National Insurance Contributions (Employer Pensions Contributions) Bill

Lord Fuller Excerpts

Wednesday 4th February 2026 Lords Chamber

[Lord Fuller (Con)]

My Lords, it is not just a capitalist economy that runs on incentives; it is human nature to calibrate actions through the lens of what is in it for us. Encouraging people to work hard, succeed, earn their place in the world, and deliver safety and security for themselves and their families, while generating the taxes that sustain public services, is the right thing. But get that balance wrong by destroying the incentives to do the right thing, or set tax rates too high, and that leads to no tax at all. It is the Laffer curve in action, and Britain is being subjected to a whole-economy experiment on the Laffer curve. At every level, incentives to advance in the UK are being weakened, just as incentives in other countries become more attractive.

Behaviours do change. A close school friend and a substantial British taxpayer has just gone to live in Dubai. Someone in my electoral ward is buying a ranch in Montana, and expensively trained newly qualified doctors and nurses are moving to Australia. Our problem is so bad that, earlier this evening in your Lordships’ House, we had an emergency debate on emergency legislation.

What is the effect of this Bill on those who are left behind? First, it creates a glass ceiling on aspiration—on salaries approaching £100,000. But, as we have heard this evening, it is not just those salaries but middle-class professions that are affected, such as those found in the other place, and mechanics, timber merchants, solicitors and accountants—a whole raft of middle-class aspirational professions.

I am sure the Minister will talk about those with the broadest shoulders, but I will give the example of my daughter’s boyfriend, who works in the West End. He was so proud to come and tell us he had been awarded a £17,000 bonus from his business for having worked so hard and become so valuable to his firm, but I was astonished when he told us that he got to keep only just over £6,000 of that tidy sum. He is paying not 60% but nearly 70% because of the student loan. Why did he bother to work so hard? He has the broadest shoulders only in the sense that he plays rugby at the weekend, but he is no fat cat. He is 28 and at the start of his career. He lives in a flatshare with people he does not know in Brixton—perhaps the noble Lord, Lord Davies, could go round and knock on his door. He is just a young man working hard for long hours, trying to save for a deposit to climb the ladder and better himself.

But at least that option or incentive has been opened to my daughter’s boyfriend to sacrifice some of that bonus to salt away some money into his pension, well over 30 years away, so that one day he might be able to reduce his reliance on the state—and, yes, perhaps look after my daughter—but that option will be slammed shut by this Bill. Earning £17,000 to get around £6,000; that is not right. I say to the noble Lord, Lord Davies: that is what has been overcooked. How much more can the man be expected to give for having worked so hard? Of course, let us not forget his company, which will have had to chip in another £2,500 in its own NIC. It is not right for him, it is not right to drive the brightest and best overseas, and it is not right for our economy or the Exchequer in the long term.

I know that salary sacrifice is not for everyone, but it is for many. As we have heard, it incentivises people who are doing well at the start of their career to invest in themselves, with a second long-term return for the state by reducing their reliance on the taxpayer in later years—both the individual and the state co-investing in our collective future.

We know that limiting salary sacrifice will affect basic rate taxpayers more, pound for pound, than higher rate taxpayers, although I accept that the sums are larger for the higher earners. We have heard, and I confirm, that employers will withdraw pension salary sacrifice as an option altogether. It is going to complicate pensions and HR in companies that are already burdened with extra costs and onerous duties, and will potentially encourage undesirable optional remuneration agreements and avoidance schemes. Further, we will see few practical details around how that £2,000 limit will be applied to weekly and monthly paid employees, and those with multiple years.

Taken together, this Bill is just another example of bureaucratic, counterproductive, anti-growth, incentive-sapping policies: more taxes on employment, inexplicable investment-sapping taxes on private rather than public businesses, existential taxes on pubs, crippling carbon taxes on our heavy industries, discriminatory taxes on private, not public, pensions and—astonishingly—even new taxes on tomatoes that will disproportionately affect those with the smallest means. Now, with this Bill, there are new taxes to discourage people from doing the right thing. This insanity will impoverish us all and the Minister is creating a fresh black hole in his name. The Government will drive tax revenues down into the dirt and impoverish our nation.

Finance Bill

Lord Fuller Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 19th March 2025 Lords Chamber

[Lord Fuller (Con)]

My Lords, I want to reflect for a moment on the impossibility of achieving the economic growth our country needs when the family-owned businesses, which are some of our most innovative, entrepreneurial and successful enterprises, will be hobbled. The changes to business property relief announced in the Budget place a material uncertainty over the future of family-owned enterprises; as a result, the growth ambitions of the Government and our nation will be damaged.

I should declare an interest. I have managed to make a career in a number of family businesses, and, in some way, it is my role to speak for them in this place. I know there is no such thing as unearned income when someone puts the whole of their family’s wealth on the line to provide good jobs and secure careers for those who work alongside them. Family businesses have an eye to the long-term thinking that builds generational wealth in our islands. They spend money locally, and they enjoy the services of local employees for decades. Those sorts of businesses comprise nearly 90% of all firms in our nation. They employ 14 million people—51% of all private sector employment—and represent the spirit of enterprise and aspiration that we see in the trading estates that surround every market town. These are the people who pay their taxes on honest profits.

