Charter for Budget Responsibility

Jim Shannon Excerpts

Tuesday 24th February 2026 Commons Chamber

[Richard Fuller (North Bedfordshire) (Con)]

I thank the Minister for a succinct opening speech.

The charter for Budget responsibility seeks to confer the important attributes of stability and credibility on a Government’s management of the public finances and the wider economy. “Stability” and “credibility” are not exactly the first two words that spring to mind to describe the current Government’s management of the economy. Through their own incompetence, they have presided over a chaotic year that has shredded any remaining confidence in the Chancellor and her team and—more important—has done lasting damage to the life chances of so many young people who now cannot find work.

As the Chancellor prepares her spring statement, we have a Prime Minister living on borrowed time. This Government are painfully lacking in real-world economic experience, and they desperately need help. We will not be opposing the measure this evening.

[Jim Shannon (Strangford) (DUP)]

Does the shadow Minister share the concerns that many, probably all, MPs from Northern Ireland have—although I welcome the good news in relation to the tax surplus; who would be churlish and not welcome something that is to the benefit of us all—about the Northern Ireland Executive finding it incredibly difficult to make ends meet and make the books balance? One thing we look back on is the Barnett consequentials. We have heard promises many times over a number of years that the Barnett consequentials would be addressed, but that has not happened. The Northern Ireland Affairs Committee has raised it, and individual MPs have raised it too. The Conservative Government and this Government said that they would look at it, but nothing has happened. Does the shadow Minister believe that it is now time to get things right for Northern Ireland, with a budget to help us to govern and deliver the goods, as the Government are doing here?

[Richard Fuller]

I thank the hon. Member for his intervention. I think his issue with the Barnett consequentials is one for the Minister to reply to, but the Conservative and Unionist party, as he knows, has very strong support for and kinship with our citizens in Northern Ireland. On his comment about the revenues that the Government received in January, I would just point out that that in large part was due to self-assessment returns and capital gains returns filed in that year. When we tease through the data, we will see that a lot of that came from people making economic decisions that, in the long run, were not in their interest, because of the uncertainty brought into the economy by the Chancellor, who has confused people for an entire year.

To illustrate the chaos of the last year, let me remind the House what the then Chief Secretary to the Treasury, the right hon. Member for Bristol North West (Darren Jones), said in the equivalent debate on the charter last year:

“Growth is the primary mission of this Government.”—[Official Report, 29 January 2025; Vol. 761, c. 344.]

But since then, comparing the OBR forecast from 2024 and 2025, growth is down in each year of the forecast period. In 2026, it is down to 1.3% from 1.8%. It is down in 2027, 2028 and 2029.

The then Chief Secretary also said that the autumn 2024 Budget

“put the public finances back on track, and we will keep them there.” —[Official Report, 29 January 2025; Vol. 761, c. 345.]

But since that statement the Chancellor has brought forward proposals to cut £5 billion from welfare. Then she reversed them. She said that she would stick to the two-child benefit cap, but then she caved in to Labour Back Benchers. The Chancellor has been forced to U-turn on her removal of winter fuel payments to pensioners. She has U-turned on her plans to tax our pubs out of existence, and she has U-turned on her damaging plans on the family farm tax and family business tax. After having said that she would not be coming back for more taxes, she did indeed come back to whack the British people again with tax increases amounting to over £26 billion.

When this Government came into office, the forecast was that they would need to borrow £77 billion this fiscal year. But under this Chancellor, that level of borrowing has ballooned to £112 billion so far and is forecast to reach £138 billion by the end of the year. According to the OBR in November 2025, public sector net debt will continue to rise over the forecast period, despite Labour raising taxes to record levels, and debt will rise from 93.6% of GDP to 97% by the time of the next general election in 2028-29—if the Government last that long.

Given the wreckage that they have caused in the general economy, Labour’s spin doctors have started to claim that the Government have the fastest deficit reduction plan in the G7. But that is only because this Government have spent so recklessly in their first years. Achieving this remarkable reduction rests on the credibility of the Government’s plans to raise taxes ahead of a general election and on their ability to rein in public spending in the out years—plans which, surely, their skittish Back Benchers will stymie, if the Government last that long.

