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Mr. Speaker : Hon. Members should look at the Order Paper to see how much business we must get through today.

Mr. Bennett : On a point of order, Mr. Speaker. May I ask for your advice on a serious matter concerning freedom of speech? The House jealously guards its right of freedom of speech, and hon. Members have a duty to protect it, which includes the process by which hon. Members are elected. Conservative party election posters in the Vale of Glamorgan have been wantonly destroyed by the hon. Member for Carmarthen (Mr. Williams). Has he approached you, Mr. Speaker, about making a statement?

Mr. Speaker : That is not a matter of order in the House.

Mr. Skinner : On a point of order, Mr. Speaker. This has nothing to do with exchanges, but you, Mr. Speaker, may have heard the Secretary of State for Foreign and Commonwealth Affairs refer to the procedure in a French court as being sub judice. Since the Wright case, it has been generally accepted that the sub judice rule applies only to British courts.

Mr. Speaker : I did not hear the Secretary of State say that, but if he did I must tell hon. Members that the matter may be sub judice in French courts but it is not yet so in ours.

Mr. Alan Williams (Swansea, West) : On a point of order, Mr. Speaker. Will you confirm that the Chair has no power if a Minister chooses to answer a question lifted from the Order Paper rather than make a statement, thereby excluding you, Mr. Speaker, from the parliamentary process? Did the Minister seek your authority to make


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a statement? Will you confirm that the effect of the procedural device, compared with a statement, used by the Secretary of State--he has been under much pressure lately and we understand that he is aware of his vulnerability--is that, first, it restricts the amount of time available--although you, Mr. Speaker, allowed every hon. Member who stood to take part and we are grateful for that? Secondly, it limits the Opposition Front Bench spokesman to a single intervention at the end of the statement. Thirdly, and most important, because that device was used, my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who had to put up with snide comments from the Secretary of State, had no prior knowledge of the statement's contents, which is a normal courtesy, and therefore had no opportunity to consider the details of a matter that is of profound national importance, in which the Minister's previous incompentence has been a matter of grave national concern.

Mr. Speaker : The House should understand that, because of the shuffle, the question might have been answered earlier. If we had not reached oral question No. 35 today, it would have received a written answer. No request for a statement was made, and the right hon. Member for Swansea, West (Mr. Williams) rightly said that I have no authority to stop questions being answered at the end.

Mr. Edward Leigh (Gainsborough and Horncastle) : You, Mr. Speaker, may have noticed from today's Votes and Proceedings that there are already 736 early-day motions on the Order Paper, a large proportion of which have been tabled by Opposition Members, who are keen to climb on any bandwagon. Will you raise with the printers of the Votes and Proceedings the strange absence of an early-day motion, which Opposition Members have surely tabled under our democratic procedures, condemning the unwarranted invasion of personal property perpetrated by the hon. Member for Carmarthen (Mr. Williams) of ripping down election posters--an act that was witnessed by television cameras?

Mr. Speaker : So far as I know, such an early-day motion does not appear on the Order Paper, but it may well do so tomorrow.

Mr. Tony Banks (Newham, North-West) : On a point of order, Mr. Speaker. You said that if question No. 35, which was tabled by the hon. Member for Welwyn Hatfield (Mr. Evans), had come up earlier in the shuffle the Secretary of State could have answered it. What is the purpose of having the shuffle if Ministers can decide what questions they will answer by making a statement from the Dispatch Box?

Mr. Speaker : That is a matter for the Minister, but the hon. Gentleman well knows that we have had a private notice question on this matter from the Leader of the Opposition. It is a matter of considerable interest to the House. I said that oral questions that are not reached on the Order Paper receive a written answer.


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Orders of the Day

Social Security Bill

As amended (in the Standing Committee), considered.

Ordered,

That the Social Security Bill, as amended, be considered in the following order, namely, any new Clauses standing in the name of a member of the Government, any new Schedules standing in such a name, other new Clauses, amendments relating to Clauses 1 to 16, Schedule 1, Clauses 17 and 18, Schedule 2, Clause 19, Schedule 3, Clause 20, Schedule 4, Clause 21, Schedule 5, Clauses 22 and 23, Schedule 6, Clauses 24 to 30, other new Schedules, amendments relating to Schedules 7 and 8.-- [Mr. Moore.]

