HC Deb 17 April 1989 vol 151 cc57-8W
31. Mr. David Nicholson

To ask the Secretary of State for Social Security what representations he has received regarding the proposed changes in employees' national insurance contributions.

Mr. Peter Lloyd

We have received only one representation.

40. Dr. Twinn

To ask the Secretary of State for Social Security if he will make a statement about the effects of the recently announced changes in national insurance contributions.

Mr. Peter Lloyd

The reform of national insurance contributions announced by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement on 14 March builds on the system of reduced irate contributions for lower paid employees which was introduced in 1985. As at present, people earning less than £43 a week will not pay contributions. From October 1989, however, employees earning £43 a week or more will pay a contribution made up of 2 per cent. of the first £43 of earnings and the standard 9 per cent. (7 per cent. for employees contracted out of SERPS) on the balance of earnings up to the upper earnings limit, currently £325 a week.

These changes are a major reform of the way in which employees' contributions are determined. They will remove two of the three steps in the national insurance system which can result in pay increases being more than offset by higher contributions, leaving the employee worse off. And the first step, when people start paying contributions, will be more than halved.

50. Mr. Wilshire

To ask the Secretary of State for Social Security how many people will be affected by the reform in the way in which employees' contributions are determined.

Mr. Peter Lloyd

The Government Actuary's Department estimates that during the second half of the 1989–90 financial year a weekly average of about 19 million people in Great Britain will be affected by the change in the structure of employees' national insurance contributions. Of these, about 15 million will gain £3 a week.

Mr. Norris

To ask the Secretary of State for Social Security when the changes to be made in employees' national insurance contributions will take effect.

Mr. Peter Lloyd

From the tax week which begins on Thursday 5 October 1989.