There are two changes in this revised charter that I would like to note. The first is the decision to change the definition of the current Budget being “in balance”. Paragraph 3.6 of the previous charter said that

“balance is defined as a range: in surplus, or in deficit of no more than 0.5% GDP.”

The current charter does not include that condition. Can the Minister tell us why the decision has been made to remove that flexibility? I would also be interested in what he thinks of the Institute for Fiscal Studies’ recent report, which stated:

“The UK’s fiscal framework is based around a set of pass-fail, numerical fiscal rules. The fiscal debate is overly fixated on the amount of ‘headroom’ the government has against the most binding of those rules. The system incentivises the government to operate with the smallest amount of ‘headroom’ possible, with policy often fine-tuned according to the central point estimate of a highly uncertain forecast from the Office for Budget Responsibility.”

The IFS report recommended that

“the UK would be better served by a new framework based around a set of ‘fiscal traffic lights’”.

The Government appear to have gone in the opposite direction to the recommendations by stressing the importance of pinpoint accuracy, and I would be interested in the Minister’s views on that.

I turn to the most significant change: the removal of what was paragraph 4.27 in the previous charter, which said:

“At the same time as the forecasts, the OBR will produce its assessment of the extent to which fiscal policy has delivered, or is likely to deliver, the fiscal mandate.”

The Government have, at a stroke, removed the opportunity for an independent assessment by the OBR ahead of the Government’s spring statement, yet last year the OBR significantly revised many of its previous assessments ahead of the spring statement. The OBR wrote that it was expecting GDP growth of 1%—half the rate of the October forecast—and that

“CPI inflation is forecast to rise from 2.5 per cent in 2024 to 3.2 per cent in 2025, 0.6 percentage points higher than forecast in October.”

[Interruption.] I have not been called “kiddo” for a while. I hope the Whip on duty, my hon. Friend the Member for South West Hertfordshire (Mr Mohindra), understands that this is an important point to make. It may have taken me some time to get there, but this is an important point.

The issue here is: why make this change now? The Budget Responsibility and National Audit Act 2011 is clear that the OBR must prepare fiscal and economic forecasts and assessments at least twice a year. Clause 251 of the Finance (No. 2) Bill retains the requirement for the OBR to prepare forecasts twice a year, but it seeks to remove the requirement in the 2011 Act for the OBR to provide its assessment twice a year. Perhaps the Minister—the wannabe Chancellor—can confirm that the reason we are today debating a revised charter, which now excludes an OBR forecast just ahead of the spring statement, is specifically to preclude the OBR from doing its own assessment on the imminent spring statement.

We support tonight’s measure, but not with any confidence in this Government’s handling of the economy. In lacking that confidence, we are not alone. According to the latest Institute of Chartered Accountants in England and Wales survey, business confidence fell again in the last quarter of 2025, with record concerns about the tax burden on business. In its December 2025 survey, YouGov found that 80% of the British people thought the Government were handling the economy badly. It is a sorry, sorry state for our great country.

Universal Credit (Removal of Two Child Limit) Bill

Jim Shannon Excerpts

Committee of the whole House
Monday 23rd February 2026 Commons Chamber

[Sir Stephen Timms]

We are confident that we can do that from April onwards. Reinstating support for all children in universal credit is a key step to tackling the structural drivers of child poverty. This Bill, combined with other measures in our child poverty strategy, will lift over half a million children out of poverty.

Clause 2 removes the two-child limit from universal credit in Northern Ireland from April. We are including Northern Ireland in the Bill at the request of the Northern Ireland Executive, who are bringing forward a legislative consent motion in the usual way. I am delighted to see the hon. Member for Strangford (Jim Shannon) in his place. On Second Reading, he made the point that 50,000 children in Northern Ireland will be lifted out of child poverty. He rightly said:

“If anyone is against that, there is something wrong with them.”—[Official Report, 3 February 2026; Vol. 780, c. 168.]

I agree with him on that point and I am grateful to him for making it.

