Universal Credit (Removal of Two Child Limit) Bill

Caroline Nokes Excerpts

2nd reading & Money resolution
Tuesday 3rd February 2026 Commons Chamber

[Clive Lewis]

I am listening to the hon. Gentleman. Conservative Members always seem to portray this as an individual moral failing. That is how they see welfare, when actually it is about a collective insurance against economic risk. That is how we see it. You see it as a moral issue; we see it as an economic one.

[Madam Deputy Speaker (Caroline Nokes)]

Order. It is not me who is being referred to; it is the hon. Gentleman.

[Dr Evans]

That is far from the truth. I am simply arguing that we need to be fair to those who need the system to support them and those who contribute to it. I worry that we are pulling at the fabric here.

It is interesting that the debate in the House is slanted towards the Labour view, because they have the numbers. If we look at the public polling, however, we know that, consistently, 60% of the public support the cap and only 30% want it to be taken away. Why is that? Fundamentally, they understand that there has to be give and take. The worry here is that someone will suddenly get £3,650 with no contractual change within society to better themselves.

The money could be better spent. To take an example from the last Government, in 2021 they changed the UC slider from 63% to 55% to encourage work. That cost about £2.5 billion; we are talking about £3 billion today. We have heard from the Government how this will be paid for. It is not hypothecated. The pharmacist I was talking about and the sister of the hon. Member for Bishop Auckland (Sam Rushworth) will pay for this, as will the publican who goes out to work. They will see their taxes rise. That is the contract that I am worried about.

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[Susan Murray (Mid Dunbartonshire) (LD)]

It seems that with increasing frequency I stand in this place welcoming Labour U-turns, and today I welcome yet another. The decision to lift the two-child cap is clearly the right moral choice, and it will lift hundreds of thousands of children out of poverty.

For those in Scotland, this is a particularly welcome change. There will no longer be any need for the Scottish Government to divert funds from social care and council services to the Scottish child payment. With that in mind, I urge the hon. Member for Aberdeen North (Kirsty Blackman), who is on the Bench behind me, to discuss with her colleagues in Holyrood the merits of using some of the projected £155 million savings to help fund a new health and care hub for the people of Bearsden and Milngavie in my constituency.

I am aware that some people do not support lifting the cap. The change is set to cost UK taxpayers over £3 billion annually by 2030—clearly an enormous sum. Over the past year, we have seen that this Labour Government are set on making working people pay for their changes through tax band freezing, national insurance rises and pension changes. With that in mind, I urge the Government to look seriously at the Liberal Democrat proposals that aim to raise tax revenue. First, banks have made record profits—an estimated £50 billion in a single year—off the backs of hard-working people. We Liberal Democrats believe that it is only fair that the banks pay back some of that money. A windfall tax on these enormous profits could raise £7 billion per year, without placing any more strain on people who are already struggling.

On top of that—I know that Conservative Members will not be happy to hear this again—we need a customs union with Europe. Trade deals with China and India are not unwelcome, but the biggest opportunity is right on our doorstep: an extra £90 billion a year in tax revenue that does not require going cap in hand to those who stand against our values or who facilitate our enemies.

Lifting children out of poverty does not have to put a further strain on working people. We can create a fair tax system in which companies pay their fair share to help those from whom they profit.

[Madam Deputy Speaker (Caroline Nokes)]

Order. May I gently remind the hon. Lady that this is a very specific debate about the removal of the two-child limit and not a wider debate on tax policy?

[Susan Murray]

I apologise.

Removing the two-child cap is a vital step, and I hope that the Government choose to listen to more Liberal Democrat proposals.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Order. For the assistance of Back Benchers who still wish to speak, I am about to remove the time limit. [Interruption.]

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[Andrew Pakes]

I think that my community is full of wonderful British people—people who stand up for British values, and who go out every single day and work to do the best for their children and community. If you want to have a fight based on British values, bring it on, because every day Labour Members will defend—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I respectfully remind the hon. Gentleman not to use the word “you”. He was suggesting that he might like to have a fight with me, and that would not end well.

[Andrew Pakes]

I apologise, Madam Deputy Speaker. I am wearing a deep heat patch for my bad back, so there would be no fight from me today. I apologise to the House for the passion I have for British values and the hard work of people in my community, who I will stand up for every day against the plastic patriots and others who seek to attack them.

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[Antonia Bance]

I say to the people in my constituency and elsewhere who have raised questions with me about this policy that in order to will the ends, you have to will the means. Save the Children published this morning some polling showing that 78% of the country want to see child poverty cut. The fastest and most effective way to cut child poverty is to get rid of this punitive, gross policy that artificially inflates the number of children in poverty and creates an escalator to get more into poverty every day, with every child born.

To the Opposition parties, I would say this. I hear you say to these families, “Go out and get a job.” Most of them are already in work. Are you telling those five and six-year-olds—

[Madam Deputy Speaker (Caroline Nokes)]

Order. Not “you”—I have not spoken in this debate!

[Antonia Bance]

Thank you very much, Madam Deputy Speaker.

I say to those on the Opposition Benches who are telling people already in work to go out and get a job: what are those people supposed to do? Are they supposed to send their five-year-olds out on a paper round to make the money add up when it does not? Do not talk to me about how families should plan better—you will never meet a better planner than a single mum in Princes End making the money stretch. Do not cry crocodile tears for kids whose dad died but when his widow needed help, we said, “Nah. You shouldn’t have had so many kids.” Do not tell me that a dad who lost his job does not deserve help for his kids because he did not predict years in advance, when planning his family, that his factory would close and he would be dumped out of work. Be honest about what supporting the two-child limit means. If you support it, you think that some kids should be hungry tonight—well, we don’t.

I have no words for the idea of the charlatans of the Reform party, who would reimpose the two-child limit, plunge thousands of children into poverty and take hundreds of pounds from families each month in order to make it cheaper to have a pint. The hon. Member for Runcorn and Helsby (Sarah Pochin) was too frit to give way to me, so I will say this to her this now. Her policy would affect Sikh children living in my constituency who have a mum or dad born in the Punjab, or children in my constituency with a mum or dad who was born in Bangladesh, Poland or Pakistan. These are British people. They are our neighbours and our friends—people who work and play by the rules. They are British citizens, but they are second-class citizens for Reform.

I was glad to see that the right hon. Member for North West Hampshire (Kit Malthouse) called out Reform. I would like to see more calling out of that frankly disgusting point of view: the differentiation between different types of British citizen based on nationality and the colour of their skin that we see going on in our national political dialogue and in the Reform party. I hope that people across the country, in Scotland, in Wales and in my borough of Sandwell, will reject that division when the time comes in May—and that those in Gorton and Denton will do so as well.

I say this to my constituents who are working hard to make ends meet: I will not apologise for prioritising our kids. Every child deserves a fair start in life. As one of our greatest Prime Ministers said when launching his own child poverty mission:

“Poverty should not be a birthright. Being poor should not be a life sentence”.

We want every child to have the freedom to learn, to play sport, to sing, to dance and to get on in life, free from want and fear—the freedom to be kids. This is what a Labour Government will deliver: half a million of children out of poverty. I will be voting for the Bill tonight, and I hope other Members will too.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

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[Sir Stephen Timms]

No, I will not be giving way.

It was very interesting to hear the arguments of the hon. Member for Runcorn and Helsby (Sarah Pochin). Her party is looking more and more like a cut-price Boris Johnson reunion party, with all the old faces turning up on the Reform Benches. Now they are even starting to sing some of the old songs. The leader of their party has been talking for years about opposing the two-child limit, and just a few weeks ago, the right hon. and learned Member for Fareham and Waterlooville (Suella Braverman) wrote an article in which she said that she opposed it. Today they are voting with the Tories in favour of the cap. Those old policies would cause the same damage if they were brought in again in the future.

I remember a time when there seemed to be at least some degree of consensus in the House on the importance of tackling child poverty. Well, there was not much sign of that among Conservative Members this afternoon, and I am sorry that we have lost it. Scrapping the two-child limit on universal credit is the single most effective lever that we can pull to reduce the number of children growing up poor, and in pulling that lever we are helping hundreds of thousands of children to live better lives now, and to have real grounds for hope for their futures. We are supporting their families, the majority of whom are working families, and by enabling the next generation to fulfil its potential we are investing in our country’s success in the years to come.

The Bill is the key to delivering the biggest fall in child poverty in any Parliament on record, and in doing so it will make a very big contribution to the missions of this Government. Our manifesto was summed up in one word—“change”—and this is what change looks like: ambition for families, and for the country.

Question put, That the Bill be now read a Second time.

The House proceeded to a Division.

[Madam Deputy Speaker (Caroline Nokes)]

Will the Serjeant at Arms investigate the delay in the Aye Lobby?

Youth Unemployment

Caroline Nokes Excerpts

Wednesday 28th January 2026 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I inform the House that Mr Speaker has selected the amendment tabled in the name of the Prime Minister.

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[Dame Diana Johnson]

Those are very wise words from my hon. Friend.

I want to say something about employers, because they have a vital role to play in all this. On keeping people in work when they develop an illness or a disability, we are really pleased that we are working with over 100 Vanguard employers to take forward the recommendations in Sir Charlie Mayfield’s “Keep Britain Working” review, and helping to create a picture of what best practice looks like when it comes to building healthy and inclusive workplaces. We have had an outstanding response from businesses, because they know that when their workers win, they win too. Contrary to what some people say and believe, the interests of employees and employers are not diametrically opposed. Everybody wins when workers are secure, happy and healthy.

That leads me on to the Employment Rights Act 2025, which includes reforms such as the extension of statutory sick pay, so that more people can take the time they need to recover, instead of risking longer-term absences. That is not just good for workers; it is good for businesses, too.

I want to address the issue of national insurance contributions and business rates. Let us be clear: employers generally do not have to pay any employer national insurance contributions for employees under the age of 21 or for apprentices under 25. Yesterday we announced that every pub and live music venue will get 15% off its new business rates bill. That is on top of the support announced at the Budget. Bills will then be frozen, in real terms, for a further two years. This Government will always support businesses, giving them the stability that they need to grow, and to create good jobs.

Before I finish, there is one other thing I want to talk about. What happens at the start of people’s working lives can have many consequences for their future, and the same is true of what happens in our childhood. When a young person ends up out of work or training, it is no use pretending that that has suddenly come about in a bubble. Someone who grows up poor is less likely to do well at school and more likely to be a NEET. Poverty, low attainment and low aspiration can not only waste the potential of a young life, but cascade on to the next generation. Shockingly, the number of children in poverty increased by over 900,000 under the Conservatives, which is shameful, and they now come to this House to ask why a generation is struggling.

We are very proud to be lifting the two-child limit. That will have benefits for hundreds of thousands of children, who will be less likely to experience mental health issues, less likely to be unemployed, and more likely to be in work and earning more, yet the Conservatives oppose it. As ever, they seem determined to pull the rug out from under the next generation, and does that not sum them up? They blame; we support. They complain; we fix. They cut; we build.

We will never forget the neglect that left our young people without the hope and opportunity that every generation deserves, but this Government are doing things differently. We are laying the foundations for young people to succeed, and giving them the opportunities that they need and the skills and support to seize them. These opportunities are of course accompanied by obligations to take them up, but that is so much better than a life that is just written off. We are breaking down barriers to opportunity, so that every young person, in every part of our United Kingdom, can fulfil their potential.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

National Insurance Contributions (Employer Pensions Contributions) Bill

Caroline Nokes Excerpts

Committee of the whole House
Wednesday 21st January 2026 Commons Chamber

[Caroline Nokes in the Chair]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I remind Members that, in Committee, Members should not address the Chair as “Deputy Speaker”. Please use our names or “Madam Chair”, “Chair” and “Madam Chairman”.

Clause 1

Employer pensions contributions pursuant to optional remuneration arrangements: Great Britain

[Mark Garnier (Wyre Forest) (Con)]

I beg to move amendment 5, page 1, line 10, after “income tax” insert—

“at the higher or additional rate”.

This amendment would exempt basic rate taxpayers in England, Wales and Scotland from the £2,000 cap.

[The Second Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 7, page 2, line 26, leave out from “as” to end and insert—

“the amount calculated under subsection (5) for a tax year (but subject to any provision made in reliance on subsection (6C)(a) or (b) of that section).

(5) In 2029-30 the contributions limit must be set at a figure equal to £2,000 uprated by any percentage change in the consumer price index between 2026-27 and 2028-29.

(6) In subsequent tax years the contributions limit must be uprated by the same percentage change as that applied to the consumer price index that year.”

This amendment would uprate the £2,000 cap by the percentage change in the consumer price index during the period before 2029-30, and would require the cap to be uprated by the same percentage as the change in the consumer price index each year thereafter.

Clause 1 stand part.

Amendment 6, clause 2, page 2, line 38, after “income tax” insert—

“at the higher or additional rate”.

This amendment would exempt basic rate taxpayers in Northern Ireland from the £2,000 cap.

Amendment 8, page 3, line 39, leave out from “as” to end and insert—

“the amount calculated under subsection (5) for a tax year (but subject to any provision made in reliance on subsection (6C)(a) or (b) of that section).

(5) In 2029-30 the contributions limit must be set at a figure equal to £2,000 uprated by any percentage change in the consumer price index between 2026-27 and 2028-29.

(6) In subsequent tax years the contributions limit must be uprated by the same percentage change as that applied to the consumer price index that year.”

This amendment would uprate the £2,000 cap in Northern Ireland by the percentage change in the consumer price index during the period before 2029-30, and would require the cap to be uprated by the same percentage as the change in the consumer price index each year thereafter.

Clause 2 stand part.

Clause 3 stand part.

New clause 1—Review of impact on SME recruitment and retention—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on small and medium-sized businesses with regard to the—

(a) recruitment of staff, and

(b) retention of staff.

(2) The report under subsection (1) must also consider the cumulative impact of changes to employer’s national insurance on businesses affected by this Act since July 2024.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the ability of SMEs to recruit and retain staff.

New clause 2—Review of impact on small and medium-sized business tax liabilities—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on small and medium-sized businesses with regard to—

(a) businesses’ overall tax burden,

(b) employment costs, and

(c) business solvency.

(2) The report under subsection (1) must also consider the cumulative impact of changes to employer’s national insurance on businesses affected by this Act since July 2024.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the overall tax burden and employment costs faced by SMEs.

