National Insurance (Hansard, 2 March 1992)

§ 1. Mr. Evennett
To ask the Secretary of State for Social Security how many non-pensioners with annual gross incomes below £10,000 a year would be affected by the imposition of national insurance contributions on income from savings in excess of £3,000 a year.

§ The Secretary of State for Social Security (Mr. Tony Newton)
We estimate that for the United Kingdom, in 1991–92, some 230,000 non-pensioners with gross incomes below £10,000 a year would have to pay national insurance contributions on their income from savings.

§ Mr. Evennett
I thank my right hon. Friend for that reply. Does he agree that the use of national insurance contributions as an underhand tax is fundamentally dishonest and that early retirers, widows and those on limited incomes would be hurt by the imposition of a savings tax as proposed by the Labour party?

§ Mr. Newton
My hon. Friend is certainly right to identify the type of people who are likely to be hit—in all, 2 more than 1 million people. What is more, they would get absolutely nothing in benefit entitlement for this purported contribution.

§ Mr. Enright
Will the Secretary of State join me in congratulating my constituent, Archie Heptinstall, on his 80th birthday this week? Will the right hon. Gentleman further explain to my constituent why people who reach that age end up in the appalling position of having all their age allowances clawed back by the Government?

§ Mr. Newton
I would wish warmly to join in congratulating the hon. Gentleman's constituent on his 80th birthday, particularly as, next month, the income support premium for the over-80s will be raised in real terms for the second time in three years.

§ 3. Mr. Riddick
To ask the Secretary of State for Social Security what would be the average cost to a non-pensioner basic rate taxpayer of the imposition of national insurance contributions at 9 per cent. on savings income in excess of £3,000 a year.

§ Mr. Newton
We estimate that in the United Kingdom the average cost in 1991–92 to a non-pensioner basic rate taxpayer would be £280.

§ Mr. Riddick
Does my right hon. Friend agree that imposing an extra 9 per cent. on savings income would almost certainly deter individuals from saving and that the knock-on effect would be to reduce the resources available for investment in industry? Does he agree that such a policy—it is, of course, Labour policy—would be sheer lunacy? Does my right hon. Friend agree that it is based on the Labour party's ideological dislike of people who are not wholly dependent on the state?

§ Mr. Newton
I have great sympathy with every point that my hon. Friend made. I have the greatest difficulty in finding the remotest sense in the policy of a party which says that it is in favour of investment but which goes out of its way by every possible means to penalise saving.

§ Mr. Flynn
Will the Secretary of State explain where is the remotest sense in the present system whereby the editor of a national newspaper pays less than 1 per cent. of his 3 salary in national insurance, someone on the Prime Minister's salary pays 3 per cent. and a person on average wages pays 9 per cent? Will the right hon. Gentleman confirm that the Government—without announcing it in any manifesto—have increased national insurance charges by 40 per cent?

§ Mr. Newton
I do not think that the hon. Gentleman's figures are right. He has looked at marginal rates in some cases, but not in others. The basic point about the national insurance system is that it is a contributory one whereby what is paid bears some relationship to what is received. If the hon. Gentleman wants to tax people more rigorously, he should do so openly and not in the disguised form in which that is proposed.