[Jim Shannon (Strangford) (DUP)]

I very much welcome what the Government are bringing forward. It is good news and, as the Minister says, if anyone is against that, there is certainly something wrong with them. I cannot see how the measure will not be welcomed. The fertility rate in Northern Ireland is 1.71 children per woman, but for the population level to be stable it needs to be 2.1 children per woman. Does the right hon. Gentleman think that the measures in the Bill will encourage more people to have children? If they do, then that is good news as well.

[Sir Stephen Timms]

I am not sure what the effect will be. It is often said that a Labour Government has the effect of increasing the birth rate, but whether that will prove to be the case this time, I do not know.

Child poverty is a big challenge. Reducing it over the next 10 years will require commitment and collaboration across all four nations. The strategy, including removing the two-child limit, builds on plans under way across Government and devolved Governments. We will continue to collaborate with devolved Governments on the issue, particularly through the implementation phase that will now follow.

Clause 3 sets out the territorial extent of the Bill, the commencement dates for each of the sections, delegated powers and the short title of the Act.

The Government recognise the consequences of child poverty and the damage that it does to a child’s life chances. In the poorest 10% of areas, babies are twice as likely to die before they turn one as those in the wealthiest 10% of areas. Poorer children are more likely to have mental health difficulties by the age of 11, to be unemployed later and to earn less as adults. We estimate that the Bill will increase the universal credit award for 560,000 families, who will gain on average £5,310 per year. That is a much-needed change from the choices of the previous Government—they chose austerity, and children paid the price. Tackling child poverty is an investment in our economy and a downpayment on Britain’s future.

--- Later in debate ---

[Rebecca Smith]

I thank the hon. Lady for her intervention, which provides me with a great opportunity to say something that I realised again while preparing for this debate. We know that lots of working people claim universal credit, but what we do not know is how many hours those people work, which would enable us to ascertain how many of them are full-time workers and how many are part-time workers. Of course, if they are full-time workers, there is one argument to be made, but if—as I would assume—the vast majority are part-time workers, we need to be encouraging them to work more hours. Later in my speech, I am going to get to a point where this is a problem, given all the other passported benefits that they get once they are entitled to universal credit.

How can it be fair to expect working parents to subsidise other families’ decisions that lie beyond their own financial reach? We also must not forget the single people whose household overheads are higher than in dual-income households. In 2024, there were 8.4 million people living alone in the UK—nearly 30% of households. They, too, should not be saddled with the extra tax burden that scrapping the two-child limit will inevitably create.

This Labour Government prefer handouts to hard choices. Giving away cash will always be more popular than exercising fiscal responsibility—the Back Benchers like it, and the left-wing think-tanks like it. The families who will get thousands more pounds every year like it, and who can blame them? Spending other people’s money is an easy way for the Government to feel good about themselves, but that money must come from somewhere. This Government are only pretending that they can afford to scrap the cap; originally, they said that doing so was unaffordable. That is true—the cost of this policy will be about £3.5 billion—but instead of sticking to his guns, our Prime Minister has capitulated to his Back Benchers. It requires backbone to bring the welfare budget under control, and backbone is exactly what Labour lacks.

In contrast, previous Conservative Governments did indeed control spending; until the pandemic, spending on working-age welfare fell in real terms. That is why we have committed to save £23 billion. We will crack down on the abuse of Motability, we will stop handing out benefits to foreign nationals—because citizenship should mean something—and we will stop giving benefits to people with low-level mental health problems, to ensure that we can target support to the people who need it most.

Under Labour, the overall benefits bill continues to balloon. By the end of this decade, health and disability benefits alone are set to reach £100 billion—I did read that right. Scrapping the cap is fiscally irresponsible and Labour knows it. This Bill will only increase the tax burden on hard-working men and women whose household budgets are already being stretched to the limit.

[Jim Shannon]

I feel I have to disagree with the hon. Lady, for a very simple reason. The Minister has mentioned my comment on Second Reading that 50,000 children will be lifted out of poverty in Northern Ireland, and some 13,000 families will have a better standard of living. The mark of any society is that whenever those who are less well off need help, we must help them. That is why I think the Government are doing the right thing: they are helping to lift people out of poverty, and what is wrong with that?

