§ 7.16 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
I beg to move,
That the Social Security (Contributions) (Married Women and Widows Special Provisions) Regulations 1973, a draft of which was laid before this House on 19th July, be approved.
These regulations provide the rules under which married women and widows may exercise the rights of election under Section 42 of the Social Security Act 1973. They supplement the Social Security (Contributions) Regulations 1973, made on 20th July 1973, and need to be made to enable employers to be given detailed guidance in time for them to plan for the changeover in April 1975 to the new system of calculating and collecting social security contributions.
The proposed regulations do not contain any provisions about benefits for married women, widows or divorcees. These, and the transitional provisions intended to simplify the changeover for women who have chosen not to pay contributions under the National Insurance Acts, will form part of a separate set of regulations which will be submitted for approval after the Summer Recess.
In general, the regulations follow the same principles as the existing regulations as to the categories which are allowed to opt and as to the procedures for making elections and for having a document as proof of election for the convenience of the women concerned and their employers. The main points of difference in principle from the present arrangements are, first, that elections apply to a minimum period of a year—that is contained in Regulation 2(4); secondly, liability as an employed earner must go hand in hand with liability as a self-employed earner—that is contained in Regulation 6; and thirdly, married women self-employed earners are liable, unless they opt out; this is contained in Regulation 2(1)(a).
These differences flow from the changes in the contribution provisions under the Act. The most important is the fact that elections must operate in units of complete tax years.
1494 As now, employers will operate on the basis that they deduct full contributions unless the woman concerned can produce a certificate that she is not liable for full contributions. In general, an election once made will run on from year to year unless it is revoked, or until widowhood, when separate conditions apply.
This will save a great deal of paper work for the women concerned, their employers and for the Department which would otherwise be involved in fresh elections every year, or where a woman remarried soon after divorce, as not infrequently happens. This sensible provision caters for the vast majority of cases, where a woman opts out as soon as she can and remains opted out for the rest of her working life.
As regards the start of an election, the most common case is where a single woman who is at work gets married. She will be able to opt out, but only with effect from the start of the next tax year. The second most common case is that of a woman who is already married, or a qualifying widow, when she takes up work. She, too, must elect in whole tax years, which will normally be for future tax years. However, if she elects before 11th May in any year, the election will be back-dated for the five weeks to the beginning of the tax year. This will clearly operate to ease the position of women and their employers by giving them a little time after the tax year starts.
Elections run on and, unless revoked or ended by widowhood, will cease automatically at the beginning of the tax year containing age 60. The regulations provide for automatic exemption from then on, because further contributions would provide no further benefit rights and would be paid only because a woman did not exercise the option through ignorance or mistake.
Widows need and receive special treatment under the regulations. On widowhood any election ends and a woman is excepted from all contribution liability for the six months' period of the widow's allowance. During this period she can choose whether to pay full contributions or opt out. A widow, therefore, has the fullest freedom of choice to do whatever suits her best. If she opts out, her election will run on from year to year until 1495 age 60, like the married woman's. Revocations can be made at any time but, like elections, will generally operate only from the beginning of the next tax year. These are the main principles underlying the regulations as they apply to the groups of women who are covered.
Perhaps I might briefly mention one or two other more detailed aspects of the regulations. The list of qualifying widows set out in Regulation 2(5) is, in substance, the same as the widow beneficiaries who are allowed to opt out under the present scheme. The reduced rate of contribution in Clause 1 is 0.6 per cent. That is in Section 2(6)(a) of the Act, covering the industrial injuries element and the National Health Service element towards the cost of the National Health Service. The opted-out self-employed woman is relieved of all liability for Class 2 contributions because she has no industrial injury cover, and it would not be worth while charging a National Health Service contribution on its own.
Class 1 and 2 elections must march in step—this is contained in Regulation 6—to prevent manipulation of elections. Similarly, any woman who makes an election must not be able to pay Class 3 contributions—this is provided for in Regulation 7—or she could opt out of sizeable Class 1 or Class 2 contributions and purchase a pension more cheaply with Class 3 contributions.
I realise that these regulations are somewhat technical and complicated. They are necessary at an early stage so that employers may have ample time to make the relevant changes in their arrangements. If the House agrees these regulations we shall, of course, be taking steps to provide comprehensive guidance to employers and all those concerned. Individual advice will be available, too, as it is now, from the staff of our local social security offices, to any married woman who may wish to seek guidance on what is the most appropriate course in her individual circumstances.
§ 7.25 p.m.
