National Insurance Contributions (Employer Pensions Contributions) Bill

Lord Ashcombe Excerpts

Thursday 5th March 2026 Lords Chamber

[Lord Leigh of Hurley (Con)]

My Lords, I will speak to my amendment in this first group. Needless to say, I agree with everything my noble friend Lady Neville-Rolfe said from the Front Bench. This Bill is a most unfortunate Bill. It clearly has come about because the Chancellor has said to her officials, “I need £5 billion, can you find it now?”, and out of the bottom drawer has come a Bill which has been rejected by so many others. I do not think it was in the manifesto; it is just an opportunistic grab of people’s savings.

The Bill has most unfortunate side effects. As we will show in later amendments, it will not raise the £5 billion that the OBR has been led to believe it will. It will fall far short of that. Proof of that, of course, is in the fact that even the OBR recognises that that £5 billion will fall by half the following year, as people work out what is going on and take evasive action. The reason it will not raise £5 billion is that people will work out, well in advance of it coming into 2029, that there are simple ways round this Bill that already have been identified, and therefore will take pre-emptive action. We are stuck with a Bill that does not work, is not needed and, workers having been penalised by the national insurance increase, penalises savers. In particular, for some bizarre reason, it penalises students who have taken out loans. This is not a good time to be making these proposals.

The Minister, a few minutes ago, suggested that the Chancellor believes that people will be £1,000 a year better off by the time of the next election. Will they really? The Joseph Rowntree Foundation—no friends of mine—has said that when housing costs from rent and mortgage payments were factored into those figures, total disposable income would have risen by just £40 a year. No pandemic to rely on, no Brexit, no nothing—that is just what it is: £40 a year.

This is not the time to impose further hardship on people, in particular students. One benefit of a pension salary sacrifice can be to reduce earnings liable to national insurance for student loan repayment purposes, as the liability to repay student loans is, for employees, based on their earnings liable to national insurance. Frankly, there remains a lack of clarity about how the policy interacts with student loan repayment calculations, which are based on national insurance definitions of earnings. If salary sacrifice pension contributions above the cap are treated as earnings for NIC purposes, this will have knock-on effects for graduate repayment levels. It will mean higher effective repayments for some borrowers, reduced disposable income and a further distortion of incentives around pension savings. The Government have not yet provided sufficient clarity. My amendments seek to address that situation.

I am grateful to the national press, in particular the Times, for its support of this amendment. I hope later to be able to test the opinion of the House on it, unless the Government feel inclined to agree to it.

[Lord Ashcombe (Con)]

My Lords, this is a very large group with a number of issues to address. First, I support my noble friends Lady Neville-Rolfe and Lord Altrincham in Amendment 1 in this group. I remind the House that the Department for Work and Pensions has acknowledged that, as of 2025, around 14.6 million working-age people are undersaving for retirement. Many of these individuals will be basic rate taxpayers, though certainly not all, and some will not have access to salary sacrifice arrangements. This amendment would ensure that only higher taxpayers are affected by the proposed £2,000 cap on salary sacrifice schemes. As a result, no basic rate taxpayer would be drawn into what might only be described as a new trap.

In Committee, the noble Lord stated more than once that 74% of employees who pay only the basic rate of tax—currently applicable up to £50,270—and who benefit from a salary sacrifice scheme would be unaffected by the £2,000 limit before the national insurance becomes payable. However, this necessarily means that 26% would be affected, and no figure has been provided for how many people that represents. Percentages alone can be extremely misleading without the underlying numbers. Therefore, I would be grateful if the minister could inform the House how many employees fall within that 26%, so that we may properly understand the scale of those who stand to be impacted.

This brings me directly to Amendment 7, in asking the Government what the definition of a high earner is. The answer given in Committee was totally noncommittal. May I therefore ask the Minister, as my noble friend Lady Neville-Rolfe has, to be transparent and provide a clear number? Is the threshold £30,000, £50,000, or is it some other number? I do not think this is too much to ask.

