THE Government was last night defeated in the Lords when peers voted, by a majority of 31, to hold Chancellor Gordon Brown to his Budget pledge to increase the lower threshold for National Insurance next year.
A Tory amendment to the Social Security Bill, carried by 146 to 115, would increase from #64 a week to #81 a week the amount that people can earn before they are liable to Class 1 NI Contributions.
It was Ministers' 19th Lords defeat since they came to power last May.
Junior Social Security Minister Baroness Hollis of Heigham, warned that the amendment, carried during the Bill's third reading, would cost the Government #1500m and deprive up to a million people of entitlement to state benefits.
Urging the House to wait until the Government had devised a mechanism to protect benefit entitlement, she dismissed the amendment as ''reckless, imprudent and wrong''.
A Social Security Department spokeswoman said after the vote: ''The Government will seek to reverse this amendment in the Commons.''
The Bill later completed its Lords stages and now returns to the Commons, where the Government will move to reverse tonight's defeat.
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