New Clause 7

Amendments relating to primary Class 1 contributions

(1) In section 4 of the principal Act, for subsections (6) to (6B) (computation of primary Class 1 contributions) there shall be substituted--

"(6) Where a primary Class 1 contribution is payable, the amount of that contribution shall be the aggregate of

(a) the initial primary percentage of so much of the earnings paid in the tax week, in respect of the employment in question, as does not exceed the current lower earnings limit ; and

(b) the main primary percentage of so much of those earnings as exceeds that limit but does not exceed the upper earnings limit ; but this subsection is subject to regulations under subsection (7) below or sections 128 to 132 below and to section 27 of the Pensions Act (contracted-out rates).

(6A) For the purposes of this Act the primary percentages shall be as follows--

(a) the initial primary percentage shall be 2 per cent. ; and (

(b) the main primary percentage shall be 9 per cent. ;

but the rates of those primary percentages are subject to alteration under sections 122 and 123A below.

(6B) In the case of earners paid otherwise than weekly, any reference in subsection (6) above to the current upper, or (as the case may be) lower, earnings limit shall be taken as a reference to the prescribed equivalent of that limit."

(2) In subsection (6F) of that section (alteration of number of primary or secondary brackets) the words "primary or" shall be omitted.

(3) In section 122 of that Act (additional power to alter contributions) for paragraph (a) of subsection (1) there shall be substituted--

"(a

(the percentage rate specified--)

(i

(as the initial primary percentage in section 4(6A)(a) ;) (ii

(as the main primary percentage in section 4(6A)(b) ;") (4) In subsection (4) of that section (variation of rates for purpose of adjusting Redundancy Fund) for paragraph (a) there shall be substituted--

"(a

the percentage rate specified--

(i

as the initial primary percentage in section 4(6A)(a) ; ()

(ii

as the main primary percentage in section 4(6A)(b) ; ". (

(5) In subsection (6) of that section, for paragraph (a) (maximum variation in Class 1 rates of 0.25 percentage points there shall be substituted--

"(a) to increase for any tax year--

(i) the percentage rate of the initial or main primary percentage, or

(ii) the percentage rate for secondary Class 1 contributions,


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to a percentage rate more than 0.25 per cent. higher than the percentage rate applicable at the end of the preceding tax year for the primary percentage or secondary Class 1 contribution in question ; or"

(6) In section 123A of that Act (further power to alter certain contributions) for subsection (1) there shall be substituted-- "(1) For the purpose of adjusting amounts payable by way of primary Class 1 contributions, the Secretary of State may at any time make an order altering--

(a) the percentage rate specified as the initial primary percentage in section 4(6A)(a) ;

(b) the percentage rate specified as the main primary percentage in section 4(6A)(b)."

(7) In subsection (3) of that section, for paragraph (a) (limit on increase of primary Class 1 rates) there shall be substituted-- "(a) to alter the percentage rate of the initial or main primary percentage to a percentage rate more than 0.25 per cent. higher than the percentage rate applicable at the end of the preceding tax year for the primary percentage in question ; or"

(8) In section 134 of that Act (destination of contributions) in paragraphs (a) and (i) of subsection (4) ("appropriate national health service allocation" and "appropriate employment protection allocation", when in force, to include specified percentage of earnings in respect of which primary Class 1 contributions were paid) after the word "paid" there shall be inserted the words "at the main primary percentage rate".

(9) In Schedule 20 of that Act (glossary of expressions) there shall be inserted at the appropriate places--

"Initial primary percentage"; "main primary percentage"; "primary percentage" See section 4(6) and (6A).

Construe "initial primary percentage rate" and "main primary percentage rate" as references to the percentage rates from time to time specified in section 4(6A)(a) or (b) as the initial or, as the case may be, main primary percentage."

"Main primary percentage" See "initial primary percentage"; "main primary percentage"; "primary percentage" above."

"Primary percentage" See "initial primary percentage"; "main primary percentage"; "primary percentage" above."-[Mr. Moore.] Brought up, and read the First time.

4.15 pm

The Secretary of State for Social Security (Mr. John Moore) : I beg to move, That the clause be read a Second time.

Mr. Speaker : With this it will be convenient to consider Government amendments Nos. 7 and 10.

Mr. Moore : The purpose of the clause is to reform the structure of employees class 1 national insurance contributions, to reduce those contributions for almost all employees and to abolish the steps in contribution rates between the lower and upper earnings limits. These changes were announced by the Chancellor in his Budget statement on 14 March 1989 and build on the reforms enacted in 1985 when the reduced national insurance contribution rates of 5 per cent. and 7 per cent. for lower paid workers were introduced.