New clause 3—Review of impact on employee marginal tax rates—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on the number of employees brought into a higher marginal rate of income tax.

(2) The report under subsection (1) must give particular regard to the impact of the freezing of income tax thresholds between April 2022 and April 2031.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the number of employees who move into a higher tax band due the increase in their taxable income due to the effects of this Bill.

New clause 4—Reviews of the impact of the Act—

“(1) The Treasury must, before March 2029, lay before Parliament an assessment of the impact of the changes made under this Act.

(2) The assessment made under subsection (1) must consider—

(a) the adequacy of pension contributions made by or on behalf of individuals affected by this Act,

(b) use of salary sacrifice schemes and optional remuneration arrangements, and

(c) any effects on the investment capability of UK pension funds.

(3) The Treasury must lay before Parliament a follow-up assessment of the impact of the changes made under this Act before March 2034.”

This new clause would require the Treasury to undertake an impact assessment of the effect of the change made under this Act, before they take effect, and again five years later.

New clause 5—Calculation and publication of lifetime pension values—

“(1) The Treasury must calculate and publish the projected lifetime value of an individual’s pension before and after the changes made by under this Act.

(2) For the purposes of subsection (1), the projected lifetime value is the total amount of pension income an individual is expected to receive over their lifetime.

(3) The calculations made under subsection (1) must—

(a) be based on clearly stated assumptions, and

(b) include illustrative examples covering different pension entitlements.”

New clause 6—Assessment of changes to pension saving through salary sacrifice schemes—

“(1) The Chancellor of the Exchequer must, within 15 months of the provisions of this Act coming into effect, lay before Parliament an assessment of the effect of this Act on the amount saved into pensions through salary sacrifice schemes.

(2) The assessment made under subsection (1) must include an—

(a) estimate of the total amount saved into pensions through salary sacrifice schemes in the 12 months preceding the provisions of this Act coming into effect,

(b) estimate of the total amount saved into pensions through salary sacrifice schemes in the 12 months following the provisions of this Act coming into effect, and

(c) an assessment of the difference between those amounts.”

[Mark Garnier]

It is a great pleasure to be with you yet again, Ms Nokes. I enjoyed our last sparring with the Pensions Minister just before Christmas, which cheered us up to no end.

Let me speak to amendments 5, 7, 6 and 8 as well as new clause 4, which all stand in my name. It will not surprise the Pensions Minister to hear that we are not at all happy with this Bill, which actually will do nothing to enhance pension savings. I will go through each of our amendments in the reverse order of importance.

New clause 4 would require the Government to assess the impact of the Bill, should it receive Royal Assent, before and after its implementation in 2029. We think it is important that the Government do their homework before implementing policies. We asked for something similar in the Pension Schemes Bill, but the Pensions Minister described it as unnecessary. In this case, the Government seem not to have listened to industry, to experts or to savers. Our new clause asks the Government to do that, so that we can better understand the impact. First, how will the Bill affect pensions adequacy? That will be after the pensions review has concluded, so we do need to know. Secondly, how many people use salary sacrifice or optional remuneration arrangements? Thirdly, what are the investment capability of UK pensions?

There has been a certain amount of commentary on this matter. The Association of British Insurers has said:

“We have consistently raised concerns about the potential impact of a cap on pension salary sacrifice on both people’s savings and employers’ resources.”

There are some issues that are of great concern to many people on this matter, so have the Government fully considered the knock-on effect that it will have on investment from UK pension funds? Also, will the Government update the terms of reference for the pensions commissioner, which is being led by Baroness Drake, to ensure that this is considered?

We are unlikely to press new clause 4 to a vote. However, I believe that the Liberal Democrats’ new clause 5 would have a similar effect. Should the Liberal Democrats wish to move the new clause, we would support it.

Amendments 7 and 8 concern the indexation of the cap. These amendments look to make the £2,000 cap naturally rise in line with the consumer prices index. We have brought these amendments forward because if the cap remains static, it will become increasingly meaningless. We have seen today, when we have had an above-expectation inflation rise of 3.4%, that would clearly devalue the value of the cap, even by the time that it is implemented in 2029. Our amendments seek to address that so that salary sacrifice arrangements do not become redundant without parliamentary intervention. Obviously, we use CPI because it is the basis for inflation. Again, the ABI has made a similar argument, as the cap does not allow for inflationary changes. Having said that, we do not propose to press those amendments.

Let me move on to amendments 5 and 6, which we feel particularly strongly about. They are mirror arrangements for each other. Importantly, we are trying to make what we feel is a very poor Bill into something that is less poor. The amendments would make basic rate taxpayers exempt from the £2,000 cap. They would support the group in the UK that typically under-saves and is the least prepared for retirement. According to the Society of Pension Professionals, a quarter of the people who enjoy salary sacrifice, who will be hit by the changes that this Bill brings in, are basic rate taxpayers. Around 850,000 basic rate taxpayers will be affected by the cap.

More fundamental to that is the fact that this group of people—lower-paid workers—will be hit disproportionately hard. Salary sacrifice allows an employee to give up a certain amount of their salary to be contributed to their pension directly by the employer. We all understand that, but it not only takes advantage of the income tax allowance, as with all pension contributions, but allows national insurance contributions to be included and transferred into the pension, in the case of an employee national insurance, and allows for employer national insurance to be used at the discretion of the employer.

The employee element—the national insurance that we all pay as employees—is the important part of this matter. While higher rate taxpayers will continue to enjoy 40% tax relief at their higher rate, the national insurance is just 2 percentage points—around one-twentieth of the tax break on the income tax. While a basic rate taxpayer enjoys just 20% income tax breaks, their national insurance contribution is 8%. The effect on lower-paid workers is four times that on higher-paid workers. That is not a good thing—indeed, 8% is two-fifths of the value of the other contribution for which they benefit from their income tax savings.

In absolute terms, as I have said, the marginal rate is four times more expensive for lower rate taxpayers than it is for higher rate taxpayers, but there is an even bigger problem: this is a harder attack on other types of savers than we had anticipated. Another group of people affected are those paying back student loans. Graduates pay back their student loans once they pass the thresholds of £28,745, and they do so at a rate of 9%. Graduates who would otherwise enjoy that 9% that goes into student loans being paid into a pension will not see it being paid into their pension because of the salary sacrifice cap. The effective loss for a graduate paying back student loans is 9%. Graduates on the basic rate of tax will see not just a loss of 8% for their national insurance schemes, but a total loss of 17% of the benefit at the marginal level above the £2,000 cap.

The director of the Chartered Institute of Taxation agrees. She said:

“The change will disproportionately affect basic rate taxpayers because they will pay at 8% NIC on contributions over the £2,000 cap, compared with a 2% charge on higher earners. It will also disproportionately impact those with student loans who earn above the repayment threshold, as they will have incurred an extra 9% student loan deduction from their pay.”

At a time when we are trying to get people to do the right thing and save for the future, it seems that the Government want to whack the lower-paid harder. Because of the way that this system works, they will whack the lower paid. They also want to whack a younger generation even harder than those who enjoyed free university education. That younger generation cannot afford to buy a house and have to pay for university education. The Government have made it far harder to get a job, with their jobs tax, and at a time when we are desperately trying to get people to save for their retirement, they are making it harder to save for a pension.

I challenge Labour MPs. Why are they being whipped to vote against these measures and against the interests of lower-paid people? Why are they being asked to vote against the interests of graduates and younger people and vote for a regressive tax?

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[Mark Garnier]

I am trying to finish my speech—in fact, I had finished my speech.

This is a very important point, and we will push amendment 5 to a vote. As I said, we will challenge Labour MPs not to do the wrong thing for their constituents—for the young, hard-working graduates who are desperate to do the right thing.

[The Second Deputy Chairman]

I call the Liberal Democrat spokesperson.

[Charlie Maynard (Witney) (LD)]

My chief concern with this Bill is that, like a lot of the measures that the Chancellor announced in the Budget, it looks like it may be a route to some medium-term increased tax revenues, but it gives no thought to longer-term consequences. That will help the Chancellor meet her fiscal rules, but I say “may” because the Bill does not kick in this year, next year, the year after or the year after that; rather conveniently, it will kick in during the election year of 2029-30. That is pretty useful if you are fighting an election and want to meet your fiscal rules, but it is not very useful if you are trying to be fiscally prudent, so that leads to some scepticism about what is actually going on here.

Given the pressures on the state pension and the social care system, it seems extremely counterproductive to reduce the incentives for those who can afford to save more towards their retirement. Let us look at the impact that small businesses have warned about. Pensions UK and the Federation of Small Businesses have jointly expressed their concern that these changes will increase costs for businesses that rely on salary sacrifice to support staff retention and reward. They state:

“Higher National Insurance costs and operational disruption would make it harder to offer competitive benefits, invest in growth, or plan effectively.”

We need to remember the wider context that small businesses are operating in. Even before this Bill, they were battling the sharply rising costs of everything from rents to energy bills, supplies, business rates, the costs of Brexit and so on, and they also have to adjust to the changes in their NICs bills that the Chancellor announced a year ago. One can imagine how that must feel for small business owners—the additional burden heaped on them feels unsustainable.

This Bill is a double whammy on last year’s national insurance hikes—the NICs burden went up last year due to the rate increase, and now this measure is raising their NICs bills for a second time. I would be interested to hear from the Minister what assessment the Government have made of the impact of these changes on businesses, and on small businesses in particular. That is why the Liberal Democrats have tabled amendments requiring the Government to publish full assessments of the impact of the Bill on the recruitment and retention and the tax liabilities of businesses.

Let us now consider the potential damage that this choice will do further down the road by disincentivising saving. Earlier this year, research by Scottish Widows found that 39% of people in the UK are not on track for a minimum lifestyle in retirement, which is a 4% increase since 2023. Research showed that people were actually saving more towards their pension in the last year, but projected retirement income was still failing to keep pace, given the rising cost of living.

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[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.

[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.

[Torsten Bell]

No, I will not mention the welfare budget.

[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.

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[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.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

The Pensions Minister is absolutely right that there is an awful lot that we agree on. It is always a great pleasure to spar with him and agree on certain things, but this Bill is not one of them. Let me be clear why we disagree with the Minister.

First, the contributors to the research done by His Majesty’s Revenue and Customs were absolutely against this Bill. The report, which was published last year and which the Minister mentioned on Second Reading, concluded that all the hypothetical scenarios explored in the research, including the £2,000 cap, were viewed negatively. It also pointed out that the £2,000 cap was the most complicated option presented. Given that the Government tabled no amendments to address the genuine concerns of savers and industry, it seems that the Minister is still apparently chuffed that he is implementing a policy that is, at best, the least worst option for everybody who was asked to comment.

Secondly, the Government are voting for a Bill that will add to the administrative burden on businesses. The pensions system is already incredibly complex for experts to navigate, let alone the general public. That is why salary sacrifice arrangements have been such a popular savings tool for both employees and employers. The principles are easy to understand, with the only real piece of admin being on the employer to ensure that the employee does not fall below the national living wage. But what are the Government doing? They are going for the option that the report considered to be the most complicated.

The Government are choosing to confuse with complications a system that is currently the simplest to deliver. The changes will add an estimated £30 million each year in administrative costs to employers—and this comes at a time when businesses and the wider economy already pay an estimated £15.4 billion just to comply with the tax system. What about the effects on businesses, which see a 15% employer national insurance bonus through helping people to save? The changes will mean that employers will be hit with a 15% increase on the costs of employment.

The savings that employers achieve through salary sacrifice arrangements are often invested back into their employees and their businesses, including through increased pension contributions to all employees, higher wages, or more investment into plant and machinery for growth. That is a good thing. The Government are now taking money away from the productive part of the economy and putting it into other parts. No wonder businesses think that this is a nonsensical policy delivered by a directionless Government, who forget that businesses are the ones that create wealth in our economy, add value to it and drive growth.

Thirdly, the Government are supporting a Bill that will not actually raise the stated revenue. As my hon. Friend the Member for North Bedfordshire (Richard Fuller) pointed out when winding up on Second Reading, the change appears to have been timed to maximise revenue in 2029-30: the year that counts for the Chancellor’s fiscal rules. That is £4.8 billion to fill the Chancellor’s black hole—she will have one by then—in order to make a cynical attempt to stick to a fiscal rule. This is a cynical measure that destroys a lifetime of savings opportunities for just one year of revenue. Frankly, it is also likely that the Government will not raise anywhere near the £4.8 billion budgeted for, as higher earners max out the benefits of the scheme before it comes into force in 2029; and, in any event, people are figuring out a workaround.

Fourthly, the Government are voting for a Bill that harms lower earners the most. As I pointed out earlier, the Society of Pension Professionals estimates that over 850,000 basic rate taxpayers who use salary sacrifice will be affected by the changes, and those 850,000 people will be taxed at a higher rate than their wealthier colleagues—something that the Government apparently seek to target with this policy. And I always thought that Labour Governments were meant to be on the side of working people, Madam Deputy Speaker!

Fifthly, and finally, the Government are voting for a Bill that will make the impending pension adequacy crisis worse. As I said in my introduction, there is widespread agreement that people are not saving enough, so why make the second largest revenue-raising measure of last year’s Budget one that goes after people’s savings for later life? It goes against that basic, important and agreed objective of people planning for their futures. More importantly, it goes against the Government’s own financial inclusion strategy.

As the Economic Secretary to the Treasury set out in November,

“Our aim is to create a culture in which everyone is supported to build a savings habit, building their financial resilience in the long term.”

How does the Bill accomplish that reasonable ambition? It won’t, because it disincentivises employees from saving more in their pensions and it disincentivises employers from providing it as an option in the first place.

Altogether, it is the wrong policy that sends the wrong message at the wrong time. We gave the Government a chance to address some of those concerns earlier, and they did not take it. We hear all those concerns loud and clear from businesses, savers and all the rest of them, which is why we want the Government to think again on this issue and why we will vote against this Bill on Third Reading.

People are simply not saving enough for their retirement. Rather than restricting the options, we should be encouraging the creation of new incentives that encourage people to save more. Instead, the Government are pushing through a Bill that will do the opposite. It is unbelievably unpopular because it punishes 3.3 million people who actively try to save for retirement by punishing the 290,000 employers who incentivise their employees to save. Worst of all, it breaks another of Labour’s manifesto promises: that it will not increase taxes on working people. It remains the wrong policy to pursue, and that is why we will vote against it.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Charlie Maynard]

I will let it pass from here.

