§ Mr. Thorntonasked the Secretary of State for Social Services what is the outcome of his approach to the National Insurance Advisory Committee for advice on the treatment of service charges in the assessment of national insurance contribution liability.
§ Mrs. ChalkerOn 24 April 1980 my right hon. Friend submitted to the National Insurance Advisory Committee, for its consideration and advice, the draft of a regulation which would have excluded from contribution liabilty payments derived from a service charge which are allocated to individual employees by someone other than the employer. The committee sent him its report on 5 November 1980 (Cmnd. 8117). It recommended that all304W service charges distributed to employees, however allocated, should be included in the earnings on which contributions are calculated, and that the draft regulation should not, therefore, be made. It examined the practical difficulties which led to the proposal to amend the regulations, and reached the conclusion that they are not insuperable. The committee had advertised for representations on the proposed regulation, both from the public generally and from the catering industry in particular; and its conclusions took account of representations it received. My right hon. Friend is happy to accept the committee's recommendation.
Accordingly, all payments distributed to employees which are derived from service charges continue to count as earnings for the purpose of assessing national insurance contribution liability. I am arranging for the consequences of this decision to be brought to the notice of the catering industry.
My right hon. Friend is pleased to be able to take this opportunity of expressing the Government's appreciation of the committee's work, both on these regulations and generally, over the years, on the numerous other regulations it has dealt with and the wider references made to it from time to time. The committee has now been replaced by the Social Security Advisory Committee, after 33 years of dedicated service.