As for Amendment 5 in the name of my noble friend Lord Leigh of Hurley and others, there are already many students—including my sons—caught by the student loans repayment scheme. To fleece this cohort of individuals even harder seems extraordinary if salary sacrifice payments are considered as part of their income. They will never have a sufficient pension and, no doubt, some future Government will have to pick up the pieces.

Next, I would like to address the size of the cap, which currently would be £2,000. As I have mentioned, the proposed limitation is simply too low. Moreover, it fails to take account of those employees who may, on occasion, receive an unexpected windfall which they wish to contribute to their pension through a salary sacrifice arrangement. Amendment 12 from the noble Baroness, Lady Kramer, provides for a £5,000 cap, which would give employees the opportunity not only to save more towards their retirement but also to avoid a substantial national insurance liability on such a windfall. Provided inflation remains under control, this is a far more realistic and workable figure. While I would prefer the figure to be £10,000, as in amendments in the name of the noble Baroness, Lady Altmann, I fear that that is a step too far.

The amendments in the name of the noble Lord, Lord de Clifford, and those in the names of my noble friends Lady Neville-Rolfe and Lord Altrincham both address another issue: the quiet but persistent impact of fiscal drag. This is one of the most insidious ways in which Governments raise revenue without taking any overt action. With such a modest cap set out in the Bill, it risks being rapidly eroded by inflation, placing an unnecessary burden on basic rate taxpayers—precisely the group for whom pension saving is the most vital to support. I very much support those amendments.

Finally, Amendments 16 and 27 concern the SME and charity sectors. Last week in Committee, I mentioned many recent legislative changes that these entities have had to face, including the cost of energy, which now appears to be heading even further in the wrong direction. Between Committee stage and now, this has become very personal, as one of my children working in the retail industry was made redundant yesterday due to all these excessive costs. This Bill has not yet hit. I truly wonder if the company will survive. The Bill is, surely, another nail in the coffin for many more employees and, I suspect, a number of companies and charities themselves. They simply do not have the wherewithal to weather these storms, yet this Government insist on piling on ever more expenses, not only through greater national insurance payments but substantial additional associated administration costs. They will need to hire external resources to handle this difficult and pernicious legislation. It will not surprise noble Lords to know that I very much support these amendments.

[Lord de Clifford (CB)]

My Lords, I speak today in support of all the amendments in this group, particularly Amendments 12 and 26 in the name of the noble Baroness, Lady Kramer, and other Peers, and my own Amendments 14 and 27. I would have added my name to the noble Baroness’s amendments, but sadly I was a bit slow, and her popularity beat me. I remind the House of my registered interests as an owner of an SME and an employer.

Both these sets of amendments seek to increase the limit in separate ways. As I have spoken about at both stages of the Bill, the proposal mainly impacts middle-income earners. If the Government were to accept the amendment of the noble Baroness, Lady Kramer, this would allow all basic rate taxpaying workers making regular contributions to salary sacrifice not to have to pay NIC on their contributions. Also, it would encourage and give flexibility for workers on different salaries to increase their pension contributions above the 5% of auto-enrolment without being penalised and having to pay NIC on these increased contributions. Auto-enrolment is such an easy way for employees to raise their pension contributions and show flexibility.

I have seen in my own business that employees on a range of salaries from £30,000 to £50,000 per annum do increase and decrease their pension contributions depending on their current situation. This could be, for example, before starting a family or when they have a salary increase, small bonuses are paid, or they are moving closer to retirement. Accepting this limit will encourage people to save for their long-term retirement and give them flexibility in their contributions.

I have resubmitted my amendment as a suggestion and a compromise between the Government’s limit of £2,000 and the proposed new limit of the noble Baroness, Lady Kramer, of £5,000. My amendment seeks to increase the limit to £5,213.15 as it stands and is linked to the upper threshold of national insurance, at 5% of that amount.

