§ 2.53 p.m.
§ Report received.
Baroness Hollis of Heigham moved Amendment No. 1:
After Clause 1, insert the following new clause:
§ ("Report by Secretary of State
§ The Secretary of State shall publish and lay before Parliament a Report on the impact of the increase in the main primary percentage under section 1 of this Act upon contributors to the National Insurance Fund who pay primary Class 1 contributions but who do not pay income tax.").
§ The noble Baroness said: My Lords, the amendment seeks to monitor, and ask the Secretary of State to report on, the poverty of those in low-paid work: those 500,000 workers, mainly women, who pay national insurance and earn over £57 a week, but who earn too little, nonetheless, to pay tax. In other words, they are earning between £57 and £66 a week, if single, or less than £100 a week if they are a lone parent or married: 500,000 people earn too little to pay tax but they pay national insurance. Currently they pay 2 per cent. on their earnings up to £56 a week and 9 per cent.—soon to be 10 per cent.—thereafter.
§ We accept fully, as was said in Committee, that the increase from 9 per cent. to 10 per cent. represents a few pence for a single person or 38p a week for a lone parent 1113 or couple. The increases are not large, although the total national insurance contribution on the earnings of someone who earns too little to pay tax still represents some £5 a week on income of, perhaps, £90 a week. That is a significant sum.
§ It is because that group is the point at which several worrying trends in taxation, earnings, and social security expenditure come together that we move the amendment. It is moved in the hope that the Secretary of State will report to Parliament. What are those trends? First, that the pay of the low paid has been falling. Today's Independent carries a report from the Greater Manchester Low Pay Unit which shows that the average pay for low paid younger people fell by nearly 7 per cent. between April 1990 and April 1993; and that, whereas 28 per cent. of jobs in 1990 for them paid less than £1.50 an hour, it is now 42 per cent. of jobs for those at 16 years old. The low pay unit reported a year ago delivery drivers earning 1.75 an hour; warehouse handlers £1.86 an hour; security guards £1.65 an hour; garage mechanics £1.81 an hour; shoe repairers £1.88 an hour; and clerical workers £1.75 an hour. The follow up report of six months ago showed sales assistants at £2 an hour; cleaners £2 an hour; switchboard operators £2 an hour, and so on.
§ On such pay, those people will not pay tax, but if they work more than 30 hours or so a week they will be paying national insurance. All the evidence shows that the abolition of the wages councils is pressing down that low pay even lower. It is being pressed down to income support levels. On their behalf, we want those trends —the deliberate consequences of deliberate government policy in abolishing the wages council—to be monitored. That is the first reason for wanting the report.
§ The second reason is that our concerns are reflected also in another worrying development reported in the latest edition of Social Trends, which was published last week. We all knew, and we discussed it in this House, that the income of the bottom 10 per cent., after housing costs, has fallen in real terms since 1979 while the income of the rest of us, as the noble Lord, Lord Boyd-Carpenter, said in Committee, has risen by an average of 35 per cent. We knew that the bottom 10 per cent. had seen their real incomes fall. What Social Trends told us last week was that it is not just the bottom 10 per cent. but the bottom 20 per cent.—some 11 million people—who have seen their income, after housing costs, fall by 3 per cent., and a third of them are in full or part-time work. While the national average has increased by 35 per cent. and the top fifth by over 50 per cent., the bottom fifth has fallen by 3 per cent. in real terms.
§ The country has become wealthier while inequality has grown. There has been no trickle-down of wealth. Our prosperity has been accompanied by, and perhaps has even been carried by, the poverty of those people.
§ Thirdly, we have a public policy interest in wanting the report. The Government, in this Bill and others, have been reducing the incidence of national insurance on employers while increasing it on employees. The Government will say, and I am sure that they are right, that that is in part to finance statutory sick pay by 1114 employers, but we all know, as we saw in "The Money Programme" on Sunday, that the costs of sick pay will be exported rapidly out to the DSS when employers sack their sick. So, at the very time when employers have a permit to drive down the wages of the lowest pay, they are also enjoying a reduction in national insurance for them, a deficit which is picked up by the low paid themselves.
