HC Deb 27 November 1984 vol 68 cc769-70
8. Mr. Tim Smith

asked the Secretary of State for Social Services what recent representations he has received about the level of the lower earnings limit for national insurance contributions.

Mr. Fowler

Since 1 August 1984, eight letters have been received about the lower earnings limit for national insurance contributions.

Mr. Smith

Is it right that anyone earning as little as £35.50 a week should suffer any deductions from pay? Is my hon. Friend aware of the bunching that is now taking place below the earnings limit and the gap that is opening up between this and the income tax threshold? As part of his social security reviews, will he look at ways in which the limit might be increased?

Mr. Fowler

I can give my hon. Friend that assurance. We are already looking at the structure of national insurance, including the lower and upper earnings limits. Like him, I am concerned about the cliff-edge effect of national insurance, where just below £34 one pays no national insurance and just above £34 one pays £3 contributions. We are examining that and shall certainly try to improve it.

Mrs. Beckett

Does the Secretary of State accept that apart from the concern which he has expressed—and I welcome his words—the Opposition are also concerned that the upper earnings limit is so low? That makes it a regressive tax, as, the wealthier one is, once one gets beyond the upper earnings limit there is no contribution at all. Will he therefore confirm that perhaps in this respect the Government will be at least as harsh to the rich as to the poor?

Mr. Fowler

I have just told my hon. Friend the Member for Beaconsfield (Mr. Smith) that we are looking at both the lower and upper earnings limits. That is part of the work of the reviews, and when they are published I shall seek to respond to the hon. Lady.