NATIONAL INSURANCE (No. 2) BILL (Hansard, 2 May 1955)

§ THE PAYMASTER GENERAL (THE EARL OF SELKIRK)

My Lords, I think this Bill should be generally welcomed in all parts of the House. It arises from the Report of the National Insurance Advisory Committee, to whom certain matters were referred in March, 1954. The House will note that the Government have not lost much time in implementing those recommendations. The Bill contains two main amendments to the National Insurance Act, 1946, which will be seen respectively in Clauses 1 and 2. Under the 1946 Act self-employed or non-employed persons could contract out of the insurance scheme, should they so wish, if their income did not exceed £104 a year. Owing to the rise in the cost of living since 1946, the Committee recommend that it would be proper to raise from £104 to £156 a year the limit below which a person can contract out. I think this will generally be regarded as reasonable. Clause 1 (2) slightly extends and formalises the present administrative practice. The Minister may now, by regulation, provide that the application to contract out may have retrospective effect for a limited period. This is not very much more than clarification.

The second clause deals with employed persons. At present, an employed person earning remuneration at a weekly rate of not more than 30s. pays less in insurance contributions than the normal employed 653 person, the employer having to make up the balance. In view of a misunderstanding in regard to what this 30s. means, may I remind the House that the First Schedule to the National Insurance Act, 1946, says: … a person shall be deemed to be earning remuneration at a weekly rate of thirty shillings or less if, but only if, his remuneration does not include the provision of board and lodging by the employer and the rate of remuneration does not exceed thirty shillings a week … That means that "living in" cases are excluded. At the present time the figure of 30s. is quite unrealistic, and the Committee recommend that this should be increased to 60s. a week—for very much the same considerations as those in the recommendations to which I have already referred. Under the new rates of contribution, to be paid from the beginning of June, the total National Insurance contribution of 11s. 10d. for an employed man will, for a low wage earner, be paid to the extent of 3s. 8d. by the employee and 8s. 2d. by the employer, instead of 6s. 4d. and 5s. 6d. respectively in the ordinary case. In the case of a woman, the total contribution of 9s. 10d. will be paid to the extent of 3s. 1d. by the employee and 6s. 9d. by the employer, instead of 5s. 4d. and 4s. 6d. The second paragraph of Clause 2 is really no more than clarification.

There are two other recommendations which the Committee made which are not included in this Bill because they can be dealt with by regulation. The first deals with disregarding for the purpose of the new exception limit, family allowances under the Family Allowances Act and allowances under the War Pensions Scheme for fatherless children. The second point is that an income should be held to be within the limit if the income does not exceed that limit by more than the amount of the insurance contribution. As I have said, both these points are in fact covered by administrative action. It is not possible to say how many people will be affected by these proposals, but at the present time the number of exception certificates has remained at about 200,000.

I should like to make one general observation in regard to exception certificates. The principle upon which the Insurance Act operates is, of course, 654 universality. The original scheme, however, frankly envisaged a lower level of income at which the payment of contributions would constitute a real hardship. None the less, it is hoped that the number whose incomes fall under that limit and who will choose to contract out will not be great, because there are very real advantages in maintaining insurance cover wherever it is at all possible for people to do so. The Insurance Fund itself is not affected by this Bill, because it is believed that the reduction in the benefit liability involved will cancel out any loss of contribution. I beg to move that the Bill be now read a second time.

§ LORD KERSHAW

My Lords, we are grateful to the noble Earl for explaining the provisions of this very short Bill. If I were promulgating a new Insurance Act I am not sure that I should be in agreement at all with the system of contracting out; but since the principle has been accepted, and the amendment proposed to-day merely brings the present proposals into line with the cost of living, obviously we can have no objection whatever to it. As the noble Earl said, the second proposal is merely administrative and is probably good in itself. With regard to the third, perhaps its main impact upon my mind is to emphasise the great difference between the earning capacity of the people to-day and what it was when the first National Insurance Act was passed. If I remember aright, in those days the low wage earners were those earning in the region of a few shillings a week, rather than 30s., or, as it is now, 60s. That emphasises the great change that has taken place in the community. I had hoped that, before we discussed this Bill, we might have initiated a debate on the general provisions of the Bill by discussing the Actuary's Report on the first quinquennial valuation. May I express the hope that when the noble Earl, who is so conversant with this subject, comes back on to this side of the House, he will initiate a debate on that all-important question. We have great pleasure in supporting the Second Reading of this Bill.