Mark Garnier
MP for Wyre Forest · Conservative · United Kingdom
“Many commentators have commented about public sector productivity underperformance. EY tells us that the public sector has underperformed to the point where it has cut GDP growth by 3% since 2019. The Institute for Government highlights an average of nearly 1% underperformance every year for that same period.”
“My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest.”
“I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat.”
“As I say, I am not an apologist for banks, and I am keen to ensure that we get a balanced argument. The hon. Lady is absolutely right that that is an awful lot of money, but it all comes down to what should be the right and proportionate response.”
“If a branch is not viable, should the bank keep it open? We must look at the other opportunities. The last Conservative Government recognised that and were committed to retaining vital banking services.”
“New York is the biggest financial services centre in the world and London is the second biggest, but in New York, 80% of the turnover is driven by the domestic market of America, while just 20% is international; those numbers are reversed in the UK, where 80% of the activity is international.”
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“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.”
“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.”
“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.”
“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.”
“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.”
“I am trying to finish my speech—in fact, I had finished my speech. This is a very important point, and we will push amendment 5 to a vote. As I said, we will challenge Labour MPs not to do the wrong thing for their constituents—for the young, hard-working graduates who are desperate to do the right thing.”
“We hear all those concerns loud and clear from businesses, savers and all the rest of them, which is why we want the Government to think again on this issue and why we will vote against this Bill on Third Reading. People are simply not saving enough for their retirement. Rather than restricting the options, we should be encouraging the creation of new incentives that encourage people to save more. Instead, the Government are pushing through a Bill that will do the opposite. It is unbelievably unpopular because it punishes 3.3 million people who actively try to save for retirement by punishing the 290,000 employers who incentivise their employees to save. Worst of all, it breaks another of Labour’s manifesto promises: that it will not increase taxes on working people.”
“It goes against that basic, important and agreed objective of people planning for their futures. More importantly, it goes against the Government’s own financial inclusion strategy. As the Economic Secretary to the Treasury set out in November, “Our aim is to create a culture in which everyone is supported to build a savings habit, building their financial resilience in the long term.” How does the Bill accomplish that reasonable ambition? It won’t, because it disincentivises employees from saving more in their pensions and it disincentivises employers from providing it as an option in the first place. Altogether, it is the wrong policy that sends the wrong message at the wrong time. We gave the Government a chance to address some of those concerns earlier, and they did not take it.”
“As I pointed out earlier, the Society of Pension Professionals estimates that over 850,000 basic rate taxpayers who use salary sacrifice will be affected by the changes, and those 850,000 people will be taxed at a higher rate than their wealthier colleagues—something that the Government apparently seek to target with this policy. And I always thought that Labour Governments were meant to be on the side of working people, Madam Deputy Speaker! Fifthly, and finally, the Government are voting for a Bill that will make the impending pension adequacy crisis worse. As I said in my introduction, there is widespread agreement that people are not saving enough, so why make the second largest revenue-raising measure of last year’s Budget one that goes after people’s savings for later life?”
“Friend the Member for North Bedfordshire (Richard Fuller) pointed out when winding up on Second Reading, the change appears to have been timed to maximise revenue in 2029-30: the year that counts for the Chancellor’s fiscal rules. That is £4.8 billion to fill the Chancellor’s black hole—she will have one by then—in order to make a cynical attempt to stick to a fiscal rule. This is a cynical measure that destroys a lifetime of savings opportunities for just one year of revenue. Frankly, it is also likely that the Government will not raise anywhere near the £4.8 billion budgeted for, as higher earners max out the benefits of the scheme before it comes into force in 2029; and, in any event, people are figuring out a workaround. Fourthly, the Government are voting for a Bill that harms lower earners the most.”
“The savings that employers achieve through salary sacrifice arrangements are often invested back into their employees and their businesses, including through increased pension contributions to all employees, higher wages, or more investment into plant and machinery for growth. That is a good thing. The Government are now taking money away from the productive part of the economy and putting it into other parts. No wonder businesses think that this is a nonsensical policy delivered by a directionless Government, who forget that businesses are the ones that create wealth in our economy, add value to it and drive growth. Thirdly, the Government are supporting a Bill that will not actually raise the stated revenue. As my hon.”
