§ Mr. PlaskittTo ask the Secretary of State for Social Security what steps she is taking to reform employers' national insurance contributions. [41711]
§ Mr. DenhamIn his Budget statement on 17 March, my right hon. Friend the Chancellor of the Exchequer announced the most radical reforms of National Insurance 545W contributions for over 20 years; reforms which support the Government's welfare to work policies and cut red tape for employers.
From April 1999, the level of earnings at which employers' contributions become payable will be increased from the lower earnings limit (£64 a week for 1998/99) to an amount equivalent to the single personal tax allowance (currently £81 a week). Employers' contributions on earnings below this new threshold will be abolished, and the four different rates of contributions they currently pay for employees not contracted-out of the State earnings-related pension scheme will be replaced by a single 12.2 per cent rate. Contribution rebates for employers with contracted-out schemes will not be affected. They will continue to be entitled to contribution rebates on earnings between the lower earnings limit and the single personal tax allowance. These changes, which are revenue neutral for employers as a whole, are contained in the Social Security Bill for which we will be seeking Royal Assent today.