§ Mr. Colvin
To ask the Secretary of State for Social Security what will be the increase in the national farm wages bill if the requirement to provide income for workers who are sick is shifted from the state to employers.472W
§ Mrs. Gillian Shephard
Under the proposals in the Statutory Sick Pay Bill, which received its Third Reading on 28 November, the amount of statutory sick pay—SSP—which employers can recover from their remittances of national insurance contributions will be set at 80 per cent. instead of 100 per cent. Also, the additional amount—currently 7 per cent.—which employers can get back as compensation for the national insurance contributions payable on SSP itself will end. Subject to parliamentary approval, these changes will operate from 6 April 1991.
My right hon. Friend has also announced reductions in national insurance contributions worth some £250 million to employers to operate from the same date. Although the reductions will apply over the whole range of employers' contributions, they have been particularly weighted towards those employers whose employees are not highly paid.
From April 1991 all the lower rates of contribution payable by employers in respect of employees earning up to £185 per week will be reduced by 0.4 per cent. This will be of particular help to employers of agricultural workers, many of whom earn less than £185 per week.
The precise effect of the combined SSP-national insurance contributions package on the national farm wages bill will depend on the sickness experience and pay levels of the work force, but the contributions reductions that I outlined will go a long way towards reducing any extra costs for employers on SSP and in some cases will completely offset this.
Bearing in mind the contribution reductions explained above and the fact that most spells of SSP are over very quickly—the average spell is three weeks and 90 per cent. are over within eight weeks—the extra costs for employers, particularly small employers, are not expected to be significant.