§ 5.7 p.m.
§ Lord WELLS-PESTELL rose to move, That the Draft Social Security (Contributions) Amendment (No. 2) Regulations 1974, laid before the House on 30th October, be approved. The noble Lord said: My Lords, if I may say so to the noble Lord, Lord Aberdare, I am very grateful for the number of tutorials which I have had in respect of these Regulations. I found the Regulations extraordinarily difficult. The purpose of the Regulations is to add to the principal Regulations, the Social Security (Contributions) Regulations 1973 which were made on 20th July 1973, provisions which prescribe liability for special Class 4 contributions for certain persons who are treated by Regulations as self-employed, and sections providing the special rules governing liability for contributions in respect of airmen, mariners and members of the Forces. They also prescribe the conditions of residence or presence in Great Britain for liability or entitlement to pay contributions. They also contain the conditions as to liability or entitlement to pay contributions of persons going abroad or coming to this country from abroad and tables setting out the weekly and monthly scales of contributions applicable to mariners and members of the Forces. These tables 49 are based on the rates set out in the 1973 Act; they will be revised as soon as possible to bring them in line with the rates approved by Parliament when the Social Security Amendment Bill 1974, which we have just been discussing, becomes law.
§ The Regulations are made under various provisions of the Social Security Act 1973, and it may help your Lordships if I deal with each of the three main subjects of the Regulations in turn, explaining the broad principles on which they are based and how they will operate in practice.
§ Provisions dealing with the liability of the generality of self-employed persons for Class 4 contributions have already been made in an earlier set of Regulations. The contributions are to be levied on profits or gains within specified limits chargeable to income tax under Schedule D. The Regulations in Schedule A add to those provisions and impose a liability for persons who, as a class, are treated as self-employed but whose earnings are chargeable to income tax under Schedule E. That, of course, refers to clergy. Because of the different tax schedule such contributions could not be assessed and collected by the ordinary method and they would be specially dealt with by my Department and not the Inland Revenue. For that reason they have been referred to as special Class 4 contributions; there is otherwise nothing in their nature which differentiates them from other Class 4 contributions.
§ I should like to add that so far no Regulations have been made designating any classes of persons to whom these provisions would apply, but it is the Government's intention to introduce a Regulation shortly which will place members of the clergy in the category of self-employed earner. I should like to repeat what I said earlier on; this is done at the request of the Church authorities. Schedule B of the Regulations adds to the principal Regulations a new Part VIII which is sub-divided into four Cases, A, B, C and D. The first three, A, B and C, provide the special arrangements which have always been recognised as necessary to cater for the unusual conditions of employment of airmen, mariners and members of the Forces. Part B also contains provisions aimed at achieving a smooth changeover to the new scheme for 50 those mariners whose pay and National Insurance contributions are settled at the end of the voyage and who are on a voyage on the day when the new arrangements begin, and who cannot, therefore, be assimilated to the new scheme in the same way as other employees.
§ The Regulations provide for special rates of contributions to be payable in the case of members of the Forces, reflecting the fact that, while serving, Forces personnel are debarred from receiving sickness and unemployment benefits, do not come within the scope of the Industrial Injuries Scheme and are not covered by the Redundancy Payments Act. Special rates are also provided for employers of mariners who come within the scope of the Redundancy Payments (Merchant Seamen Exclusion) Order 1973 and for mariners employed on foreign-going ships. This reduction is in recognition of the special responsibilities which are placed on ship-owners by the Merchant Shipping Acts for the medical care and maintenance of mariners during incapacity for work in the course of a voyage.
§ All these reductions have been carefully calculated by the Government Actuary, and the parties concerned, the National Maritime Board for mariners and the Ministry of Defence for members of the Forces, have indicated to my officials that they are acceptable. They are based on the principles on which similar reductions in contribution liability have for many years operated under the present schemes. Although the Regulations for the special groups in general follow the principles established under the National Insurance Acts and carry forward to the new social security system the special arrangements at present in force, there are some differences which require explanation.
§ The first of these changes relates to airmen and mariners who are not domiciled in this country. Under the present scheme, British-based employers of non-domiciled airmen and mariners pay a flat-rate National Insurance contribution in certain circumstances for each such person in their employ. The employees themselves pay nothing, as is proper, since they have only fleeting connections with this country and could not build up entitlement to benefit under our schemes.
51§ We have discussed these long-standing provisions with both sides of the industries concerned, and have agreed that the time has now come when they may be abolished without detriment to the interests of the employees in those industries who are resident or domiciled in this country. This is without prejudice to the arrangements entered into under the terms of reciprocal agreements with other countries over the years and to the obligations acquired under the ILO Conventions to provide cover for industrial injuries benefits for the nationals of certain specified countries.
§ The provisions for members of the Forces differ from the existing Regulations as they affect members of the Reserve Forces and certain married Service-women. The differences reflect the changed character of the scheme. For reservists the effect of the new arrangements will be that contributions will be payable on their pay for a month in which a substantial period of service has been rendered; in practice, this will usually occur at the time of annual camp training.
§ Married Servicewomen who opt not to pay National Insurance contributions, and who consequently pay no flat-rate contributions at all at present, will, in future, pay reduced rate contributions at a rate which recognises their exclusion from industrial injuries benefits, but secures that they are otherwise treated like their civilian counterparts.
§ Case D of the Regulations prescribes the conditions as to residence or presence in Great Britain which employees, employers and other contributors are required to fulfil in relation to liability or entitlement to pay contributions. Apart from a few differences in detail the Regulations closely follow those of the present National Insurance scheme, and I will not, therefore, trouble your Lord-ships with an explanation of their effect. My Lords, that is all I think I need say, subject to the consent of the House, and I beg to move.
§ Moved, That the Draft Social Security (Contributions) Amendment (No. 2) Regulations 1974, laid before the House on 30th October, be approved.—(Lord Wells-Pestell.)
§ On Question, Motion agreed to.