§ Ms CorstonTo ask the Secretary of State for Social Security in which years since 1979 national insurance contribution rates were changed; and what was(a) the total effect on revenue on each change and (b) the cumulative effect on total contribution income from all the changes over the period from 1979 to 1995–96. [3046]
§ Mr. HealdInformation in respect of employee and employer class 1 national insurance contributions and self-employed class 4 profits-related national insurance contributions is in the tables. If the contribution structure, rates and level of contracted-out rebates in force in 1979–80 had applied in 1995–96, employees would have paid about £5.3 billion less and employers would have paid about £5.6 billion more in national insurance contributions and surcharge for that year. If the class 4 contribution rate in force in 1979–80 had applied in 1995–96, the self-employed would have paid about £0.3 billion less in national insurance contributions for that year.
The self-employed class 2 flat-rate national insurance contribution has generally increased in line with the increase in prices. Apart from a £1.25 a week reduction made in October 1985, the class 2 rate rose gradually from £2.10 in 1979–80 to £5.75 in 1995–96. Thus, the financial effect has been relatively small. The financial effect for the voluntary class 3 national insurance contribution, which is set at 10p less than the class 2 contribution, is similarly small.
Class 1A national insurance contributions for company cars and car fuel were introduced at a rate of 10.4 per cent. in 1991–92 and raised £470 million in the first year of collection. The reduction in the rate of 0.2 per cent. from April 1994 reduced revenue by some £9 million.
Table A Year Employee class 11 National Insurance rates (Percentage) Estimated change in2 contribution revenue (£ million) 1979–80 6.5 — 1980–81 6.75 3+225 1981–82 7.75 3+1,020 1982–83 8.75 3+1,096 1983–84 9 3+285 1984–85 9 — 1985–86 9 (9,7,5 from October) 4-100 1986–87 9,7,5 — 1987–88 9,7,5 — 1988–89 9,7,5 — 1989–90 9,7,5 (2 + 9 from October) 5-1,000 1990–91 2 + 9 — 1991–92 2 + 9 — 1992–93 2 + 9 — 1993–94 2 + 9 — 1994–95 2 + 10 3+1,914 1995–96 2 + 10 — Notes:
1Not contracted-out rates shown. The level of contracted-out rebate for the period shown was:
520W2.5 per cent. —1979–80 to 1982–83; 2.15 per cent. —1983–84 to 1987–88; 2.0 per cent. —1988–89 to 1992–93; 1.8 per cent. —1993–94 to 1995–96.
2Figures show the cash change in revenue for the tax year in which the change in contribution rate was made.
3Estimates taken from Government Actuary reports on the various Contributions Re-Rating Orders and Social Security (Contributions) Bills which introduced the changes in contribution rates.
4Reduced rates for employees were introduced from October 1985. Estimate taken from the Financial Statement and Budget Report 1985–86 and relates to part year only.
5Revised structure applied from October 1989. Estimate given in the Official Report, 24 April 1989, column 670 and relates to part year only.
Source:
Government Actuary's Department.
Table B Employer class 11 National Insurance rates Estimated change in contribution3 revenue (excluding effect of National Insurance Surcharge) Year (percentage) (£ million) 1979–80 210 + 3.5 — 1880–81 210.2 + 3.5 4+248 1981–82 210.2 + 3.5 — 1982–83 210.2 + 3.5/2 — 1983–84 210.45 + 1.5/1 4+309 1984–85 210.45 + 1 nil — 1985–86 10.45(10.45,9, 7 from October) 530 1986–87 10.45, 9, 7, 5 — 1987–88 10.45, 9, 7, 5 — 1988–89 10.45, 9, 7, 5 — 1989–90 10.45, 9, 7, 5 — 1990–91 10.45, 9, 7, 5 — 1991–92 10.4, 8.6, 6.6, 4.6 4-290 1992–93 10.4, 8.6, 6.6, 4.6 — 1993–94 10.4, 8.6, 6.6, 4.6 — 1994–95 10.2, 7.6, 5.6. 3.6 4-909 1995–96 10.2, 7, 5, 3 4-254 Notes:
1Not contracted-out rates shown. The level of contracted-out rebate for the period shown was:
4.5 per cent.—1979–80 to 1982–83; 4.1 per cent.—l983–84 to 1987–88; 3.8 per cent.—1988–89 to 1992–93; 3.0 per cent.—1993–94 to 1995–96.
2National insurance surcharge.
3 Figures show the cash change in revenue for the tax year in which the change in contribution rate was made. The rate of national insurance surcharge was 3.5 per cent. between 1979–80 and 1981–82. In 1981–82 the surcharge raised about £3.65 billion. Thereafter, the rate of surcharge was gradually reduced until its abolition in October 1984. The financial effect of the surcharge is not included in the table.
4Estimates taken from Government Actuary reports on the various Contributions Re-Rating Orders and Social Security (Contributions) Bills which introduced the changes in contribution rates.
5The upper earnings limit for employers' contributions was abolished and reduced rates for employers of the lower paid were introduced from October 1985. Estimate taken from the Financial Statement and Budget Report 1985–86 and relates to part year only.
Source:
Government Actuary's Department.
521W
Table C Year Self-employed class 4 National Insurance rates (percentage) Estimated change in1 contribution revenue (£ million) 1979–80 5 — 1980–81 5 — 1981–82 5.75 2+21 1982–83 6 2+10 1983–84 6.3 2+12
Table C Year Self-employed class 4 National Insurance rates (Percentage) Estimated change in 1 Contribution revenue (£ million) 1984–85 6.3 — 1985–86 6.3 — 1986–87 6.3 — 1987–88 6.3 — 1988–89 6.3 — 1989–90 6.3 — 1990–91 6.3 — 1991–92 6.3 — 1992–93 6.3 — 1993–94 6.3 — 1994–95 7.3 2+117 1995–96 7.3 — Notes:
1 Figures show the change in revenue for the tax year in which the change in contribution rate was made.
2Estimates taken from Government Actuary reports on the various Contributions Re-Rating Orders and Social Security (Contributions) Bills which introduced the changes in contribution rates.
Source:
Government Actuary's Department.