[Rebecca Smith]

I thank the hon. Gentleman for his intervention. Of course how we care for the most vulnerable is the mark of our society, but as Conservatives we do not believe that it is simply about trying to lift them up by giving them extra cash. All we are doing is changing the relative poverty measure; we are not suddenly lifting all these people out of poverty because we are giving them more money. We do not know what they are going to spend that money on. What we need to do is spend the money not on sticking plasters, but on putting things in place that actually have a systemic impact. We need to bring people from long-term poverty into a long-term position in which they can afford what they need.

Inflation has soared to nearly twice as high a level as when this Government entered office. Food prices are rising. Utility bills are rising. Even the cost of relaxing at the pub with a beer is rising. We cannot lift children out of poverty by making the whole country poorer, as my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) has argued so persuasively. When inflation rises, spending power falls. The money people earn buys less, because each pound is worth less than before; indeed, the money people receive on benefits is also worth less because of inflation. Families feel it at the checkout, at the petrol station and with every bill that drops through the door.

Inflation not only squeezes families’ budgets, but narrows their choices. With the cost of everyday essentials continuing to climb, many working families are being forced to delay or even abandon plans for another child. Scrapping the two-child cap gives families on benefits a choice that many working households can no longer dream of: the ability to grow their family without facing financial choices.

This unfairness erodes trust in our social contract. The social contract is an implicit agreement between citizens and the state that gives the state its legitimacy. People work and pay their taxes; in return, they trust the state to step in if they fall on hard times. They trust the state to spend their taxes responsibly on their behalf, but the welfare system has become totally lopsided. Over half the households in this country now receive more from the state than they pay into it. Taxpayers are supporting a system larger than themselves. Scrapping the two-child limit will further exacerbate the imbalance.

The problem does not stop there. There is an entire shadow system working alongside universal credit. As I have mentioned, passported benefits are costing the taxpayer £10 billion every single year. They include healthy food cards, discounted broadband and free prescriptions. Together, they distort work incentives, leading to a cliff-edge denial of entitlements when a claimant comes off universal credit. Many parents want to work, but are better off remaining on benefits once they factor in their loss of eligibility for those extra entitlements. Yet again, they have been let down by a system that should be supporting them into work, not trapping them on benefits.

Place-based Employment Support Programmes

Jim Shannon Excerpts

Tuesday 10th February 2026 Westminster Hall

[Leigh Ingham (Stafford) (Lab)]

It is a pleasure to serve under your chairship, Dr Murrison, and I thank my hon. Friend the Member for Southport (Patrick Hurley) for bringing forward what I consider to be a truly vital discussion. Colleagues will not be surprised to hear me talk about towns today—I am the proud product of one, and I proudly represent two towns, Stafford and Eccleshall. It is important to be in this Chamber today discussing them, because I want to use this debate to make a simple but important point about place.

Far too often, towns such as Stafford are described in relation to somewhere else. We are labelled a commuter town because we have excellent rail connections—and we do: a person can get to London, Birmingham or Manchester really quickly from Stafford, but Stafford should not be defined by its neighbouring cities, and a child growing up in Stafford should not be told, “Just go to a city to access better employment opportunities.” If our policy only sees us as part of someone else’s labour market, it will misunderstand us and the brilliant talent that we have in my constituency.

Our young people deserve to build happy, successful lives in the town they call home, and there is so much potential for that. We are home to GE Vernova, whose Stafford site produces the only high-voltage direct current transformers manufactured in this country, which are absolutely key to our national energy security. We have Bostik’s UK headquarters, where world-leading adhesives are made. We have Arco Professional Safety Services keeping those working in risky roles safe, including on Big Ben—or the Elizabeth Tower, I should say—and we have so many wonderful small and medium enterprises. We are supported by Stafford college, widely acknowledged to be the best college in the country, with back-to-back outstanding Ofsted ratings, which works closely with local employers to build the technical and vocational skills that our industries require.