Question put, That the Bill be now read the Third time.

National Insurance Contributions (Employer Pensions Contributions) Bill

Caroline Nokes Excerpts

2nd reading
Wednesday 17th December 2025 Commons Chamber

[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.

[Madam Deputy Speaker (Caroline Nokes)]

I remind Members that the knife will fall at 7 o’clock.

[Jim Dickson (Dartford) (Lab)]

The Chancellor’s Budget, delivered at the end of November, enables the Government to deliver on the priorities that we set out clearly in our manifesto last year. I pay tribute to the work that the Chancellor and the Ministers on the Front Bench tonight and across the Treasury team have done on that.

As the Minister said, this is a very straightforward Bill. It means that from April 2029, there will be limits to NICs relief that higher earners can take advantage of through salary sacrifice. Importantly, it protects lower earners with a £2,000 threshold. It is always a challenge for any Government to find the right balance in their policies. This change ensures fairness in a system where we could otherwise have seen the costs of salary sacrifice schemes triple between 2017 and the end of the decade. That would undermine vital public service and investment priorities, such as the armed services, the NHS, SEND, our prison system and a vast number of other public services that everyone in this House would want to see properly funded.

The greatest burden in this change is therefore being borne by those with the broadest shoulders. It is right that we have kept our manifesto pledges on tax, and it should only be in the most challenging of circumstances that we step back from those commitments. This change has enabled us to keep those pledges. It is good to see the Government getting on with delivering the change we promised, with inflation coming down; a sixth cut in interest rates coming soon, we hope; gilt prices moving in the right direction; and growth forecast to rise next year.

As a Member of the Treasury Committee, I have not had a chance to speak in the Chamber since the Budget. With your indulgence, Madam Deputy Speaker, I would like to welcome the lifting of the two-child benefit cap. It was clear from the evidence we heard on the Committee that this change will transform thousands of young lives—

[Madam Deputy Speaker]

Order. I will make exactly the same point I made yesterday. Yesterday’s debate was about the Finance Bill, and this debate is on the National Insurance Contributions (Employer Pensions Contributions) Bill. It is not on the two-child cap or on spending commitments.

[Jim Dickson]

Thank you for your guidance, Madam Deputy Speaker.

I will conclude simply by saying that when the Chancellor appeared before our Committee last week, she was clear that this was a Budget of necessary and fair choices on tax—of which the Bill is one—so that we can deliver on the public’s priorities of rebuilt public services and fair growth. This change enables us to do that.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

While businesses are still reeling from last year’s national insurance increase, with this Bill the Labour Government are set to increase tax again by making salary sacrifice pension contribution schemes worse for workers.

What has the Labour party said previously? In its 2024 manifesto, on page 79, it stated:

“Our system of state, private, and workplace pensions provide the basis for security in retirement…We will also adopt reforms to workplace pensions to deliver better outcomes for UK savers and pensioners.”

It gets even more ridiculous when we see that the same manifesto also stated on page 21:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance”.

That is exactly what the Bill does.

Recent survey data from the Confederation of British Industry showed that three in four employers will have to decrease pension contributions as a result of the measures in the Bill. As the CBI has said, it is

“‘a tax on doing the right thing’”.

It goes on to state:

“Ultimately, this unwise move will only damage growth, investment and pension saving rates.”

It is not just the CBI that has voiced alarm at the Bill. The Association of British Insurers stated:

“Capping salary sacrifice for pension saving is a short-sighted tax grab which will lower pension saving and undermine people’s retirement security.”

The Minister said in his introduction that

“everyone who has thought about this”

will come to the same conclusion. He might not wish to refer to the CBI and ABI coming to different conclusions, but they have clearly thought about it.

It is not even clear that the measure will raise the money that the Chancellor expects. A former pensions Minister from the coalition era has said that he expects it to raise “a fraction” of the intended amount, as firms will restructure payments to evade it. In addition to the likelihood of payments being restructured, even the OBR has made it clear to the Chancellor that it expects employers simply to pass the cost on to employees through lower wages and less generous schemes. It will be working people who ultimately pay for this short-term thinking, with a lower standard of living and less spending power in their retirement.

As we have seen with the maladministration of pension changes for 1950s-born women, politicians cannot and must not change the goalposts on retirement planning without giving significant advance notice. Any approach otherwise, such as in the Bill, is deeply unfair to savers. This move will land businesses with yet more administrative costs, disproportionately hitting small to medium-sized employers who are still absorbing the increased NIC costs from last year’s Budget. Is this muddled policy really from a Government who stood on a pledge of growing the economy? This is yet again another Budget with another rise in national insurance by Labour.

There are numerous unanswered questions, but the following are top of the list. What assessment has the Minister made of likely behavioural changes to pension savings as a result of this policy? What is the estimated increased cost to businesses as a result of this policy? Does the Minister anticipate lower pensions for workers as a result of this policy, and if so, how much would the decrease be? Can the Labour Government seriously make a commitment in this Chamber not to increase national insurance in next year’s Budget, given the rises in both their Budgets since coming into power? This Bill is deeply flawed and the SNP will not support it today.

[Madam Deputy Speaker (Caroline Nokes)]

As there are no further Back-Bench contributions, I call the shadow Minister.

[Richard Fuller (North Bedfordshire) (Con)]

For a Bill that proposes to raise taxation on working people by such a large amount, this has been a remarkably brief debate. But I commend my hon. Friend the Member for Solihull West and Shirley (Dr Shastri-Hurst), who correctly said that this was yet another anti-aspiration measure from this Government, and the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter), who made it clear that this was yet another example of Labour breaking its manifesto pledge not to raise taxes on working people. He also asked one of the key questions, which I hope the Minister will address in his reply: as this measure is due to come into force in three years’ time, what assessment have the Government made of behavioural changes, and can the Minister be assured that the amount in the OBR forecast is robust on a dynamic accounting basis?

This is the final economic Bill of the year to be voted on in the House of Commons, and it is another Bill that targets people who are trying to do the right thing. The Bill is a bad measure. It is an anti-savings measure and it is an attack on prudence, so of course the Conservative party will oppose it. This final Bill, at the end of this full-on year of Labour government, leaves me with one fundamental question: why do the Labour Government hate the private sector so much? If you are a family farmer, the Labour Government will snatch your farm away from your children when you die. If you believe in private education, the Labour Government will put up a barrier at the school gate. If you save for your retirement, Labour will tax your every effort to achieve security in retirement. Why do the Labour Government take every opportunity to punish people who are trying to do the right thing?

The Bill makes a mockery of the Government’s own Pensions Commission, set up in July this year, when it wrote:

“Put bluntly, private pension income for individuals retiring in 2050 could be 8% lower than those retiring in 2025—undermining a central measure of societal progress.”

Back in June, the Government recognised the problem of a secure retirement. Now, they are adding to the problem.

I have a question about the numbers. It is interesting that this measure is scored by the OBR in that crucial year of 2029-30 at £4.845 billion, falling the following year to £2.585 billion. That is an important year, because that is when the Chancellor says she has put in all this headroom—how interesting. Does the Minister agree with the director of Willis Towers Watson, one of the world’s biggest advisers on pensions, when he said:

“While earlier introduction would be unwelcome, the change appears to have been timed to maximise revenue in 2029/30—the year that counts for the Chancellor’s fiscal rule. £1.6 billion of revenue in that year is a temporary gain which will be returned to taxpayers who pay employee contributions instead and claim back part of their tax relief”?

On the £4.845 billion—the full amount—is any of that actually a fiction that will be returned the following year, as experts suggest it will be?

The Bill makes it less attractive for employers to contribute to private sector pensions. We all know that there is less certainty in the private sector, because that is where defined contribution schemes predominate, whereas in the public sector, greater certainty is given by a defined benefit scheme. In the public sector, there is also benefit because the contribution from the employer to employee pensions is much higher than in the private sector. In the public sector, employer contributions are equivalent to 27% of earnings, on average, according to research by the Taxpayers’ Alliance, but in the private sector the average contribution is only 8%. Why are the Government proposing to make it harder for private sector employers to contribute to the pensions of their employees? The Bill actively exacerbates the differences. By the way, it does nothing to tackle the unfunded £1.5 trillion liability of unfunded public sector pensions, which will fall on taxpayers.

The Bill is yet another example of the lack of private sector experience on the Government Front Bench. This Government are the least business aware Government in our country’s history. They are taxing and regulating growth out of our economy. Labour Ministers are punishing workers who want to save more for their retirement, and making it harder for their employers to help them to do so. While they can rely on their cushy, gold-plated public sector pensions, private sector workers are worse off.

[Madam Deputy Speaker (Caroline Nokes)]

Order. Before I call the Minister, I want to put on the record that the behaviour I have seen on both Front Benches this evening has been about the worst I have ever witnessed. The debate should take place across the Dispatch Box, not from a sedentary position. [Interruption.] No—not “He started it!” This is not a classroom.

Pension Schemes Bill

Caroline Nokes Excerpts

Report stage
Wednesday 3rd December 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Caroline Nokes)]

With this it will be convenient to discuss the following:

Government new clause 31—Indexation of periodic compensation for pre-1997 service: Great Britain.

Government new clause 32—Indexation of periodic compensation for pre-1997 service: Northern Ireland.

Government new clause 33—Financial Assistance Scheme: indexation of payments for pre-1997 service.

Government new clause 34—Exemption from public procurement rules.

Government new clause 35—Funding of the Board of the Pension Protection Fund.

New clause 1—Independent review into pension losses incurred by former employees of AEA Technology—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the pension losses incurred by former employees of AEA Technology who—

(a) transferred their accrued pension benefits out of the UK Atomic Energy Authority (UKAEA) public service scheme to AEA Technology (AEAT) on privatisation in 1996, and

(b) suffered financial losses when AEA Technology went into administration in 2012 and the pension scheme entered the Pension Protection Fund (PPF).

(2) The review must examine—

(a) the extent and causes of pension losses incurred by affected individuals,

(b) the role of Government policy and representations in the transfer of pensions during the privatisation of AEA Technology,

(c) the findings of the Public Accounts Committee and the Work and Pensions Select Committee,

(d) the adequacy of safeguards provided at the time of privatisation,

(e) potential mechanisms for redress or compensation, and

(f) the estimated financial cost of any such mechanisms.

(3) The review must be—

(a) conducted by an independent panel appointed by the Secretary of State, with relevant expertise in pensions, public policy, and administrative justice, and

(b) transparent and consultative, including engagement with affected pensioners and their representatives.

(4) The panel must report its findings and recommendations to the Secretary of State and lay a copy of its final report before Parliament within 12 months of its establishment.

(5) The Secretary of State must, within 6 months of the publication of the report under subsection (4), lay before both Houses of Parliament a statement setting out the Secretary of State’s response to that outcome.”

This new clause would require the Secretary of State to commission an independent review into the pension losses incurred by former employees of AEA Technology.

New clause 2—Transfer of British Coal Staff Superannuation Scheme investment reserve to members—

“(1) Within 3 months of the passing of this Act, the Secretary of State must by regulations make provision for the transfer of the British Coal Staff Superannuation Scheme investment reserve to members of the scheme.

(2) Those regulations must include—

(a) a timetable for transferring the total of the investment reserve to members of the scheme, and

(b) plans for commissioning an independent review into how future surplus will be shared.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require the Secretary of State to set out in regulations a timetable for transferring the whole of the BCSSS investment reserve to members and committing to review how future surplus will be shared.

New clause 3—Terminal illness: means of demonstrating eligibility—

“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.

(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.

(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.

(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”

This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.

New clause 4—Review into investment in defence companies—

“(1) The Secretary of State must, within six months of the passing of this Act, carry out a review into investment in defence companies within Local Government Pension Schemes.

(2) The review must consider how the investment in defence companies—

(a) impacts on, and

(b) aligns with,

the UK Government’s international obligations.

(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to conduct a review into investment in defence companies within Local Government Pension Schemes and how that impacts and aligns with Government international obligations.

New clause 5—Review into defined benefit schemes’ social impact—

“(1) The Secretary of State must, within 12 months of the passing of this Act, carry out a review into the social impact of defined benefit schemes.

(2) The review must include an assessment of—

(a) the efficacy of investment strategies in delivering social good, and

(b) the potential impact of increasing investment in—

(i) social housing, and

(ii) green technology.

(3) For the purposes of this section—

“social good” means something which benefits society as a whole, and

“green technology” means the use of technology and science to create environmentally-friendly products and services.

(4) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to review the efficacy of investment in terms of delivering social good and the benefits of directing more investment towards social housing and green technology.

New clause 6—Indexation of pre-1997 service—

“(1) The Secretary of State must by regulations make provision for indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.

(2) Those regulations must specify that—

(a) pension payments from the PPF and FAS are increased each year in line with Consumer Prices Index (CPI) inflation for pensionable service before and after 6 April 1997,

(b) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with CPI inflation, but which their scheme provided for, the scheme manager must—

(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and

(ii) reimburse the member for the amount determined under paragraph (b)(i), and

(c) increased payments must also apply to transferee members, to ill health payments and to payments to surviving dependants.

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights.

New clause 7—Report on indexation of pre-1997 Pension Protection Fund and Financial Assistance Scheme benefits—

“(1) The Secretary of State must, within 12 months of the passing of this Act, publish a report on options for providing indexation to pension rights relating to pre-1997 service in the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS).

(2) The report must consider—

(a) the current absence of indexation on pre-1997 accrued rights and the financial impact on affected pensioners;

(b) the number of pensioners affected and the mortality rates since the establishment of FAS and PPF, including evidence from the Pensions Action Group;

(c) the feasibility of introducing indexation, in full or in part, for pre-1997 rights;

(d) the potential use of scheme reserves, including residual funds from failed schemes transferred into the FAS, and the implications for taxpayers;

(e) the urgency of reform given the age profile of affected members and the social impact of frozen incomes;

(f) alternative funding mechanisms that could deliver indexation without undermining the sustainability of the PPF; and

(g) comparative approaches to legacy benefit indexation in other jurisdictions.