§ Mr. Michael Meacher (Oldham, West)
The issue underlying the regulations has already been discussed under Section 42 of the Social Security Act, both in Committee and on Report. Therefore, I do not intend to go over the ground at any length.
1496 I ought to make it clear that the Opposition's view is that the married women's option should not be retained at all but should be abolished. This is a view which is shared by the National Women's Commission, which is a bipartisan and prestigious body which believes that the retention of the provision is retrogressive. We believe that to retain it is to retain the concept of dependence for women. In recent years women have shown that they wish the concept to be abolished.
We also believe that perhaps the most critical area in social security provisions concerns marital breakdown and the gaps within the service. Perhaps there is greater need to make provision for resettlement allowance rather than to retain, for example, the election of married women not to pay full social security contributions.
Thirdly, if they make such an option women lose altogether contributions which they made before their marriage. If they continue to work after their marriage, they come up against the problem of the half test, which is dependent on the retention of the married women's option and the need to prove that contributions are being made fully as married women. Indeed, I shall be bringing to the Under-Secretary's attention this week the case of a constituent of mine who, as a result of the existence of the married women's option, will lose altogether no less than 33 years of contributions. That is one of the deep problems involved in retaining the option.
Fourthly, married women who qualify on their husband's insurance cannot get the pension until their husband reaches retirement age, unless they are five or more years younger, which in most cases they are not. That produces a great deal of heartache in a number of cases. Fifthly, a wife cannot compel her husband to pay contributions. This often leads to severe problems. Lastly, if she exercises her option under the regulations, she denies herself unemployment and sickness benefit, though her wage or the benefit she may have as a result if the option did not exist may well be crucial for hire-purchase payments or for the mortgage.
For these reasons, we believe that it is retrogressive to retain the regulations. I shall not take the time of the House any longer, because these issues have been 1497 discussed at some length. I shall therefore ask the Under-Secretary some specific questions about the operation of the regulations.
The first question concerns Regulations 2 and 3. It appears that a widow's election, which seems rather anomalous, will continue to have an effect under the regulations if she remarries. Is this the case? If so, what is the justification? Why should a widow when she has just remarried be treated differently from any other married woman who is deemed liable to pay Class 1 contributions, unless she makes a specific election not to do so?
The second question, which is of some importance, concerns the definition of married women, which is the one item in the regulations not defined in Regulation 1. Let us consider a woman cohabitating so that if she were dependent on supplementary benefit she would be denied supplementary benefit under the cohabitation rule. If she went out to work but retained the same relationship, would she be entitled to exercise the married woman's option? I do not think that that is a nit-picking question. It raises an important principle because, if that is not so, the question arises whether it is fair to deprive her of benefit as though she were married and then not to grant her the prerogative under the regulations which is appropriate to a married woman. I should be grateful for the Under-Secretary's considered opinion.
Thirdly I turn to Regulation 5, and in particular paragraph (1)(b). When a widow decides in the 26 weeks after she has been widowed to pay Class I contributions and then changes her mind—as the Minister said, that is permitted under the regulations—and elects to pay Class I contributions at the reduced rate, is her decision in that case retrospective? If so, is she entitled to a refund?
My last question concerns Regulation 9(4). In view of the period of grace of five weeks under Regulation 2(4) for the election to be operative in the year in which it was made, what is the position if the employer holds on to the certificate so that the period of grace elapses without the certificate being handed to an office of the Department?
Alternatively, if a married woman or a widow wishes to revoke the election which she has previously made but the employer, for whatever reason, fails to 1498 return the certificate in time, is there provision within the regulations to regard a specific request in writing to the employer as tantamount to making an election for revocation or whatever the case might be?
I have mentioned four detailed points and I appreciate that it may not be possible for the hon. Gentleman to give an immediate answer. However, they raise important issues of principle and I hope that he may in due time be able to have another close look at these matters in accordance with the points I have made.
§ Mr. Dean
The hon. Gentleman has asked me a number of detailed and technical points. It will be for the convenience of the House, as I did not have notice of the points he intended to raise, if I were to write to him about them. I think I have the answers to all the matters he raised but I want to be certain that the information I give to him on these extremely detailed matters is accurate. If the hon. Member agrees to that course, I think it would be the most convenient procedure.
I must apologise for a small misprint in the regulations. It appears in page 2, Regulation 2(1)(b), where it is said:A widow who satisfies the requirement of paragraph (4)".That, in fact, should read "paragraph (5)".
§ Question put and agreed to.
§ That the Social Security (Contributions) (Married Women and Widows Special Provisions) Regulations 1973, a draft of which was laid before this House on 19th July, be approved.