Lords Soften NICs Pensions Cap, Bolster Oversight

High-Level Summary

The House of Lords took oral questions on per- and poly‑fluoroalkyl substances (PFAS), class inequality in the arts, the Access to Work scheme, and VAT threshold issues, before agreeing several business motions. Royal Assent was announced for three Acts. Ministers set out positions including no current plans to consult on a blanket PFAS consumer ban, new and existing funding streams for arts access, record Access to Work spending amid rising demand, and the context for VAT threshold data. On Report of the National Insurance Contributions (Employer Pensions Contributions) Bill, the House agreed amendments to exempt basic rate taxpayers, raise the cap on salary sacrifice, secure affirmative parliamentary scrutiny of most regulations, and adjust student loan interactions, following divisions.

Detailed Summary

Royal Assent

Royal Assent was notified for three Acts: the Medical Training (Prioritisation) Act 2026, the Rare Cancers Act 2026, and the Sustainable Aviation Fuel Act 2026. The House was informed: “Royal Assent was notified for the following Acts:”, listing the three Acts thereafter.

PFAS – Question

Baroness Ritchie of Downpatrick asked whether the consultation announced in the Government’s PFAS Plan would include an option to ban PFAS in all consumer products manufactured or sold in the UK. Baroness Hayman of Ullock replied that there were “no current plans to consult on banning PFAS in consumer products” and that any future regulatory ban would involve consulting first. She said the Government would have “due regard to the environmental principles policy statement … which includes the precautionary principle” while noting many PFAS have useful properties and some critical uses lack alternatives. Peers pressed for faster action, including via the water White Paper and forthcoming Bill, which the Minister described as “a central part of the Government’s programme and a priority for Defra” and confirmed that the Cunliffe report is being looked at “extremely carefully”. Baroness Hayman highlighted the complexity of PFAS as “a large and complex group of over 15,000 chemicals” and ongoing work with the EU. She described the PFAS plan as “the starting point and the platform for moving forward” with industry and consumers, and noted the EU is “developing a broad ban on PFAS” with an update expected the following week, to be followed by consultation.

Class Inequality in the Arts – Question

The Earl of Clancarty asked about the University of Manchester report Class Ceiling and steps to address class inequality in the arts. Baroness Twycross said it is “considerably harder for someone from a working-class background to access the arts” and cited a £1.5 billion Arts Everywhere fund, £132.5 million of dormant asset funding, and a £9 million creative careers service. She also said the Government will invest £1.5 billion in capital funding for arts and culture over this Parliament and are working to widen participation and apprenticeships. Peers raised specialist music and dance schools, apprenticeships in sectors dominated by freelancers, barriers to access, and VAT on private schools. The Minister referenced a new BRIT School in Bradford “opening in 2028” with “500 free places”, confirmed the Government is “not considering a basic income scheme for artists”, and said ending VAT and business rates tax breaks for private schools was “a tough but necessary decision” linked to wider education commitments.

Access to Work Fund – Question

Lord Touhig asked when the operation of the Access to Work fund was last reviewed. Baroness Sherlock said Access to Work “has not substantially changed since its introduction in 1994” and that the Government had consulted on its future in the Pathways to Work Green Paper. She noted demand has risen, with the Government spending a “record amount, over £320 million” and application rates having doubled since 2019–20. She outlined steps taken including a 29% staff increase and operational improvements, support for SMEs through a service “developed with SME employers”, and a changing case mix with more mental health and complex learning conditions. She also said that the scheme currently supports “only around 1% of the working disabled population,” making expansion a key challenge.

Small Businesses: VAT Threshold – Question

Lord Londesborough asked about HMRC data suggesting more small businesses are earning below the VAT threshold. Lord Livermore said the data “does not show that” and only covers voluntarily VAT‑registered firms below the £90,000 threshold, excluding unregistered businesses. He explained that registered firms have no incentive to suppress turnover once registered and that the data moves around over time. On policy, he acknowledged that bunching around the threshold is “well established” and noted the UK threshold is high by international standards, with £90,000 versus an OECD average of £30,000. He referred to constraints from the Windsor Framework—“an upper limit of just over £90,000 on the threshold in Northern Ireland”—and broader SME support, and confirmed review of online marketplace VAT rules with consultations to take place.

Business of the House – Motion on Standing Orders

The House agreed to dispense with Standing Order 44 on 12 March to allow specified Bills to complete remaining stages that day. The motion outcome was: “Motion agreed.”.

Pension Schemes Bill – Order of Consideration Motion

The House agreed the marshalled order for Report stage: “That the amendments for the Report stage be marshalled and considered in the following order:” followed by Clauses 1–118, the Schedule, Clauses 119–123, Title. The motion was agreed.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026 – Motions to Approve

The House approved the draft Regulations laid on 15 January, which had been considered in Grand Committee on 2 March. Outcome: “Motions agreed.”.

National Insurance Contributions (Employer Pensions Contributions) Bill – Report

Peers debated amendments concerning the new cap on salary sacrifice for employer pension contributions. Baroness Neville‑Rolfe argued, “This Bill is a mistaken Bill” that would “reduce pensions adequacy”, and said “26% of basic rate taxpayers will not be protected” by the cap. She also sought SME and charity exemptions. Responding, Lord Livermore said “three‑quarters of those earning up to £50,270 and using salary sacrifice will be entirely protected,” rising to 95% for those earning £30,000 or less, and warned that exempting basic rate taxpayers would add “considerable additional administrative burden” as NICs are not assessed annually. He later confirmed that “the £2,000 cap will apply to each employment” to align with NICs practice, and that changing jobs within a year would restart a fresh cap per employment. He also stated that “the Government do not believe that this Bill is the appropriate vehicle” to amend student loan repayment rules. Outcomes (divisions and agreements): • Amendment 1 (exempt basic rate taxpayers in Great Britain) agreed: “Ayes 214, Noes 142”; recorded as agreed. • Amendment 5 (exclude excess amounts from student loan earnings, Great Britain) agreed: “Ayes 208, Noes 142”; recorded as agreed. • Amendment 9 (make most regulations subject to the affirmative procedure, Great Britain) agreed: “Ayes 198, Noes 139”; recorded as agreed. • Amendment 12 (raise initial cap to £5,000 in Great Britain) agreed: “Ayes 194, Noes 140”; recorded as agreed. • Amendment 16 (exempt SMEs and charities in Great Britain) agreed: “Ayes 193, Noes 143”; recorded as agreed. • Northern Ireland equivalents were also agreed: exempt basic rate taxpayers (Amendment 17); exclude excess from student loan earnings (Amendment 21); affirmative procedure (Amendments 24 and 25); raise cap to £5,000 (Amendment 26); exempt SMEs/charities (Amendment 29). Further points included Government statistics that SMEs are less likely to use salary sacrifice and to exceed the cap—“Only 10% of employees in SMEs” versus 18% in larger firms—and that automatic uprating of the cap was not supported. Many other amendments on carry‑forward mechanisms and reporting were withdrawn or not moved. Next steps: not stated in the transcript.

Supply and Appropriation (Anticipation and Adjustments) (No. 2) Bill – First Reading

The Bill was brought from the Commons, endorsed as a money Bill, and read a first time. The House adjourned at 3.34 pm.