“They are going for the option that the report considered to be the most complicated. The Government are choosing to confuse with complications a system that is currently the simplest to deliver. The changes will add an estimated £30 million each year in administrative costs to employers—and this comes at a time when businesses and the wider economy already pay an estimated £15.4 billion just to comply with the tax system. What about the effects on businesses, which see a 15% employer national insurance bonus through helping people to save? The changes will mean that employers will be hit with a 15% increase on the costs of employment.”
“Given that the Government tabled no amendments to address the genuine concerns of savers and industry, it seems that the Minister is still apparently chuffed that he is implementing a policy that is, at best, the least worst option for everybody who was asked to comment. Secondly, the Government are voting for a Bill that will add to the administrative burden on businesses. The pensions system is already incredibly complex for experts to navigate, let alone the general public. That is why salary sacrifice arrangements have been such a popular savings tool for both employees and employers. The principles are easy to understand, with the only real piece of admin being on the employer to ensure that the employee does not fall below the national living wage. But what are the Government doing?”
“The Pensions Minister is absolutely right that there is an awful lot that we agree on. It is always a great pleasure to spar with him and agree on certain things, but this Bill is not one of them. Let me be clear why we disagree with the Minister. First, the contributors to the research done by His Majesty’s Revenue and Customs were absolutely against this Bill. The report, which was published last year and which the Minister mentioned on Second Reading, concluded that all the hypothetical scenarios explored in the research, including the £2,000 cap, were viewed negatively. It also pointed out that the £2,000 cap was the most complicated option presented.”
“The principle behind this is something that fundamentally we are 100% behind. It is a very good policy, and it is really important that we get this right, but issues have been raised by legal experts who are cleverer than me—but probably not cleverer than the Minister, who I think started at Slaughter and May. Obviously, we are very keen to work with the Government to get this right; I was hopeful that the Minister would agree to meet me and some experts in this area to look at the drafting of this legislation to see if that is possible. We will support it if she is happy to do that, and then we can move forward, get something together and hopefully get this right. It is important that we get this right, but I would be grateful to hear the Minister’s thoughts.”
“To allow that in the legislation would provide immense benefits to the City. A failure to make those simple and textually minor clarificatory changes would not only make it very difficult for the UK to become a global hub for digital assets and blockchain technologies, but would risk the UK losing its position as a leading international financial centre. This piece of legislation is intended to be ground-moving in terms of seizing an opportunity for our financial services industry, and it would be tragic if it were reduced to a minor tremor for the sake of simple loose drafting. Those concerns go into great detail, but we need to address them to ensure that we do not mess up a golden opportunity to get this right. One or two other concerns have been raised with me, but I think we can talk about them at a different time.”
“It would be far clearer and simpler to have an exemption drafted in a way that is bespoke to stablecoins, rather than attempting to shoehorn them into a legacy definition that was not drafted with the stablecoin payment process in mind. Alternatively, an existing statutory definition could be used that accommodates the full range of payment activities, such as referring to the use of stablecoins and providing “payment services” in the way that the Payment Services Regulations 2017 do. Equally as important is the fact that there is, in the current draft, no similar purpose-based exemption for the use of stablecoins in capital markets or foreign exchange transactions, nor in asset or corporate treasury management. Again, those would be straightforward to introduce and should be entirely uncontroversial from a policy perspective.”
“The Government appear to have attempted to address the issue in the case of payments, by copying across the legacy purpose-based sale of goods and services exemption from the traditional regulatory regime, which disapplies the new “dealing” and “arranging” activities for the use of stablecoins to buy or sell goods. That does not, however, achieve the aim of exempting all those who are crucial to the stablecoin payments process. Significantly, it is not clear that it covers those who exchange fiat money for stablecoins and stablecoins for fiat money. The payments process stands and falls by the ability of users to convert the fiat currency into stablecoins and back again, yet the exemption as currently drafted is likely to deter market participants from providing those essential services because it is not clear that it applies to them.”
“Of course, both need securing, but in ways that recognise the fundamental difference between the two. From a practical perspective, applying the new “dealing” and “arranging” activities to regulated stablecoins has the effect of potentially requiring market participants who are seeking to use or facilitate the use of regulated stablecoins for the purposes I have mentioned to apply for new licences from the FCA, purely because they are using regulated stablecoins instead of traditional fiat money. In that world, market participants simply will not use them, and the principal benefit and advantage of stablecoins may never be realised.”
