out of time, but can the Government please look at amendments to protect basic rate taxpayers, index the threshold to inflation and require comprehensive review before implementation?