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Lord McIntosh of Haringey: My Lords, I apologise to the noble Lord. I was saying that I have been in Scandinavia in student hostels at which all sorts of people feed out of the same fridge, but we were certainly not family!

Lord Northbourne: My Lords, I am told that there are 11 departments of state whose decisions affect the fortunes of children and parents. In view of the quality of this debate, will the Minister undertake to ensure that the other 10 of his colleagues in the relevant departments read this debate?

Lord Filkin: Yes, my Lords, I will.

Lord Northbourne: My Lords, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

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Social Security (Contributions) (Amendment No. 2) Regulations 2003

9.13 p.m.

Lord McIntosh of Haringey rose to move, That the draft regulations laid before the House on 24th February be approved [12th Report from the Joint Committee].

The noble Lord said: My Lords, in moving these regulations, I shall also speak to the Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order, which was laid on 5th February.

The two instruments represent the final changes needed to implement the increase in national insurance contributions announced in last year's Budget, as well as making the minor changes to rates and thresholds announced in the Pre-Budget Report. The Government's plan to use national insurance to raise money towards the cost of a major programme of improvements to the National Health Service was widely welcomed.

The Social Security (Contributions) (Amendment No. 2) Regulations make changes to the married women's national insurance contributions reduced rate, and other minor consequential changes to the national insurance contributions regulations. The provisions in the regulations and the re-rating order are compatible with the European Convention on Human Rights.

Let me set out why the changes to the married women's reduced rate are dealt with in regulations when the changes to the main rates of national insurance were dealt with in the National Insurance Contributions Act 2002. That is because the married women's reduced rate can be varied by regulation under the existing primary legislation and, unlike the main contribution rates, there is no limit to the amount by which it can be changed. That means that primary legislation was not needed to increase it by 1 per cent.

Apart from some minor consequential changes to allow for the Budget changes to contributions, the main substantive change is in Regulation 6. This will ensure that married women who elected to pay national insurance contributions at the reduced rate before 1997 and are still paying at only 3.85 per cent will also pay the proposed extra 1 per cent national insurance contributions from this April. Approximately 80,000 married women are paying the reduced rate. It is only fair to other contributors that they should also pay towards the cost of an improved National Health Service. This will raise the reduced rate to 4.85 per cent. Married women paying the reduced rate will also pay 1 per cent on their earnings above the upper earnings limit.

The regulations also make a minor drafting change, arising from the National Insurance Contributions Act 2002, to the mariners regulations. Regulation 4 ensures that the calculation of a mariner's earnings period when on a voyage reflects the introduction of the main primary percentage and the additional primary percentage. We have taken the opportunity in

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Regulations 10 and 11 to make a drafting correction to Regulation 156 of the contributions regulations to correct an oversight, not picked up at the time, which omitted the married women's reduced rate provisions applying in Northern Ireland.

The re-rating order makes two changes announced in last year's Pre-Budget Report. First, the annual small earnings exception below which a self-employed person may claim exemption from payment of class 2 contributions will rise broadly in line with prices from 4,025 to 4,095 per year. Given that the rate of class 2 contributions for 2003–04 will remain at 2 a week—a reduction in real terms—it may be that many low-earning self-employed people will choose to pay the contributions in order to protect their benefit entitlement.

Secondly, the draft order deals with the weekly rate of voluntary class 3 contributions, which allow those with insufficient contribution records in any given tax year to make up a "qualifying year" for benefit purposes. The rate of class 3 will rise this April by 10 pence to 6.95 a week—a standard re-rating in line with prices.

The review of contribution rates is accompanied by a report from the Government Actuary detailing the effects of the draft order and the draft order up-rating benefits laid by the Secretary of State for Work and Pensions on the National Insurance Fund. There is no expectation that the fund will need a Treasury grant. Nevertheless, we are making a prudent minimal provision of 2 per cent of all benefit expenditure. That is set out at paragraph 4 of the order.

As happened in the past two years, there is a single draft order for both Great Britain and Northern Ireland. Northern Ireland has a separate national insurance scheme from Great Britain, but the two schemes are closely co-ordinated and maintain parity of contribution rates. Following the transfer of national insurance to the Inland Revenue in 1999, Northern Ireland's social security legislation was amended to enable the draft re-rating order to include corresponding measures for the Province. I beg to move.

Moved, That the draft regulations laid before the House on 24th February be approved [12th Report from the Joint Committee].—(Lord McIntosh of Haringey.)

Baroness Wilcox: My Lords, I thank the Minister for explaining in detail what is before us. As he said, the regulations bring about changes to married women's reduced rate contributions to national insurance. Married women who have elected to pay a reduced rate of national insurance will also be subject to the 1 per cent increase that the Government propose.

As discussed in the First Standing Committee on Delegated Legislation, the plan is that money raised from national insurance is put towards a major programme of improvements in the National Health Service. Sadly, however, we on these Benches believe that that policy is flawed and will not result in the

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consequences that Her Majesty's Government envisage. Surely a system in which there are more administrators than beds is indicative of a structural problem which will not be solved by throwing money at it. Now married women too are having to pay the price of the Government's mismanagement of our public services.