Stafford is a county town where people are proud to live, but people feel its potential is not yet being fulfilled. Research from the University of Southampton shows that that is a pattern repeated across the country, and a pattern that we must address as a Government. We must provide the tools for every community to ensure that their town flourishes. Let us be frank: there is no one-size-fits-all approach to this. When we talk about designing employment programmes around place, we are talking about a massive opportunity for promoting our towns, and building secure jobs and futures for residents that cater to our national diversity.

The economy of places including Stafford should not be trickle-down cities. We must recognise the strengths of towns such as Stafford, particularly in manufacturing and energy infrastructure. We must directly align skills provision with local employer demand, rather than assume that opportunity sits elsewhere. It is also time that we stop telling our talented young people to move away to London or Manchester, and start recognising the potential that our towns have as economic engines in their own right.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady. In Northern Ireland, we are doing a collaborative, localised model through the Ards community network. We have done there what the hon. Lady is referring to in Stafford: identifying job opportunities. HGV training is one—it costs about £3,500 to do that—and there is also security training. The local Ards community network, the Government in the Northern Ireland Assembly and others have come together to ensure that those job opportunities are available for people in my constituency. Many of those people are now driving HGV lorries, and lots of them are in security jobs and training. That inspires people from deprived areas, and I think that is what she was talking about in Stafford.

[Leigh Ingham]

I completely agree with the hon. Member. Recognising the talent that we have in our towns, and making sure that all our Government programmes are working to support that, is integral. I welcome the Government’s investment in growth and opportunity, and we are seeing a revised investment in towns. Pride in Place and town of culture are really good examples; those are not necessarily employment programmes, but they lay the foundations of our commitment to regeneration across the country. The upcoming high street strategy also has a lot of potential to help with that investment.

Although investment into UK cities is undoubtedly important, it is vital to remember that most of our population live in towns, and many of those people are feeling left behind, frustrated by the decline on their high streets under the Conservative Government and sceptical that politicians in Westminster understand them or the places that they call home. This is a chance to show that we do, and that is exactly what Labour Governments do better than anyone else. Time and again, we see that working with communities and using their local knowledge and experience is how we can best regenerate our areas.

I ask the Minister what conversations she is having with colleagues to ensure that towns have a voice in designing their local employment strategies, and what steps the Government are taking to ensure that young people who grow up in towns including Stafford can secure well paid jobs in the towns they call home. Towns such as Stafford are central to our Government’s plan for growth, and I welcome employment programmes that recognise that reality.

Pensions and Social Security

Jim Shannon Excerpts

Tuesday 10th February 2026 Commons Chamber

[Sir Stephen Timms]

I am grateful to the right hon. Gentleman for raising this point. It might be of some comfort to him to know that it was not only the last Government who failed to do anything about this, and that previous Governments also failed. Indeed, in my previous tenures of the office of Pensions Minister, this issue was raised with me. However, it was the case that when those people left the UK, the rules were then as they are today. They were quite clear when people left. Of course, it depends on which country they went to, but in the countries where uprating has not been applied, it has always been the case that uprating has not been applied there, so it should not have come as a surprise to those who left that their pensions were not uprated. We are not looking at any proposals to change the situation at the moment, but I know that the right hon. Gentleman has campaigned on this matter consistently over a long period and I pay tribute to him for that.

[Jim Shannon (Strangford) (DUP)]

We very much welcome the triple lock and the extra moneys coming to our pensioners, but an issue has come to my attention recently. I had an 84-year-old pensioner in my office just last week who said, “Jim, I’ve got a demand from the HMRC for hundreds of pounds, but I’ve never been in debt in all my life.” When it comes to those pensioners who now find themselves being taxed when they were never taxed before, is it not possible to have a different system where the money could be taxed at source, rather than asking pensioners who are financially, mentally and emotionally under pressure to fill in an online form, which they just cannot do? There must be a simpler way of doing it.

[Sir Stephen Timms]

The question of how the tax system operates is a matter for His Majesty’s Treasury rather than for me. However, the hon. Gentleman might take some comfort from the reassurance provided by the Chancellor that those whose only income is the basic or new state pension, without any increments, will not have to pay any income tax in the course of this Parliament. Of course, those who have additional income beyond the state pension often do have a tax liability. The mechanism for how that is applied is a matter for my hon. Friends in His Majesty’s Treasury rather than for me, but I can certainly ensure that his point is passed on to them.

