APPENDIX 6
Letter to Chairman of the Committee from
Dawn Primarolo MP, Paymaster General, HM Treasury and Stephen
Timms MP, Minister of State, Department of Social Security (CP
1)
The Chancellor announced in his Budget last
year that responsibility for National Insurance contributions
(NICs) policy and operations would transfer from the Department
of Social Security to Treasury Ministers and the Inland Revenue.
The legislation has now completed its passage through Parliament.
The transfer of the Contributions Agency (which is responsible
for NICs operations) and NICs policy will take place on 1 April
as planned so we are writing to set out the changes in policy
and operational responsibilities.
The Board of Inland Revenue will become
responsible for National Insurance contributions operations.
This includes: collecting all contributions including self-employed
people; recording individuals' contributions and managing the
data for contributory benefits claims; the pensions contracting-out
system and Home Responsibilities Protection; making decisions
on Statutory Sick Pay and Statutory Maternity Pay entitlement;
and the security of the National Insurance numbers the Inland
Revenue allocates.
Those Contributions Agency staff and operations
based at Newcastle will form the National Insurance Contributions
Office (NICO), an Executive Office of the Inland Revenue under
the control of a Director. We are pleased that George Bertram,
who has enormous experience in the Contributions Agency and is
the Agency's current Chief Executive, is leading it through the
transfer to the Inland Revenue and will be the first Director.
Those Agency staff who are based around the
country dealing mostly with surveys and advice to employers will
become part of the Inland Revenue's Regional Executive Office
structure, again managed by Directors.
Responsibility for policy on National
Insurance contributions will pass to Treasury Ministers.
They will handle parliamentary business on policy and operational
issues.
The Secretary of State for Social Security
will retain responsibility for policy and operations
for the calculation, award and payment of contributory
benefits and more generally for the contributory principle itself.
He will also retain responsibility for policy on pensions contracting-out,
Statutory Sick Pay, Statutory Maternity Pay, National Insurance
number allocation and security and Home Responsibilities Protection
and NI credits.
The respective responsibilities of the two Departments
and their working relationship are set out in a Memorandum of
Understanding between the respective Accounting Officers. Copies
have been placed in the Libraries and we thought you would like
to see the enclosed copy.
Increasingly, Departmental Select Committees
are undertaking enquiries that cut across more than one Department.
This has happened most recently with your work on tax credits
and on child benefit. On both occasions Inland Revenue officials
appeared before your Committee to give evidence.
As Select Committees are responsible for deciding
their own work programmes, we cannot predict when or how often
this could arise in future but we believe that the current arrangements
for handling are sufficient.
We expect the benefits from this transfer of
contributions work to accrue over a number of years as we integrate
the two operations. We believe that you will find this new relationship
between our two Departments reflects the aims of the transfer—more
effective customer service, better compliance and a reduction
of burdens on employers.
March 1999
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