§ There is a fourth reason for wanting the report. It is because the low paid are so poor that they are not paying tax that the state has to supplement their income by family credits. Like the old Speenhamland system, employers know that low pay will be partly offset for families by higher state benefits. At the very time that we require fathers rather than the state to support their children, the abolition of the wages councils will allow employers to reduce their wages, knowing that they will be made up by the state. There is therefore for us all a key interface between wage levels, state benefits and family poverty. We need to monitor it properly, and the amendment would secure that.
§ The final reason for wanting the report is that this group of people—that is, the 500,000, mostly women, who are earning too little to pay tax but are paying national insurance—is experiencing some of the most regressive effects of the Government's fiscal policy. If the Government had increased direct taxation by one penny, which all of us earning above the personal allowance would have paid—that is above £66 per week as a single person and £100 per week in marriage—that would have brought in £360 million less than by raising national insurance by 1 per cent. The difference is that that £360 million extra is paid by the poorest who are too poor to pay income tax—and the amount is capped for those earning more than £22,000 per year.
§ So that group of 500,000 people, mostly women, who are earning too little to pay tax but are paying national insurance earn only low pay which is falling lower, their hours of work are increasing, they have lost the protection of the wages councils, their incomes have fallen in real terms since 1979, and their national insurance benefits will be cut should they be sick, disabled or unemployed. Yet they are being asked to pay more in national insurance so that the better off pay less in direct taxes. That is unfair. In order to monitor those deeply disturbing trends we have tabled this amendment and ask the Secretary of State to report to Parliament on the developments of that group. I beg to move.
§ 3 p.m.
§ Lord Boyd-Carpenter
My Lords, it is obvious from the speech that we have heard that the amendment has little to do with the Bill. It is designed to enable Members of the Opposition Front Bench to discuss what they feel strongly about, in particular the abolition of wages councils. We discussed the abolition of wages councils at great length only a short time ago and I do not believe that either side of the House convinced the other. I remain convinced that we were right to abolish the wages councils.
The point is that the issue does not arise in this Bill at all. The amendment is simply an attempt to write into the Bill a certain amount of propaganda on behalf of 1115 noble Lords opposite, in particular the Front Bench, which have little to do with the Bill and its working. Therefore, it would be an abuse of our procedure to put the amendment into the Bill.
§ Lord Tordoff
My Lords, I rise in support of the amendment and in total opposition to what has been said by the noble Lord, Lord Boyd-Carpenter. The amendment makes no reference to wages councils. Admittedly, in speaking to it and in giving the background, the noble Baroness, Lady Hollis, properly drew attention to the changes in social security contributions. But to suggest that the amendment is an abuse of the process is totally wrong. It is a necessary amendment to ensure that Parliament and the rest of the country can see the impact of what the Government are doing in this field. I support it.
§ Baroness Elles
My Lords, I agree with my noble friend Lord Boyd-Carpenter. The amendment tabled by the Opposition relates to one area only. Surely, if one wants a report, one wants to consider all contributors and the effect on the whole economy. Several reports relating to such matters are published regularly by the Government and if specific information is required Ministers can be asked to reply to Questions tabled in this House and in another place. Therefore, the amendment appears to be totally otiose and I hope that the House will reject it.
The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor)
My Lords, your Lordships will be well aware that the present system of earnings-related national insurance contributions was introduced in 1975. The structure and contribution rates for employees, and also for employers, have changed a number of times since then. The present two-tier contribution structure for employees, which we introduced in 1989, is particularly helpful to those with lower earnings because the first £57 of weekly earnings is subject to a contribution rate of just 2 per cent.—and that is not changing from April.
This means that low-paid workers pay proportionately more of their contributions at the initial rate of 2 per cent. Therefore, someone on £100 a week, which is about the level at which a married man starts to pay tax, will continue to pay contributions at only 2 per cent. on his earnings up to the lower earnings limit of £57. The increase of 1 per cent. in the main contribution rate applies only to those earnings above £57. Thus the increase in contributions from April will be only 36 pence a week.