Other components of state pension awards, such as those previously built up under earnings-related state pension schemes, including the additional state pension, will increase by 3.8%, in line with prices. The Government are committed to supporting pensioners on the lowest incomes, so the safety net provided by the pension credit standard minimum guarantee will increase by 4.8%. That means that it will increase from £227.10 to £238 per week for single pensioners, and from £346.60 to £363.25 per week for couples. The maximum amount of pension credit savings credit will increase by 3.8%, in line with prices.

Construction Industry Training Board: Funding

Jim Shannon Excerpts

Wednesday 4th February 2026 Commons Chamber

[Steve Race (Exeter) (Lab)]

Since its establishment in 1964, the Construction Industry Training Board has been the industry-led and industry-funded training board for the UK construction industry. At present, it is an arm’s length body of the Department for Work and Pensions, so I thank the Minister for being here to respond.

The CITB was tasked, in its words, with ensuring a safe, professional, and fully qualified construction industry, and with addressing critical skills shortages. As Members will no doubt agree, some things do not change; indeed, we are grappling today with the very same challenges, as we commit to delivering new infrastructure and regeneration of our public realm, and as we face the need to build much-needed new homes right across the country.

The CITB has always been funded by the sector; legislation grants it the power to collect a levy from private construction firms. In return for this levy, the CITB’s role is to redistribute to sector firms the grants, funds and subsidies for training. This sector-wide approach has meant that skills are transferable, and that the cost of training is equitably shared between smaller and larger construction firms.

That is one of the ways in which the whole sector benefits. As all Members will know from having donned hard hats and visited construction sites, every project involves a huge range of large and small firms, including those that do bricklaying and carpentry, as well as electricians, plumbers and so on. Rarely, if ever, is any project completed solely by one large firm.

Just last Friday, I visited the St Michael’s Meadow housing development in my Exeter constituency to congratulate the site manager, Roy, and his trainee site manager, Sam, who have been awarded the seal of excellence in the NHBC Pride in the Job awards. While there, I also met Dylan and Reece, two carpentry apprentices, both of whom are reaching the end of their apprenticeship training with Barratt Redrow. One is heading directly into the specialist carpentry firm that Barratt Redrow works with on its projects. That is the way that the industry works, and the CITB has long reflected this in its engagement and, in particular, through its stewardship and funding for CITB local training groups.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for securing this debate. He is absolutely right on this. He has been an assiduous, committed and very industrious MP for his constituency, and I thank him for that. CITBNI is very similar to the organisation on the mainland to which he refers. It provides key support for some 6,500 apprentices over three years, and a 50% grant for net zero training. It is an absolute lifesaver for small contractors who can no longer afford the cost of apprenticeships, given that the cost of insurance alone for the apprentice is almost as much as their wage.

Universal Credit (Removal of Two Child Limit) Bill

Jim Shannon Excerpts

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

[Janet Daby]

My hon. Friend is absolutely correct; it is about supporting parents into better-paid work.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady. May I put on record my thanks to her for her words, the Secretary of State for his commitment and the Labour Government for bringing this change forward? Some 50,000 children in Northern Ireland, out of 13,000 households, will benefit—out of child poverty and into a better standard of living. That has to be good news. If anybody is against that, there is something wrong with them.

[Janet Daby]

I thank my hon. Friend—I call him that even though he sits on the other side of the House—for stating that so eloquently and accurately.

This means that the previous Conservative Government got it wrong. I would also add that with rents rising and mortgages increasing, they got it wrong. Who suffers? It is babies, toddlers, primary and secondary school children, and that is wrong. Unlike the previous Government, this Government accept the overwhelming scale of this challenge. I am sure that Ministers will agree that more still needs to be done.

To bring further reality to the situation, my own son has paid for a schoolfriend’s lunch on more than one occasion when they have not had enough money on their lanyard. I am sure that many other children also share food with their friends because they have compassion and do not want their friends to go hungry.

I welcome the Government’s decision to lift the two-child benefit cap, which will provide crucial support to an estimated 3,530 children across my constituency. It is a significant step and I commend the Government for taking it.