(3) In preparing the report, the Secretary of State must consult—

(a) the Pensions Regulator,

(b) the Pension Protection Fund,

(c) representatives of Financial Assistance Scheme members,

(d) the Pensions Action Group, and

(e) such other stakeholders as the Secretary of State considers appropriate.

(4) The Secretary of State must lay a copy of the report before both Houses of Parliament.”

This new clause would require the Secretary of State to publish a report examining options for addressing the lack of indexation on pre-1997 pensionable service in the PPF and FAS, with particular regard to evidence provided by the Pensions Action Group, mortality data, scheme reserves, and the urgency of the issue.

New clause 8—Universal Pension Advice Entitlement—

“(1) The Secretary of State must by regulations establish a system to ensure that every individual has a right to receive free, impartial pension advice at prescribed times.

(2) Regulations under subsection (1) must provide for individuals to be offered advice—

(a) at or around the age of 40; and

(b) at a prescribed age, not more than six years before the individual's expected retirement age.

(3) The regulations must make provision about—

(a) the content and scope of the free, impartial pension advice, which may include, but is not limited to, guidance on—

(i) pension types (including both defined contribution and defined benefit schemes),

(ii) investment strategies,

(iii) charges,

(iv) consolidation of pension pots, and

(v) retirement income options;

(b) the qualifications, independence, and impartiality requirements for any person or body providing advice;

(c) the means by which individuals are notified of their entitlement to receive the advice and how they may access it;

(d) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to advice;

(e) the sharing member information with prescribed persons or bodies subject to appropriate data protection safeguards.

(4) Regulations under this section may—

(a) make different provision for different descriptions of pension schemes or different descriptions of individuals;

(b) confer functions in connection with the provision or oversight of the advice on—

(i) the Pensions Regulator,

(ii) the Financial Conduct Authority,

(iii) the Money and Pensions Service, or

(iv) other prescribed bodies;

(c) require the provision of funding for the advice service from prescribed sources.

(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause makes provision by regulations for everyone to receive free, impartial pension advice at age 40 and again around five years before their expected retirement.

New clause 10—Independent review of forfeiture of survivor pensions in police pension schemes—

“(1) The Secretary of State must commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions on the grounds of—

(a) remarriage or entry into a civil partnership by the surviving partner of a deceased scheme member; or

(b) cohabitation with another person as if married or in a civil partnership.

(2) The review must examine—

(a) the legal and policy basis for such provisions;

(b) the financial, social, and emotional impact on affected individuals and families;

(c) consistency with other public sector pension schemes, including schemes for—

(i) the Armed Forces,

(ii) the NHS, and

(iii) the civil service;

(d) potential options for reform, including retrospective reinstatement of pensions;

(e) any other matters the Secretary of State considers relevant.

(3) The Secretary of State must—

(a) appoint an independent person or panel with relevant legal, pensions, and public policy expertise to conduct the review; and

(b) publish the terms of reference no later than three months after this Act is passed.

(4) The person or panel appointed under subsection (3) must—

(a) consult with relevant stakeholders, including—

(i) the National Association of Retired Police Officers (NARPO),

(ii) survivor pension recipients,

(iii) police staff associations, and

(iv) pensions experts;

(b) consider written and oral evidence submitted by affected individuals; and

(c) publish a report of its findings and recommendations within 12 months of appointment.”

This new clause would require the Secretary of State to commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions.

New clause 11—Independent review into state deduction in defined benefit pension schemes—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit pension schemes.

(2) The review must consider—

(a) the origin, rationale and implementation of state deduction in the Midland Bank Staff Pension Scheme,

(b) the clarity and adequacy of member communications regarding state deduction from inception to present,

(c) the differential impact of state deduction on pensioners with varying salary histories, including an assessment of any disproportionate effects on—

(i) lower-paid staff, and

(ii) women,

(d) comparisons with other occupational pension schemes in the banking and public sectors, and

(e) the legal, administrative, and financial feasibility of modifying or removing state deduction provisions, including potential mechanisms for redress.

(3) The Secretary of State must ensure that the person or body appointed to conduct the review—

(a) is independent of HSBC Bank plc and its associated pension schemes;

(b) possesses relevant expertise in pensions law, occupational pension scheme administration, and equality and fairness in retirement income; and

(c) undertakes appropriate consultation with—

(i) affected scheme members,

(ii) employee representatives,

(iii) pension experts, and

(iv) stakeholder organisations.

(4) The person or body conducting the review must—

(a) submit a report on its findings to the Secretary of State within 12 months of the date the review is commissioned; and

(b) the Secretary of State must lay a copy of the report before Parliament and publish the report in full.

(5) Within three months of laying the report before Parliament, the Secretary of State must publish a written response setting out the Government’s proposed actions, if any, in response to the report’s findings and recommendations.

(6) For the purposes of this section—

“state deduction” means any provision within a defined benefit occupational pension scheme that reduces pension entitlements by reference to the member reaching state pension age or by reference to any state pension entitlement;

“defined benefit pension scheme” has the meaning given in section 181 of the Pension Schemes Act 1993;

“Midland Bank Staff Pension Scheme” includes all associated legacy arrangements and any successor schemes administered by HSBC Bank Pension Trust (UK) Ltd.”

This new clause would require the Secretary of State to commission an independent review into clawback provisions in occupational defined benefit pension schemes, in particular, the Midland Bank staff pension scheme.

New clause 12—Section 40 commencement—

“(1) The provisions in section 40 shall not come into force except in accordance with regulations made by the Secretary of State.

(2) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require that the provisions in clause 40 could only be enacted once agreed through secondary legislation.

New clause 13—Targeted Advice Access for Under-Saving Cohorts—

“(1) The Secretary of State must make regulations to provide enhanced access to pension advice or guidance for cohorts identified as under-saving for retirement.

(2) Regulations may make provision for—

(a) identifying under-saving groups, including but not limited to—

(i) women,

(ii) ethnic minority groups, and

(iii) others affected by long-term pay or pension gaps;

(b) mechanisms to fund and deliver targeted support;

(c) reporting and evaluation requirements to assess take-up and effectiveness.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause allows for the creation of targeted pension advice or guidance interventions for groups at risk of under-saving for retirement.

New clause 14—Cap on cost of advice for pension holders—

“(1) The Secretary of State may by regulations introduce a cap on the cost recoverable for providing pension advice per pension holder under any scheme operating free or subsidised advice.

(2) The cap may vary depending on—

(a) the value of the pension pot;

(b) the type of pension scheme;

(c) the complexity of advice required.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause enables the introduction of a cost ceiling for advice provision to members of pension schemes.

New clause 15—Independent review into the British Coal Staff Superannuation Scheme—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme (BCSSS).

(2) The review must consider—

(a) the origin and operation of the Government’s surplus-sharing arrangements with the BCSSS since 1994,

(b) the adequacy of communication to scheme members regarding the use of surpluses,

(c) the impact of the Government’s retention of scheme reserves on members’ retirement income,

(d) representations made by the Trustees of the BCSSS calling for reserves to be released to members, and

(e) options for reforming how any future surpluses in the BCSSS are shared between the Government and scheme members.

(3) The person or body appointed to conduct the review must—

(a) be independent of the Government and the BCSSS Trustees,

(b) possess relevant expertise in pensions law and scheme administration, and

(c) consult with affected members, Trustees, pension experts, and stakeholder organisations.

(4) The review must report to the Secretary of State within 12 months of being commissioned, and the Secretary of State must lay the report before Parliament and publish it in full.

(5) Within three months of publication, the Secretary of State must publish the Government’s response to the review’s findings.”

This new clause would require the Secretary of State to commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme, including the handling of scheme reserves and future surplus-sharing arrangements.

New clause 16—Report on Pension Scheme Eligibility and Access—

“(1) The Secretary of State shall, within 12 months of the passing of this Act, lay before Parliament a report into the operation of occupational pension schemes where certain categories of employees have been excluded on the basis of job classification or employment start date.

(2) The report must examine the case of employees and former employees of Fife Joinery Manufacturing (a subsidiary of Velux), including—

(a) whether affected workers were provided with opportunity to join existing pension schemes,

(b) the adequacy of record-keeping and employer accountability, and

(c) potential remedies to ensure equal access to workplace pensions.”

This new clause would require the Secretary of State to report on the Velux Pensions case.

New clause 17—Clarification of pension scheme investment duties—

“(1) The Pensions Act 1995 is amended as follows.

(2) In section 36 (Choosing investments), after subsection (9), insert—

“(10) Regulations under subsection (1) must provide—

(a) that when interpreting the best interest or sole interests of members and beneficiaries for the purposes of this section and the regulations, the trustees of a trust scheme may (amongst other matters) take the following into account—

(i) system-level considerations,

(ii) the reasonably foreseeable impacts over the appropriate time horizon of the assets or organisations in which the trust scheme invests upon prescribed matters, including upon members’ and beneficiaries’ standards of living, and

(iii) the views of members and beneficiaries;

(b) that investment powers or discretions must be exercised in a manner that considers and manages the matters specified in subsection (10)(a)(i) and (ii) where they are financially material; and

(c) a prescribed definition of the term “appropriate time horizon” for these purposes.

(11) For the purposes of this section, “system-level considerations” means, over the appropriate time horizon, risks and opportunities relevant to the scheme that—

(a) cannot be fully managed through diversification alone, and

(b) arise from circumstances at the level of one or more economic sectors, financial markets or economies, including but not limited to those relating to environmental or social matters.

(12) Regulations under subsection (1) must come into force no more than one year after the passing of the Pension Schemes Act 2025.

(13) In complying with requirements imposed by this section and regulations, a trustee or manager must have regard to guidance prepared from time to time by the Secretary of State.”

(3) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.

(4) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.

(5) The rules and regulations under subsections (3) and (4) must come into force no later than the date on which regulations pursuant to section 36(10) of the Pensions Act 1995 (as amended by this Act) come into force.”

This new clause gives the Secretary of State a duty to make regulations clarifying investment duties of occupational pension schemes, including system-level considerations and other matters including impacts of investee firms, beneficiaries’ standards of living and views. It also imposes duties on the FCA and the Secretary of State to make corresponding rules and regulations for workplace personal pension schemes and the Local Government Pension Scheme respectively.

New clause 18—Report on indexation of pre-1997 benefits—

“(1) The Secretary of State must, within 6 months of the passing of this Act, publish a report on whether the Pension Protection Fund and the Financial Assistance Scheme should provide indexation on compensation in respect of pre-1997 rights, where pension schemes provided for that.

(2) The report must consider—

(a) the potential benefits for affected pensioners;

(b) approaches of occupational pension schemes to indexation of pre-1997 benefits;

(c) the impact on compensation schemes’ surpluses and on public finances;

(d) international approaches to indexation of legacy pension benefits.

(3) The Secretary of State must lay a copy of the report before both Houses of Parliament.”

This new clause requires the Secretary of State to report on whether the PPF and FAS should provide indexation on compensation in respect of pre-1997 rights, where scheme rules provided for that.

New clause 19—Fossil fuels and climate change risk—

“(1) The Pensions Act 1995 is amended as follows.

(2) In section 41A (Climate change risk), after subsection (6) insert—

“(6A) Regulations under subsection (1) must, within 1 year of the Pension Schemes Act 2025 receiving Royal Assent, prohibit the trustees or managers of schemes of a prescribed description from holding relevant assets.

(6B) The relevant assets in subsection (6A) are issuance by issuers which, in relation to thermal coal—

(a) derive 10% or more of annual revenue from its production, transport or combustion,

(b) produce annually 10 million tonnes or more, or

(c) have 5GW or more of power generation capacity.

(6C) Within 2 years of the Pensions Act 2025 receiving Royal Assent, and every 3 years thereafter, the Secretary of State must carry out and publish a review on whether the definition of relevant assets should be extended to include—

(a) issuance by issuers which, in relation to thermal coal, derive a smaller proportion of revenue, produce a smaller amount or have a smaller amount of power generation capacity than the proportion and amounts specified in (6B),

(b) some or all new issuance by issuers of a prescribed description deriving a prescribed proportion or amount of their revenue from the extraction, transport, trading or combustion of prescribed fossil fuels, or

(c) some or all new or existing issuance by issuers of a prescribed description investing a prescribed proportion or amount in exploring for, or expanding the extraction of, prescribed fossil fuels.

(6D) Regulations under subsection (1) may implement the conclusions of the review referred to in (6C).”

(3) In subsection (8), at end insert—

““thermal coal” means coal and lignite used in the generation of electricity and in providing heat for industrial or residential purposes;

“issuance” means all investable assets, including equity and debt.”

(4) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.

(5) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.

(6) The rules and regulations under subsections (4) and (5) must come into force no later than the date on which regulations pursuant to section 41A(6A) of the Pensions Act 1995 (as amended by this Act) come into force.”

This new clause would require Government and the FCA to make regulations and rules restricting exposure of some occupational and workplace personal schemes to thermal coal investments and to regularly review whether the restrictions should be extended to other fossil fuel investments.

New clause 20—Pensions and savings advice allowance—

“(1) The Secretary of State must by regulations make provision for a tax-free pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pensions to access financial advice.

(2) Regulations must specify—

(a) the maximum amount for the pensions and savings advice allowance,

(b) the content and scope of the pensions and savings advice,

(c) the qualifications and independence requirements of any person or body providing pensions and savings advice,

(d) the means by which individuals are notified of their entitlement to the pensions and savings advice allowance and how they may access—

(i) the allowance, and

(ii) advisers who meet the requirements under subsection (2)(c),

(e) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to the pensions and savings advice allowance, and

(f) whether the pensions and savings advice allowance counts towards the Individual Lump Sum Allowance.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause requires the Secretary of State to introduce, by regulations, a pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pension savings tax-free to access appropriate financial advice.

New clause 21—Significant life event lump sum—

“(1) The Secretary of State must by regulations make provision for a significant life event lump sum of up to £5,000 which a person is entitled to before they attain normal pension age.

(2) The regulations may prescribe circumstances in which, and conditions subject to which, a person may become entitled to a significant life event lump sum, including—

(a) purchasing a first home;

(b) getting married;

(c) unexpected loss of employment.

(3) The regulations must specify that the significant life event lump sum counts towards the Individual Lump Sum allowance.

(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require the Secretary of State to introduce, by regulations, a significant life event lump sum of up to £5,000 tax-free which individuals can take from their lump sum allowance prior to reaching pension age.