I asked the Minister in Committee if there was any basis to the £2,000 limit other than the researchers’ suggestion to employers in the research commissioned by HM Revenue & Customs on attitudes to salary sacrifice, released in January 2024. Having reviewed the research, it appears that £2,000 is an arbitrary figure, if in some way linked to the median salary. The researchers contacted only 51 employers, of whom only 41 offered salary sacrifice. I believe that the total number of employers who offer salary sacrifice is around 290,000. Surely, only 51 employers is not a significant sample on which to base such an important change to the tax and pension systems.

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There is a lot in the Bill that is badly drafted and not clear or thought through. I have put down Amendment 36, which would delay the Bill coming into force. As that is less likely to be successful, I support Amendment 9, which would mean that, when these regulations come through, as they must, proper democratic scrutiny is applied by this House.

[Lord Ashcombe (Con)]

My Lords, very briefly, I support Amendments 6 and 22 from my noble friends Lord Mackinlay and Lord Fuller. As we have heard, the practical application of the £2,000 cap per person must be clearly defined in primary legislation. Leaving such a significant distinction—whether the cap applies to an individual or to each job they may hold—to secondary legislation would create profound uncertainty.

The administration of salary sacrifice schemes is already complex. It is unreasonable to expect each employer to know whether their part-time employees have additional jobs elsewhere, let alone what they earn in those roles. Many of these additional jobs may be sporadic or seasonal, with even the employee unsure of when work will arise or what their pay will be, particularly if it is commission based. It is difficult to believe that the Government intend individuals with multiple jobs to track their own cumulative salary sacrifice across different employments; nor, I suggest, is it remotely feasible for HMRC to monitor such arrangements effectively. From a practical standpoint, this amendment is simply common sense.

I turn quickly to those amendments that address the affirmative procedure. As I mentioned earlier, it is widely recognised that pension legislation is, at best, complicated, and particularly important to individuals when they retire. It is only right that changes in legislation that concern so many people and so much capital should be subject to proper parliamentary scrutiny. This is not a political issue but one of immense importance; it should therefore be subject to affirmative procedure.

[Lord Freyberg (CB)]

My Lords, as mentioned in the previous group, the creative industries are defined by workers holding multiple short-term contracts with different employers across a single year. The central question that this group addresses, and which has been repeated several times today, is one that was put to the Minister in Committee and remains unanswered: is the £2,000 contributions limit £2,000 per person across all employments, or £2,000 per employment? The Minister was asked precisely this question in Committee by the noble Lord, Lord Mackinlay of Richborough, who has repeated it today. The Minister’s answer was:

“That intention will be set out in the regulations once we have fully consulted relevant employers”.—[Official Report, 24/2/26; col. GC 365.]


I have no doubt that that consultation will be thorough, but for workers planning their finances now, and employers designing payroll systems well before 2029, that leaves a gap that the Bill itself should fill. Amendments 6 and 22 would fill it: the limit would apply in relation to each employment.

Even with that resolved, a second problem remains. As we have heard from the noble Lords, Lord Fuller and Lord Ashcombe, when a worker moves between employers mid-year, no mechanism exists for tracking what has already been sacrificed or reporting it to the next employer. Amendments 36 and 39 would address this by making commencement conditional on the Government first publishing guidance that answers both those questions.

There is a further complication that has not been addressed by debates in either House. Many creative workers are engaged by the BBC under schedule D terms as self-employed contractors with no access to salary sacrifice. However, under the off-payroll rules that have applied to public sector bodies since 2017, the BBC must assess whether each such engagement is “employment in substance”. Where the BBC concludes that an engagement is employment in substance, the worker is deemed an employee for NIC purposes, yet they have no actual contract to vary. Salary sacrifice requires a varying employment contract; deemed employment, created by statute, is not a contract. The worker acquires the NIC liability of employment without access to its benefits. That same worker may also be genuinely self-employed with one employer and employed in an ordinary sense with another all in the same year, with no framework in the Bill to accommodate any of it.

These amendments would not change the policy or the 2029 commencement date. They would ensure that, when the Act comes into force, the people it affects know how much it applies to them. I will therefore be supporting all four amendments.