For a single person the tax threshold is about £66 a week and the maximum increase in national insurance contributions at that level of pay will be 2 pence—I repeat, 2 pence.
The contribution payable in these two cases will be £2.04 and £5.44 respectively. The House may wish to note that as a percentage of pay, these contributions represent 3 per cent. and 5.4 per cent respectively. Under Labour these people would have paid 6.5 per cent. of their pay in contributions; that is £4.29 and 1116 £6.50 respectively. The single person would have been paying more than double under Labour than we now propose and the married person £1.06 more.
The noble Baroness, Lady Hollis, has commented on the effect of the contribution increase on people earning about £6,000 a year; for example, a nursing auxiliary. That level of pay is, of course, subject to tax even for someone with the married person's allowance and is not therefore strictly within the terms of the amendment. However, from next April such a person would pay about 6 per cent. of their pay in national insurance contributions. This compares to the 6.5 per cent. of earnings which all contributors paid under the Labour Government when they left office.
There is a further point which your Lordships should not lose sight of when considering the effect upon the low paid. People paying contributions at a relatively low level compared to higher paid people are earning the rights to the full range of pensions and other benefits —for example, widows' pensions, sickness and invalidity benefits, unemployment and maternity benefits—as well as going towards the state earnings related pension. For the single person it really is very good value to be earning a pension for £2 or less a week.
It is, nonetheless, worth emphasising that many of the people concerned will be second wage earners for whom it is convenient to work part-time in order to supplement a main wage.
The amendment asks for a report on the effects of the increase on contributors who do not pay tax. I have explained that the effect on the lower paid will be marginal. We already provide Parliament with full details of the financial effects of contribution changes, by means of a report by the Government Actuary. This, will be published next month. As my noble friend Lady Elles said, we publish a full report, which is important. An extra report is totally unnecessary, as my noble friend Lord Boyd-Carpenter said.
This Government have protected the low paid by the re-structuring of national insurance, which we introduced, and we shall continue to do so. I hope, therefore, that the noble Baroness will be prepared to withdraw her amendment.
§ Baroness Hollis of Heigham
My Lords, I thank noble Lords who have taken part in the discussion. I was a little disappointed in the Minister's reply. It appeared that he was replying to a speech made in Committee, when perhaps his notes did not arrive in time. At no point today did I mention the figure of £6"000 or discuss people earning £6,000. I did so in Committee but today I gave the hourly pay rates of people from whom wages council protection has been withdrawn.
As that argument was made in Committee, I accept the figures which the Minister gave today and that the increases are modest, even though for someone earning £90 per week a £5.50 contribution in national insurance is a significant sum. I also wish to challenge the Minister's comments about the full range of benefits, which was a point made in Committee. Those benefits are being cut.
Like the noble Lord, Lord Tordoff, I do not understand the nature of the Government's opposition. 1117 If, on the one hand, the Minister is saying that the information is already available in a wide range of reports and therefore that the report is—I use the word of the noble Baroness, Lady Elles—otiose, then it involves little effort and cost to bring it together in a targeted way.
However, if that information does not exist and it cannot be brought together in an easy way, then that should be done so that we know what is the impact of the Government's changes, which have a knock-on effect on us all as regards fiscal and benefits policy. If we have the information already, then it is not expensive to provide it. If we do not have it, we should do. We need to know. That is the basis of pressing for the amendment; namely, so that we know in future how the import of those contributions will bear on the lowest-paid members of our society at a time when all the other information that we have suggests that their poverty is worsening relative to the rest of us.
I shall look at the Minister's reply. Perhaps on Third Reading he will reply to the speech that I have made on Report.
My Lords, perhaps the noble Baroness will permit me to intervene. I replied to the speech that she made this afternoon. However, I had looked very carefully—as I imagine she hoped I would do—at what she said in Committee. Therefore, I was able to amplify what she said in Committee. Finally, perhaps I may put the noble Baroness straight on one matter. She keeps announcing that contributions are going up and benefits are being reduced. That is not the case. This proposal increases national insurance contributions by 1 per cent. in 1994–95. I emphasise that in 1994–95 there will be no reduction in benefits.
