Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2006 [16th Report from the Joint Committee]. The noble Lord said: I am pleased to introduce this order, which deals with various national insurance contribution rates and thresholds. The provisions in the order are compatible with the European Convention on Human Rights and all the changes were announced at the time of the Pre-Budget Report. For the self-employed, it raises the small earnings exception below which, depending on the level of their profits, they may claim exemption from paying class 2 contributions. The exception will rise in April, from £4,345 to £4,465 a year, an increase broadly in line with prices. Many people choose to pay those contributions in order to protect their benefit entitlement. The rate of class 2 contributions for 2006–07 will stay at £2.10 a week. Staying with the self-employed, the order also sets the profits limits between which main-rate class 4 contributions are paid. The lower limit at which contributions become due and the upper limit will increase broadly in line with inflation. The lower limit will rise in line with the income tax personal allowance, from £4,895 to £5,035 a year. At the other end of the scale, the upper profits limit will continue to match the upper earnings limit for employees, which will go up to £33,540 for 2006–07. That ensures that the self-employed pay main-rate class 4 contributions on much the same range of earnings as employees liable to class 1 contributions and is an essential element in making the national insurance system fair for everyone. The order also deals with the weekly rate of voluntary class 3 contributions, which help those with insufficient contribution records in any given tax year to make up a qualifying year for benefit purposes. The rate of class 3 contributions will rise in April by 20p to £7.55 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 order and the order uprating benefits laid by my right honourable friend the Secretary of State for Work and Pensions on the National Insurance Fund. I am pleased to say that, for the seventh year in a row, there is no expectation that the fund will need a treasury grant. Nevertheless, a prudent provision of 2 per cent of all benefit expenditure is made. 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. The order covers both Great Britain and Northern Ireland. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2006 [16th Report from the Joint Committee].—(Lord McKenzie of Luton).