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National Insurance contributions

The Paymaster General (Dawn Primarolo): I have completed the annual review under section 141 of the Social Security Administration Act 1992. I propose the following changes to take effect from 6 April 2003. These rates and limits will also apply to Northern Ireland National Insurance Contributions.

Employers and Employees In line with the Social Security Contributions and Benefits Act 1992, the Lower Earnings Limit for primary Class 1 contributions is to be raised to £77 a week. It is set at the level of the basic Retirement Pension for a single person from April 2003 and rounded down to the nearest pound.

The Primary and Secondary Thresholds for Class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be frozen from April 2003. The Primary and Secondary Thresholds will therefore remain at £89 a week. This means that no tax or Class 1 contributions will actually be paid on earnings below this level.

The Upper Earnings Limit for primary Class 1 contributions will be raised to £595.

The self-employed The rate of Class 2 contributions will be frozen at £2.00 a week.

Self-employed people with earnings below the annual Small Earnings Exception can apply to be exempted from paying Class 2 contributions. This limit will be raised by £70 to £4,095 in line with inflation.

The annual lower profits limit for liability to Class 4 contributions will remain at £4,615 a year (in line with the income tax personal allowance). The Upper Profits Limit will increase by £520 to £30,940, to maintain the link with employees' earnings liable to Class 1 contributions.

Class 3

The rate of Class 3 voluntary contributions will be increased by 10 pence to £6.95 a week.

Share fishermen The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseekers Allowance in addition to the other contributory benefits available to the self-employed, will remain at £2.65 a week.

Volunteer Development Workers

The special rate of Class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 10 pence to £3.85 in line with the statutory formula of 5 per cent of the primary Class 1 Lower Earnings Limit.

Treasury Grant I need to ensure that the Fund can maintain a prudent working balance throughout the coming year. In accordance with section 2 (2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the Fund in 2003–04 shall not exceed 2 per cent of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.

I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my right hon. Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.

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The following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2003–04.

National Insurance Contributions, Proposed re-rating, April 2003 Item 2003–04
Lower Earnings Limit, primary Class1£77
Upper Earnings Limit, primary Class 1£595
Primary Threshold£89
Secondary Threshold£89
Employees' primary Class 1 rate11 per cent from £89.01 to £595 plus 1 per cent above £595
Employees' contracted-out rebate1.6 per cent
Married women's reduced rate4.85 per cent from £89.01 to £595 plus 1 per cent above £595
Employers' secondary Class 1 rate12.8 per cent on earnings above £89
Employers' contracted-out rebate, Salary-related schemes3.5 per cent
Employers' contracted-out rebate, money-purchase schemes 1 per cent
Class 2 rate£2
Class 2 Small Earnings Exception£4,095
Special Class 2 rate for share fishermen£2.65
Special Class 2 rate for volunteer development workers£3.85
Class 3 rate£6.95
Class 4 rate8 per cent from £4,615 to £30,940 plus 1 per cent above £30,940
Class 4 Lower Profits Limit£4,615
Class 4 Upper Profits Limit£30,940

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Inland Revenue

(Departmental Expenditure Limits)

The Paymaster General (Dawn Primarolo): Subject to Parliamentary approval of the necessary Supplementary Estimate, the Inland Revenue Departmental Expenditure Limit will be increased by £77,954,000 from £2,524,032,000 to £2,601,986,000 and the administration costs limit will be increased by £78,102,000 from £2,566,610,000 to £2,644,712,000. The net administration costs limit is reduced by £218,000 from -£6,347,000 to -£6,565,000. Within the DEL change, the impact on resources and capital are as set out in the following table:

ResourcesCapital
ChangeNew DELOf which: VotedNon- VotedChangeNew DELOf which: VotedNon- Voted
77,9542,601,9862,252,799349,18738,531168,086168,0860


The change in the resource element of the DEL arises from the draw down of £78,102,000 administration costs EYF, and additional income for VOA services.

The change in the capital element of the DEL arises from the draw down of capital EYF and non-discretionary EYF, totalling £37,631,000 as set out in the Public expenditure Outturn White Paper (CM5574). It also includes the draw down of £900,000 from the Capital Modernisation Fund.

Office for National Statistics

(Departmental Expenditure Limits)

The Financial Secretary to the Treasury (Ruth Kelly): Subject to Parliamentary approval of the necessary Supplementary Estimate, the Office for National Statistics Resource Departmental Expenditure Limit (DEL) will be increased by £771,000 from £127,465,000 to £128,236,000 and the administration costs limit will be increased by £771,000 from £126,666,000 to £127,437,000. The Office for National Statistics Capital DEL will decrease by £1,003,000 from £23,066,000 to £22,063,000. The impact on resources and capital are as set out in the following table:

Resources (£) Capital (£)
ChangeNew DELOf which: votedNon-votedChangeNew DELOf which: votedNon-voted
771,000128,236,000123,876,0004,360,000- 1,003,00022,063,00022,063,0000


The net increase in the resource element of the DEL is due to two factors. Firstly, there is an increase in Resource DEL due to the draw down of £1,021,000 in respect of Resource DEL end year flexibility arrangements. This is partially offset by a transfer of £250,000 in total to other Government Departments in relation to work to develop the Neighbourhood Statistics programme. The transfers comprise £97,000 to the Department for Education and Skills, £127,000 to the Department of Health and £26,000 to the Lord Chancellor's Department.

The reduction in the capital element of the DEL arises from a transfer of capital costs of some £1,003,000 in total to other government departments in relation to work to develop the Neighbourhood Statistics programme. The transfers comprise £1,000,000 to the Department for Work and Pensions and £3,000 to the. Department of Health.

NORTHERN IRELAND OFFICE

Departmental Expenditure Limit

The Secretary of State for Northern Ireland (Mr. Paul Murphy ): Subject to Parliamentary approval, the Northern Ireland Office (NIO) will be taking a

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2002–2003 Winter Supplementary Estimate. The effect this will have is to increase the NIO's DEL by £60,000,000 from £1,151,862,000 to £1,211,862,000 and the administration costs limit will be increased by

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£10,000,000 from £144,716,000 to £154,716,000. Within the DEL change, the impact on resources and capital are as set out in the following table:

ResourcesCapital
Change New DELOf which: VotedNon- VotedChangeNew DELOf which: votedNon-voted
55,0001,147,3091,147,30905,00064,55364,5530


The change in the resource element of the DEL arises from the draw down of £55,000,000 End Year Flexibility. This amount includes a total of £10,000,000 for administration costs.

The extra resource costs cover a range of areas within the Department such as policing and security, central administration, political, criminal justice and prisons.

The change in the capital element of the DEL arises from the draw down of £5,000,000 End Year Flexibility.

The extra capital costs cover a range of areas within the Department such as policing and security, central administration, political, criminal justice and prisons.

The increases will be offset by transfers charged to the DEL Reserve and will not therefore add to the planned total of public expenditure.


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