§ Baroness Hollis of Heigham
My Lords, do I take it from the noble Viscount's statement that the Secretary of State for Social Security is misinforming Parliament when he draws attention to the cuts in benefit and the savings which will come from altering the jobseeker's allowance and invalidity benefit?
My Lords, the noble Baroness is mistaken, and she should read rather more carefully what my right honourable friend the Secretary of State said. He said that we are proposing changes to invalidity benefit but those changes will not take effect until 1995. The Social Security (Incapacity for Work) Bill, currently in another place, introduces a benefit which has a more objective test for incapacity. For example, our proposals for a single new benefit, the jobseeker's allowance, does not come into effect until 1996.
§ Baroness Hollis of Heigham
My Lords, we are well aware of when the benefits are due to be introduced. The point is that those alterations will result in a reduction in their value and will ensure a saving for the Treasury. That has been made perfectly clear in question after question and debate after debate in another place. I am surprised that the Minister suggests that that is not the case. However, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.1118
Baroness Turner of Camden moved Amendment No. 2:
After Clause 1, insert the following new clause:
§ ("Statement of change in contribution and benefit levels
§ The Secretary of State shall, on request, but not more than once in each financial year, supply every contributor to the National Insurance Fund with a statement of the change (as against the level at 5th April 1994) in the level of his annual contributions consequent upon section 1 of this Act and of any change (as against the level at 5th April 1994) in the rate of, and in the period of entitlement to, the benefits from the National Insurance Fund for which that contributor might qualify.").
§ The noble Baroness said: My Lords, in Committee my noble friend Lord Carter moved an amendment to ensure that contributors receive an annual statement of the increase in contributions together with information on any changes in the value of the benefits to which they are entitled.
§ The reason for the amendment was that we believed that individuals are entitled to know what they are paying and if there is an increase, what that increase will buy. Contributors to private insurance schemes will expect to receive that information.
§ If one looks at what the Minister said in Committee at col. 840 of Hansard, he seemed to find the objective of the amendment laudable, although he opposed it on the ground that it would be administratively difficult. He also gave lack of up-to-date computer facilities as a reason for resisting the amendment. He indicated that a fair amount of information is already made available, particularly in the pensions area. He said that a retirement pension forecast is made available to contributors. Of course, we are concerned with general benefit entitlement, including unemployment benefit. As my noble friend Lady Hollis has already said, we are anxious about the prospect that that will be reduced by the prospective jobseeker's allowance which will be paid for only six months as of right and thereafter on a means tested basis, as the Minister has agreed, from 1996.
§ I wonder also for how long it has been the practice to tell contributors what are their pension forecasts and how they are arrived at. I ask that because in recent years I have been approached by women nearing retirement who are devastated to learn that they will not be entitled to the basic retirement pension until their husbands reach the age of 65. As many women are younger than their husbands by two or three years and retire at the age of 60, it will be seen that that is a cause of some concern to them.
§ The problem is that those women took the married women's option many years ago and decided to rely on their husband's insurance. I told them that it was foolish to do that; but many simply did not realise what would happen. They tell me that had it been made clear to them earlier, they would have opted to pay the full amount. That is just one example of people not understanding what their contributions will or will not buy. For most people, deductions from salary are merely accepted. They know when they are increased, but they often have no idea why or what they are buying in the way of social insurance benefits.1119
§ Of course the married women's option in regard to pensions is a thing of the past but the Government may be considering other options in regard to social insurance for the future.
I had the impression in Committee that the Minister was quite sympathetic to what we seek. The wording of this amendment is altered slightly so that it says:
The Secretary of State shall, on request, but not more than once in each financial year, supply every contributor to the National Insurance Fund with a statement of the change".
§ The Minister may have considered this matter further since Committee. If he does not accept the wording of the amendment, perhaps he will take the matter on hoard and do something about it. I beg to move.
§ 3.15 p.m.