“There is currently no defined distinction for the majority of the new regulated activities between “qualifying stablecoins” specifically and “qualifying cryptoassets” generally, which has a number of cascading and adverse effects. The most adverse is that, under the current wording, stablecoins, including those regulated by the FCA and the Bank of England, are treated in the same way as unbacked cryptoassets such as bitcoin. Given that the risk profile of those assets is starkly different from that of a fiat-pegged stablecoin, which is, crucially, simply another form of regulated money, that makes no sense. Lumping unbacked assets together with stablecoins for regulatory purposes is rather like buying a car instead of a horse, but still tying the car to a post in case it runs off.”
“If that is the effect of the SI, these new forms of money will not be used because of the unnecessary regulatory hurdle put in the way of market participants. As a result, the development of digital assets and blockchain technologies in the UK could simply grind to a halt. That will take all its growth potential with it, as well as the chance of the UK remaining the pre-eminent force in the financial world. Unfortunately, the likely need for those additional licences is precisely the effect of the wording in the draft regulations, despite the fact that it appears to run counter to the Government’s often stated, and highly laudable, policy intention. There appears to be a simple drafting error that could be easily rectified.”
“The SI does not achieve what I hope we all agree we want, which is the UK to lead the way in cryptoassets, including stablecoins and the wider payments opportunity that distributive ledger technology—DLT—provides. However, the solution is simple, straightforward and easily achieved. Essentially, market participants should be able to use regulated stablecoins and tokenised commercial bank deposits in place of traditional fiat currency for the purposes I have mentioned—to make payments, settle capital markets and foreign exchange transactions, and for collateral and corporate treasury management. But crucially, they must do that without suddenly needing to apply for additional licences from the Financial Conduct Authority.”
“However, importantly, without a proper treatment of stablecoins that recognises the way in which the assets actually function in practice, the UK risks not only missing out on positive growth benefits but, crucially, losing ground to other jurisdictions. That ground will be difficult to recover because market provision will already have been established elsewhere, where providers can be certain of their legislative position. We will be trying to catch up where other jurisdictions will have made progress and secured their lead. With the current wording of the SI, that important lead, which provides much economic benefit to the winner, will not be here in the UK.”
“It therefore wants to support such a role for stablecoins as part of a “multi-money” system alongside commercial bank money, including tokenised bank deposits, so in effect they would be part of the payments system itself. Similarly, we know that as the world progresses, capital markets, foreign exchange and asset management will increasingly be settled through digitalised blockchain technologies. For the UK to maintain its leading global position in those markets and others, it is vital that we take a leading role in adopting blockchain technologies in the payments system. Used in this way, stablecoins will bring immense benefits in terms of speed, lower costs and programmability. In other words, they are the key to growth both in our economy and in our financial services industry.”
“In the case of stablecoins, that will be achieved by regulating issuers under the new regulatory regime brought in by this legislation, which will be introduced and supervised by the Financial Conduct Authority. Also, in the case of sterling-denominated systemic stablecoins, issuers will be subject to dual regulation by the Financial Conduct Authority and the Bank of England. In its consultation paper on its proposed regulatory regime for sterling-denominated systemic stablecoins, published in November last year, the Bank of England confirmed that the use of regulated stablecoins could lead to faster, cheaper retail and wholesale payments, with greater functionality, both at home and across borders.”
“A critical component of the successful development of digital asset markets is an effective form of digital settlement asset—that is, digital cash. There are three forms of digital cash: first, there are central bank digital currencies, or CBDCs; secondly, there are tokenised commercial bank deposits; and thirdly, there are regulated stablecoins. If the UK is to establish itself as a global hub for digital assets, it is essential that all of those can be used interchangeably with traditional fiat money, or state-backed money. For that to happen, each form needs to be regulated in a way that recognises its particular nature and function.”
“Without strong, decisive and nuanced categories, the potential for effective regulation, and therefore optimum growth, will be lost. This is not an opportunity to be squandered, yet the current drafting threatens to do just that. The Government’s policy note that accompanied the original draft SI, published in April last year, states: “This is a draft SI and should not be treated as final. It is being published for technical checks, such as any significant errors or oversights in the legal drafting that would mean that the provisions in this SI would not achieve the desired outcomes explained in this note, or that could lead to other significant unintended consequences.” My goal today is to explain why an oversight in the current drafting means that the SI’s provisions do not achieve their stated aim. Let me explain.”
