Contribution
That is a question the hon. Gentleman should put to his Front Benchers, who opened the negotiations with Mauritius in the first place. Opposition Members come to the House making cheap points, because they used to take seriously the job of government and they have given up entirely. I will make some progress now, having engaged with the hon. Member who obviously gave up on the job of serious government some time ago.
A world where 95% of those earning £30,000 or less and contributing via a salary sacrifice are unaffected makes the case for the £2,000 cap I have set out, but the Government agree with the sentiment raised in the Lords about keeping it under review. The Bill allows for that to take place in future.
That leads me to Lords amendments 2 and 8, which would exempt salary sacrifice pension contributions over the £2,000 cap from the calculation of student loan repayments. It is right that we focus on the outcomes for younger generations too often let down by the failures of the previous Government. I gently remind Conservative Members—there are only two of them here, but there are some Liberal Democrats who deserve some of the “credit” too—of their track record on this matter: trebling tuition fees, raising interest rates, scrapping maintenance grants and the rest. And that is before I get to not allowing anything to be built. That is what younger generations are being let down by.
On the specific proposal, it is worth noting that while salary sacrifice arrangements can reduce the student loan repayments made, they do not reduce the total amount due for repayment. Much more important is the fact that the £2,000 cap means that young graduates are broadly unaffected. In fact—these are new figures that were not available for the discussion in the Lords, but as this issue has been raised and brought to the Commons, I will provide them—the £2,000 cap means that 90% of graduates under the age of 30 repaying student loans who are saving into a pension will be unaffected, in the sense that 90% of them save less than £2,000 a year. I hope that provides some reassurance to Members who have raised that point.
Lords amendments 3, 4, 9 and 10 would make the regulation-making powers in the Bill subject to the affirmative procedure, except for those which solely increase the contributions limit. The Government agree on the importance of maintaining strong parliamentary scrutiny, particularly where changes could affect individuals’ national insurance liabilities. However, the Bill already contains a series of safeguards and the legislative approach taken follows long-standing precedence for national insurance legislation. In addition, the Delegated Powers and Regulatory Reform Committee has carefully scrutinised the powers in the Bill, including the proposed level of parliamentary scrutiny, and concluded that there is nothing in the Bill that it wishes to draw to the special attention of the House.
Lords amendments 6 and 12 seek to exempt small and medium-sized enterprises, alongside smaller charities and social enterprises, from the Bill’s provisions. Again, the Government agree on the importance of supporting small businesses—I am sure that that is a matter of cross-party support—but small businesses are much less likely to use salary sacrifice than larger businesses. Furthermore, the £2,000 cap means that 90% of employees in SMEs making pension contributions through salary sacrifice will be entirely unaffected. Indeed, the largest benefits from uncapped salary sacrifice accrue to larger businesses, not smaller ones. In practice, the changes in the Bill will help to level the playing field between small businesses and their larger competitors. Those wanting to see support for small businesses should support the measures in the Bill. The Government are engaging with employers, payroll professionals and software developers to ensure that the changes are implemented in the least burdensome way possible for employers of all sizes.
I hope that right hon. and hon. Members will understand why it would not be right to support the amendments from the other place, even though we recognise the valuable objectives that have in many cases motivated them. As I said, the Government spend over £500 billion each year on various tax reliefs within the tax system. That is more than double the entire annual NHS budget. The size of the spend means that the Government must always keep the effectiveness and the value for money of those reliefs under review. These are necessary, pragmatic and fair reforms that protect ordinary workers while ensuring that public finances are kept on a sustainable footing. I respectfully propose that this House disagrees with the amendments.