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National Insurance Contributions Review
Mr. Nigel Evans: To ask the Secretary of State for Social Security if he has yet completed his review of national insurance contributions for 1996-97. [3232]
Mr. Lilley: I have completed the annual review under section 141 of the Social Security Administration Act 1992. My proposals will take effect from 6 April 1996. There will be no change to the standard rates of contributions for either employees or employers. The rates will remain at 10 per cent. and 10.2 per cent. respectively, but from April 1997, I intend to reduce the main rate of contributions for employers by 0.2 per cent. The savings to employers from this measure will be equivalent to the money raised from the landfill tax. The national insurance contribution holiday for employers, also announced in last year's Budget, will take effect from 6 April 1996. This will effectively remove the national insurance costs for employers for up to a year when they take on someone who has been out of work for at least two years. I am reducing the rate of class 4 contributions paid by self-employed earners by 1.3 per cent. to 6 per cent. This will more than offset the effect of the abolition of the tax relief for class 4 contributions announced by my right hon. and learned Friend.
Employers and employees
In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for class 1 contributions is to be raised to £61 a week. It is set at the level of the basic retirement pension rate for single person from April 1996, rounded down to the nearest pound.
The upper earnings limit is to be raised to £455 a week which is slightly less than seven and a half times the new basic pension rate as provided by the Social Security Contributions and Benefits Act 1992. These new earnings limits will replace the current ones of £58 and £440 respectively.
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- Employees whose earnings reach the lower earnings limit will continue to pay an initial contribution of 2 per cent. of that limit and standard rate contributions of 10 per cent. on that portion of their earnings which exceeds the lower but not the upper earnings limit.
For employers, the three lower contribution rates remain unchanged at 3 per cent., 5 per cent. and 7 per cent. respectively. The thresholds for these rates will be raised so that from April 1996 they apply to weekly earnings which fall below £110, £155 and £210 respectively, compared with £105, £150 and £205 at present.
Not contracted out employees and their employers
Neither employees nor employers will have to pay any contributions if earnings are less than £61 a week. Employees whose earnings do not exceed £440, the former upper earnings limit, will pay 24p a week less in contributions than at present. This is because a further £3 of their weekly earnings will be subject to the 2 per cent. rate rather than 10 per cent. For employees with earnings above £440, the maximum possible increase will be £1.26 per week.
There will be no change for most employers, but some employers will pay less as a result of the increase in the earnings thresholds. For example, where earnings fall between £205 and £209.99, employers will pay between £6.56 and £6.72 a week less.
Contracted out employees and their employers
Employees with earnings between £61 and £440, the former upper earnings limit, will usually pay 18p a week less. For those who earn more than £440, the maximum possible increase will be £1.05 per week.
Where earnings are less than £440, most employers will pay 9p a week extra. This is due to the increase in the lower earnings limit which means that a further £3 of earnings is not subject to the contracted-out rebate. Some employers will pay less as a result of the increase in the earnings thresholds. For example, where earnings fall between £205 and £209.99, employers will pay between £6.47 and £6.63 a week less. Where earnings reach or exceed £455, employers will pay 36p a week less.
Self-employed people
The flat rate class 2 contribution will be raised by 30p to £6.05 a week.
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The rate of class 4 contributions will be reduced by 1.3 per cent. to 6 per cent. The annual limits of profits between which class 4 contributions are paid will be raised to £6,860 and £23,660 from £6,640 and £22,880 respectively.
Self-employed people who pay only class 2 contributions will pay an extra £15.60 a year in 1996-97.
All self-employed people who pay class 2 and class 4 contributions will pay less, ranging from a few pence a year less for those with profits of £6,860, the new lower profits limit to £208.72 a year less for those with profits of £22,880, the former upper profits limit.
Class 3 (voluntary) contributions
The rate of class 3 contributions will be raised by 30p to £5.95 a week.
National health service allocation
The allocation to the national health service is unchanged at 1.05 per cent. from employees and 0.9 per cent. from employers.
Treasury grant
The general increase in contributory benefit expenditure, which I am maintaining, means that the outgoings of the national insurance fund will continue to exceed income. In accordance with section 2(2) of the Social Security Act 1993, I propose to maintain the level of the fund in 1996-97 by means of a grant from the Treasury. I estimate that the grant required will be approximately £2.2 billion.
As usual, I shall lay a draft order before Parliament, with a report by the Government Actuary describing the effects of my proposals.
Mortgage Protection Insurance
Mr. Flynn: To ask the Secretary of State for Social Security if he will place in the Library a summary of the information he has obtained about the quality, availability and cost of mortgage protection insurance. [897]
Mr. Roger Evans: A summary of the information requested has been placed in the Library.
Housing Costs (Domestic Violence)
Ms Coffey: To ask the Secretary of State for Social Security (1) if the easement which enables women who have been deserted by their partners and who make an application for income support after 1 October to have their housing costs treated as existing housing costs, will include women who have been subjected to domestic violence and have taken legal action to exclude their partner from the house; [2787]
(2) how he will establish that adjudication officers in judging that a woman who had been the victim of domestic violence and had taken legal action to exclude her partner from the house, had been abandoned, had interpreted statute law correctly. [2788]
Mr. Roger Evans: Our intention is that this easement should apply to any lone parent who claims income support as a result of being deserted by his or her partner. This should not preclude a claimant in the circumstances
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outlined in the question from benefiting from it. However, decisions on the application of the income support regulations to individual claims are taken by the independent adjudicating authorities after applying the regulations to the circumstances of the individual case. The operation of all aspects of the new rules on income support help with mortgage interest payments, including this easement, will be kept under review.
Statutory Instruments
Mr. Steen: To ask the Secretary of State for Social Security how many statutory instruments his Department sponsored in the last Session of Parliament; and how many of these (a) constituted a new rule or regulation, (b) were introduced to implement European Community directives and (c) amplify the minimum standards set out in an original European Community directive. [2458]
Mr. Heald: The number of statutory instruments sponsored by the Department of Social Security in the last Session of Parliament was 71. Of these, one consolidated existing legislation: the remainder therefore constituted new legislation. None were introduced to implement European Community directives and none amplified the minimum standards set out in a European Community directive.
National Insurance Numbers
Mr. Madden: To ask the Secretary of State for Social Security what are the current weekly and monthly earnings limits which do not require a person to make national insurance contributions or to be allocated a national insurance number; and what is the current estimate of the numbers of people to whom these exemptions apply. [2548]
Mr. Heald: The current weekly and monthly earnings limits below which an employee is not required to pay contributions are £58 and £252 respectively. In any week, some 3 million people are estimated to have earnings below £58. Any individual who enters employment and does not already have a national insurance number is required to apply for one to the Secretary of State, irrespective of the level of earnings.
Mr. Madden: To ask the Secretary of State for Social Security how many spare national insurance numbers exist at the present time.
Mr. Heald: There is technically no such thing as a "spare" national insurance number, or NINO. NINOs are unique reference numbers allocated to individuals. These NINOs are kept by the individual throughout their lifetime.
Mr. Kaufman: To ask the Secretary of State for Social Security under what circumstances an employer is not required to ask a new employee for his or her national insurance number. [2721]
Mr. Heald: The administration of the national insurance scheme is a matter for Mrs. Faith Boardman, the chief executive of the Contributions Agency. She will write to the right hon. Member.
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