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Democratic Republic of Congo

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Chris Mullin): Following consultations with the Foreign and Commonwealth Office and the Ministry of Defence, the Department of Trade and Industry issued a licence for the export to the Democratic Republic of Congo (DRC) of body armour and military helmets. This equipment will be used by the UN Office for the Co-ordination of Humanitarian Affairs, who are part of the United Nations operation in the DRC.

UN Security Council Resolution (SCR) 1493 (2003), adopted on 28 July 2003, implemented an embargo on the provision of arms and any related materiel to all armed groups operating in the east of the country. Operative Paragraph 21 of the SCR provides an

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exemption to the embargo for


Security Vetting Arrangements

The Minister of State, Northern Ireland Office (Jane Kennedy): My right hon. Friend the Secretary of State, in a written ministerial statement on 12 December 2002, Official Report, col. 32WS, announced a thorough and comprehensive review of security vetting arrangements in Northern Ireland.

I am glad to report that an initial programme of reform is underway to improve the effectiveness of current protective security arrangements across the Northern Ireland Office, the Northern Ireland Departments, PSNI, and associated bodies. These changes will take some months to implement in full.

This programme is identifying vulnerabilities and establishing appropriate protective security arrangements to prevent disruption or compromise. These arrangements include where necessary the security clearance of staff. These arrangements are in accordance with recognised best practice and normal government requirements.

In particular, in future applicants for posts in the Northern Ireland Civil Service will undergo a basic check procedure, designed to ensure that they are adequately identified; and will be asked to declare any unspent criminal records. This will bring to an end the existing practice of security vetting all administrative applicants. All those staff occupying, or who are to occupy, posts in specific areas identified in the programme of reform as requiring security clearance on grounds of national security, will be required to undergo national security vetting, to the appropriate level, in accordance with stated Government policy.

These protective security arrangements will be kept under regular review. Future security vetting policy changes will be screened for their impact on equality, and where necessary subject to formal equality impact assessment.

I am confident that these steps will help to safeguard the essential functions of government in Northern Ireland; protect the public from risk, and meet human rights and equality obligations.

The work of the review will carry on into next year; I will make further statements as and when I reach decisions on recommendations made to me.


Review of National Insurance Contributions—2004–05

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 2004. These rates and limits will also apply to Northern Ireland National Insurance Contributions.

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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 £79 a week. It is set at the level of the basic Retirement Pension for a single person from April 2004 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 increased to £4,745 from April 2004. The Primary and Secondary Thresholds will therefore be increased to £91 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 £610.

The self-employed

The rate of Class 2 contributions will be raised to £2.05 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 £120 to £4,215 in line with inflation.

The annual lower profits limit for liability to Class 4 contributions will increase to £4,745 a year (in line with the income tax personal allowance). The Upper Profits Limit will increase by £780 to £31,720, 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 20 pence to £7.15 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 be increased to £2.70 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 £3.95 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 2004–05 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 2004–05.

National Insurance Contributions, Proposed re-rating, April 2004

Item 2004–05
Lower Earnings Limit, primary Class 1 £79
Upper Earnings Limit, primary Class 1 £610
Primary Threshold £91
Secondary Threshold £91
Employees' primary Class 1 rate 11% from £91.01 to £610 plus1% above £610
Employees' contracted-out rebate 1.6%
Married women's reduced rate 4.85% from £91 01 to £610 plus 1% above £610
Employers' secondary Class 1 rate 12.8% on earnings above £91
Employers' contracted-out rebate, salary-related schemes 3.5%
Employers' contracted-out rebate, money-purchase schemes 1.0%
Class 2 rate £2.05
Class 2 Small Earnings Exception £4,215
Special Class 2 rate for share fishermen £2.70
Special Class 2 rate for volunteer development workers £3.95
Class 3 rate £7.15
Class 4 rate8% from £4,745 to £31,720 plus 1% above £31,720
Class 4 Lower Profits Limit£4,745
Class 4 Upper Profits Limit£31,720


Service Pensions Taxation Error

The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin): The report of the internal

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inquiry into the incorrect deduction of tax from Service attributable pensions recommended that, in addition to the Inland Revenue refund and repayment supplement, consideration should be given to further compensation for those affected by the error. The Inland Revenue allowed a significant concession in waiving the time limits that normally apply in refunds of tax. However, representations have been made that the Ministry of Defence should pay further compensation to those pensioners for whom the effect of the error persisted over a considerable number of years. The Government accept that, where individuals suffer a financial loss as a result of its administrative errors, then the onus is on that Department to restore those individuals to the position they would have enjoyed had the errors not occurred. The Ministry of Defence has already accepted responsibility for the errors which led to tax being wrongly deducted and has apologised unreservedly. We further accept that, in certain cases, payments made so far have not provided full compensation for the cost of the errors to individuals.

I have therefore decided that further ex-gratia compensation will be paid to those who were in receipt of pensions outside the normal six-year Inland Revenue repayment period. Compensation will be calculated by applying compound interest, using the Retail Prices Index plus 2 per cent. to the tax wrongly deducted, net of the estimated repayment by the Inland Revenue. We will also pay ex-gratia compensation, calculated in the same way, to those who suffered from the related error of delays in payment of benefits under the Armed Forces Pension Scheme, including using the Inland Revenue Repayment formula for compensation for errors within the normal six-year period. Payment will be made as quickly as possible.

It will, however, take some months to complete all payments because the necessary data on each individual are held mainly on manual records. We deeply regret the errors made but I hope that this offer of compensation will draw matters to a satisfactory conclusion.

Finally, I would like to express my considerable gratitude to those pensioners, in particular Major John Perry and Captain John Lewis, who have worked tirelessly to bring this matter to our attention and to help with its resolution.