Draft Social Security (Contributions) (Amendment No. 2) Regulations 2022

Nick Smith Excerpts

Monday 28th March 2022 General Committees

[The Financial Secretary to the Treasury (Lucy Frazer)]

I beg to move,

That the Committee has considered the draft Social Security (Contributions) (Amendment No. 2) Regulations 2022.

I will explain why we are bringing this draft statutory instrument before the Committee. As Members are aware, from April the new health and social care levy will increase class 1 and class 4 national insurance contributions rates by 1.25 percentage points. That will secure a long-term dedicated source of funding for our national health service and for those who require care. The instrument will apply the 1.25-percentage point increase to those paying the married women’s reduced rate of national insurance in the 2022-23 tax year. As the result of a drafting oversight, that group are excluded from paying the levy. If the legislation were not enacted, the result would be an unfairness, as not everyone would be in the same position and therefore not everyone would be treated equally.

This draft SI will increase the married women’s reduced rate from 5.85% to a temporary rate of 7.1%. The reduced rate is a lower form of NICs, currently paid by fewer than 1,000 women. Originally, it was introduced to allow women to use their husband’s NI contributions to qualify for a state pension at a time when fewer women worked. However, the scheme has been closed to new entrants since 1977. In fact, today, the circumstances in which a woman might pay the reduced rate are relatively unusual: a woman must have joined the scheme before May 1977, she must have been married at the time and have not divorced since, and she must still be under the state pension age and have not had a break of two years or more in her employment history.

[Nick Smith (Blaenau Gwent) (Lab)]

Will the Minister let us know the average age of the women affected by the new draft regulations?

[Lucy Frazer]

They will, obviously, be at the older end of the spectrum, as the scheme has been closed to new entrants since 1977, although some will still be in work. Very few people are in the scheme—we think fewer than 1,000.

This is new legislation, but the change it will implement has been anticipated for some time. We have already communicated the 2022-23 NICs rate on the gov.uk website. Employers, and software and payroll providers are expecting the change and have updated their systems. Legislation is already in place to ensure that, from April 2023, those paying the married women’s reduced rate will be subject to the health and social care levy. There has never been a suggestion that that category of women ought to be excluded.

[Nick Smith]

The Minister was unable to answer my question about the average age of the women affected by the draft regulations. Will she go back to the Department to get an assessment of the question and please write to the Committee?

[Lucy Frazer]

I am happy to do that. As I mentioned, those women will be of an older generation, of an older age, but I am happy to get the specifics, if the hon. Gentleman wishes me to do so.

--- Later in debate ---

[Nick Smith]

I thank the Minister for giving way again. She is being generous with her time and her efforts, but she did not answer the question of my colleague, my hon. Friend the Member for Rotherham: will the Government write to the women affected by this issue? She mentioned that it had been on the Government website, but given that WASPI women and others have complained that they were not properly informed of changes to their pensions and other financial arrangements of the Government through time, will she assure us categorically that she will write to those affected, please?

[Lucy Frazer]

I thank the hon. Gentleman for his question, but I reiterate: there is no need to notify the women, because everyone knows that the social care levy is coming in. It has been widely publicised. The current position is that everyone who is eligible to pay that tax will pay it, so there is no need to tell a group of women who through an oversight were not included in the levy that they will now be included, because at the moment they will not think that they are not.