Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)

These regulations are made each year to uprate child benefit and the guardian’s allowance and set the national insurance contribution rates, limits and thresholds. First, the Child Benefit and Guardian’s Allowance Up-rating Order 2026 sets the rates for both child benefit and the guardian’s allowance, and will ensure that these benefits are uprated by inflation in April 2026. Secondly, the Social Security (Contributions) (Rates, Limits And Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026 set the rates of certain national insurance contributions classes and the level of certain thresholds for the 2026-27 tax year. The regulations also make provision for a Treasury grant to be paid into the National Insurance Fund if required, for the same tax year, through a transfer of wider government funds to the National Insurance Fund. Finally, they also extend the veterans’ employer NICs relief for two years until April 2028. I turn first to the details of the Child Benefit and Guardian’s Allowance Up-rating Order 2026. The Government are committed to delivering a welfare system that is fair for taxpayers while providing support for those who need it. This order will ensure that the benefits for which Treasury Ministers are responsible and which HMRC delivers are uprated by inflation in April 2026. Child benefit and the guardian’s allowance will increase in line with the consumer prices index, which had inflation of 3.8% in the year to September 2025. I turn now to the details of the Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026. National insurance contributions, or NICs, allow people to make contributions when they are in work to receive contributory benefits when they are not working—for example, if they have retired or become unemployed. National insurance contributions receipts fund these contributory benefits as well as helping to fund the NHS. The primary threshold and lower profit limits are the points at which employees and the self-employed start paying employee class 1 and self-employed class 4 NICs respectively. The primary threshold and lower profit limits will be maintained at their current levels until April 2031, and these regulations set the level for the 2026-27 year. For employees, entitlement towards contributory benefits, such as the state pension, is determined by their earnings being at or above the lower earnings limit. For self-employed people, their entitlement is determined by their profits being at or above the small-profits threshold. These regulations uprate the lower earnings limit and small profits threshold. This is the usual process and maintains the real level of income where someone gains entitlement to contributory benefits. Wage growth is currently higher than inflation, which means that, following the uprating by CPI, compared to last year, there will be a reduction in the number of hours that someone who has received a typical wage increase needs to work to gain entitlement. The upper earnings limit for employees’ national insurance contributions and the upper profits limit for self-employed national insurance contributions—both the points at which the main rate falls to 2%—are aligned with the higher-rate threshold for income tax of £50,270 per annum. These thresholds will be maintained at their current levels until April 2031, and these regulations set the level for the 2026-27 year. As noble Lords are aware, the Government announced at the 2025 Budget that employer NIC thresholds, including the secondary threshold—the point at which employers become liable for secondary class 1 national insurance contributions—are also maintained at their current levels. The secondary threshold will be maintained at £5,000 until April 2031, with these regulations setting the levels for 2026-27. I now turn to thresholds for employers’ national insurance contributions reliefs, including employees’ NICs reliefs for under-21s, under-25s, apprentices, veterans, new employees, free ports and investment zones. The regulations we are debating set these thresholds in line with other personal tax thresholds or maintain the existing level. The regulations also make provision for NIC relief for employers of veterans to be extended for a final two years until April 2028, from which point support for veterans into employment will be covered through spending settlements rather than this tax relief. This measure means that, for the next two years, businesses will continue to pay no employer NICs on earnings up to the veterans’ upper secondary threshold of £50,270 for the first year of a qualifying veteran’s employment in a civil role. I now move on to the Treasury grant and National Insurance Fund, which is where the majority of NICs are paid and which is used to pay the state pension and other contributory benefits. The National Insurance Fund is generally self-financing, with NICs receipts paying for contributory benefits. However, the Treasury has the ability to transfer funds from wider government revenues into the National Insurance Fund, in the event that the balance of the National Insurance Fund falls below one-sixth of estimated annual benefit expenditure. These regulations make provision for a transfer of this kind, known as a Treasury grant, of up to 5% of forecasted annual benefit expenditure, to be paid into the National Insurance Fund, if needed, during 2026-27. A similar provision will be made in respect of the Northern Ireland National Insurance Fund. The Government Actuary’s Department report laid alongside these regulations forecasts that a Treasury grant will not be required in 2026-27, but, as a precautionary measure, the Government consider it prudent to make a provision at this stage for a Treasury grant, which is consistent with previous years.