National Insurance Contributions (Hansard, 16 June 1977)

§ Mr. Orme

A review has been carried out of many aspects of the operation of the new fully earnings-related contributions system introduced in April 1975. The review covered the question of the making of refunds of overpaid contributions in relation to which, as many hon. Members are aware, there were difficulties over the past year. These arose largely from the fact that the numbers of those in multiple employments and requiring refunds were far higher than had been estimated. Large numbers of additional staff had to be trained and allocated to the work of paying refunds and this factor, coupled, in many cases, with delays on the part of employers in sending in the relevant documents for processing, resulted, in some cases, in long delays in the making of payments. There were also, I regret to say, many instances of delay in acknowledging correspondence relating to individual claims for refunds. The review which as been undertaken has examined ways of improving the Department's performance in these respects.

While there is nothing to suggest that the number of refund cases this year will be significantly fewer than last year, some easement would be obtained if all those who might qualify for the deferment of liability on other than their main employments would apply for it. It is estimated that some 40,000 contributors might qualify for deferment; so far, only 7,000 applications have been received. I urge those eligible for deferment, therefore, and who have not applied for it to do so immediately; this will not only save them from having contributions deducted in the first place and then having to wait for refunds but will make it easier for the Department to cope with the rest of its workload. Deferment application forms are available at all social security offices. Alternatively, an advance payment of an amount which will cover the maximum contribution liability as an employee for a year, can be made.

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To reduce delays in the payment of refunds last year I told hon. Members in August that contributors who were able to send in alternative evidence—for example, completed P60, forms issued annually by employers recording earnings and tax—that contributions in excess of the maximum had been paid could have their cases dealt with without waiting for the normal processes to be completed. This system worked well, and I have decided that it should become a part of the normal procedure. People seeking an early refund of contributions should, as soon as possible, send evidence of what they have paid to the Department's Refunds Group, Newcastle. This can be done by letter or on a claim form available at our local offices. On receipt of the claim payment will be made quickly. People who do not or are unable to provide secondary evidence of contributions paid should not expect to receive a refund until the autumn at the earliest, since most employers' records cannot be processed before then. Last year's experience has shown that, in some cases, entitlement to a refund will not be identified automatically until well into the year following that in which the tax year ends.

The review which has been carried out has demonstrated once more the difficulties which can arise in ensuring that contributions are properly attributed to those who have paid them if employers do not enter a person's national insurance number on his tax deduction card or put on a wrong number. I am sorry to have to repeat this advice yet again, but thousands of cards continue to be returned without national insurance numbers on them. Once again I must ask employers to ensure that this does not happen.