McKinsey tells us that family businesses

“focus on purpose beyond profits”,

with

“a long-term view and emphasis on reinvesting in the business”,

combined with

“a conservative and cautious stance on finances”.

That resonates with me. My grandfather, an Olympic sprinter, told me that nothing less than running 110 yards to everybody else’s 100 would do in our family business. I have combined his hunger for business with my strong work ethic to stand beside loyal friends who have worked alongside our shareholder families for over 40 years. Nothing has pleased me recently more than the son of one of our long-term employees, Curtis, joining us in business.

Tim Rix, of the Rix Group in Hull and Montrose, tells us in the Times how the chilling effect of the changes in business property relief has already caused him to stop doing deals, trim back on investment and shelve staff growth. I know Tim’s business well; his family has built it up over six generations. It is a shining example of what patient capital can achieve. But he warns that enterprises crafted over generations can be easily dispersed and lost. Labour’s Budget plans carelessly and recklessly place businesses like his in danger.

For a Government apparently fixated on growth since the Chancellor’s damascene conversion at a car factory in Oxford in January, it is odd that they imperil growth in this way. The effect of the BPR plans is to starve businesses of working capital—the lifeblood of next year’s profits and corporation tax receipts—while at the same time put an arbitrary £80,000-a year aspiration cap on profit, because that is the level at which the EBITDA multiplier gets you to a £1 million valuation. It will see diverting cash to less productive uses—unless you are in the life insurance business—and damage incentives to grow and innovate. It amounts to an asset-stripping of that part of the economy with the greatest growth potential.

Most businesses are not rich in cash terms. In my own, we reinvest all our money into growing that business. These plans will result in a pivot away from profit. They will drive new core activities to offset future tax liabilities and the preparation of different succession plans. In many cases, these will involve selling assets, diverting investment, cutting hiring or, terribly, doing something completely different entirely.

It all exposes how Labour fundamentally misunderstands how business works, whether through the effect on VAT in schools hollowing out rural market towns, stifling innovation by restricting APR relief to schemes run by the Government and not by others, and killing off the country pub. At its heart, we see that Labour does not understand the relationship between profit and loss and the balance sheet, and between revenue and capital, and that today’s working capital drives tomorrow’s profits. To Labour it is just money and, “We’ll have that”.

History will show that the plans laid out in the Budget will slowly start to strangle private businesses and instead show a preference for large, debt-fuelled corporations that reshore profit and taxes elsewhere. It is generational investment, long-term thinking and, yes, business property relief, that have helped private business make Britain the world’s sixth-largest economy in GDP terms. BPR is not a loophole, it is a feature. Britain is already poorer as a result of this Budget, but damaging the bedrock of family businesses will impoverish us even further by killing the geese that lay the golden eggs.

Carbon Border Taxes

Lord Fuller Excerpts

Wednesday 12th March 2025 Lords Chamber

Asked by

[Lord Fuller]

To ask His Majesty’s Government, further to the proposals by the European Union to exempt 80 per cent of eligible EU companies from new carbon border taxes, what plans they have to ensure that equivalent businesses in the United Kingdom are treated similarly.

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

My Lords, this is already the case. To ensure that the costs of complying with the UK carbon border adjustment mechanism are proportionate, it will apply only to those firms importing CBAM goods valued at £50,000 or more over a rolling 12-month period. The Government estimate that this will exclude 80% of CBAM-eligible firms while retaining more than 99% of imported emissions within the scope of the tax.

[Lord Fuller (Con)]

My Lords, the carbon border adjustment mechanism is a tariff by any other name. I am involved in an industry affected by CBAM, so I know more than most about the astonishingly divergent way in which the UK Government plan to introduce this tax. It will damage competitiveness, be complex to administer and drive growing inflationary pressures. There are even proposals to levy the tax to protect industries that do not even exist anymore. The EU has worked out for itself—

[Noble Lords]

Question!

[Lord Fuller (Con)]

I am just about to ask the question. The EU has worked out for itself that building a walled garden around the economy will damage its own competitiveness. The Prime Minister said today in PMQs that all options were on the table in so far as tariffs are concerned. Does the Minister agree that the whole UK proposal needs a fresh look, or is he prepared to see us sleepwalk into a trade war with our friends and allies in the United States while damaging trade with our close EU partners?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. However, the answer is no, I do not agree with him. Reducing the UK’s carbon emissions is necessary to meet our emissions targets, and the emissions trading scheme and the carbon border adjustment mechanism are necessary tools to do that. Our approach is very similar to that of the EU. As the noble Lord said in his Question, we are doing exactly what the EU is doing—in fact, I think it has followed us, rather than the other way around, so our approaches are extremely similar. The US Administration have made no public comment on the UK CBAM, and I am not going to speculate on a hypothetical.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Fuller Excerpts

Committee stage
Thursday 6th February 2025 Grand Committee

Moved by

[Lord Fuller]

70: After Clause 3, insert the following new Clause—
“Impact of this Act on local authoritiesThe Secretary of State must, within six months of the day on which this Act is passed, lay before Parliament an impact assessment of the cost of the provisions of this Act on local authorities.”Member’s explanatory statement
This probing amendment seeks to respond to concerns about increased costs for local authorities.

