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National Insurance

Mr. Edwards: To ask the Chancellor of the Exchequer if he will estimate the change in revenue resulting from a reduction in the NIC rate by 1 per cent. assuming (a) the upper earnings limit remains as it is, (b) the upper earnings limit is set at the threshold of the higher rate of income tax at £575 per week and (c) the upper earnings limit is abolished. [151424]

Dawn Primarolo: The full-year effects in 2001-02 of making the changes are set out in the table.

Full-year effect in 2001-02 of a 1% reduction in the employee rate of National Insurance Contributions Cost (£ billion)
(a)With the upper earnings limit at £575 per week2.80
(b)With upper earnings limit set at the income tax higher rate threshold (equivalent to £652.60 per week)2.90
(c)With no upper earnings limit3.25

The estimates show the reduction in gross employee contributions only--rebate rates have not been affected.

Widows and Widowers

Mr. Drew: To ask the Chancellor of the Exchequer if he will make a statement on his policy towards the taxation of, and benefits available to, widows and widowers. [150856]

Dawn Primarolo: From 9 April 2001, the Government are introducing a new system of bereavement benefits which for the first time will be available to men as well as women. The new benefits are a lump-sum bereavement

27 Feb 2001 : Column: 643W

payment, bereavement allowance and a widowed parents allowance. Bereavement benefits are payable so long as the deceased spouse has paid enough National Insurance contributions and other conditions are met. Women currently receiving widows' benefits will not be affected by these changes.

27 Feb 2001 : Column: 644W

Bereavement allowance and widowed parents allowance will be taxable as are the current widows' benefits. The Bereavement Payment is not taxable. Widows and widowers who have children can also be eligible for the Children's Tax Credit and the Working Families Tax Credit.