New clause 22—Indexation of pre-1997 pensions—

“(1) The Pensions Act 1995 is amended as follows.

(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).

(3) In subsection (2), leave out from “pensionable service,” to “or”.

(4) In subsection (2), leave out from “commencement day]” to “—".

(5) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.

(6) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.

(7) In subsection (5)(a), leave out “6 April 1997 or”.

(8) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.”

This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 in order to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997.

New clause 23—Indexation of pre-1997 service—

“(1) The Secretary of State must by regulations make provision for the use of Pension Protection Fund surplus/reserve funds for the indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.

(2) Those regulations must specify that—

(a) pension payments from the PPF and FAS are increased each year in line with Retail Prices Index (RPI) inflation for pensionable service before and after 6 April 1997,

(b) the cap on the annual increase is raised to 7%,

(c) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with RPI inflation, the scheme manager must—

(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and

(ii) reimburse the member for the amount determined under paragraph (c)(i), and

(d) payments made to reimburse members under paragraph (c)(ii) must be made from Pension Protection Fund surplus funds and future funds.

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights, for indexation to follow RPI inflation with a cap of 7%, and for retrospective payments to be funded from PFI surplus and/or reserve funds.

New clause 24—Indexation of pre-1997 pensions—

“(1) The Pensions Act 1995 is amended as follows.

(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).

(3) In subsection (2), after “52” insert “52A”.

(4) In subsection (2), leave out from “pensionable service,” to “or,”.

(5) In subsection (2), leave out from “commencement day]” to “—”.

(6) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.

(7) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.

(8) In subsection (5)(a), leave out “6 April 1997 or”.

(9) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.

(10) After Section 52 (Restriction on increase where member is under 55) insert—

“52A Restriction on increase where a pension scheme is not in surplus

No increase under section 51 in the annual rate of a pension shall not be paid or shall not be paid in full unless the pension scheme is in surplus.””

This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997, with the restriction that annual increases would only be paid if the pension scheme is in surplus.

New clause 25—Review of impact of this Act—

“(1) Within five years of the passing of this Act, the Secretary of State must carry out a review of the impact of the provisions of this Act on actual and projected retirement incomes.

(2) The review must consider—

(a) the impact of the provisions of this Act on actual and projected retirement incomes, and

(b) whether further measures are needed to ensure that pension scheme members receive an adequate income in retirement.

(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to review the impact of this Act on retirement incomes and whether additional measures are needed to ensure the adequacy of retirement incomes.

New clause 26—Establishment of targeted investment vehicles for pension funds—

“(1) The Secretary of State may by regulations make provision for the establishment or facilitation of one or more investment vehicles through which pension schemes may invest for targeted social or economic benefit.

(2) Regulations under subsection (1) must specify the descriptions of targeted social or economic benefit to which the investment vehicles are to contribute, which may include, but are not limited to, investment in—

(a) projects that revitalise high street areas;

(b) initiatives demonstrating social benefit;

(c) affordable or social housing development;

(d) capital projects that meet essential public needs, such as care homes;

(e) clean, renewable energy projects.

(3) The regulations must make provision for—

(a) the types of pension schemes eligible to participate in such investment vehicles;

(b) the governance, oversight, and reporting requirements for the investment vehicles and participating pension schemes;

(c) the means by which the contribution of such investments to targeted social or economic benefit is measured and reported;

(d) the roles and responsibilities of statutory bodies, including the Pensions Regulator and the Financial Conduct Authority, in authorising, regulating, or supervising such investment vehicles and the participation of pension schemes within them.

(4) The regulations may—

(a) make different provision for different descriptions of pension schemes, investment vehicles, or targeted social or economic benefits;

(b) provide for the pooling of assets from multiple pension schemes within such vehicles;

(c) require pension scheme trustees or managers to have regard to the availability and suitability of investment vehicles when formulating investment strategies, where consistent with—

(i) their fiduciary duties, and

(ii) the long-term value for money for members.

(5) In this Chapter, "pension scheme" has the same meaning as in section 1(5) of the Pension Schemes Act 1993.”

This new clause would allow the Secretary of State to establish investment funds to encourage investment in areas such as high streets, social housing, care homes, clean renewable energy, and other investments with clear social benefits.

New clause 27—Review of proposed mandated investment powers and their impacts—

“(1) The Secretary of State must, before making any regulations under this Act relating to mandated investment requirements for pension schemes, lay before Parliament a report reviewing the potential impacts of such powers.

(2) The report under subsection (1) must include an assessment of—

(a) the extent to which any mandated investment requirements may conflict with the fiduciary duties of trustees and managers of occupational and personal pension schemes;

(b) the potential effects of such requirements on the long-term financial returns of scheme members, including—

(i) risks relating to illiquid or politically directed assets,

(ii) risks to diversification, and

(iii) any expected increase in costs borne by savers;

(c) the risk that mandated investment requirements could lead to politicisation of pension scheme decisions or undermine public confidence in the private pension system;

(d) the adequacy of parliamentary oversight and scrutiny of the exercise of powers to mandate investment allocations, including whether additional safeguards are required;

(e) the question of accountability in circumstances where mandated investments perform below expectations, including whether liability would rest with trustees, fund managers, or the Government;

(f) the potential for market distortion arising from requirements that schemes invest in specific UK-based assets, including the risk of asset inflation or the creation of investment bubbles; and

(g) alternative policy measures that could encourage pension scheme investment in the United Kingdom without the use of mandatory requirements, including the removal of regulatory barriers and the creation of suitable investment opportunities.

(3) The report must include a summary of views received from—

(a) industry bodies representing pension schemes, trustees, and fund managers;

(b) relevant financial regulators; and

(c) any other persons the Secretary of State considers appropriate.

(4) The Secretary of State must publish a response addressing the findings and any recommendations contained in the report.

(5) No regulations requiring pension schemes to meet mandated investment allocations may be made under this Act until the report under subsection (1) has been laid before Parliament and the response under subsection (4) has been published.”

This new clause requires the Secretary of State to review the potential effects of mandated investment powers including on risks to returns, fiduciary duties, market distortion, and accountability before any powers can be exercised.

New clause 28—Pension Protection Fund: members who have not attained normal pension age at assessment date—

“(1) Schedule 7 of the Pensions Act 2004 is amended in accordance with subsections (2) to (7).

(2) In sub-paragraph 3(3), for “the appropriate percentage” substitute “100%”.

(3) Omit sub-paragraph 3(4).

(4) In sub-paragraph 11(3), for “90%” substitute “100%”.

(5) In sub-paragraph 14(3), for “90%” substitute “100%”.

(6) In sub-paragraph 15(3), for “90%” substitute “100%”.

(7) In sub-paragraph 19(3), for “90%” substitute “100%”.

(8) The Secretary of State must by regulations make provision for the retrospective payment of compensation to PPF members, as if the amendments made by this section to Schedule 7 of the Pensions Act 2004 had had effect on the day on which that Schedule came into force.”

This new clause would provide that pension scheme members who have not reached Normal Pension Age by the Pension Protection Fund assessment date receive compensation at a rate of 100% instead of 90%, and provides for retrospective application.

New clause 29—Pension Protection Fund: estimate of cost of increasing compensation for surviving spouses or partners of members—

“(1) The Pension Protection Fund (PPF) must prepare and publish an annual estimate of the cost of increasing the value of compensation paid to surviving spouses or partners of PPF members to a sum equivalent to the value of any payments to which they would have been entitled had the scheme not entered the PPF.

(2) The first assessment under this section must be published before the end of the 2025/26 financial year.”

This new clause would require the Pension Protection fund (PPF) to publish annually an assessment of the costs of increasing compensation to the spouses or partners of PPF members to equal the amount they would have received if the pension scheme had not entered the PPF.

New clause 36—Local Government Pension Scheme: expenses and duties of administering authorities—

“(1) The Secretary of State must by regulations make provision for—

(a) a cap on the management expenses that can be claimed by administering authorities, such that they do not exceed ten basis points of the asset base of the pension fund,

(b) a cap on the investment management expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund,

(c) a cap on the general administrative expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund.

(2) Regulations under this section must also require administering bodies to provide to the Local Government Pension Scheme Advisory Board—

(a) evidence that they have considered and acted on any guidance issued by the Local Government Pension Scheme Advisory Board, and

(b) evidence of the steps that they have taken to comply with their fiduciary duties in respect of pension scheme members and Scheme employers.

(3) In making regulations under this section, the Secretary of State must consult the Local Government Pension Scheme Advisory Board.

(4) In this section—

“administering authorities” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013, and

“Scheme employer” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013.”

Amendment 1, in clause 1, page 3, line 7, at end insert “, or

(b) secure employee representation on the company’s board.”

This amendment would add employee representation on boards as a requirement on asset pool companies for Local Government Pension Schemes within the scheme regulations under clause 1.

Government amendments 20 and 21.

Amendment 2, in clause 2, page 4, line 7, at end insert—

“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) should be invested in a way that is compliant with the UK’s duty not to aid or assist serious breaches of international law, including genocide and other atrocity crimes, and illegal military occupation.”

This amendment would require that investments of the local government pension scheme should be compliant with the UK’s duty not to aid or assist serious breaches of international law.

Amendment 3, page 4, line 7, at end insert—

“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) must be divested from any oil and gas companies within 5 years of the passing of this Act.”

This amendment would require that local government pension schemes divest from oil and gas companies within 5 years.

Government amendments 22 and 23.

Amendment 17, in clause 9, page 9, line 25, leave out from “does” to the end of line 25 and insert

“apply to a scheme that is being wound up unless the trustees determine by resolution that it shall not apply.”

This amendment would ensure that the principles for surplus extraction shall also apply to surplus release after further wind-up, so that employers are not incentivised to wind-up funds rather than release surplus to pensioners.

Amendment 18, in clause 10, page 10, line 21, after “notified” insert “and consulted”

This amendment would ensure that members of pension funds have to be consulted on surplus extraction.

Amendment 4, page 10, line 36, at end insert—

“(e) about the proportion of any surplus that may be allocated, or the manner in which it may be determined, for the purpose of contributing to the provision of free, impartial pension advice and guidance services for scheme members.”

This amendment enables a proportion of surplus funds to be used to fund free pension advice.

Amendment 19, page 10, line 36, at end insert—

“(e) that the trustees are satisfied that it is in the interests of the members that the power to pay surplus is exercised in the manner proposed;

(f) that the trustees have taken full account of—

(i) the extent to which members’ pensions have kept up with the cost of living and inflation (as defined in the relevant rules and deeds), and

(ii) any previously rejected requests for discretionary pension increases.”

This amendment would reinstate the current requirement that ensures trustees consent to the paying of surplus as proposed, and creates an obligation on trustees to take account of any erosion in members’ standards of living.

Amendment 5, in clause 11, page 11, line 38, at end insert—

“(aa) make, publish and keep under review the consistency of—

(i) regulated VFM schemes, or

(ii) regulated VFM arrangements,

with the goals of the Paris Agreement on climate change and clean energy;”

This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 6, page 11, line 38, at end insert—

“(aa) make, publish and keep under review the compliance of—

(i) regulated VFM schemes, or

(ii) regulated VFM arrangements,

with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers,”

This amendment would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.

Amendment 7, page 12, line 10, at end insert—

“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “climate alignment metric data”) regarding the scheme’s exposure to climate-related financial risks and the alignment of its investments with the goals of the Paris Agreement on climate change and clean energy.”

This amendment, with Amendment 5 would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 8, page 12, line 10, at end insert—

“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “sewage discharge compliance data”) regarding the scheme’s exposure to, and investment in, companies holding permits to discharge sewage, including those companies’ performance against statutory and regulatory targets for reducing sewage discharges.”

This amendment, with Amendment 6, would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.

Amendment 9, page 12, line 41, leave out “that provides money purchase benefits”

This amendment, together with Amendment 10, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.

Amendment 10, page 13, line 5, at end insert—

“(14) Value for money regulations may make different provision for different descriptions of relevant pension schemes and must make provision for the application of the value for money assessment with a VFM rating to defined benefit occupational pension schemes.”

This amendment, together with Amendment 9, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.

Amendment 11, in clause 13, page 14, line 13, at end insert—

“(iv) the consistency of the investment portfolio with the goals of the Paris Agreement on climate change and clean energy, including metrics for assessing climate-related financial risks and opportunities;”

This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 12, page 14, line 13, at end insert—

“(iv) the compliance of the investment portfolio with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers, including metrics for assessing related environmental and financial risks and opportunities;”

This amendment would require pension funds and managers to monitor and report on the performance of water and sewerage companies they invest in against targets for reducing sewage discharges.

Government amendments 24 to 49.

Amendment 16, in clause 40, page 43, line 38, leave out from beginning to end of line 27 on page 46.

This amendment would remove the ability of the Government to set mandatory asset allocation targets for certain pension schemes, specifically requiring investments in UK productive assets such as private equity, private debt, and real estate.

Amendment 15, page 46, line 9, leave out from “Before” to the end of the subsection and insert

“implementing the first set of regulations under subsection (1) the Secretary of State must—

(a) prepare and publish a report regarding—

(i) what barriers pension funds, based in the United Kingdom, are facing that are preventing them from investing back into the United Kingdom due to—

(A) legislation introduced after The Pensions Act 1995;

(B) regulations introduced by the Financial Conduct Authority, Prudential Regulation Authority, HM Treasury, or Bank of England;

(C) cultural and market behaviours;

(ii) how financial interests of members of relevant Master Trusts and group personal pension schemes would be affected by the proposed regulations;

(iii) what effects the proposed measures could be expected to have on economic growth in the United Kingdom;

(iv) any other matters the Secretary of State considers appropriate; and

(b) respond to any recommendations or issues raised in the report.”

This amendment prevents use of the reserved mandation powers in this Bill until the Government produces a report on the reasons why the powers are needed and the effects of the use of the powers and resolves any issues raised in the report.

Amendment 14, page 48, line 15, leave out paragraphs (a) to (c) and insert—

“(a) The scheme in question demonstrates strong potential for growth and an ability to innovate, and”

This amendment would revert the text of section 28F(2) on the eligibility conditions for new entrant pathway relief to its form in the Bill as introduced.

Government amendments 50 to 85.

