HC Deb 16 November 1998 vol 319 cc605-6
29. Mr. Mackinlay

What plans he has to change the rules on employers' contributions to the national insurance fund. [58397]

The Parliamentary Under-Secretary of State for Social Security (Mr. Stephen Timms)

I am delighted that my hon. Friend is here.

From April 1999, the point at which employers start to pay secondary class 1 contributions will be raised to a new "earning threshold" set at the level of the personal tax allowance—which is £83 per week, as announced by my right hon. Friend the Chancellor of the Exchequer, on 3 November, in the pre-Budget report. Additionally, the current multiplicity of employers' contribution rates for different earnings levels will be abolished and replaced with a single 12.2 per cent. contribution rate payable on earnings above the new earnings threshold. Employers will no longer have to pay contributions on the portion of earnings below the earnings threshold.

Provision for the changes was made in the Social Security Act 1998—which made provision also for the introduction of a new class 1B employers' national insurance contribution, so that treatment of contributions on payments and benefits to employees included in a pay-as-you-earn settlement agreement can be aligned with the tax treatment. Regulations to give effect to all those changes will be laid before both Houses in due course.

Mr. Mackinlay

I concentrated on that reply with considerable vigour. May I ask the Minister what he will do about employers—such as P and O Stena, and Cable and Wireless—who have the practice of paying their employees offshore, thereby avoiding paying national insurance contributions? That practice is not only unfair but unpatriotic. Should it not be stopped, immediately, by legislation? What does he say?

Mr. Timms

I am aware of the concerns expressed by hon. Friend, which we are closely examining.

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