HC Deb 19 June 1995 vol 262 cc10-1
11. Mr. French

To ask the Secretary of State for Social Security when he proposes to meet the chief executive of the Contributions Agency to discuss national insurance contributions. [27610]

Mr. Arbuthnot

My right hon. Friend the Secretary of State has regular meetings with Mrs. Faith Boardman, chief executive of the Contributions Agency, to discuss a wide range of issues.

Mr. French

When my right hon. Friend next meets the chairman of the Contributions Agency, will he ask her why the tests to determine whether an individual is employed or self-employed are sometimes applied differently by the Contributions Agency and the Inland Revenue? Does he accept that the tests ought to start off being the same and be applied consistently? Unnecessary confusion arises when the Inland Revenue accepts individuals as being self-employed while the Contributions Agency says that they are employed. Will he bring measures to bear to ensure consistency?

Mr. Arbuthnot

I have sympathy with my hon. Friend's question. My Department and the Inland Revenue have a common approach to employment status. Where one person is described as employed by one department, that judgment is normally accepted by the other department. That is intended to reduce burdens on businesses and on employees, and in almost every case it has that effect. If my hon. Friend would care to contact me about any individual cases that he might have in mind, I shall be pleased to take them up.

Mr. Flynn

Why are the Government planning to reduce the value of employees' and employers' contributions from 18.25 per cent. of median wages to 14. per cent. in the next century, while allowing the value of the basic state pension to fall? The pension has already fallen from 20 per cent. of average male wages in 1979 to 15 per cent. now, and it will be 10 per cent. in 2020. Is that not an example of the Government trying to drive people into poor value private pensions and away from a good value national insurance scheme, the running costs of which are a mere 5 per cent.? In private pensions, the cost of administration, commissions and profit is 50 per cent. Is that not very poor value for future pensioners?

Mr. Arbuthnot

No. Perhaps the hon. Gentleman was not listening to some of the answers that I gave earlier. The state pension, as a proportion of earnings, is falling because other people's earnings and occupational pensions are going up so fast. One of the reasons for the prosperity of this country is that so many people have opted out of the state earnings-related pension scheme into private, funded occupational pension schemes. The result of that is that we now have more money set aside in occupational pension schemes in this country than in the whole of the rest of the European Union put together. We are in a very good position indeed.