Amendment 13, in clause 117, page 120, line 19, leave out “2035” and insert “this Parliament”

This amendment provides that if section 40 is not commenced before the end of the current Parliament in respect of the insertion of certain provisions, then the insertion of those provisions would be automatically repealed at that time.

Government amendments 86 to 89.

[Torsten Bell]

I start by thanking all hon. Members for their valuable contributions during the Bill’s passage to date. In particular, I thank members of the Public Bill Committee who offered line-by-line scrutiny. They have challenged the Government, but always constructively—that includes the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), who is not with us today. That reflects the broad consensus across the House that the Pension Schemes Bill is an important piece of legislation, and it is a consensus for which I am very grateful. The same consensus underpinned the introduction of automatic enrolment under the previous Government.

It is exactly because we as legislators have more than gently nudged people into pension savings that the Bill’s most fundamental job is to drive up returns on those savings. The case for this focus is clear: those retiring in 2050 are currently set to do so with lower private pension income than those retiring today. The Bill also recognises that, with the second largest pension system in the world, pensions matter not just to deliver an income in retirement but for the whole economy as the largest source of domestic capital. With those goals in mind, this Bill builds a solid foundation on which we can build, not least via the Pensions Commission over the next year, exactly as several hon. Members called for on Second Reading.

The vast majority of the amendments tabled by the Government are minor technical amendments, and there are two substantial areas on which I would like to dwell. The first is on pre-1997 indexation within the Pension Protection Fund and the financial assistance scheme.

The PPF is one of the most important legacies of the last Labour Government, but we have all heard about the challenges caused by the lack of indexation of compensation related to pre-1997 pensions. I am grateful for the time that affected pensioners have given me in discussing their experiences directly. I have listened carefully to them and to hon. Members who have kept attention on this issue.

I particularly acknowledge the contribution of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) and her Work and Pensions Committee, as well as my hon. Friend the Member for Basingstoke (Luke Murphy) and the hon. Member for Aberdeen North (Kirsty Blackman) who raised this matter in Committee. I am also grateful to the hon. Members for Didcot and Wantage (Olly Glover), for Caerfyrddin (Ann Davies), for Torbay (Steve Darling) and for Belfast South and Mid Down (Claire Hanna), and my hon. Friend the Member for Poole (Neil Duncan-Jordan), for their proposed new clauses and amendments related to this matter.

--- Later in debate ---

[Dame Nia Griffith]

I thank the Minister for that, but it is a matter of action and ensuring that it really happens. We are too used to regulators not having the powers they are supposed to have or not being effective in using them. We need some action, and hopefully the Minister will help us to see how it could be done.

There is a bitter irony that the Pension Protection Fund is funded by a levy on the very same companies that are refusing to index-link their own pensioners’ pensions. We know from lots of evidence that the only way the companies will listen is through legislation. These companies are multinationals, and in countries where there is legislation, they pay up—so they do respond if there is a law.

As I was saying, saying that the trustees have the powers is sadly very far removed from the reality. Trustees of various countries have asked repeatedly for indexation, and before handing over any surplus to the companies, they will be very wary because they do not trust them at all. They will want cast-iron guarantees on indexation.

Let us look at the scale of the problem. Seventy-five per cent of UK defined-benefit schemes already provide pre-1997 indexation. The remaining 25% represents approximately 1.5 million members, including some 734,000 pensioners, with 80% of all pensioners concentrated within just 200 large schemes with strong employers. As we have seen, employer discretion has failed in practice, and many pensioners have had years of zero increases.

New clause 22 would set the statutory principle that there should be indexation. The Government can then design proportionate safeguards—for example, phasing in, exemptions and triggers—in order to protect genuinely weak schemes and to ensure, as the Society of Pension Professionals says, that schemes are not pushed into having to be picked up by the Pension Protection Fund.

We want action on this. We are talking about a small, manageable number of schemes, but we want the trustees really to be given the powers to force those companies to make that indexation. If the Minister is not minded to put this provision into the legislation, as we want, we want to see some concerted action and a genuine way forward. If that proves not to work, there needs to be an opportunity to come back and put this into secondary legislation instead.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Steve Darling]

For people who are lucky in the lottery of life, their pension can be one of their biggest assets, but, sadly, we know that 12 million people across the United Kingdom are not saving enough. That is around the population of Belgium. Talking more broadly, there is much about the legislation to be welcomed. I am sure the Minister had his best birthday ever by spending it in the Bill Committee. I am sure that as a 14-year-old, he dreamed of that day, on Committee corridor—sadly I am not joking.

Budget Resolutions

Caroline Nokes Excerpts

Thursday 27th November 2025 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Order. In an attempt to get everybody in today, I am going to put an immediate six-minute time limit on speeches.

--- Later in debate ---

[Sir Geoffrey Clifton-Brown]

No, I have already given way once on this subject.

Our wealth creating sector is shrinking, whereas the public sector is ballooning, yet the Government’s policies are punishing businesses and wealth creators. The freezing of tax thresholds is a tax rise, as the Chancellor has confirmed many times at the Dispatch Box, but she has now confirmed that they will be frozen for another three years. Every time they are frozen, that brings more people into the tax net. In this case, it is forecast to bring another 750,000 into the tax net. The 2% increase on savings and dividends is another penalisation of those working hard to save their money. Where are the incentives to save money if the Government are taking more of their savings?

Finally, hospitality businesses are going to be hit hard by this Budget. In North Cotswolds, they are at the heart of the community, yet nationally one pub is closing its doors every day at the moment. I do not see any pub landlords welcoming this Budget—

[Madam Deputy Speaker (Caroline Nokes)]

Order.

--- Later in debate ---

[Monica Harding]

I do not have the time.

Older homeowners who have watched their properties’ value soar over the years will be hardest hit by this granny tax. They are asset-rich but cash-poor. They may be forced to sell up—at reduced asking prices—and more properties will get dragged into the mansion tax net. As that happens, a proportion of terraced houses, flats and semis will join them.

Worst of all, this is not a serious attempt to reform property tax, including business rates, stamp duty and council tax. Like the Budget, it is tinkering and meddling around the edges. This is a patchwork Budget that does not take us much further forward. Where has the national mission for growth gone? This is a low-growth Budget from a low-growth Government who thumb their nose at the wealth creators. It does not tackle some of the big questions. Where is the money in the plan for adult social care? Where is the money in the plan for the £14 billion deficit in SEND provision to help local authorities that are about to go bankrupt? The Budget is a smorgasbord of contempt for aspiration and growth. The Government have not only abandoned working people in my constituency, but waged a quiet war on aspiration itself.

I am pleased that the Government have lifted the two-child benefit limit. [Hon. Members: “Ah!”] My party laid out how we would do that, but Government Members know as well as I do that poverty does not end there. To tackle poverty, we need to create growth.

There is an alternative, which the Liberal Democrats have laid out in our plan to turbocharge economic growth by repairing the £90 billion Brexit black hole caused by the previous Conservative Government. The UK needs to negotiate a new bespoke customs union with the European Union: a modern arrangement designed around the needs of British businesses and workers, which would raise £25 billion a year. Instead of that we have a Budget that taxes work, punishes investment, stifles aspiration and still fails to deliver for public services; a Budget that tells wealth creators—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I call Graeme Downie.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

After the next speaker there will be a five-minute time limit.

--- Later in debate ---

[Bradley Thomas]

My right hon. Friend is absolutely correct. The Government have a duty, in every single thing that they do and in their entire approach, to ensure that they promote the interests of the UK and of the businesses and farms that strive to keep us fed and prosperous.

Unemployment is up and redundancies are rising. In my constituency, local employers are cutting jobs, leaving families anxious about their future. Spending is up, and borrowing overshot forecasts by £9.9 billion this year. My constituents know that every pound borrowed today is a pound that they will repay tomorrow. Confidence is down, with business surveys showing stagnation, and local shopkeepers tell me that they are holding back investment because they see no stability. Growth is also down, with GDP growing by just 0.1% in Q3 of this year. My constituents see stagnation in wages, stagnation in opportunity and stagnation in hope.

This is Labour’s economic scoreboard: inflation is up, taxes are up, unemployment is up, spending is up, borrowing is up, confidence is down and growth is down. That is not rebuilding Britain; it is dismantling Britain’s prosperity, and all our constituents are paying the price. Two thirds of the British public now say that they want to see spending cuts. My constituents are tightening their belts, and cutting back on holidays and meals out. Some are even cutting back on heating. They expect the Government to do the same and to live within their means, yet Labour’s Budget expands spending recklessly.

Businesses in my constituency are being hit hard. Last year, employer national insurance contributions were increased and business rates relief was cut, and businesses are struggling to survive. For savers, ISA allowances have been reduced, which undermines savings. Retail has lost over 100,000 jobs in the last year. With our high streets feeling the pain, shops are closing and livelihoods are being destroyed. The Budget offers no relief for small businesses in my constituency; it only offers more burdens.

Labour claims that fairness is at the heart of the Budget, but fairness is not what families in my constituency are feeling. Income tax thresholds have been frozen, dragging more workers into higher tax bands, and savers have seen their allowances cut. Even electric car owners, who have been encouraged to go green and to do the right thing, are now being penalised. This punishes aspiration.

Farmers in my constituency are among the hardest hit, and the family farm tax remains largely intact. The changes to inheritance tax threaten the survival of the family farm, and rising input costs and inflation are compounding the pressure. Farming is not just an industry; it is the backbone of our food security, as my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) pointed out, and the backbone of rural life, yet Labour continues to undermine it.

We are seeing an exodus of capital and labour in a world that is highly mobile. Over the last year, we have seen an exodus of high-net-worth individuals. While Labour Members may scowl at and casually dismiss that, the reality is that the displacement of those individuals would require another half a million average earners paying tax to plug the gap of tax revenue lost. That is the scale of the hole that the Government have created. Who will fill that? All of our constituents will—ordinary families, ordinary workers and ordinary savers.

Ambition without discipline is not a plan; it is a gamble. Labour’s Budget is a gamble with Britain’s future. Every £1 spent servicing debt is £1 not spent on public services, every broken promise erodes trust and every squeeze on families and businesses undermines the engine of our economy. Let us be clear: Labour spends until it runs out of other people’s money, and when the money runs out, our constituents pay the price. All of our constituents deserve better than what we have seen in this Budget. They deserve a Government who will restore fiscal discipline, encourage enterprise and deliver fairness for everyone.

Yesterday’s Budget is not a plan for the future, but a blueprint for decline. It ignores the public’s demand for spending cuts and for the Government to live within their means. It presides over the loss of further jobs, and it drives away wealth creation, leaving ordinary taxpayers to pick up the bill. It squeezes families, undermines businesses and will devastate farmers. This is not rebuilding Britain; this is dismantling Britain’s prosperity. Labour spends until it runs out of other people’s money, and my constituents cannot afford that any longer.

[Madam Deputy Speaker (Caroline Nokes)]

I call Perran Moon.

--- Later in debate ---

[Ben Obese-Jecty]

I wholeheartedly agree. I have spent the last year talking to small businesses in my constituency that have been crippled by the measures in the last Budget. When this year’s measures come in as well, some of those businesses will struggle desperately to keep on lower earners, particularly young people.

My first job as a 16-year-old was working in a supermarket, and I am sure many Members had a similar experience. Those opportunities are going to disappear for young people as a result of these measures. What this Labour Government have not taken into account is that every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for those we represent. Many businesses that want to employ people will now find themselves unable to take on staff or to take the risks that the Chancellor mentioned, meaning that businesses cannot grow.

We are very likely to see the wage compression effect, whereby the gap between those on the minimum wage and those in more skilled or experienced roles becomes smaller. That, yet again, leads to a lack of incentive to develop skills and opportunities for those with them. The Government must address that, as it will curtail opportunities for young people and lower earners. Unemployment is now set to peak at 5% and the number of economically inactive people will also rise.

The pay-per-mile tax on electric vehicles will surely disincentivise the switch to EVs before the ban on new petrol and diesel vehicles kicks in, and the OBR estimates that there will be 440,000 fewer EV sales over the next five years because of the tax. How much tax revenue will be lost because those sales never happen? Then there is the plethora of other taxes that are part of the smorgasbord: the tourism tax, the NI raid on pension contributions, the reduction in the tax-free cash ISA allowance and even a milkshake tax.

We have not even touched on the absence of the commitment to 3% of GDP on defence anywhere in the Budget. There is not a single reference to it and I do not understand how. We saw today that the service chiefs will write to the Defence Secretary to tell him that it will not be possible to deliver the strategic defence review. I would love to hear from the Minister how Labour will facilitate defence in this day and age.

The OBR has stated that not a single measure contained in the Budget will improve growth, which has, in fact, been downgraded from the figure forecast in the summer. Taxes on working people have been increased by stealth to pay for welfare. That will be Rachel Reeves’s legacy, and this is quite possibly her last Budget—

[Madam Deputy Speaker (Caroline Nokes)]

Order. You can refer to the Chancellor of the Exchequer as the Chancellor or by her constituency name, but not by her own name.

[Ben Obese-Jecty]

I apologise, Madam Deputy Speaker. I shall draw to a close.

It comes to something when the Chancellor can stand at the Dispatch Box to deliver her Budget, make a boob joke and that not be the most offensive thing she says.

Welfare Spending

Caroline Nokes Excerpts

Tuesday 15th July 2025 Commons Chamber

[Brian Leishman]

I thank the hon. Gentleman for that point, which I will come on to. He has clearly had advance sight of my speech.

The Government should of course lift the two-child cap immediately, and it was wrong of them not to make that a part of the King’s Speech.

The wording in the motion referring to a “benefits culture” is both lazy and classist, not to mention demonstrating the ignorance—wilful or otherwise—of the Conservatives about the struggles experienced by millions in this country. However, I expect that from some in the Conservative party. I agree that the welfare system is broken and that it needs changed, but the changes it needs are not to be found in this motion or in what the Government put before the House last week. Like thousands of my fellow party members, I do not expect that from the Labour party. Last week’s vote was a stain on a great party that should be defending and fighting for the people that this motion seeks to belittle.

Improving living standards should be the priority of this Government and every Government, and we are not doing nearly enough—not yet. A year into this Government, what people need is not MPs creating a living standards coalition group; they need them voting in this place to improve living standards, not writing letters about improving living standards. After last week’s vote, which came too late for disabled people, I urge MPs to wake up before making the same mistake again.

