§ 2. Dr. Ian Gibson (Norwich, North)What plans he has to review the payment of those benefits under which vouchers are issued to employees. [68006]
§ The Minister of State, Department of Social Security (Mr. Stephen Timms)In November 1998, we referred draft regulations to the Social Security Advisory Committee to make non-cash vouchers subject to national insurance contributions, in the same way as cash earnings.
After a period of consultation, the committee sent its report to the Secretary of State on 28 January 1999. We are considering the report and its recommendations and will respond in due course.
§ Dr. GibsonMy hon. Friend will be aware that one of the anomalies raised in the draft regulations became known as the Great Yarmouth anomaly. An unscrupulous employer at a care home was dodging national insurance contributions by paying in Asda vouchers. Does my hon. Friend consider that luncheon vouchers are in the same boat, as it were? After all, first they have never been considered to be part of wages and salaries. Secondly, their use would discriminate against people who do not have national insurance-free and tax-free canteens in their workplaces. Thirdly, it might lead to much unemployment in the catering industry.
§ Mr. TimmsWe announced during the summer of 1997 that we wanted to reduce the burden for business by bringing together the arrangements for income tax and national insurance. The Social Security Contributions (Transfer of Functions, Etc.) Bill which will be considered by the House this afternoon is an example of that process.
Where two people receive the same pay but one receives part of his pay in vouchers, there is no good reason why that person should pay less in national insurance than the other. My hon. Friend has made an important point. It has been possible for unscrupulous employers to avoid paying national insurance by paying part of people's pay in vouchers, thereby keeping the cash wage less than the lower limit for national insurance contributions. That keeps people outside the national insurance system and outside the protection of contributory benefits when they should be inside that system and within that protection.
I believe that what we are proposing is right. I am aware that concern has been expressed about damage to the catering industry. However, I do not see any reason to expect a significant impact on people in that industry.
§ Mr. PicklesWhen considering those persons on benefit and those in receipt of vouchers, will the Government take into consideration the discussion that is now taking place between the Secretary of State and the Home Office about involving the benefit system in the penal system? Will those in receipt of vouchers be treated differently from those in receipt of general benefits? Will the benefits that are designed to support the family be affected? Are there other proposals to bring the penal system into the benefit system?
§ Mr. TimmsAs far as I know, people on probation are not in receipt of luncheon vouchers. I can assure the hon. Gentleman that, in resolving the issue and coming forward with proposals in response to the report that we have received from the Social Security Advisory Committee, we shall take all relevant issues fully into account.