“She was responsible for the Electronic Trade Documents Act 2023 and the Property (Digital Assets etc) Act 2025. As I have discussed, this draft legislation establishes the regulatory parameter for cryptoassets in the UK, including stablecoins. As such, what we are discussing is crucial for the delivery of HM Treasury’s often repeated policy intention for the UK to become a global hub for digital assets and blockchain technologies—something that we are 100% behind. That means that a properly drafted Bill is mission critical. The ability of the UK to become a global leader in the digital economy, and to retain its position as a leading international financial centre, depends on the ability of this piece of legislation to set out clearly, decisively and unambiguously how it will distinguish between different types of cryptoassets.”
“Cryptoassets—bitcoin and the like—are commodities in the same way as a bond, a share or other commodities. They are items that are bought and sold with a view to their value changing. However, a stablecoin is an asset fully backed by a fiat currency, and thus a proxy of that underlying fiat currency. A stablecoin is part of the payment system and should be regulated as such. I am someone who understands the principles of this legislation, but sometimes it is important to have the help of people who really get the law. I am grateful to a couple of people who have helped me to put this argument forward today, in particular Mike Ringer, who is the founder of ReStabilise, but more importantly Professor Sarah Green, who was a law commissioner for commercial and common law at the Law Commission of England and Wales from 2020 to 2024.”
“As new technology comes forward, it is vital that the City of London, or the UK’s financial services sector, not just adopts this new technology but leads on it, and leads on it with the intelligence and experience that we have gained over the previous centuries of legislating in this area. As we move forward in the age of new technology, we need to legislate. This SI is possibly the best example of how we can embrace that change. Indeed, the short time that we have been given to debate this piece of legislation belies its importance and the months of consulting that lie behind it. While the Opposition are absolutely behind the thrust of the SI, we believe that it is slightly flawed in its drafting. It appears to draw together two separate things: in very simple terms, it appears to confuse cryptoassets with stablecoins.”
“I start by welcoming the general thrust of this incredibly important legislation. The Minister and I have sparred a number of times in the past, and so far we have managed to keep it to under five minutes; I must now apologise to the Committee, as I might take a little longer. As the Minister said, work on this piece of legislation was started under the previous Government, and it is absolutely vital for the City of London to maintain its presence as a global financial leader. The City of London has been innovative and thought-leading for a few hundred years now. Jonathan’s Coffee House was the first to advertise share prices, from which the London Stock Exchange grew, setting the model for equity ownership the world over; similarly, Lloyd’s Coffee House created the insurance market that we see today.”
“My hon. Friend and Worcestershire neighbour is making a strong argument about the risks of a north-south divide, in which the north could be subsumed under a greater Birmingham. That is a very important point. Is he as surprised as I am that, of the district and city councils across Worcestershire, Wyre Forest was the only one to advocate a single Worcestershire unitary authority rather than the split model?”
“My hon. Friend has been very indulgent of me. I suspect one interesting point was not taken into account by the survey. That would be the fantastic cost of splitting up all the county-wide services, which range from adult and children’s social care to waste disposal. To divide that into two and then merge the district authorities would in itself be an unnecessary cost if we have two authorities rather than one.”
“The financial inclusion strategy, published recently, stated very clearly: “Our aim is to create a culture in which everyone is supported to build a savings habit, building their financial resilience in the long term.” A brilliant idea. [ Interruption. ] Thumbs up from the Pensions Minister! But even after that very clear message, the Government reduced the cash ISA limit, scrapped lifetime ISAs for new investors, and introduced a 2% increase to dividend tax and, the icing on the cake, a £4.8 billion tax on pension savers.”
“Here we are with something that is popular and that incentivises the right behaviour, and the Government say, “No, we don’t like it.” The Government’s proposal, which we are discussing today, is a tax on 3.3 million people and 290,000 employers—those in the highest levels of pay. How much are they being asked to contribute? How much are we going to whack savers? Some £4.48 billion. That is right—if you do the right thing, if you work and save, this Government will come after you. The Office for Budget Responsibility gets it. It realises—unlike, apparently, the Government—that this will change behaviour and so the tax take drops to £2.6 billion in the second year because people will change their behaviour. Even the Government lose out. The Government’s contradictions are legion.”