I urge the Government to resist going down the road of pitting old people against children or children against striking workers, or any of that nonsense. Leave that division and nastiness to other parties that seek to divide and conquer and create inequality.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

--- Later in debate ---

[Peter Swallow (Bracknell) (Lab)]

I would like to clear up what this Prime Minister and Government have done. They have expanded eligibility for free school meals to include more than 3,000 children in Bracknell Forest; expanded Best Start family hubs, which is something the previous Government never funded in Bracknell Forest; expanded the warm home scheme; rolled out free breakfast clubs in primary schools; limited expensive school uniforms to three branded items—

[Madam Deputy Speaker (Caroline Nokes)]

Order. The hon. Gentleman should know that interventions must not be his speech read out at speed.

--- Later in debate ---

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

According to the latest DWP data, more than 11,800 children in my constituency of Dewsbury and Batley are living in poverty. This is not abstract and it is not inevitable; it is a direct result of policy choices by the previous Government and the maintenance of that policy by the current Government. One parent shared—

[Madam Deputy Speaker (Caroline Nokes)]

Order! May I please urge people to make interventions short and pithy and not pre-prepared and read out.

[Danny Kruger]

I will come in a moment to the matter of child poverty, and I recognise the point that the hon. Gentleman is making.

I was just referring to the fact that all the parties except ours—indeed, it is unclear what those on the Government Front Bench think—seem to support lifting the two-child cap. The Liberal Democrats cannot seem to see a spending opportunity without grabbing it with both hands. Their spokesman, the hon. Member for Torbay (Steve Darling), spent £4.5 billion just in his speech earlier this afternoon. Then we have the SNP Government, who have presided over higher economic inactivity and lower employment than in England, have missed all their targets for child poverty, and still clamour for more money for welfare.

Then there is the Reform party, which is sadly absent today. I do quite like the Reform party and I agree with its Members on lots of things, but there is a problem: they would spend money like drunken sailors. I can see what is happening and I am very worried about it—they will end up in an electoral pact with the Liberal Democrats with a joint ticket to protect welfare spending. I do not know how hon. Members feel about the anticipated alliance.

The hon. Member for Dewsbury and Batley (Iqbal Mohamed) and others, particularly Members on the Government Benches, have cited widening poverty rates over the past decade or more, and they repeatedly raised the issue of 4.5 million children, but they are talking about relative poverty. The fact is that relative poverty increased under the previous Government because, overall, the economy grew, as more people became more prosperous. As the median income rises, more people come under it; that is how it works. If relative poverty goes down under this Government, it will be because they shrank the economy. That is highly likely, but it is not an achievement to boast about.

Relative poverty is not a measure of anything except the operation of the law of averages. Therefore, what we need to look at is real poverty, absolute poverty. As we rescued the public finances and grew the economy, absolute poverty went down under the Conservatives.

On children, the percentage of children in absolute poverty after housing costs fell between 2010 and 2024. We pulled 800,000 people out of absolute poverty and averted over a million more people falling into absolute poverty. We had more people in work, a higher employment rate, and fewer workless households than since records began. We should thank my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) for that. Mention was made of Wilberforce and Disraeli. One day they will add the name of Duncan Smith to that great record.

[Madam Deputy Speaker (Caroline Nokes)]

Order. That should have been “the right hon. Member for Chingford and Woodford Green”.

[Danny Kruger]

It just doesn’t flow as well, but yes, apologies Madam Deputy Speaker.

--- Later in debate ---

[Graham Stuart]

On a point of order, Madam Deputy Speaker. Given collective responsibility, is it in order for a Minister of the Crown to argue against a policy of his own Government? If I have understood correctly, it is the policy of the Government and the Labour party to maintain the two-child benefit cap.

[Madam Deputy Speaker (Caroline Nokes)]

Order. The right hon. Gentleman will know that that is not a matter for the Chair, and he is seeking to drag me into the debate.

[Andrew Western]

It is also not what I said, Madam Deputy Speaker. I said that we on our child poverty taskforce are considering all available levers in the lead-up to the child poverty strategy, which will come in the autumn.

The Opposition spokesperson, the hon. Member for East Wiltshire (Danny Kruger), made a point about controlling welfare spend. Yet again, we heard that the four years post-covid were not an appropriate time to tackle the spiralling welfare bill that the Conservatives created. In those four long years, the Conservative party got through three Prime Ministers, five Ministers for health and work, six Secretaries of State for Education and seven Sunak resets, yet the welfare bill continued to spiral. Child poverty worsened, and we had wasted years, so we will take no lectures from the Conservatives on welfare spend, and certainly not on the best way to tackle child poverty.



This party inherited the Conservatives’ shameful legacy of disastrous levels of child poverty and a broken social security system that fails to command people’s trust. Across Government, we have started the urgent work to fix these problems and to drive down child poverty once again, as the last Labour Government did, in partnership with the devolved Administrations, charities, local authorities and others, and to build a fairer, more sustainable social security system that helps people build better lives by giving them the right incentives and support. We will do that important work because tackling child poverty is a moral mission for this Government, and we will oppose this motion today because all levers are under active consideration as we seek to do so.

[Madam Deputy Speaker (Caroline Nokes)]

Before I put the Question, I will just remind the Minister that, like the shadow Minister, he should not be referring to Members by their name in the Chamber but by their constituency.

Question put.

Universal Credit and Personal Independence Payment Bill

Caroline Nokes Excerpts

Committee of the whole House & 3rd reading
Wednesday 9th July 2025 Commons Chamber

[Several hon. Members rose—]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

Before I call the next speaker, may I remind all Members that this is the Committee stage? Can we have some focus on the amendments we are debating this afternoon, not wide-ranging Third Reading speeches? At this rate, there will be little time for Third Reading.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

I rise today to speak in support of amendments 2(a), 37 and 39, and new clauses 8, 10 and 11. Without going into a Third Reading speech, it is important to highlight that we are debating a Bill that will have a profound and, in many cases, devastating impact on thousands of families across our country.

As the Resolution Foundation puts it, this Bill represents an

“income shock for millions of low-income households.”

That should give every Member in this Chamber pause. What is particularly troubling is that the areas hardest hit are the very communities that this Government claim to support—places in the north of England, in Wales and in my region of Yorkshire. These proud working-class areas are being failed by a Government tightening the purse strings on the most vulnerable.

In Dewsbury and Batley, 7.9% of people claim personal independence payment. I have had more than 150 constituents contact me terrified about what these cuts mean. Those are not just numbers; they are real people with real needs. The universal credit health element is an essential lifeline for millions of people in our country. One of my constituents, Andrew Waring, ran a business before 2020. Then covid left him with long-term organ damage. He could barely walk 10 metres, and his PIP payments became a lifeline. Cutting such support is not about trimming fat; it cuts into people’s dignity and survival. More than 20 civil society organisations have urged MPs to reject these cuts. Even with the Government’s amendments and the change introduced last week to defer any cuts to PIP until the Timms review has concluded, people are still left concerned and in severe distress.

As it stands, clause 2 will leave 750,000 people, according to the Government’s impact assessment published last night, up to £3,000 worse off by 2030. One in five people on universal credit and disability benefits have used a food bank in the past month, and this Bill will just increase that number. That is why I support amendment 2(a) tabled by the hon. Member for Leeds East (Richard Burgon) to maintain the current universal credit health element. That cut will especially hurt people with mental health conditions who are already struggling to access support.

Many Members across the House have spoken in support of the other amendments that I also support, and I will not repeat their eloquent and informed speeches and the points they made. To conclude, what has been disappointing at the end of my first year in Parliament is to see a critical Bill, which will impact millions and millions of people in our country, rushed through the legislative process in a way that has not allowed the relevant time to understand, amend and improve it so that it is fit for purpose. I am sorry to say so, but this process has been a legislative mess.

--- Later in debate ---

[Several hon. Members rose—]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I understand that Sir Roger may already have made this point, but about 23 colleagues are still waiting to speak and we have roughly 88 minutes left. At four minutes each, most of you will get in. If you choose to take eight minutes each, half of you will get in. I will allow colleagues to make the decision as to whether they wish to help each other.

[Steff Aquarone (North Norfolk) (LD)]

It is an honour to follow the hon. Member for South West Norfolk (Terry Jermy), who is my constituency neighbour. I welcome and value his testimony and his authenticity of purpose in what he said.

I wish to speak in favour of my new clause 5, which I am pleased to say has been supported by many of my colleagues representing both inland and coastal communities. My new clause would require the Government to publish, within six months of the Bill passing, an assessment of how its provisions impact on coastal communities, such as mine in North Norfolk. That is really important, because this Bill could have a huge and detrimental impact on such communities, and I am deeply concerned that the Government have once again failed to consider coastal communities in their policy. I have heard from hundreds of worried constituents, and I am sure that the same is true of my coastal colleagues from across the House—we all know that our areas are too often overlooked and not valued enough by Governments. My new clause would ensure that the Government have to take account of how our areas will be particularly harmed by such badly thought-out changes.

What is on the face of the Bill as it stands will be really damaging to our coastal regions, even if we accept the Government amendments. Some of the highest rates of PIP claims are in coastal communities, as are some of the highest rates of unemployment. Considerably above-average rates of sickness, poor health and lower quality of life are found in coastal communities. If the Government press ahead with such blunt changes without supporting more people into work first, it could be catastrophic for communities all around our coastline.

Communities who are eager to get into work are faced with a litany of barriers that the Government are not doing enough to solve. We have real issues with public transport access, so for many trying to access inland employment, it is either too far or too hard to get to many jobs, or they see their pay packets eaten into disproportionately by bus or train fares. Almost one in five unemployed people have not applied for jobs or have turned down offers due to problems with transport.

This problem is even more acute among young people—both employed and not—who are nearly three times more likely than their older working age peers to turn down a job because they simply cannot get to it. These struggles extend to those accessing vocational training, which can be a new route into new trades and qualifications that are simply not accessible for many due to the distances required, or the lack of a workforce to provide the training. We have many talented people currently in receipt of PIP or UC who would be eager to train for an industry that they feel could allow them to work, but in communities such as mine the opportunities are just too lacking.

We know that the welfare system is not working—that is clear—but the Government have to stop looking at this issue as mere numbers on a balance sheet. When the Government do that and just look at ways to get to a magic number demanded by the Treasury, they ignore the people behind the numbers. There is an urgent need to tackle underemployment and, in particular, the rise in the number of young people with mental ill health being sentenced to a lifetime of worklessness. But ripping out the safety net will do nothing to help young people in coastal communities such as mine, who are three times as likely to suffer from undiagnosed mental distress than their inland equivalents in underprivileged areas.

Pension Schemes Bill

Caroline Nokes Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Order. Before I call the next speaker, I just want to be clear that it will be about an hour before the wind-ups. Nine Members are bobbing, so perhaps you can all reflect on that in your contributions so that I do not have to put on a time limit.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to speak on this Bill. Pensions and the regulation of private pensions are increasingly of national interest. I believe that regulation is needed, so I welcome the Bill. Obviously the small print will become more apparent during its passage, but it is good that we are introducing the Bill.

The Government’s intention of ensuring that people have a private pension to supplement their income when they eventually reach retirement is increasingly being realised. By and large, most young people—22 million, I understand—have a pension. The Minister will remember the story I told him about when I was 18. I think I am right in saying that I am the oldest person in this Chamber, so that was not yesterday. The fact is that pension advisers were almost unheard of then. I will tell hon. Members who the best pension adviser I ever had was: my mum. When I was 18, she took me down to the pension man in Ballywalter. She said, “You need a pension.” I said, “Mum, I’m only 18. What do I need a pension for?” She said, “You’re getting a pension.” We know how it is: our mum tells to do something, and we just do it, so I got a pension on her advice.

I ended up with four pensions over my working life, which were all beneficial. I did not understand the value of them until I came to the stage at which I was going to cash some of them in—I realised the value of them then. Today, we have an opportunity to advise young people of the need for a pension. When it comes to pensions, not everybody has my mum, but everybody has somebody, or an equivalent through Government.

Let me give a quick story about my office staff. I employ six ladies and one young fella. They are in their 20s, 30s, 40s, 50s and 60s. I will not get into trouble by naming the staff in each bracket, but their approach to their pension varies by age bracket, and that is a fact; they see it differently. Listening to their discussion highlighted to me the need to educate people on the importance of paying into their pension, because it is so important that we get this right. That is why the Bill is important: it is an opportunity to advise people.

One member of my staff has two children at primary school. She highlighted that she was paying an additional 5% into her pension on the advice of her older colleague, only to find that the tax on her savings this year meant that she actually had less money in her account each month compared with last year. The first thing to go was not the kids’ piano lessons or hockey camp—she said that those experiences shaped her children’s memories. The first reduction was scaling back on her pension additions. People might say, “My goodness me! That was not necessary,” but actually it was, if she wanted to preserve that lifestyle for her children. It seems that the tax on savings means that one mum has made the choice to stop supplementing her pension, and to instead sow the money into her children’s lives just now. That is not the aim of the Government or the Minister, but there is only so much that we can tax the middle class before they make cuts that are not in their best interests.

Apart from a number of clauses, this legislation does not directly affect Northern Ireland, but it should be noted that accompanying legislation and a number of legislative consent motions—statutory instruments—will come to this Chamber that will change the pension schemes in Northern Ireland. Ultimately, what we discuss here and what happens through this Bill will come to us in Northern Ireland, and the Northern Ireland Assembly will bring provisions in Northern Ireland in line with those here. I have therefore considered carefully the aims of this legislation, and whether I believe it will be effective in achieving those aims. The Minister has said that this Bill will fundamentally

“prioritise higher rates of return for pension savers, putting more money into people’s pockets in a host of different ways. For the first time we will require pension schemes to prove they are value for money, focusing their mindset on returns over costs and protecting savers from getting stuck in underperforming schemes for years on end.”

When we look at the issues, we understand the necessity for the Bill.