§ Lord Tordoff
My Lords, at first sight, I was unenthusiastic about the amendment; but the noble Baroness, Lady Turner, has convinced me that certainly the second half of the amendment has great merit. It is true that many people do not know what their benefits are buying in the long term. This amendment is extremely helpful in prompting them to find out. Therefore, I support the amendment.
My Lords, the amendment before the House would now make a statement available to contributors on request. As the noble Baroness said, it is slightly different from the amendment moved in Committee.
However, the first part of the amendment which deals with a statement of contributions as opposed to benefits would still, in my view, be of very limited value to people, providing as it does for a statement of the change in the level of people's contributions as against the level at April 1994. That will be an unhelpful piece of information, which might amount to a few or many pounds depending on the person's earnings, periods of employment and so on, and not necessarily related to the 1 per cent. increase in national insurance at all. It would tell people nothing which they cannot deduce for themselves by looking at their pay slip or end of year P60.
Of course, if people seek a statement from my department of their contribution records, we are only too willing to provide it as a matter of good service. The Contributions Agency has produced its own charter, as part of the Government's Citizen's Charter initiative. That is widely available and reviewed regularly.
The requirement in the amendment is to provide on request a statement of any change in the rate and period of benefits available from the National Insurance Fund, but I feel once again that that would not be especially helpful. In my view people want to know to what, exactly, they may be entitled.
As I explained in Committee, there are already existing measures to advise contributors of their entitlements under the national insurance scheme. The Contributions Agency issues over 3 million annual notices following the end of any year to those contributors whose contribution record is insufficient to count towards their basic retirement pension. The statement provides details of contributions paid and gives contributors the opportunity to pay voluntary 1120 contributions to bring the year up to the qualifying level and thus secure benefit entitlement. In addition to that administrative arrangement, the Benefits Agency also provides a retirement pension forecast service to contributors: they can request a forecast by completing an application form obtainable at local social security offices. The forecast gives details of the pension entitlement based on the national insurance record held. It states the number of qualifying years required in the future to obtain the maximum pension which can be achieved, and offers advice on the payment of additional contributions, if required.
If there is more information which people need, their enquiries can be dealt with on an individual basis, either by letter or by our special Freeline telephone inquiry service. Of course, there is also a very wide range of explanatory leaflets available covering every benefit in detail. I agree entirely that people should be able to get information about their entitlements and that we should inform them where there is a risk that they will lose out on qualifying for benefits. 'We already haw substantial administrative arrangements towards meeting those aims.
The noble Baroness asked me a few questions about married women with a reduced rate pension and election. The reduced rate option was abolished in 1977, except for those women who had exercised the right to retain it. The January 1977 and February 1978 editions of the leaflet National Insurance 1, for married women, publicised the introduction of home responsibilities protection, drawing attention to the fact that the latter was not available to those who retained their non-paying election. The same message is repeated in current editions of the leaflets which mention HRP.
The noble Baroness also referred to pension entitlement. The service to provide a future pension estimate has been available for at least six years on a formal, structured basis and also, before then, an individual calculation would be made on request. I should emphasise that the service is provided on request. It is for contributors to ask for a forecast. As I said, the Contributions Agency is considering how far the issuing of statements should be developed. We are also considering the possible issue of a fuller statement but have yet to evaluate the costs or benefits of such a move. It might include more details of people's prospective benefit entitlement as well as their contribution record.
I hope I have been able to give the noble Baroness some reassurance. While I sympathise with her intentions, I trust that my explanation will provide her with sufficient information to show that we are going a long way to produce substantially what she requires.
§ Baroness Turner of Camden
My Lords, I thank the noble Viscount for that explanation. As he indicated, there is now a great deal more information available than used to be the case. I am very glad to learn that in the pensions area in particular consideration is being giving to developing the issue of statements and information generally. There really was a problem as regards some older women who opted for the married women's option many years ago. Thankfully, that is 1121 now a thing of the past. As I said, they opted for that option many years ago and it was not until they were approaching retirement age and began to think about pensions (as most people do) that they suddenly realised they would have to wait until their husbands were 65 before they could collect their pension. That was a problem of the time. I am glad that steps are apparently being taken to deal with the matter.