[Lord Fuller (Con)]

My Lords, since the Great Reform Act of 1832, local authorities have been an integral part of our nation. Joseph Chamberlain unleashed the powers of municipal entrepreneurialism in the 1800s, bringing gas and clean water to the growing metropolis of Birmingham. A new council in Stevenage was created for the first new town, complete with a traffic-free zone opened by Her Majesty the Queen; I know that the noble Baroness, Lady Taylor of Stevenage, has done her bit to shape that town since. To bring us right up to date, the leader of Cornwall Council—another Taylor: my friend Linda Taylor, who has announced that she is stepping down in May—has championed a space port in her county. I congratulate her on those efforts and thank her for her service to the local government family. All those activities are about the 140 things that local authorities do for every family in every street and in every neighbourhood.

For the past 14 years, I have been a vice-chairman of the Local Government Association’s economy and resources panel. Alongside the noble Baroness, Lady Taylor, I led all the district councils in England for our respective parties during Covid, and I remain a councillor, so I know that council finances in England are under pressure like never before. Reductions in grant funding, increases in the scale and complexity of service demand, and the recent spike in inflation and wage costs have created the perfect storm for our town halls.

The fundamental challenge facing the sector is that cost and demand pressures are rising faster than funding. Although inflation has fallen steadily since its peak in 2022-23, significant cost and demand pressures remain in the system in council services. In essence, council revenues tend to grow linearly with the growth in the wider economy; lately, however, costs have grown geometrically in councils, with the demands from homelessness, children’s social care, adult social care and home-to-school transport growing fast and likely to get even worse. The Covid overlay is, of course, a further aggravation.

There comes a moment where the lines of income and demand diverge so much that the gap becomes unbridgeable. That moment was already upon us before the national insurance announcements, and I want to explain its serious and consequential effects. Of the 140 activities undertaken by councils, three are responsible for nearly two-thirds of all the cost: social care in adults and children, and special educational needs. These pressures have seen the greatest increase in cost.

We should get some numbers on the record for the Minister. Increases in cost and demand in adult social care have risen by £3.7 billion—that is, 18%—in the five years since 2019. Spending on children’s social care has increased by 25.7% in real terms in the five years from 2019 to the current year. Growing numbers of children with education, health and care plans mean that money spent on home-to-school transport has risen by 62.7% in the five years to this year. Taken together, the increased demand for services for children with special educational needs and disabilities results in an unexpected current account deficit of £5 billion this year for those services.

--- Later in debate ---

The Government carefully consider the impact of all policies, including the changes to employer national insurance contributions. I know that it will disappoint noble Lords, but for one last time in this Committee, as I have said previously, an assessment of the policy has already been published by HMRC in its tax information and impact note. Furthermore, the OBR’s Economic and Fiscal Outlook sets out the expected macroeconomic impact of those changes. The Government and the OBR have therefore already set out the impacts of the policy change. The Government do not intent to provide further impact assessments. In light of these points, I respectfully ask the noble Lord to withdraw his amendment.

[Lord Fuller (Con)]

My Lords, so often councils and other organisations indulge in special pleading for an exceptional case here or a particular need there. This small debate on my Amendment 70 has shown the gravity of the situation that councils find themselves in. It is the cumulative impacts of this exceptionally damaging proposal which will harm the most vulnerable and those in greatest need. The debate has also shone a light on the efficiencies that councils have taken in aggregate since 2010. Over £24 billion-worth of annual savings have been made by councils, if one takes into account inflation in that period. It has allowed them to keep the wheels on the wagon while suffering a 22.2% reduction in core spending power.

However, there comes a moment when you cannot keep trimming the fat—there is no more fat to trim. This £1.227 billion additional burden on council-tax payers, who are paying their council tax out of their own taxed income, is a real number. I do not dismiss it, as the Minister suggests when he says that it is just an external number and that the Government do not believe anything that does not come out of the Treasury. We heard that argument on the agricultural property relief, for example. “Just trust us on this” is not something that we want to do.

We cannot keep hollowing out local government. I proposed a remedy. Through the Section 34 mechanism, this assessment can and should be made. We can then have a debate, not just for this year but in those following the comprehensive spending review, on what the additional burdens will be. We need to get down to real numbers. I mention Harlow, simply because my noble friend Lady Neville-Rolfe did so. Harlow’s increase in national insurance contributions this year on a £10 million or £11 million budget is over £1 million—and the Government have just given them £198,000. That is the quantum of the shortfall. Not only has that cost been made but their core spending grant has been cut by 21%.

I will not say much more, but we have placed a marker on this point. I am disappointed that we have not answers to all the points. Not having an answer to those questions which I and my noble friends asked invites representations on Report. I expect my noble friends and I will return at that point. In the meantime, I beg leave to withdraw the amendment.

Amendment 70 withdrawn.