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Moved by

[Lord Ashcombe]

34: After Clause 2, insert the following new Clause—
“Publication of relevant documents and reports(1) HM Treasury must maintain a single, publicly accessible location on a Government website in which all documents relevant to the operation and implementation of this Act are published.(2) Documents to be published under subsection (1) must include—(a) any Tax Information and Impact Notes relating to this Act,(b) any guidance issued to employers or employees relating to the operation of section 4(6A) of the Social Security Contributions and Benefits Act 1992 (as inserted by section 1) or section 4(6A) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (as inserted by section 2),(c) any consultation documents, technical notes or policy papers relating to regulations made under those provisions,(d) any reports or reviews concerning the operation, impact or effectiveness of this Act, and(e) any regulations made under section 4(6A) of those Acts and any accompanying explanatory memoranda.(3) HM Treasury must ensure that any document falling within subsection (2) is published in the location described in subsection (1) no later than the day on which it is laid before Parliament or otherwise made publicly available.(4) HM Treasury must ensure that the location described in subsection (1) is clearly advertised and regularly updated.”Member's explanatory statement
This amendment seeks to require the Treasury to publish all documents, guidance, consultations, regulations and reviews relating to the Act in a single, publicly accessible location to ensure transparency and ease of access for Parliament and businesses.

[Lord Ashcombe (Con)]

My Lords, I speak to my Amendment 34 in this group, and I am grateful for the support from the noble Lord, Lord Londesborough. Pensions legislation is, as many of your Lordships appreciate, inherently complex and difficult to understand. It is also currently undergoing further refinement in this House, which will inevitably bring more change. My amendment seeks to make life easier for those who provide pensions and those who invest in them. Its purpose is straightforward: to require the Treasury, should this Bill pass, to publish all documents, guidance, consultations, regulations and reviews arising from the Act in a single, publicly accessible and advertised location. This would support transparency and ensure that both Parliament and business can easily find the information that they need.

In Committee last week, the Minister referred to at least four different documents containing differing information and mentioned them this morning or this afternoon as well. This week, we learnt in the Times that Sir Steve Webb made a freedom of information request asking for a more detailed breakdown of the composition of the £4.5 billion to be raised in 2029 as a result of this Bill, who will be affected and how employers are expected to react to the changes. HMRC indicated that the information requested would “undermine” the policy-making process. Is it not our duty to ask the questions and expect a proper response in order to hold the Government to account? This would, of course, have added another document to those that would be publicly accessible.

In my professional life, I work for Marsh, a global company whose code of conduct for the greater good includes two principles that are particularly relevant to this debate—the code, of course, is written with the regulators in mind. They are that we treat customers fairly and we that communicate honestly and professionally with investors and the public. I am not convinced that the current approach to information accessibility meets either of these standards. It is difficult to imagine customers or investors being satisfied if told that essential documents are scattered across multiple websites and must be hunted down individually. Yet this is precisely the situation facing those who wish to understand the documents associated with this Bill. Why should the Government not be held to the same standards as the private sector? This amendment is simply about ensuring openness and transparency. It would create a single, reliable point of access for all relevant material, replacing the current scramble to locate information needed to make what are often complex and consequential decisions. I beg to move.

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In the light of the position that I have set out, I hope noble Lords feel able not to press their amendments.

[Lord Ashcombe (Con)]

My Lords, I thank the Minister for his responses and thank those who have taken part in this short debate. I am not sure that we have unknown unknowns, because the Minister has again stated where these various documents are scattered around, but we have an unresolved unresolved. As noted by the noble Lord, Lord Londesborough, this will reappear time and again as we go through different Bills in the Chamber.

Looking to the amendments other than my own, over the last month or so, as we have debated this complex subject, an awful lot of unknowns have appeared. Therefore, we should have clear thought put into, and publications on, what is going to happen, prior to the Bill being enacted—because it does not come into force until 2029—and subsequently on whether there is any degree of similarity after that, as I am not convinced. Having said that, I beg leave to withdraw my amendment.

Amendment 34 withdrawn.