The draft order deals with various national insurance contribution rates and thresholds. The regulations and the order are necessary steps for the Government to implement the increase in national insurance contributions announced in last year's Budget. It is not difficult to work out how we find ourselves in this situation when the Labour Party has pledged not to increase income taxes but, as a consequence of underestimating the slow down of the British economy, the Government are short of money. Tax revenues are not sufficient to bring about much needed improvement in public services.

The Government can see no way out of the dilemma apart from doing what they do best: taxing more and spending more. As income tax cannot be touched, the only alternative is national insurance contributions—a tax on jobs. Make no mistake: our people will suffer and business will suffer. It has been reported that the national insurance surcharge for employers would cost the health service and local government an estimated 600 million. In the long run, that is one more step down a road where Great Britain becomes less competitive as labour costs mount.

Both order and regulations must be accepted for the Government to implement their policy. While we may be unhappy with the way in which the Government are tackling the problem of public services, I recognise that the Government must get their business done, and we shall not oppose the order or the regulations.

Baroness Barker: My Lords, at this late hour and on this narrow subject I wish that I were in a position to speak on behalf of mariners everywhere and keep the Minister on his toes, but I am not. As he may have guessed, I shall speak briefly on the married women's stamp. We on these Benches support the 1 per cent increase in national insurance to pay for the health service. We believe that that is a much needed and wise investment. However, as my honourable friend in another place, Steve Webb, has argued, the imposition of an extra 1 per cent on those women who pay the married women's stamp compounds a long-standing injustice.

Those women who pay the married women's stamp currently pay 3.85 per cent compared to the full rate of l0 per cent, but in return they do not receive 40 per cent of the basic state pension. In many cases they receive just a few pence, and one woman who contacted my honourable friend receives just 1p. a week. They also lose entitlement to all contributory benefits. Many of the women are currently paying 3.85 per cent, and in return receive nothing.

This debate takes place in the context of the pensions Green Paper discussions that are taking place. Therefore, from previous discussions in the

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House I understand that the Minister will argue that women made an informed choice in this matter. Our contention is that some women made an informed choice but many others did not. In May 2000 the then Minister in another place, the noble Lord, Lord Rooker, admitted that the information given to women would not pass the plain English test. Indeed, the noble Baroness, Lady Hollis of Heigham, in October 2002 said:


    "Women first entering the labour market in the 1960s and 1970s had to sign to elect to receive the reduced stamp; secondly, in 1977–78, they had all the information"—

through leaflets, newspapers, radio and so on—


    "thirdly, they received further information in 1989; and, fourthly, they were given further information in 2000 associated with the changes in the lower earnings limit. So, on four occasions, married women paying the reduced stamp received fairly straightforward—I do not say that it was brilliant—accessible information on which to make an informed choice".—[Official Report, 15/10/02; col. 693.]

An example of that accessible information is the national insurance 1 leaflet of 1976 which stated:


    "If you satisfy the first condition and (where it applies) the second condition, but you do not satisfy the third condition because the number of your qualifying years is less than required, you will not get a standard rate pension. However, you will get a basic state pension at a reduced rate provided that the number of qualifying years is at least a quarter of the number required for a standard rate pension. If the number of your qualifying years is less than a quarter of the number required, no pension at all can be paid on your own contributions".

The Minister was right. It is not brilliant.

A user said:


    "I can remember having a letter many years ago . . . but it was written in the usual official jargon, which few understand, and it was certainly not drawn to one's attention as being of major importance".

She then made the key point:


    "The DHSS must have realised from the lack of response that thousands like me had not understood the full implications and should have issued something about it in normal English, which spelt it out better".

This 1 per cent rise is about paying for the NHS. In that context we could consider this example, which was sent in by a man. He said:


    "My wife has worked for the NHS as a registered nurse for more than 30 years, working normally four hours each week less than full-time . . . Earlier this year she was diagnosed with cancer ... She received part of her salary and SSP for six months, and at the end of this period she applied for Incapacity Benefit. She has been refused this on the grounds that she has paid the married woman's stamp . . . She is very upset".

We believe that not only was the information unclear, but there was a culture among some employers automatically to make the election for women, and in some cases they did not even tell them. On top of that the advice from the DSS in some cases was that women would be better off to pay the married women's stamp. As the Minister said, 80,000 women still pay the married women's stamp. We contend that those women should be contacted and have their situation explained clearly while they still have time to make up contributions, which others do not.

As this discussion is in the context of the Green Paper, I want to take the opportunity to mention one other group of women. They do not make any

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contribution. They are women prisoners. That issue has been raised in the media recently. They are not allowed to make NICs, so when they do come out, they inevitably have a broken contribution record and will have a lower pension. The Fawcett Society is currently embarking on research into women and the criminal justice system. While the whole issue of women and pensions is live, perhaps the Department for Work and Pensions might contribute to that research because when talking of women and pensioner poverty, surely those women are at the bottom.

At the moment there is a widespread debate about pension settlements. It is agreed that there is a need for clarity and responsibility on all sides in order to rebuild trust in pensions. We believe that enabling women to make contributions to restore their broken earnings record would begin to restore that trust for some women.


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