Social Security (Contributions) (Amendment) Regulations 2010

My Lords, I can confirm that in my view the provisions in the regulations are compatible with the European Convention on Human Rights. The national insurance contributions rates and thresholds for the 2010-11 tax year were announced at the time of the Pre-Budget Report on 9 December 2009. These regulations are necessary in order to set the class 1 national insurance contributions lower earnings limit, primary and secondary thresholds and the upper earnings limit from 6 April 2010. The class 1 lower earnings limit is increased from £95 to £97 per week from 6 April 2010. The lower earnings limit is legislatively linked to the level of the basic state pension and is the level of earnings at which entitlement to contributory benefit begins. The class 1 primary and secondary thresholds for the 2010-11 tax year will be £110 per week, the same as in 2009-10. The primary and secondary thresholds are the point at which employers and employees start to pay class 1 national insurance contributions. The primary and secondary thresholds have in past years been increased broadly in line with prices. However, as the September 2009 retail prices index was negative, we have frozen the primary and secondary thresholds at the 2009-10 levels. Had we reduced the primary and secondary thresholds to reflect the reduction in the retail prices index in September 2009, low-paid employees in particular would have had to pay more national insurance contributions, as would their employers. In the 2007 Budget the former Chancellor of the Exchequer announced a package of reforms to modernise the tax and benefits system. Part of the package included changes to national insurance contributions to align the upper earnings limit with the level at which the higher rate income tax becomes payable from 6 April 2009. I confirm that we will maintain that alignment for the 2010-11 tax year. The upper earnings limit will be £844 per week for the 2010-11 tax year. This is the same as for the 2009-10 tax year. Earnings between the primary threshold and the upper earnings limit are liable to main rate employee contributions of 11 per cent. Earnings above the upper earnings limit are subject to the additional employee rate of 1 per cent. Employers pay contributions at 12.8 per cent on all earnings above the secondary threshold. The Government Actuary published a report detailing the effects of both the national insurance contribution rates and thresholds announced for 2010-11 and the draft order uprating benefits laid by my right honourable friend the Secretary of State for Work and Pensions on the National Insurance Fund. The Government Actuary has confirmed that there is no expectation that the fund will need additional funding in the form of a Treasury grant for the 2010-11 tax year. 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 draft regulations cover both Great Britain and Northern Ireland. I commend the regulations 2010 to the House.