National Insurance Contributions (Employer Pensions Contributions) Bill

Debate between Lord Leigh of Hurley and Lord Londesborough

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

[Lord Leigh of Hurley (Con)]

My Lords, I will speak briefly to this group of amendments in lieu. I am grateful to my noble friend Lady Neville-Rolfe for returning these issues to the House despite the very disappointing decision to cloak all our previous amendments in the financial privilege. Up and down the country, SME businesses are horrified by this. They have had a wall of difficult legislation sent their way, such as the national insurance increase and the Employment Rights Bill, so they have not focused on this, but those I talked to who have focused their mind on it are very unhappy to say the least with the possibility of this Bill affecting their business.

I want to focus on one particular issue. We have heard repeatedly in recent weeks of the position facing graduates repaying student loans, which is simply not fair. For those on plan 2 loans in particular, the picture is particularly stark: an anaemic jobs market, high rents, high living costs and, on top of that, what amounts to a 9% graduate tax with interest rates of around 6.2%, meaning that for many, full repayment is not possible. I urge the Minister and others to speak to their children or their grandchildren who will tell them that they are put off by this Bill.

This policy now risks making the matter worse. It threatens to increase the effective burden on graduates precisely when they are trying to do the right thing by saving for their retirement through salary sacrifice. They see the costs that are ahead of them when they retire. For many, particularly recent graduates, disposable income is already stretched to the limit with rents and the cost of living, so they have little scope to save beyond the auto-enrolment minimum, which, as we have heard, is insufficient to provide savings for their longer life. If the Government undermine the salary sacrifice regime, they risk entrenching a generation who simply cannot afford to save enough for their retirement.

In conclusion, that is why this amendment from my noble friend matters. It asks the Government to do what they should already have done: properly assess the impact of this policy in relation to student loans. I do not think anything the Minister said specifically addressed the issue of the impact on students. I did not see it in any of the Explanatory Notes or anywhere else. It may have been because they did not think it affected it or they did not realise it, but it has not been done. In the absence of that work, the least the Government can do is pause and consider the long-term consequences before pressing ahead. The Treasury now has the opportunity and the responsibility to get this right. I urge the Minister and all other Peers to do so.

[Lord Londesborough (CB)]

My Lords, I rise to throw my support behind the four Motions in the name of the noble Baroness, Lady Neville-Rolfe. I will be brief. Is the Government’s apparent resistance to the impact assessments proposed in these amendments in any way connected to the fact that the measures in this Bill will not take effect until 2029? The Secretary to the Treasury stated in the other place on Monday, while rejecting all of the Lords amendments, that,

“the status quo is indefensible”.—[Official Report, Commons, 23/3/26; col. 84.]

If that really is the Government’s view, why are we waiting three years to bring in the pension gap? But, since we do have this three-year gap, there is happily plenty of time for the Government to prepare economic and behavioural impact assessments, and it would surely make sense to do so.

Employment Rights Bill

Debate between Lord Leigh of Hurley and Lord Londesborough

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 94, tabled by the noble Baroness, Lady Noakes, and Amendment 159, tabled by the noble Lords, Lord Sharpe and Lord Hunt, both of which I have signed. I also support the amendment in this group tabled by the noble Lord, Lord Leigh, which calls for some scientific and statistical significance in polling a representative group of SMEs on the impact of certain provisions in the Bill. This Government’s consultation with SMEs is, to put it politely, curious and opaque, lacking, so far, any meaningful numbers or quantified response, and with barely any names. Consultation carries little weight if it lacks statistical credibility.

The entirely sensible and pragmatic amendment tabled by the noble Baroness, Lady Noakes, seeks to hand the Secretary of State regulatory tools to bring in exemptions to Part 1 for certain groups or sectors, for specified periods of time, should he or she decide that these are appropriate.

Noble Lords may remember that the Government were offered similar powers of exemption by amendment in the NICs Bill earlier this year, voted through enthusiastically by Conservatives, Liberal Democrats and the majority of Cross-Benchers, only to receive the custard pie treatment in the other place under the cloak of financial privilege, which was a great pity. The noble Baroness has, very generously in my view, made the same offer again, and I hope it gets a more constructive response this time.

For there is broad consensus across business that Part 1 of the Bill will have a significant impact on the jobs market, especially for SMEs, but let us be frank: the degree or level of impact is highly unpredictable. If we see the sorts of outcomes suggested by membership surveys from such bodies as the ICAEW and the FSB, then the Secretary of State would be well advised to grab the option of these exemption tools with both hands rather than doggedly sticking to a one-size-fits-all mantra.

Turning briefly to Amendment 159, seeking the disapplication of certain provisions for small and micro-businesses with fewer than 50 employees, this gets my wholehearted support. I will spare the House a repeat of my arguments in Committee. But for the Government to argue, as I am sure they will, against this amendment, because they do not want to create a two-tier workforce, simply does not reflect economic reality or indeed the jobs market or the structure of businesses.

SMBs cannot compete with large businesses when it comes to pay scales, training, promotion opportunities, pensions and a whole range of other benefits. That is a reflection of their size, their culture and their stage of development, yet they succeed in delivering strong employee loyalty and identification. This is true of family businesses, start-ups and scale-ups. To apply all the provisions in this Bill, and specifically those listed in this amendment for disapplication, to a micro-business employing five staff as it does to a multinational employing 10,000 is wilfully indiscriminate and, I suggest, economically illiterate. That is why I put my name to the amendment.

[Lord Leigh of Hurley (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Londesborough, and, of course, my noble friend Lady Noakes. I shall speak to my Amendments 106, 153, 155 and 184. The main thrust of the first amendments is to force the Government to listen to real concerns of the SME community who, frankly, even at this late stage, are unaware of the effects of this Bill. They are too busy trying to keep afloat in a difficult economic environment, where the painful costs of NICs and other tax rises are kicking in.

I declare an interest as an adviser to many SME businesses in my career at Cavendish plc and, to the extent that it is relevant in union matters, as a Conservative Party treasurer. We have not yet heard from any Labour Party Back-Benchers today, but I am sure that, if we do, they will declare their interests in respect of union membership.

Turning first to Amendment 106, which relates to Part 1 of the Bill, we are constantly told by the Labour Front Bench that they want to consult with business—indeed, they repeated that today. They want to consult with business, but they fail to disclose who exactly they are consulting with, let alone what they are being told by those businesses and their representative bodies. I suspect that is because they are embarrassed by the backlash against the severity of this Bill from SME and micro employers, who will make it clear to the Government that this Bill will mean they are less likely to employ more people and much more likely to let people go as the burden of employment is ratcheted up. I am grateful to the noble Lord, Lord Vaux of Harrowden, for reminding us of the Labour Party manifesto’s commitment to consultation.

If the Government are so confident of the benefits of this Bill for all businesses, why not agree to engage with them? This proposal is really very modest: just 500 companies out of some 5.5 million in the UK. It is not unreasonable to ask the Government to be honest with us and tell us what the reaction of the SME community is and what are its concerns, particularly as we know there has been a shocking lack of impact assessments for this Bill. We know that the recent CIPD survey revealed that 79% of organisations expect these legislative changes to increase employment costs.