MEMBERS OF PARLIAMENT (NATIONAL INSURANCE) (Hansard, 22 May 1978)

§ Mr. Foot

The following is the text of my letter to my hon. Friend:

3rd May 1978

Dear Jeff,

Thank you for your letter of 11 April enclosing a letter and paper from Dr. Bernard Juby of 1 Wash Lane, Birmingham.

I have read the paper that Dr. Juby enclosed with his letter and find that I can agree with few, if any at all, of his conclusions. In particular, I cannot accept the implication that the change in the National Insurance position of Members under the Social Security Act 1973 was brought about solely for the financial benefit of Members themselves.

The position prior to that enactment was that MPs, along with certain other groups, were treated as employed persons for tax purposes but as self-employed for social security purposes. The new National Insurance Scheme was earnings-related and it was obviously sensible to collect the Class 1 contributions through the PAYE machinery used to collect Schedule E tax. One of the main aims of this Act which was, of course, introduced by the last Conservative Administration, was to align the social security and income tax positions as far as possible so that there was a close relationship between Schedule E income tax and Class 1 and between Schedule D and Class 2. In practical terms this meant that the Class 1 insurance field, which had previously been confined to employees and their employers, was extended to include those holders of an office, such as Members of Parliament, sub-postmasters, and local veterinary inspectors, who are required to pay tax under Schedule E and who had previously been considered generally to be self-employed for national insurance purposes. The change of classification of Members under the new arrangements was not, therefore, something which was directed only at them but was part of a wider concept involving office-holders generally.

Dr. Juby is quite wrong to suggest that office-holders are "self-styled" since this is a category defined by statute. The provision putting all office-holders with emoluments taxable under Schedule E—and not just Members of Parliament—into Class 1 for National Insurance purposes was section 1(7) of the Social Security Act 1973, which specifically 412W stated, so as to put the matter beyond any doubt, that the offices in question included elective office. Section 2(4) of that Act provides that the person responsible for paying an office-holder secondary Class 1 contributions was, in the absence of special provision, "the government department, public authority or body of persons responsible for paying the emoluments of the office". For Members this is the Fees Office. These provisions were specifically drafted to make it clear that office-holders were not employed under a contract of service like employees and that they did not have, and were not even regarded for National Insurance purposes as having, an employer. It is therefore quite wrong to say that MPs became "employees" as a result of the Act.

A further point that you may care to note is that, unlike the previous arrangements whereby there was a liability for one contribution only in a week even if a person had two or more employments, under the new provisions there is a liability in respect of each employment. If, therefore, a Member has other employment or self-employment he will be liable to Class 1 or Class 2 and possibly Class 4 contributions up to certain maxima, in addition to his Class 1 contribution as a Member.

Perhaps I ought also to comment very briefly on some of the misconceptions on Members' status and Members' pay which appear in Dr. Juby's paper. It is of course nonsense to suggest that Members of Parliament have become "Agents of the Crown" or "salaried Civil Servants". They are salaried from public funds—and have been so since 1911—but that does not alter their status as representatives of the electorate, and neither does the fact that they pay "employed earner" National Insurance contributions as I have already explained. Members' salaries are not at present linked in any way to those of civil servants. You may remember that a resolution expressing the desirability of a link with Civil Service Pay was moved by the House in 1975 but incomes policy ruled out further consideration of the matter. Moreover, even had such a link come into existence, this would obviously have had no bearing at all in the matter of constitutional status.

There is finally the question of union representation which Dr. Juby raises and on this he may care to be reminded of the attached written answers that I have given. [Vol. 940, column 477; Vol. 139, column 257; Vol. 934, column 290.]"

MICHAEL.

(Michael Foot).