The 1985 reforms were a welcome change for the lower paid, but there was a major difficulty. When a person's earnings crossed the lower earnings limit for national insurance, he had to pay a 5 per cent. contribution on all his earnings. An individual earning £42 a week in 1989-90 would pay no contributions. A pay increase of £1 will take


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his weekly earnings over the lower earnings limit of £43 a week and he will then pay a contribution of 5 per cent. on all his earnings--£2.15 a week--which is considerably more than his increase in earnings. There are similar effects when earnings rise above £75 and £115 a week--the earnings levels at which the higher 7 per cent. and 9 per cent. rates come into force. Not surprisingly, people are deterred from increasing their earnings to take them over these cliff edges.

People keeping their earnings below the lower earnings limit can be excluded from a wide range of national insurance benefits. Under the reformed system, which comes into effect in October, people earning less than the lower earnings limit--£43 a week for 1989-90--will still pay no contributions. Individuals earning more than £43 a week will pay contributions at 2 per cent.--the initial percentage rate--on the first £43 of weekly earnings and at 9 per cent.--the main percentage rate-- on earnings above £43 a week up to the upper earnings limit of £325. At the current lower earnings limit, the national insurance entry fee is just 86p a week. Individuals earning at this level throughout the year will earn entitlement to all national insurance benefits for this small weekly sum.

The single 9 per cent. rate of earnings above the lower earnings limit will remove the steps in contributions that occur on changing from 5 per cent. to 7 per cent. and from 7 per cent. to 9 per cent. A pay increase of just £1 above the £75 and £115 earnings limit means that people will no longer be worse off overall by over £1 a week through higher contributions. The clause will entirely remove the disincentives for individuals to increase their weekly earnings above those earnings limits.

The change will lead to lower contributions generally. From October, 15 million people earning more than £115 a week will pay £3 a week less in national insurance contributions. The 4 million people earning less than £115 a week will not gain as much, but they have already gained from the 1985 reforms, and the combined effect of those reforms and those proposals will result in a gain of £3 a week. They will also benefit from the removal of the cliff edges at £75 and £115 a week, which may have kept down their net earnings. The new system will cost, in terms of lower national insurance contributions, about £1 billion in 1989-90 and about £2.8 billion in 1990-91, which will be its full first year of operation.

The clause removes the steps in national insurance contributions, which were disincentives for employees to increase their hours of work. It reduces the class 1 contributions for almost all employees by up to £3 a week. It provides entitlement to all contributory benefits, including the basic retirement pension, for as little as 86p a week.

I am sure that the measure will be widely welcomed and I commend the clause and associated amendments to the House.

Mr. Frank Field (Birkenhead) : I should like to continue a conversation that I had during an earlier Question Time with Ministers on the Treasury Bench. I made a plea that the Government should not rest on their laurels and leave their reform of national insurance at this stage. I was concerned specifically with the growth of part-time work and with the fact that 40 per cent. of all part-time jobs in the EEC are in this country. In reply, the Secretary of State said that the reason was probably that large numbers of workers wanted part-time jobs.


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I accept that many people want to work part time, and they should have the opportunity to do so. However, at that time I was making a separate point. If employers' contributions are exempted up to the lower ceiling, as it now is, there is an incentive for them to pay people below that level--in other words, to create part-time jobs--whereas, if there were no rigging of the market by national insurance contributions, they might create full-time jobs. I should like the Government to consider that aspect.

I should like to underline a point made by the Secretary of State. For the small sum of 86p a week, people at that end of the market get a very good deal.

Question put and agreed to .

Clause read a Second time, and added to the Bill .

New Clause 10

Benefits for women widowed before

11 th April --1988 (1) In the case of a widow whose late husband died before 11th April 1988 and who either--

(a) was over the age of 40 but under the age of 55 at the time of her husband's death, or

(b) is over the age of 40 but under the age of 55 at the time when she ceases to be entitled to a widowed mother's allowance, section 26 of the principal Act (widow's pension) shall have effect, and be taken always to have had effect, as if section 36(3) of the 1986 1986 (which substituted "45" for "40", and "55" for "50", in subsections (1) and (2) ) had never been enacted.