“Add to that their employer’s contribution, and for a headline basic rate taxpayer on up to £50,000, for each £100 they earn, the taxman takes £47. For a higher rate taxpayer, the marginal rate goes to 57%. The taxman takes more than the employee. Given the hit to payrolls, both at the employee and employer level, it is no wonder that saving into a pension through salary sacrifice has become popular. Even the Government think it is a brilliant idea, using it for 10% of government employees. It is no wonder, therefore, that people use incentives such as salary sacrifice to make the most of their money, to do the right thing, to save a little bit more, to take responsibility for their futures, and to not rely on the state in their retirement. It is no surprise then that 7.7 million people take advantage of that.”
“For hard-working people, this Government have reduced real household disposable income, pulled millions more people into paying the higher rate of income tax, and created perverse incentives that make some better off on benefits. These are her choices. So it is no wonder that this Budget has been dubbed the smorgasbord of misery. It has now got to the stage where our economy has never been taxed so much, and it will get worse. When coming into office, the tax take was 36.4% of GDP. By the time Labour leaves office in four years’ time, it will be 38.2%. It is worth looking at examples of how it is levied. For example, a basic rate taxpayer earning £100 will pay 20% tax, but they will also pay 12% national insurance—an actual tax rate of 32%.”
“But we also agree with the noble aim of delivering growth in the UK economy, even if the Government are making a little bit of a mess of delivering that aim— growth slowing, inflation up, unemployment up—but we hope they get the hang of it in due course. But that is why the Chancellor’s Budget is disappointing. For pensioners, she has flown kites about the tax-free lump sum, frozen the personal allowance threshold, and forced millions of pensioners to start paying income tax. Those are her choices. For savers, she has reduced the cash ISA limit to £12,000, scrapped the lifetime ISA for new investors, and increased tax on dividends and savings by two percentage points. Those are her choices.”
“I have to say that it is a joy to yet again be locking horns with the Pensions Minister on a topic that is important to us all: saving for our retirement. And it is important to note that there are many things that we agree on. We all acknowledge there is an impending issue with pension adequacy: when 50% of savers are projected to miss a retirement income target set by the 2005 Pensions Commission, we agree there is a problem that needs dealing with. We also all acknowledge that UK pension funds are not investing into the UK equity market to the extent that we would all want, although I would caveat that with a fundamental disagreement: on this side, we want to understand the problem; the Minister wants to tell fund managers what they should and should not be doing in terms of where their investment goes.”
“Are the Government proud of this rousing endorsement by the industry? It is absurd. When I was quizzing the Minister about this last week at oral questions—he will remember it well—he proudly held up the report that was commissioned under the previous Government—”
“In doing so, the act of saving into a pension will now be more expensive, more complex and less attractive to both employees and employers.” Evelyn Partners stated: “Restricting this sensible tax benefit that makes private sector saving more attractive adds insult to injury in a two-tier pension system”. PwC stated: “In a bid to bolster the public purse…Budget risks reducing employees’ take-home pay while placing additional pressure on businesses through rising employment costs”. Hargreaves Lansdown stated: “Restricting salary sacrifice on pension contribution could cause long-term damage to people’s retirement prospects. We could see employees less likely to increase pension contributions beyond auto-enrolment minimums”. The Society of Pension Professionals—it goes on and on.”
“The House would expect me to bang on about this—I am the shadow Minister and that is my job—but let us listen to the verdict from a few experts about the policy we are debating today. Pensions UK stated: “Any change to salary sacrifice would inject uncertainty into a system that needs long-term trust, not sudden shocks…Introducing a cap would weaken incentives to save when we are facing a generation retiring with inadequate retirement savings.” The Institute of Chartered Accountants in England and Wales stated: “This cap will make it more complex for employers to offer a simple and flexible solution for retirement savings.” The Institute and Faculty of Actuaries stated: “The decision to impose a £2,000 limit…will undermine current efforts to improve retirement outcomes for individuals.”
