§ The Paymaster General (Dawn Primarolo)
I have completed the annual review under section 141 of the Social Security Administration Act 1992.1 propose the following changes to take effect from 6 April 2003. These rates and limits will also apply to Northern Ireland National Insurance Contributions.
Employers and Employees
In line with the Social Security Contributions and Benefits Act 1992, the Lower Earnings Limit for primary Class 1 contributions is to be raised to £77 a week. It is set at the level of the basic Retirement Pension for a single person from April 2003 and rounded down to the nearest pound.
The Primary and Secondary Thresholds for Class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be frozen from April 2003. The Primary and 26WS and Excise DEL will be increased by £50,878,000 from £1,107,850,000 to £1,158,728,000 and the administration costs limit will be increased by £61,644,000 from £956,323,000 to £1,017,967,000. Within the DEL change, the impact on resources and capital are as set out in the following table:
Secondary Thresholds will therefore remain at £89 a week. This means that no tax or Class 1 contributions will actually be paid on earnings below this level.
The Upper Earnings Limit for primary Class 1 contributions will be raised to £595.
The rate of Class 2 contributions will be frozen at £2.00 a week.
Self-employed people with earnings below the annual Small Earnings Exception can apply to be exempted from paying Class 2 contributions. This limit will be raised by £70 to £4,095 in line with inflation.
The annual lower profits limit for liability to Class 4 contributions will remain at £4,615 a year (in line with the income tax personal allowance). The Upper Profits Limit will increase by £520 to £30,940, to maintain the link with employees' earnings liable to Class 1 contributions.
The rate of Class 3 voluntary contributions will be increased by 10 pence to £6.95 a week.
The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseekers Allowance in addition to the other contributory benefits available to the self-employed, will remain at £2.65 a week.
Volunteer Development Workers
The special rate of Class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 10 pence to £3.85 in line with the statutory formula of 5 per cent of the primary Class 1 Lower Earnings Limit.
I need to ensure that the Fund can maintain a prudent working balance throughout the coming year. In accordance with section 2 (2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the Fund in 2003–04 shall not exceed 2 per cent of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.
I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my right hon. Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.27WS
The following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2003–04.
National Insurance Contributions, Proposed re-rating, April 2003 Item 2003–04 Lower Earnings Limit, primary £77 Class 1 Upper Earnings Limit, primary £595 Class 1 Primary Threshold £89 Secondary Threshold £89 Employees' primary Class 1 rate 11 per cent from £89.01 to £595 plus 1 per cent above £595 Employees' contracted-out rebate 1.6 per cent Married women's reduced rate 4.85 per cent from £89.01 to £595 plus 1 per cent above £595 Employers' secondary Class 1 rate 12.8 per cent on earnings above £89 Employers' contracted-out rebate, 3.5 per cent Salary-related schemes Employers' contracted-out rebate, 1 per cent money-purchase schemes Class 2 rate £2 Class 2 Small Earnings Exception £4,095 Special Class 2 rate for share £2.65 fishermen
Resources Capital Change New DEL Of which: Voted Non- Voted Change New DEL Of which: Voted Non- Voted 77,954 2,601,986 2,252,799 349,187 38,531 168,086 0
The change in the resource element of the DEL arises from the draw down of £78,102,000 administration costs EYF, and additional income for VOA services.
The change in the capital element of the DEL arises from the draw down of capital EYF and non-discretionary EYF, totalling £37,631,000 as set out in the Public expenditure Outturn White Paper (CM5574). It also includes the draw down of £900,000 from the Capital Modernisation Fund.
Resources (£) Change New DEL Of which: voted Non-voted Capital (£) Change New DEL Of which: voted Non-voted 771,000 128,236,000 123,876,000 4,360,000 -1,003,000 22,063,000 22,063,000 0
The net increase in the resource element of the DEL is due to two factors. Firstly, there is an increase in Resource DEL due to the draw down of £1,021,000 in respect of Resource DEL end year flexibility arrangements. This is partially offset by a transfer of £250,000 in total to other Government Departments in relation to work to develop the Neighbourhood Statistics programme. The transfers comprise £97,000 to the Department for Education and Skills, £127,000 to the Department of Health and £26,000 to the Lord Chancellor's Department.
The reduction in the capital element of the DEL arises from a transfer of capital costs of some £1,003,000 in total to other government departments in relation to28WS
National Insurance Contributions, Proposed re-rating, April 2003 Item 2003–04 Special Class 2 rate for volunteer £3.85 development workers Class 3 rate £6.95 Class 4 rate 8 per cent from £4,615 to £30,940 plus 1 per cent above £30,940 Class 4 Lower Profits Limit £4,615 Class 4 Upper Profits Limit £30,940