I accept what the noble Viscount said with regard to the wording of my amendment. However, I still feel that there is a case for writing into legislation somewhere the requirement that contributors should have, on request, a statement informing them of the contributions that have been made on their behalf and of the benefits to which they are entitled. I believe that that is a very reasonable request to make.
§ Lord Avebury
My Lords, would the noble Baroness consider adding to that request a provision that requires the department concerned to give such information within a given space of time? People are asking for statements on their entitlement but not receiving them for many months. I have personal knowledge of a colleague who asked for a statement on his retirement pension for which he is still waiting.
§ Baroness Turner of Camden
My Lords, that is a most useful intervention. There is not much point in having the information unless you receive it at the appropriate time; for example, when you are making decisions about retirement, and so on. In view of the points made in today's debate, we would like to take back the wording and re-examine it with the purpose of perhaps producing something a little more appropriate and apposite which even the Minister may feel able to accept. I sense that the noble Viscount is very sympathetic to our arguments this afternoon, just as he was to the viewpoint expressed in Committee. Accordingly, I beg leave to withdraw the amendment. However, we shall look most carefully at all the points made in debate with a view to advancing something a little more acceptable on Third Reading.
§ Amendment, by leave, withdrawn.
Baroness Turner of Camden moved Amendment No. 3:
After Clause 1, insert the following new clause:
§ ("Annual Report to Parliament
§ The Secretary of State shall publish annually a report to Parliament setting out the yield from the increase in primary Class 1 contributions payable as a consequence of the provisions of section 1 of this Act.").
§ The noble Baroness said: My Lords, the above is a similar amendment to one which we tabled in Committee. I said then that we wanted to look at what was said and, perhaps, return to the matter if we felt that it was not entirely acceptable. We are suggesting that the Secretary of State should publish annually a report to Parliament setting out the yield from the increase in primary Class 1 contributions payable as a consequence of the provisions of Section (1) of the Act.
As we have seen from the statement in the Bill headed, Financial effects of the Bill:
Clause 1 will increase contributions to the National Insurance Fund by some £1.9 billion in a full year.
§ Clearly, that is a very substantial amount of money. In our view, it should be possible for Parliament to consider in a formal way each year whether such a large yield is still necessary and whether, indeed, the Treasury should begin to make a bigger contribution.
§ As we all know—and, indeed, we said so in Committee—when the system was first inaugurated it was believed that Beveridge had in mind that there should be a fund on a tripartite basis with the employers, employees and the Treasury making a contribution. As time went on the Treasury contribution eventually disappeared, although I believe that it is now being reinstated.
§ We are dealing with very large sums of money and an increase becoming payable by large numbers of employees at a time when those same employees will also have to consider a further tax burden. I know that we do not discuss tax in your Lordships' House and we have repeatedly been told that this is not a tax. However, for employees it is additional money that will be deducted from their pay packets. At a time when large numbers of people are having to pay a substantial increase in taxation all round, there surely is a case for a separate accounting as regards social security contributions.
§ Therefore, despite the noble Viscount's response to a very similar amendment in Committee, we think it quite reasonable to require that the Secretary of State should publish annually a report to Parliament setting out the yield from the increase. That would give Parliament the opportunity to decide whether such an increase is still required and whether further contributions might more usefully be made from the Treasury. I beg to move.
§ Lord Boyd-Carpenter
My Lords, I wonder whether the amendment is really necessary. I am quite sure that noble Lords on both sides of the House will insist on very full information being given by the Government on the working of the national insurance system; indeed, they always have and they always will. Whether it is necessary to entrench such a provision in the terms of the Bill seems to me to be most doubtful. I am all against cluttering up the Bill with additional provisions unless they are really necessary.
So far, I have not encountered any indication that your Lordships' House—or, indeed, the other place—has not been kept fully informed of almost every detail of the complex financial arrangements of the national insurance scheme. Therefore, to pick out such a provision and put it into the Bill seems to me to be unnecessary.
