National Insurance Contributions (Employer Pensions Contributions) Bill

Lord Livermore Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 25th March 2026 Lords Chamber

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

1A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, in moving this Motion, I will also speak to Motions B, B1, C, D, E, F, F1, G, G1, H, H1, J, K, L, M and M1. The other place has disagreed with Amendments 1 to 12, as they would alter the financial arrangements made by the Commons. The other place did not offer any further reason, trusting that this reason is deemed sufficient.

While the Government disagree with the substance of these amendments, I am pleased that we have been able to discuss and debate these issues. I am very grateful to the noble Baronesses, Lady Neville-Rolfe, Lady Kramer and Lady Altmann, and the noble Lords, Lord Altrincham, Lord Leigh of Hurley, Lord Fuller, Lord Mackinlay and Lord Londesborough, for ensuring that these important matters have been addressed. On that basis, I hope that noble Lords are content not to insist on these amendments.

I turn now specifically to Amendments 1B, 1C, 2B, 2C, 6B, 6C, 7B, 7C, 8B, 8C, 12B and 12C, tabled by the noble Baroness, Lady Neville-Rolfe. These amendments would make commencement of the Act contingent on the publication of impact assessments on basic rate taxpayers, employees making student loan repayments and small and medium-sized enterprises.

Before addressing each of these in turn, it may be helpful if I remind your Lordships’ House of the documents that have already been published by the Government and the Office for Budget Responsibility. The tax information and impact note sets out the expected impacts of the policy on individuals, employers and the Exchequer. The policy costing note sets out details on the costings of the measure, including the tax base, static costing and a summary of behavioural responses expected by employers and employees.

The Office for Budget Responsibility published its economic and fiscal outlook, which provides the OBR’s independent scrutiny of the Government’s policy costings. The OBR also published a supplementary forecast note which provided additional information it received prior to last year’s Budget to further increase the transparency of this measure.

I should also like to remind noble Lords that the expected behavioural impacts of this measure have been set out in the policy costing note and both the OBR’s economic and fiscal outlook and supplementary note. Both the Government and the OBR have been transparent about the expected behavioural responses by employers and individuals.

I turn first to amendments which make the commencement of the Act contingent on the publication of economic and behavioural impact assessments on basic rate taxpayers. As set out in the Budget document, the £2,000 cap means that 74% of basic rate taxpayers who use salary sacrifice will be entirely unaffected by these changes. The remaining proportion of basic rate taxpayers who have contributions above the cap will still get national insurance contributions relief for the first £2,000 of contributions made by salary sacrifice in addition to the full income tax relief that is available to all employee pension contributions. Further, 87% of affected salary sacrifice contributions above the cap are forecast to be made by higher and additional rate taxpayers. This is a fair and pragmatic reform, and the distributional effects of it are clear. On this basis, the Government do not consider a separate and additional impact assessment on basic rate taxpayers to be needed.

I turn to amendments which make commencement of the Act contingent on the publication of economic and behavioural impact assessments on individuals repaying student loans. It is right that we focus on outcomes for younger generations, particularly given that, over the past 14 years, they have seen their fees trebled, interest rates increased and maintenance grants scrapped. Importantly, though, the £2,000 cap means that young graduates are broadly unaffected. In fact, the £2,000 cap means that 90% of graduates under the age of 30 repaying student loans who are saving into their pension are completely unaffected by this measure. Both this and the prior set of amendments make a broader point about pension savings and pensions adequacy for these populations. This is a real challenge for our pensions system, but the data is entirely clear that today’s salary sacrifice is not the answer. As discussed at earlier stages, salary sacrifice existed in the 2000s and early 2010s, yet there were falls in private sector pension saving during that period.

There has been a clear consensus throughout our debates that the key factor that has led to an increase in saving in recent years has been automatic enrolment. As a result, more than 22 million workers across the UK are now saving each month.

Although we all share a commitment to improving pensions adequacy, many groups at highest risk of undersaving, including the self-employed, lower earners and women, are not the most likely to benefit from salary sacrifice. Only one in five self-employed people save into a pension, but they are entirely excluded from salary sacrifice. Low earners are most likely not to be saving, but higher earners are more likely to be using salary sacrifice. Many women are undersaving for retirement, but many more men use pension salary sacrifice.

The pensions tax relief system remains hugely generous and there remain significant incentives to save into a pension. The £70 billion of income tax and national insurance contribution relief which the Government currently provide on pensions each year will be entirely unaffected by these changes.

I turn to the amendments seeking an impact assessment on small and medium-sized enterprises and charities. The Government agree on the importance of supporting small and medium-sized businesses and charities, but small businesses are much less likely to use salary sacrifice than larger businesses. Furthermore, the £2,000 cap means that 90% of employees in SMEs making pension contributions through salary sacrifice will be entirely unaffected. Indeed, the largest benefits from uncapped salary sacrifice accrue to larger businesses, not smaller ones. In practice, the changes in the Bill will help level the playing field between small businesses and their larger competitors.