(2) The Social Security (Widow's Benefit and Retirement Pensions) Amendment Regulations 1987 shall have effect, and be taken always to have had effect, with the addition at the end of regulation 3 (transitional provision for widowed mother's allowance where husband died before 11th April 1988) of the following--

"(3) In determining whether a widow--

(a) whose late husband died on or after 7th October 1987 and before 11th April 1988, and

(b) who became entitled to a widow's allowance on his death, is also entitled, after the cessation of that allowance, to a widowed mother's allowance for any period beginning on or after 11th April 1988, regulation 16(1) of the principal Regulations shall apply as if regulation 2(6) above had not been made.

(4) In determining whether a widow--

(a) whose late husband died before 11th April 1988,

(b) who immediately before that date was entitled to a widowed mother's allowance otherwise than by virtue of regulation 16(1) of the principal Regulations, and

(c) who would, apart from this paragraph, cease to be entitled to that allowance on or after that date,

is entitled to such an allowance for any period beginning on or after that date, that regulation shall apply as if regulation 2(6) above had not been made."

(3) The Social Benefit (Dependency) Amendment Regulations 1989 shall have effect, and be taken always to have had effect, with the insertion after regulation 3 (which made amendments concerning widowed mother's allowance to regulation 4B of the Social Security Benefit (Dependency) Regulations 1977) of the following--

"3A. The first amendment made by regulation 3 above shall not have effect in relation to a widow whose late husband died before 11th April 1988.".

(4) in any case where--

(a) a claim for a widow's pension or a widowed mother's allowance is made, or treated as made, before the passing of this Act, and (

(b) the Secretary of State has made a payment to or for the claimant on the ground that if the claim had been received immediately after its passing she would have been entitled to that pension or allowance, or entitled to it at a higher rate, for the period in respect of which the payment is made,


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the payment so made shall be treated as a payment of that pension or allowance ; and, if and to the extent that an award of the pension or allowace, or an award at a higher rate, is made for the period in respect of which the payment was made, the payment shall be treated as made in accordance with that award.

(5) Where, apart from section 165A of the principal Act (making of claim a condition of entitlement), a widow falling within subsection (1) above would be entitled to a widow's pension for any period beginning on or after 11th April 1988, then, notwithstanding anything in that section, she shall be entitled to that pension for that period if she has made a claim for it before the end of the period of twelve months beginning with the passing of this Act.

(6) Where a widow's late husband died on or after 7th October 1987 and before 11th April 1988 and, apart from section 165A of the principal Act, she would have become entitled to a widow's allowance on his death, then if either

(a) she was over the age of 40 but under the age of 55 at the time of his death, or

(b) she would, apart from that section, have been entitled to a widowed mother's allowance on the cessation of her entitlement to the widow's allowance,

she shall, notwithstanding anything in that section, be entitled to the widow's allowance (and, accordingly, in a case falling within paragraph (b) above, to the widowed mother's allowance) if she has made a claim, or is treated as having made a claim, for it before the end of the period of twelve months beginning with the passing of this Act.

(7) Where in consequence of any of the amending provisions an adjudicating authority has decided before the passing of this Act that a widow whose husband died before 11th April 1988 either-- (a) is not entitled to a benefit under section 25 or 26 of the principal Act, or

(b) is entitled to such a benefit at a particular rate, an adjudication officer may review that decision, notwithstanding anything in section 104 of the principal Act.

(8) In any case where--

(a) it is determined on such a review that the widow in question was entitled to a benefit under section 25 or 26 of the principal Act, or was entitled to such a benefit at a higher rate, and

(b) the application for the review was made before the end of the period of twelve months beginning with the passing of this Act, the decision on the review may take effect on 11th April 1988 or any later date, notwithstanding any provision of any Act or instrument restricting the payment of any benefit or increase of benefit to which a person would otherwise be entitled by reason of a review in respect of any period before the review.

(9) Subsection (4) of section 104 (appeals from reviews) shall apply in relation to a review under this section as it applies in relation to a review under that section.

(10) In this section--

"adjudicating authority" means--

(a) an adjudication officer ;

(b) a social security appeal tribunal ;

(c) a Commissioner ; and

"the amending provisions" are--

(a) section 36(3) of the 1986 Act ; and

(b) regulation 2(6) of the Social Security (Widow's Benefit and Retirement Pensions) Amendment Regulations 1987 (deemed entitlement to child allowance for purposes of widowed mother's allowance etc). (11) The amendment by this section of provisions contained in regulations shall not be taken to have prejudiced any power to make further regulations revoking or amending those provisions. (12) Nothing in this section shall be taken to prejudice section 16 or 17 of the Interpretation Act 1978 (effect of repeals, substitutions etc).'.-- [Mr. Moore.]

Brought up, and read the First time.


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