Perhaps I may refer to another point made by the noble Baroness. She suggested that the Exchequer contribution should be higher, but I noticed that she referred all the way through her remarks to payment by the Treasury when of course what she meant was payment by the taxpayer. It is important that we should be clear in our minds that the Treasury is not sitting on an enormous, easily acquired fund but that if it is desired to shift something from the contributors it would have to be shifted onto taxpayers. If we are not clear about that, we shall deal with the matter under a happy sense of illusion.
§ 3.30 p.m.
My Lords, this is an identical amendment to the one moved last week. As I explained to the Chamber then, there is an existing statutory requirement for a report by the Government Actuary to be laid each year with the affirmative resolution orders which set the rates of benefits and contributions for the coming year. These reports describe expected changes to contribution income and benefit expenditure in considerable detail, and they highlight the financial effects of changes in structure or rates. Because the orders are subject to the affirmative resolution procedure in both Houses, there is an opportunity for your Lordships' House to debate the changes in detail.
In Committee I also mentioned the requirement for the Government Actuary to undertake a five-yearly examination of the National Insurance fund and report on the extent to which it may be expected in the longer term to bear a proper relation to demands in respect of benefit. This is also a statutory requirement and the report must be laid before Parliament. The last such report was presented in July 1990, so another will be due before too long. The last quinquennial review, as it is known, ran to some 70 pages and took account of legislation enacted in the period 1980 to 1989. It then looked in great detail at the possible effect on contribution rates of maintaining the national insurance scheme over the next 60 years.
The report by the Government Actuary on the benefits and contribution orders will be laid before your Lordships next month. It will need to give full details of changes which have occurred to the contributions system and will set out the yield deriving from them. This will include the financial effect of the 1 per cent. increases, which is exactly what this amendment is seeking.
The noble Baroness, Lady Turner, mentioned the Treasury contribution. However, it is already set at a maximum of 17 per cent. of annual spending on benefits. We must keep a limit on the extent to which the taxpayer—my noble friend Lord Boyd-Carpenter was right to point out that we are discussing the taxpayer here—underwrites the spending on benefits. The fund must be principally funded by contributors if this is to be a contributory scheme. The grant will, of course, be set out in the Government Actuary's report next month.
However, this amendment would also require reports in respect of 1995–96 and each subsequent year separately to identify the yield deriving from the 1 per cent. increase. I feel that this would be an unnecessary burden and, as my noble friend Lord Boyd-Carpenter pointed out in Committee, it is a figure which any noble Lord could obtain by tabling a Question in advance of the annual debate on the contribution re-rating order. Furthermore, the noble and learned Lord, Lord Simon of Glaisdale, pointed out in Committee why this amendment is unnecessary. As your Lordships know, the noble and learned Lord is always prepared to propose the affirmative instrument where he thinks it is necessary.
We already have ample statutory requirements for the provision of information concerning the National 1124 Insurance Fund to Parliament and it would not be helpful to oblige the Secretary of State to provide, on an ongoing basis, a particular piece of information which would soon cease to have any relevance and, as I have said, would have to identify separately the yield deriving from the 1 per cent. increase.
§ Baroness Turner of Camden
My Lords, I thank the Minister for his explanation, although of course I find it a little disappointing. I am not surprised that both the Minister and the noble Lord, Lord Boyd-Carpenter, should have said that the amendment is not necessary. Perhaps the whole Bill might not have been necessary had the Government not decided to forgo a substantial sum to the National Insurance Fund by giving people bribes to get into the personal pension field. However, they did so and it seems to me that that was done at a large cost to the taxpayer.
My understanding of the position is that we have this Bill as part of a social security package. It does not stand on its own. We shall deal with the Statutory Sick Pay Bill tomorrow, and there may be other social security measures in the pipeline. It was because we understood this Bill was part of a social security package which the Government were arranging that we felt there was a case for treating it differently and for arguing that there should be annual reports to Parliament as regards the amount of yield from this increase. However, I fear that there is no point in pressing the amendment this afternoon. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ In The Title:
§ [Amendment No. 4 not moved.]