“Absolutely. The Government are really keen to get people to save for their futures and then they do everything they can to try to stop them doing that. The hon. Gentleman is absolutely right. We are just going to kick another problem down the road. By the way, when the Minister talks about hip replacements and so on, it is savers’ money. It is just that they are taxing them less. At the same time as the Government look to improve pensions adequacy, they will be taking £4.8 billion from savers and employers. They identify a problem, say they will work to make it better, and then make it worse. Surely, when they were writing the Budget—I know the Pensions Minister has been a significant penholder in that process—they must have seen the extraordinary contradictions in their proposals?”
“If you try to save towards dignity and retirement, you will lose out.” It is the wrong policy to pursue and we will definitely vote against it tonight.”
“I know that the Minister would agree with that, so I hope that he hears the genuine concerns I have raised on behalf of a lot of people. Many people and businesses and are very worried about this policy, and he needs to take it away and think carefully about it. Fundamentally, we are taking away something that is beneficial to the individual while also being tax efficient for business. Instead of encouraging the creation of incentives such as salary sacrifice or pensions, we are reducing the number. It is the wrong policy, and it sends the wrong message at the wrong time. All it does is add to the ongoing narrative that, “If you work hard to make a decent income, you will lose out. If you work hard as an employer to grow your business, you will lose out.”
“It would be a big job.” The National Audit Office estimates that the annual cost on business just to comply with this Government’s tax system is £15.4 billion, yet the Government feel that the time is right to put more costs on businesses. I have to ask, what happened to the Chancellor’s pledge to cut red tape by a quarter? I think I will move on to my conclusion in order to save people. [ Laughter. ] There was some great stuff in this speech, but I understand that people want to get away and wrap their Christmas stockings—particularly the Pensions Minister who, like the Grinch, is taking a lot of money away. To conclude, the Government should think again on this policy. People are simply not saving enough for their retirement. We need to do more to encourage them to save for their retirement.”
“Anyway, there is going to be a cost, and that money will be taken away from businesses. This is going to be— [ Interruption. ] The Minister is chuntering from a sedentary position; he is obviously proud of what he is doing to the pensions industry. Furthermore, the change will create administrative burdens for employers. With the current system, there are few administrative issues; the only thing that businesses have to bear in mind is ensuring that their employees’ pay does not fall below the national living wage—that is it. So what do the Government do? They go for the most complicated option that the report considered. That was explicitly stated by those involved in the research. As a pensions administration manager for a large manufacturing employer said, “We’d have to reconfigure all our payroll systems and all our documentation.”
“They increased employer national insurance contributions to 15% and, at the same time, reduced the starting threshold to £5,000. Businesses reacted and adapted. They were reassured by the Chancellor’s promise that she would not come back for more, yet here we are discussing further tax rises on businesses. Let us look at the actual impact this raid on pensions will have on employers. According to the Government’s own impact assessment, it will hit 290,000 employers. A business highlighted in the 2025 report that “If salary sacrifice were to go away, it would be additional cost of £600,000 to £700,000 per annum to the company in national insurance”. While the Government are not abolishing it altogether, 44% of people currently using salary sacrifice— [ Interruption. ] I am worried; the pairing Whip is coughing.”
“The Government keep telling us that this policy will affect top earners, but the reality is that those on middle incomes will be disproportionately hit—the very people we should be encouraging to save more. The Bill will also potentially hit low earners. Somebody who is lucky enough to get a Christmas bonus will not be able to add it to their salary sacrifice, taking advantage of any headroom, because the accounting looks at regular payments, not one-offs. [ Interruption. ] I am slightly worried, Madam Deputy Speaker, that the pairing Whip has a rather bad cough; I hope he gets better. This will potentially hit the 75% of basic rate taxpayers the cap supposedly protects. Finally, the Bill hits employers. In the previous Budget, the Government absolutely hammered business.”
“It is a perfect target market for the Government’s savings ambitions. However, it does not stop there. In total, at least 3.3 million savers will be affected, which is 44% of all people who use salary sacrifice for their pension. These are all people who work hard—people on whom the Chancellor promised not to raise taxes. In fact, middle-income employees will be affected more than higher earners. According to the Financial Times , under the Bill, an employee who earns £50,000 and sacrifices 5% of that will pay the same amount in national insurance contributions as an employee on £80,000. If the contribution rate is doubled to 10% of their salary, the disparity grows even further, meaning that an employee earning £50,000 will pay the same amount in national insurance contributions as an employee on £140,000. How is that fair?”