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Written Ministerial Statements

Thursday 2 December 2004


Financial Services and Markets Act 2000

The Financial Secretary to the Treasury (Mr. Stephen Timms): A paper giving details of the outcome of the two-year review of the Financial Services and Markets Act 2000, which the former Financial Secretary to the Treasury announced on 4 November 2003, Official Report, column 28WS, is available in the Vote Office and the Library of the House, and is accessible on: www.hm-treasury.gov.uk.

National Insurance Contributions 2005–06

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 2005. These rates and limits will also apply to national insurance contributions in Northern Ireland.

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 £82 a week. It is set at the level of the basic state pension for a single person from April 2005 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 £4,895 from April 2005. The primary and secondary thresholds will therefore be increased to £94 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 £630.
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The self-employed

The rate of Class 2 contributions will be raised to £2.10 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 £130 to £4,345 in line with inflation.

The annual lower profits limit for liability to Class 4 contributions will increase to £4,895 a year (in line with the income tax personal allowance). The upper profits limit will increase by £1,040 to £32,760, 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 £7.35 a week.

Share fishermen

The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseeker's Allowance in addition to the other contributory benefits available to the self-employed, will be increased to £2.75 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 15 pence to £4.10 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 and, 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 2005–06 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 Honourable Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.

The following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2005–06.
National insurance contributions, proposed re-rating, April 2005

Lower earnings limit, primary Class 1£82
Upper earnings limit, primary Class 1£630
Primary threshold£94
Secondary threshold£94
Employees' primary Class 1 rate11% from £94.01 to £630 plus 1% above £630
Employees' contracted-out rebate1.6%
Married women's reduced rate4.85% from £94.01 to £630 plus 1% above £630
Employers' secondary Class 1 rate12.8% on earnings above £94
Employers' contracted-out rebate, salary-related schemes3.5%
Employers' contracted-out rebate, money-purchase schemes1.0%
Class 2 rate£2.10
Class 2 small earnings exception£4,345
Special Class 2 rate for share fishermen£2.75
Special Class 2 rate for volunteer development workers£4.10
Class 3 rate£7.35
Class 4 rate8% from £4,895 to £32,760 plus 1% above £32,760
Class 4 lower profits limit£4,895
Class 4 upper profits limit£32,760

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Private Finance Initiative Information

The Chief Secretary to the Treasury (Paul Boateng): Enclosed below are the latest figures reported by Departments on their Private Finance Initiative (PFI) activities. The submission of this information is in accordance with Departments' obligation to disclose PFI information to Parliament on a biannual basis.

Table 1 shows the estimated private sector investment in public services resulting from signed PFI contracts over the period 2004–05 to 2006–07.

Table 2 shows the estimated total capital value of PFI contracts that are currently at the Preferred Bidder stage of procurement. Tables 1 and 2 are both presented on a departmental basis.

Table 3 shows a forecast of the estimated payments for services flowing from signed PFI projects. It should be noted that procuring authorities only pay when they receive the high quality services specified in PFI contracts. If such services are not received then deductions can be made from anticipated payments. This table is presented in aggregate form and covers the period 2004–05 to 2029–30.
Table 1: Departmental Estimate of Capital Spending by the Private Sector (signed deals)(001), (002)

DepartmentProjections (£ millions)2004–052005–062006–07
Education and Skills(003), (004)8741
Transport(005), (006)1,4501,4971,411
Office of the Deputy Prime Minister5455101
Home Office10460
Constitutional Affairs33298
Foreign and Commonwealth Office655
Trade and Industry552
Environment, Food and Rural Affairs694624
Work and Pensions414434
Northern Ireland Executive2416
Chancellor's Departments463834
Cabinet Office610
Culture, Media and Sport5139

(001) Investment in assets scored on the public sector balance sheet also scores as public sector net investment. Figures are for investment under PFI-type contracts only.
(002) PFI activity in local authority projects is included under the sponsoring central government department.
(003) Excludes private finance activity in educational institutions classified to the private sector.
(004) Figures reported for non-IT projects relate to the amount of PFI credits awarded.
(005) Includes estimates of the capital expenditure for the London Underground Limited (LUL) Public Private Partnership PFI Contracts in the years that investments are expected to take place.
(006) Excludes estimates of capital expenditure on the Channel Tunnel Rail Link (CTRL).

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Table 2: Estimated Aggregated Capital Value of Projects at Preferred Bidder Stage

DepartmentProjections (£ millions)2004–052005–062006–07
Education and Skills(7)87000
Office of the Deputy Prime Minister356055
Home Office91260
Constitutional Affairs000
Foreign and Commonwealth Office000
Trade and Industry000
Environment, Food and Rural Affairs000
Work and Pensions000
Northern Ireland Executive503220
Chancellor's Departments000
Cabinet Office000
Culture, Media and Sport463311

(7) Figures reported relate to the amount of PFI credits awarded.

Table 3: Estimated Payments under PFI Contracts—December 2004 (signed deals)(8)

YearProjections(£ billions)YearProjections(£ billions)

(8) The figures between 2004–05 and 2017–18 include estimated payments for the LUL PPP contracts. These contracts contain periodic reviews every 7.5 years and therefore the service payments are not fixed after 2009–10.

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