HC Deb 03 February 1992 vol 203 cc1-3
1. Mr. Gwilym Jones

To ask the Secretary of State for Social Security what would be the weekly cost to someone on one and a half times male average earnings of abolition of the national insurance upper earnings limit.

The Secretary of State for Social Security (Mr. Tony Newton)

Someone earning £490 a week, which is about one and a half times average male earnings, would pay an extra £9 per week in national insurance contributions if the upper earnings limit was abolished.

Mr. Jones

Does my right hon. Friend agree that abolishing the upper earnings limit would hit well over 3 million people—for instance, policemen, health service workers and those in seasonal occupations—merely because overtime bonuses or profit-related pay would take their earnings over the average in any particular week? People in those categories certainly should not be described as rich.

Mr. Newton

It is absolutely true that a large number of people who could not remotely be described as rich would be hit by the proposal. What is more, they would receive absolutely nothing in return in the form of benefits: they need to be aware of that.

Mr. Skinner

Is the Secretary of State aware that millions of people have been hit by the actions of his Department over the past 12 years? The Department has taken away the earnings-related supplement, and have got rid of death and maternity grant and income support for 16 and 17-year-olds who would not work on the Tory Government's slave labour schemes. Most of those measures were introduced by the present Prime Minister.

Mr. Speaker

Order. Is the hon. Gentleman's question about national insurance upper earnings limit?

Mr. Skinner

Absolutely—and it is the Secretary of State's Department that is guilty of taking benefits away from millions of people who would have benefited if the Labour Government's policies had been maintained over the past 12 years by this tawdry, rotten Tory Government.

Mr. Newton

I am aware of two things. First, all the groups to whom the hon. Gentleman has referred were hit much harder by the policies of high taxation and raging inflation over which the Labour Government presided. Secondly, all the groups who are considered to be priorities by both the Government and the Opposition—low-income pensioners, low-income families and disabled people—have benefited significantly from what the Government have done in recent years.

2. Mr. Tim Smith

To ask the Secretary of State for Social Security what would be the estimated cost to business if the lower earnings limit for employers' national insurance contributions were abolished.

The Parliamentary Under-Secretary of State for Social Security (Mr. Michael Jack)

We estimate that abolishing the lower earnings limit would cost business around £175 million a year in extra national insurance contributions.

Mr. Smith

Does my hon. Friend agree that, given the substantial extra burden that will be placed on employers, well-meaning proposals to extend the benefits of the national insurance system to low-paid employees would have the opposite effect to the one intended, as most would lose their jobs?

Mr. Jack

My hon. Friend, in his usual perceptive way, has put his finger precisely on the import of such proposals. It is interesting to note that they come from the same stable that brought us the national insurance surcharge. It is also interesting to note that, when Labour was last in power, the combined contribution to the national insurance scheme by an employee earning £52 a week and his employer was £10.40, while under the present Government it is £3.43.

Mr. Flynn

Will the Minister confirm that the present Government have introduced higher taxes than any other Government, and that they have increased national insurance contributions for those on average and low pay by a massive 40 per cent? Is it right that someone earning £200,000 a year should pay only 1 per cent. in national insurance? Should not such people bear their share of the burden?

Mr. Jack

It is amazing that the hon. Gentleman, who professes knowledge of social security matters, has not alluded to the fact that we restructured the national insurance scheme. I do not know where he has been for the past few years, but we have reduced the rates on lower earnings so that people now pay on average about £3 a week less in national insurance.