§ The transfer of these costs from the taxpayer to business will reduce public spending by around £700 million a year over the next three years, but to ensure that business as a whole does not lose, my right hon. Friend and I have decided to reduce the main rate of employers' national insurance contributions by 0.2 per cent. from next April. This means that, for well managed companies with low sickness rates, there will be a net reduction in the cost of employing people. Other companies will have a much sharper incentive to improve their management of sick leave and to take a greater interest in the health of their own employees.
§ However, with unemployment in Britain still far too high, it is vital that we do everything we can to reduce the cost of providing employment. Having reviewed the position, I have therefore decided that, even in a year of acute fiscal stringency, we can and should go further.
§ Long-term unemployed people are most likely to find unskilled and semi-skilled work at the lower end of the pay scale. To improve companies' incentives and ability to provide that kind of job, I propose, again from next April, to reduce each of the lower rates of employers' national insurance contributions by one full percentage point.
§ Overall, the reductions in national insurance contributions I have announced will reduce the cost to employers of providing jobs by £830 million next year, rising to £1 billion by 1996–97. That £1 billion is well above the overall cost to employers of the reforms that I have announced to statutory sick pay.
§ In our discussions within the European Union, my right hon. Friend the Prime Minister and I have repeatedly made clear our view that the surest route to higher employment is not the dirigisme of the social chapter, but measures to reduce the cost of creating jobs. That is the message that we will be taking with us to the European Council in Brussels next week.