HC Deb 20 May 1991 vol 191 cc627-8
10. Sir Trevor Skeet

To ask the Secretary of State for Social Security how many individuals would be affected by the removal of the upper earnings limit for national insurance contributions.

Mr. Newton

Based on 1990–91 figures, if the upper earnings limit for employees' national insurance contributions were removed, it is estimated that about 3.4 million people would pay more in contributions. If the corresponding upper profits limit for self-employed people were also removed, it is estimated that about another 0.5 million people would also pay more in contributions.

Sir Trevor Skeet

Will my right hon. Friend draw attention to the fact that the vast increases in social security payments and health service expenditure that occur almost every year are funded not by any special taxes but from the wealth of the nation —which is created only by Conservatives? Will my right hon. Friend confirm that because of the ceiling placed on national insurance contributions advanced by the Opposition, one seventh of the working population would have to pay additional taxes?

Mr. Newton

I agree very much with my hon. Friend. The more rapid economic growth achieved over the past decade under the present Government has been a crucial factor in enabling greater spending on both health and social security and in reversing some of the cuts in the hospital capital building programme that were made by the previous Labour Government. It is becoming clearer by the day that a significant part of the population —including senior nurses, managers and middle-managers, experienced teachers and many others—would be hit very hard by Labour's proposals for financing some of their promises.

Mr. Allen

Does the Secretary of State agree that many people earning £20,000, £30,000, £100,000 or £1 million a year see the justice of paying national insurance contributions on all their income? They see the justice because they know that it will fund an increase in pensions for the single pensioner of £5 a week and for the couple of £8 a week, with index linking thereafter, as well as restoring child benefit to its 1987 level. Does the right hon. Gentleman accept that national insurance payers are annoyed because they are having to fork out an extra £6 billion a year to pay for the Secretary of State's scheme to get people to opt out of state sector pensions and into private pension plans?

Mr. Newton

Very large numbers of those who will be expected to pay sizeable imposts under the Labour party's proposals will feel that there is no reason why they should pay increased national insurance contributions to finance a non-national insurance benefit, which has never before been paid out of the national insurance fund—child benefit. For the first time, they will apparently be expected to pay large amounts in national insurance contributions, for which they will gain no benefit.