§ Mr. Meacherasked the Secretary of State for Social Services if he will set out in a table the national insurance contributions liability at its weekly equivalent of (a) contracted-in employees through class 1, (b) contracted-out employees through class 1 and (c) self-employed people through class 2 contributions and class 4 contributions net of tax relief, in 1986–87, assuming their income is at the following constant levels throughout the year: (i) £38, £60, £95, £285, and £1,000 per week, (ii) £2,075 and £4,450 per year and (iii) 0.5, 1.0 and 2.0 times average female earnings and 0.5, 0.75 and 1.5 times average male earnings, respectively, and at the minimum level of income to benefit in full from the tax relief on class 4 contributions at 40 per cent., 45 per cent., 50 per cent., 55 per cent., and 60 per cent. as a single person with no other tax allowances.
§ Mr. Major[pursuant to his reply, 6 May 1986, c.78]: The information is as follows: 387W
Weekly Equivalent Rates *£s Earnings £s Employees (Class 1) Self Employed (Class 2 and Class 4) Not Contracted-Out Contracted-Out National Insurance †Tax Relief 0.50 × Average Earnings 4.71 4.08 3.75 nil 1.00 × Average Earnings 12.08 10.01 6.81 0.44 2.00 × Average Earnings 24.14 19.19 15.26 1.67 Average Earnings (male) 204.20║ 0.50 × Average Earnings 9.20 7.82 4.79 0.15 0.75 × Average Earnings 13.79 11.31 8.01 0.62 1 .50 × Average Earnings 25.65 20.34 16.31 1.82 Minimum level of annual income to benefit in full from tax relief on Class 4 19,862 (40 per cent, relief) 25.65 20.34 16.31 2.52 22,862 (45 per cent, relief) 25.65 20.34 16.31 2.83 28,062 (50 per cent, relief) 25.65 20.34 16.31 3.14 35,962 (55 per cent, relief) 25.65 20.34 16.31 3.45 43,862 (60 per cent, relief) 25.65 20.34 16.31 3.77 * Figures for class 1 are from national insurance contribution tables and are not exact percentage calculations. Figures for class 4 and associated tax relief are rounded on a weekly basis instead of the normal annual calculation. † These figures represent the weekly value of the tax relief on class 4 contributions at the proposed 1986.87 tax levels. ‡ A self-employed person with earnings of £38.00 per week will have annual earnings below the 1986–87 small earnings exception limit of £2,075 and may claim exception from payment of class 2 contributions. ║ Provisional figures for all occupations for February 1986. The average is extrapolated from the April 1985 new earnings survey using the average earnings index. The laster is adjusted for seasonal factors and for the effect of major industrial disputes.
§ Mr. Meacherasked the Secretary of State for Social Services what would be the current level of class 2 national insurance contributions if they had not been reduced in October 1985 and if they had been increased in April 1986 in line with the usual formula; and at that level what would be the extra income to the national insurance fund or the Exchequer.
§ Mr. Major[pursuant to his reply, 6 May 1986, c. 78]: On the assumptions in the hon. Member's question, the 1986–87 class 2 national insurance contribution rate would be £5.10 per week (net of the 30p abatement in force in October 1985). The full year effect on the national insurance fund, including Treasury supplement and interest, is estimated to be £135 million. All figures are calculated on the same basis as the report by the Government Actuary on the draft of the Social Security (Contributions, Re-rating) Order 1985 (Cmnd. 9672).
§ Mr. Meacherasked the Secretary of State for Social Services what level of class 2 and class 4 contributions would be necessary to ensure that the self-employed paid the full actuarial cost of the benefits which they receive.
§ Mr. Major[pursuant to his reply, 6 May 1986, c. 78]: Self-employed national insurance contribution (NIC) rates were last reviewed in detail when setting NIC rates for 1983–84 (paragraph 5, report by the Government Actuary on the draft of the Social Security (Contributions, Re-rating) Order 1982: Cmnd. 8742). The NIC rates were calculated in accordance with the methods adopted by the Government in 1977, as set out in the report by the Government Actuary on the draft of the Social Security (Contributions, Re-rating) (No. 2) Order 1977 (Cmnd. 7036). Since the last review of self-employed rates for 1983–84, the effective class 1 NIC rates against which comparison is made have remained unchanged. For administrative reasons the self-employed are charged a combination of flat rate (class 2) and profits-related (class 4) NICs. To remain in line with the 1977 method the class 4 rate should remain at its 1983–84 level and has done so: in addition, the class 2 rate would have to be revalued in 388W line with the lower profits limit, (which is itself uprated by the same factor as the basic pension) to produce a class 2 rate in 1986–87 of £5.40 per week.
§ Mr. Meacherasked the Secretary of State for Social Services what would be the gain to the national insurance fund or the Exchequer of removing the upper earnings limit for class 1 national insurance contributions; and what reduction could be made in the standard rate of contribution using that gain.
§ Mr. Major[pursuant to his reply, 6 May 1986, c. 78]: If the upper earnings limit (UEL) for class 1 national insurance contributions (NICs) were removed from 6 April 1986, but with no change in the UEL for the contracting-out rebate, the full year effect on the national insurance fund, including Treasury supplement and interest, is estimated to be a gain of £780 million.
If that were used to alter NICs in the present employer-employee ratio of 10.45:9 then reductions in the standard rate of 0.30 per cent. and 0.25 per cent., respectively, could be made. These figures assume no change in the reduced rate NICs.
All figures are calculated on the same basis as the report by the Government Actuary on the draft of the Social Security (Contributions, Re-rating) Order 1985 (Cmnd. 9672).
§ Mr. Meacherasked the Secretary of State for Social Services what would be the gain to the national insurance fund or the Exchequer of removing the reduced rates of national insurance for very low earners, in such a way that the full rate of contribution were payable down to the lower earnings limit.
§ Mr. Major[pursuant to his reply, 6 May 1986, c. 78]: If from 6 April 1986 national insurance contribution (NIC) rates returned to the pre-October 1985 structure but without an upper earnings limit for employers' NICs, then the full year effect on the national insurance fund, including Treasury supplement and interest, is estimated to be a gain of £1,450 million.
389WThis figure is calculated on the same basis as the report by the Government Actuary on the draft of the Social Security (Contributions, Re-rating) Order 1985 (Cmnd. 9672).