The amendment also requires assessment of the expected impact on business and compliance costs. This analysis is already set out in the tax information and impact note. As set out in that document, the administration of this measure is estimated to result in a one-off cost of £75 and an ongoing £99 per business per year for those using salary sacrifice.

The Government recognise that these changes will impact those currently using salary sacrifice. That is why we chose a long lead-in time of April 2029 to give employers maximum time to prepare for these changes. As mentioned previously, HMRC is engaging with employers, payroll providers and software developers to deliver the changes in the most suitable way with the fewest administrative burdens for businesses of all sizes that use salary sacrifice. For the reasons I have set out, I respectfully ask that the noble Baroness does not press her Motions. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

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[Lord Fuller (Con)]

My Lords, once again, taken together, this is a further insult to working people. As we have heard this evening, it is about not the fat cats but the youngsters and the poorer paid who are starting off and trying to do the right thing, making their way in the world. There is already intergenerational unfairness, and this Bill amplifies it and makes it worse. The Government have a tin ear. When they say they are trying to look after the youngsters, they are speaking with a forked tongue. Youngsters just want a break, but this Government are beating them with a stick. We have got to stop it.

[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have spoken in this debate.

On the topic of impact assessments, I remind noble Lords of the information that we have already published. The tax information impact note sets out the expected impacts of the policy on individuals, employers and the Exchequer. The policy costing note sets out detail on the costing of the measure, including the tax base, static costing and a summary of behavioural responses expected by employers and employees. The Office for Budget Responsibility published its economic and fiscal outlook, which provides the OBR’s independent scrutiny of the policy costing. The OBR also published a supplementary forecast note which provides additional information it received prior to last year’s Budget.

I also remind noble Lords that the expected behavioural impacts of this measure have been set out in the policy costing note and both the OBR’s economic and fiscal outlook and supplementary note. Both the Government and the OBR have been very transparent about the expected behavioural responses by employers and individuals.

The noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Londesborough, asked about the 2029 implementation date. As I have said already, we chose a long lead-in time of April 2029 to give employers maximum time to prepare for the changes. As I have mentioned before, HMRC is engaging with employers, payroll providers and software developers to deliver the changes in the most suitable way with the fewest administrative burdens for businesses of all sizes which use salary sacrifice.

The noble Lord, Lord Leigh of Hurley, spoke about small and medium-sized enterprises. I say again that the £2,000 cap means that 90% of employees and SMEs making pension contributions through salary sacrifice will be entirely unaffected. The noble Lord also mentioned students. He is absolutely right; as I said before, it is right that we focus on outcomes for younger generations, particularly given that, over the past 14 years, they saw their fees trebled, interest rates increased and maintenance grants scrapped. The £2,000 cap means that 90% of graduates under 30 repaying student loans who are saving into their pension are completely unaffected by this measure.

These are fair and balanced reforms. They give employers many years to prepare and they ensure that both our pensions system and the public finances are kept on a sustainable footing. The £2,000 cap protects lower-earning employees who use salary sacrifice to make pension contributions and preserves the tax benefit of salary sacrifice for all employees on the first £2,000 of their contributions.

Importantly, these changes leave the tax reliefs on regular pension contributions completely untouched. These reliefs are worth £70 billion a year and are available to all workers and employers, not just those who use salary sacrifice. For the reasons that I have set out, I respectfully ask the noble Baroness, Lady Neville-Rolfe, not to press her Motions. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I am afraid that I am not satisfied with the Minister’s response, particularly on the question of the behavioural assessments that we have had. They are really not fit for purpose. I give notice that will I seek to test the opinion of the House on Motion A1 and, if successful, on further Motions.

--- Later in debate ---

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.

2A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

--- Later in debate ---

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 3, to which the Commons have disagreed for their Reason 3A.

3A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

--- Later in debate ---

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 4, to which the Commons have disagreed for their Reason 4A.

4A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

--- Later in debate ---

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 5, to which the Commons have disagreed for their Reason 5A.

5A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

--- Later in debate ---

Moved by

[Lord Livermore]

That this House do not insist on its Amendment 6, to which the Commons have disagreed for their Reason 6A.

6A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

--- Later in debate ---

Motion G

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 7, to which the Commons have disagreed for their Reason 7A.

7A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion G1 not moved.

Motion H

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 8, to which the Commons have disagreed for their Reason 8A.

8A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion H1 not moved.

--- Later in debate ---

Motion J

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 9, to which the Commons have disagreed for their Reason 9A.

9A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion J agreed.

Motion K

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 10, to which the Commons have disagreed for their Reason 10A.

10A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion K agreed.

Motion L

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 11, to which the Commons have disagreed for their Reason 11A.

11A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion L agreed.

Motion M

[Lord Livermore]

Moved by

That this House do not insist on its Amendment 12, to which the Commons have disagreed for their Reason 12A.

12A: Because the Lords Amendment would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion M1 not moved.