Breakfast clubs are absolutely fantastic, but they are limited to primary schools, meaning that secondary school children miss out. There could be three children from the same household where two children receive breakfast at primary school but the other goes hungry at secondary school. That is not right. Parents should not have to worry about their ability to feed their children and teachers should not have to subsidise parents or the state by feeding their pupils.

As I come to an end, I must mention the remarkable football player Marcus Rashford, who knew what it was like to go hungry as a child and is now dedicated to ensuring that it does not happen to other children. I respect his efforts to reduce child poverty. I ask this Government to make the necessary effort to keep children out of poverty and to support them to ensure they have a full stomach and reach their full potential in life.

Women’s State Pension Age Communication: PHSO Report

Jim Shannon Excerpts

Thursday 29th January 2026 Commons Chamber

[Pat McFadden]

I know that the equalisation of the state pension age has produced quite a lot of opposition. The 2011 decision was too quick; that is why we opposed it at the time. On the issue of compensation to which my hon. Friend refers, if we were to compensate everyone in this age group, we would end up compensating a significant number of people who knew that their state pension age was increasing. We do not think that would be the right and fair thing to do, and that is why we have reached the conclusion that I have announced.

[Jim Shannon (Strangford) (DUP)]

On behalf of the 5,000 WASPI women in my constituency, I must register my deep concerns about the way that people are hiding behind the ombudsman’s report, and saying, “No, we can’t help the WASPI women.” The WASPI women back home speak to me every week about this subject. They ask, “Jim, what’s happening now? Where are we?” Unfortunately, the most vulnerable people, including the elderly and disabled people who have waited all this time, have nothing; I need to put that on the record. Some who are listening to the case that the Secretary of State has made will ask, “What does that actually mean?” The WASPI women need some explanation; is there some way of giving them that?

The last point the Secretary of State made was about the pension uplift, pension credit, and how they can help. Can I suggest one other way that the Government could help those people? It would not be in any way a fallback case, but it would be something. When it comes to self-assessment and letters, WASPI women and those over a certain age find it incredibly hard to go online. There has to be some methodology, so that elderly people can know that every penny they get will not be lost in tax beforehand. There must be a methodology and a system, rather than elderly people having to go online, which they cannot do.

[Pat McFadden]

I remind the House that by the end of this Parliament, due to our commitment to increase the basic state pension, we will be spending an estimated £30 billion a year more on the state pension. That is testament to our commitment to maintaining the value of the basic state pension and ensuring that people have a good and decent retirement. That is, of course, for the hon. Member’s constituents as much as for any other Members’ constituents.

On the full reasoning behind the decision, there is a full decision document, which I have deposited in the Library of the House today. That is available to the hon. Member. On online and face-to-face services, he is right that it is important that when people access a benefit, they can do so through a range of channels, so that people do not lose out for the reasons that he gave.

Youth Unemployment

Jim Shannon Excerpts

Wednesday 28th January 2026 Commons Chamber

[Sarah Olney]

One of my big concerns is that, for our economy, we are not getting that pipeline of young people into those entry-level jobs. That threatens our future sustainability and growth, as well as imperilling the prospects of those young people who cannot gain a role.

Those students also expressed their concerns about artificial intelligence replacing many professional jobs, making the skills that they are learning surplus to requirements for many employers. As the Government look to promote public sector efficiency through using AI, many young people are worried that that will mean even fewer jobs for them.

[Jim Shannon (Strangford) (DUP)]

I always try to be constructive with my interventions and comments. In Northern Ireland, youth unemployment is at 7.3%, but here it is more than double that at, I think, 15.4%. Does the hon. Lady agree that we should look at success stories in this United Kingdom of Great Britain and Northern Ireland where youth unemployment has reduced by so much? In Northern Ireland, we focused on young Protestant males from 12 to 18 who could not get jobs, and reduced the unemployment rate. If we can do that in Northern Ireland, I am quite sure that we could do the same on the mainland. Does the hon. Lady agree that we should look at that?