In his introduction, the Minister referred to 13 million small pension pots floating about in the UK pension system, with £1,000 in each. It seems logical to have a better pension system for people—I think it does, anyway, and maybe we all do. It is essential that the opt-out is iron-clad, and I will give a reason why. One of my office staff members would not be comfortable with her pension paying into any companies that test on animals, for example. Another has said that she wants the highest return, full stop, so we must ensure that the Bill enables people to follow their moral obligations as well as get a return on their work. I am concerned that consumers will be tied down and face difficulty in leaving pots, which is something that must be addressed. With that in mind, I welcome this Bill to regulate the pension market, but we must ensure that it does not become a mechanism for Government to control the private pension industry and direct pension pots into Government investment. We must ensure that this Bill simply protects pensioners, and I very much look forward to watching its progress.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Rebecca Smith (South West Devon) (Con)]

It has been a privilege to hear so many well-informed and considered speeches this evening. I am sure we would all agree that there is clearly significant expertise in the Chamber.

The heart of this Bill is people doing the right thing by preparing for their future and saving into their pension pots. With auto-enrolment having been introduced by the Conservatives in 2012, there are now over 20 million employees saving into a workplace pension. That is 88% of eligible employees saving into a pension and preparing for later in life, which is a great achievement that I hope everyone in this House can celebrate. However, while the number of people who are saving has increased significantly, engagement has remained low, as we have heard this evening. Less than half of savers have reviewed how much their pension is worth in the past 12 months, while over 94% of pension savers are invested in a pension scheme’s default investment strategy. With people taking the right steps and starting to save for their retirement early thanks to our action, we must now ensure that the pensions market is working for them, so that they get the best returns on their savings and ultimately have the comfortable and secure retirement for which they were planning.

We have heard many contributions this evening. I will briefly mention the hon. Member for Tamworth (Sarah Edwards) and my right hon. Friend the Member for North West Hampshire (Kit Malthouse), both of whom gave us lengthy and very detailed speeches presenting both sides of the argument. [Interruption.] They were very enjoyable speeches—that was not a criticism, just an observation of the way things have gone this evening. Both the hon. Member and my right hon. Friend clearly showed the expertise that they garnered earlier on in their careers and expressed some legitimate concerns, particularly about the consensus that there has perhaps been in the Chamber this evening. Some points have been made showing that that consensus is not entirely guaranteed, certainly among Conservative Members. We support the principles behind the Bill—indeed, much of what we have heard builds on the work that the Conservatives were doing while we were in government. We want to ensure that poorly performing pension schemes are challenged, excessive administration costs are removed, and savers receive the best returns on their investments. Ultimately, that is how we will ensure more people have a comfortable retirement.

However, we have concerns about some specific measures in the Bill, which we will scrutinise further as it progresses. In particular, we have significant concerns about the reserve powers that allow the Government to set percentage targets for asset allocation in core defaults offered by defined-contribution providers. In other words, a future Government could tell pension schemes where they must invest their funds, regardless of whether it delivers good returns for savers. This potentially conflicts with their fiduciary duty to act in the best interests of their members. While I know the Minister will stress that the Government do not intend to use those reserve powers, that neither addresses concerns about what a different future Government could do nor explains why those powers are being brought in. It could be asked why the reserve powers are being created at all.

We want to see more investment in the UK market. While this country is one of the largest pension markets in the world, only around 20% of DC assets are invested in the UK. However, the solution should be to make domestic investment more attractive—to create opportunities that deliver better returns for savers—not simply to mandate investment in assets that deliver lower returns. During our last term in office, we worked with the industry to introduce the Mansion House reforms as a voluntary agreement to boost investment in the UK, but this Bill goes further—it could mandate such investment against the wishes of the industry. Similarly, the local government pension scheme will have a new duty to invest in the local economy. While that is understandable at face value, it raises concerns about returns on investments if there are not suitable local opportunities.

We also have questions about some of the Government’s assumptions, and would like to understand more about how they were reached and the evidence used. For example, why is the minimum value for megafunds just £25 billion? Why is having fewer and larger pension providers better? We recognise the benefits of economies of scale, but what about competition and innovation? It has also been raised by the industry that a significant number of details are unknown, as they will come later in the form of regulations. Can the Minister set out some more details on when the various sets of regulations will be published, and whether that will be before the Bill has passed through Parliament?

Finally, the Bill fails to cover a number of areas, and we would like to understand why. Concerns about pension adequacy have been touched on this evening and whether people are saving enough to have the security and dignity in retirement they deserve. Auto-enrolment was a good start, but it will not be the only solution. Indeed, lots of people are still not eligible. When we passed the Pensions (Extension of Automatic Enrolment) Act 2023, the then Conservative Government confirmed their intention to reduce the lower age limit to 18, as has been mentioned this evening. As yet, the current Labour Government have not done so. Auto-enrolment does not apply to self-employed people, despite just 16% of self-employed people actively saving into a workplace or personal pension. The Bill does not look at whether people are saving enough and early enough, and I would be grateful if the Minister could set out whether that is deliberate and whether further action will be taken.

I briefly draw the House’s attention to my declaration in the Register of Members’ Financial Interests as a serving councillor, but I hasten to add that unfortunately I am not a member of the local government pension scheme. Sadly, I was elected after that provision was scrapped, but an entire chapter is given over to the local government pension scheme in this Bill. Indeed, it is a key element, enabling local authorities to use pension schemes to invest in their local economy. However, as with much of the legislation being taken through Parliament at the moment, the who, what and when remain unanswered. Without the English devolution Bill before us, for example, we are not entirely clear on what form local government will take, nor entirely clear on how compatible this Bill is with that forthcoming local government legislation.

We are in effect being asked to legislate on a moveable feast. Indeed, there is likely to be a considerable transition timetable for local government changes, which all raises questions about how the local government reorganisation transition fits in with the plans in the Bill. Following on from the comments of the hon. Member for Truro and Falmouth (Jayne Kirkham), how will asset pools work under local government reorganisation? Who gets the potential investment benefits or spending power, and where does all that investment take place?

The Bill also fails to mention any reforms to the local government pension scheme, which reached a record surplus of £45 billion in June 2024. One reason for that might be that it is being used to offset Government debt under the Chancellor’s current fiscal rule, which uses public sector net financial liabilities to measure that debt. That is a huge amount of money in local government terms, and it is not going towards local services, business support or regional projects. Can the Minister confirm whether the Government intend to reform the local government pension scheme beyond the measures outlined in the Bill? Finally on the local government pension scheme, I look forward to seeing more detail as to how newly created asset pools will work in practice with the local government pension scheme.

Local government treasury management over recent years has seen local authorities taking advantage of the investment opportunities available to them to acquire properties and the like, but often some distance from their local authority. That is something to tease out in Committee, but when the Government state that they wish local authorities to have finance available to invest locally to bring economic growth, what does “local” look like?

Finally, can the Minister confirm that fiduciary rules regarding investments and how they are assessed will prevail going forward? Overall, we will support a Bill that reduces administration costs, removes complexity for savers and maximises value for members, ultimately helping people who took the right action to save for their retirement to live in comfort and dignity. While this Bill makes the start, there is more to do to get it right, and we look forward to working with the Government to achieve that. There is plenty of food for thought for amendments to take us forward.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

Women’s State Pension Age: Financial Redress

Caroline Nokes Excerpts

Thursday 3rd July 2025 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

rose—

[Madam Deputy Speaker (Caroline Nokes)]

Order. Before Mr Shannon intervenes, may I respectfully ask the hon. Lady to consider truncating her speech a little, as a number of colleagues will want to speak this afternoon?

[Jim Shannon]

There are 77,000 WASPI women in Northern Ireland, 7,000 of them in Strangford. Does the hon. Lady appreciate their palpable anger about how they have been mistreated and about the injustice that they wish to see addressed? On behalf of those 7,000 constituents of mine, I seek the same thing as the hon. Lady and all of us in this Chamber today.

--- Later in debate ---

[Sir Julian Lewis]

Yes. In a way, the Government have fallen between two stools. The report, as we have heard, anticipated that the Government would be reluctant to the right the wrong done to so many people at once, but nevertheless the Parliamentary and Health Service Ombudsman felt that justice required compensation to be paid. It knew that there would be this Government resistance, so it must have meant a lot to the ombudsman to still go down this highly unusual route of trying to present its report directly to Parliament, because it felt it would not get far by dealing with the Government directly.

One might have expected the Government to offer a scheme that fell some way short of the ombudsman’s recommendation, but their outright rejection of any restitution at all is rather insulting to the women whose complaint was upheld by the ombudsman. As we have heard, despite the DWP claiming to accept the findings, and even apologising for its maladministration, it is not offering a penny in restitution, and is relying in its response on a deeply unconvincing polling exercise that supposedly found that nine out of 10 of the affected women knew in advance that their state pension age was going to change. If that was the case, why did so many of them carry on as if nothing was going to change at all? A few moments ago, the hon. Member for Falkirk (Euan Stainbank) asked about the nature of the sampling that was done; only some 200 women born in the 1950s were included in the sample of nearly 2,000 people surveyed, which led to that misleading result.

I know the Minister has a great deal of expertise and a strong track record on issues of this sort from his former career, before he came to this House. I therefore appeal to him to at least reach out the hand of negotiation and discussion; to accept the offer that reasonable people are making to the Government; and to sit down and talk to them, and not to let the whole thing go through the courts, which would lead to an adversarial deepening of hostility and, inevitably, a less desirable outcome for everyone concerned.

[Madam Deputy Speaker (Caroline Nokes)]

With an immediate four-minute time limit, I call Brian Leishman.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to speak in this debate. First, I thank the hon. Member for Salford (Rebecca Long Bailey) for setting the scene so incredibly well and all the hon. and right hon. Members who have contributed fantastically, putting across the demands of their constituents.

This is not a new issue, and we know that. I do not think I have missed a WASPI debate. Indeed, I do not think the right hon. Member for South Holland and The Deepings (Sir John Hayes) has missed one either in the time I have been here. This week in this House has given me hope that perhaps the Government can acknowledge when we are moving in the wrong direction. The Government need to correct the wrong steps taken and follow through on the recommendations in the ombudsman’s report.

Northern Ireland has some 77,000 WASPI women, of whom 7,000 are my constituents. I do not know all 7,000 personally—I have not done that roll-call—but those who have come to me have told me their stories. In many cases, they are ladies who have cleaned floors or cleaned offices or been classroom assistants or teachers. Age catches up with us all, and it catches up with me, too. It catches up with them, and their knees are not as strong as they used to be. They planned their pensions in accordance with the timescale, and then it was taken away from them. That is the concern I have. They had planned for their life, and then they were deprived of that.

The report rightly found that some WASPI women were not informed about the changes to their pensions and had made long-term financial plans based on the assumption that they would receive their state pension at 60. All their financial planning was in place, and then it was just taken away. That meant that when the WASPI women lost their pensions, they lost all sources of income and met unexpected financial insecurity. The insufficient information was not only negligent, but deeply unjust, and the Government have acknowledged that to be the case, so there is a precedent. The hon. Member for Lewes (James MacCleary) was right to say that the process was backed away from.

Women who spent decades raising families, paying taxes and contributing to the economy were left without recognition for their hard work. Many WASPI women were forced back into the workforce, often with disabilities and often into low-paying jobs, or had no choice but to apply for benefits. Those women should never have had to do that after a lifetime contributing to the system.

A number of these women—I call them the silent generation—still face significant outstanding debts and loans that they will struggle to pay off for the rest of their lives due to the inability to manage their income appropriately. When they realised that they could not access their pensions, their ability to go back to full-time hours was not simple, and the emotional toll has been significant, too. Many WASPI women now experience stress and depression brought about by financial uncertainty. It is only fair that the hard and consistent work done by these ladies is financially recognised.

I say this with respect to the Minister, but one of the first steps that this Government took was to sort out the back pay of union workers. I am not saying they should not have done that, but if there is to be fairness in this system, I cannot for the life of me understand how they can do that in one breath, and then in the next apologise to the WASPI women but not do right by them.

The silent generation are determined to be silent no longer. I applaud them for going against the grain, as we often say at home, by continuing to complain. I applaud them for continuing to speak, when many of them have been told to be quiet and give it up. I applaud them for continuing to hold Governments—this one and the last one—to account. I applaud them for standing beside the weary and the worn, and for demanding compensation for all affected.

Apologising is not enough. As the hon. Member for Aberdeenshire North and Moray East (Seamus Logan) said, it is not about words any more. It is about action, and now is the time.

[Madam Deputy Speaker (Caroline Nokes)]

I refuse to believe that age is catching up with the hon. Gentleman. I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I, too, congratulate the hon. Member for Salford (Rebecca Long Bailey) on securing the debate, on campaigning on this issue, and on making sure that this debate came to the main Chamber. I thank all hon. Members for their contributions this afternoon. As well as hearing the very strong and powerful case around this particular issue, we have heard personal examples. Whether it is Gill from Tiverton, Ann from Newcastle, Helen from Seaford or Paula from Dewsbury, we have heard that many women rightly feel a sense of raw injustice, and the Government must act.

I have met WASPI women many times in Parliament, but I have also met them in my constituency. A couple of years before I was elected, I met a group of 30 WASPI women. I regret that I cannot recall the name of the woman whose case I remember, but her circumstances stuck with me. She was quietly spoken, and I could tell that she had real rage and fury inside her, but she was not prepared to show it. She just said, “I’ve spent my entire life working. I’ve raised a family. I’ve watched the pennies, and I was proud to stand on my own two feet. But at the end of my working life, I felt robbed of my money and robbed of my dignity. Even though I know this situation is not of my making and not my fault, I feel a tremendous sense of shame.”

That really stuck with me. Some 3.8 million women are affected by this issue, and many of them feel a sense of shame. They should not, but they do. It is really frustrating that the Government, notwithstanding the terrible inheritance that they received, have chosen to do nothing, and there are two problems facing them. The first is that an obvious injustice has been left unaddressed. The second is that, as so many Members from across the House have said, it sets a very dangerous precedent. For some women, an offer of an apology or a payment might be symbolic, but it is far more than that for many of them. It is about survival, and it would help them to get out of the struggle that they are now in.

On behalf of my party, I urge the Government please to reflect after this debate, and to go back to the drawing board and think about what can be done. At the very least, they should think of something to help those women who are struggling the most. Doing nothing is really not an option. If the rebellion earlier this week was for any reason at all, it was to send a message to this Government that their own party, this House and the British public want a Government who will stand up for the underdog—those who are hard done by in life, by the Government and by circumstances out of their control. I hope the Government listen today and act, because to govern is to choose. The Government must know that it is not too late to make a different choice.

[Madam Deputy Speaker]

I call the shadow Minister.