[Sarah Olney]

The hon. Gentleman always makes constructive interventions. He is absolutely right that we need to look at what works. We need to focus on this issue not just for the health and benefit of our young people but for the economy as a whole.

Although we should continue to invest in technological breakthroughs, I am concerned that the Government do not have a strategy for our young people who could be pushed out of the job market by automation. I would be grateful if the Minister responded to that.

There is also a lack of alternatives for young people who wish to upskill, as the apprenticeship pathway is so limited. Businesses tell me that the apprenticeship levy does not work, despite the Government’s attempts at reform. The Liberal Democrats have long called for reform to replace it with a wider skills and training levy, which would give businesses real flexibility about how they spend the money to train their staff and, consequently, provide young people with a better avenue to enter the workforce. The decision taken to defund level 7 apprenticeships for over-22s risks limiting those opportunities. In 2024-25, 51% of all apprenticeship starts were for those aged 25 and over. That is a critical skills pipeline in areas that are key to economic growth, and while the economy is changing so rapidly, we need to provide opportunities for older workers to retrain so that they can continue to find meaningful work later in life.

The Liberal Democrats would fix the skills and recruitment crisis by investing in education and training, including the availability of apprenticeships and career advice for young people. The current system needs to be reformed. That would include boosting the take-off of apprenticeships by guaranteeing that they are paid at least the national minimum wage from the first year, creating new lifelong skills grants for adults to spend on education and training throughout their lives, and expanding vocational training. Although the Liberal Democrats welcomed discussions in the Budget regarding a wider youth guarantee and a growth and skills levy package, I have yet to understand the timeline for implementation. With youth unemployment rising, I encourage the Government to take quick and active steps to deliver that package.

Oral Answers to Questions

Jim Shannon Excerpts

Monday 26th January 2026 Commons Chamber

[Pat McFadden]

I opened the Neath opportunity hub in south Wales in October, and I announced further funding of £10 million for the trailblazer covering that area. Alan Milburn is doing important work in reporting on the whole issue of young people in activity and work. The thing that unites these efforts is the belief that work is good for you, and that we do not want to see young people graduating from education into a life on benefits. That work brings together current activity and the future changes that we will need to make.

[Jim Shannon (Strangford) (DUP)]

14. What steps he is taking to ensure that the Timms review of personal independence payment considers the needs of people with arthritis and other musculoskeletal conditions.

[The Minister for Social Security and Disability (Sir Stephen Timms)]

As I have said, the review will be co-produced with disabled people to put lived experience at its heart. It will engage widely to bring together the full range of voices, including those of people with arthritis and musculoskeletal conditions.

[Jim Shannon]

I wish you well, Mr Speaker, and I hope you are being spoiled by the staff around you, and obviously at home as well. You deserve it.

I thank the Minister for that positive answer. As he will appreciate, people living with arthritis and other musculoskeletal conditions make up one of the largest groups of PIP claimants, and should the previous PIP proposals have continued, more than 77% of claimants living with arthritis and other musculoskeletal conditions would have lost their claims. The Minister is a good man. Would he please agree to a roundtable with me, Arthritis UK, and people living with arthritis, organised at his convenience, so that he can hear directly from those impacted?

[Sir Stephen Timms]

The hon. Gentleman makes an interesting suggestion, and I will be happy to have the roundtable he has called for.

National Insurance Contributions (Employer Pensions Contributions) Bill

Jim Shannon Excerpts

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

[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?

[Jim Shannon (Strangford) (DUP)]

I commend the shadow Minister for what he is saying. This is about not just those on lower incomes, but those on middle incomes. It is about the mums and dads of the students—all this falls back on their shoulders. Does he agree that this Bill is an attack on younger people who have aspirations and hopes for the future? We should be encouraging young people and helping them, and the Government have very clearly fallen down on that.

[Mark Garnier]

I completely agree. That is a fundamental problem. We are doing completely the wrong thing for people who want to do the right thing. We are disincentivising people taking responsibility for their future at a time when the state pension is coming under a lot of pressure. It is expected in 11 or 12 years, I think, that less money will be paid into the pension schemes pot than is withdrawn by those of us who are approaching retirement—I declare an interest, in my own case.