Explanatory note

This Order reduces the appropriate percentage rate specified in the secondary earnings brackets in section 9(3) of the Social Security Contributions and Benefits Act 1992 (“the Act”), from 10.2 per cent. to 10 per cent. in respect of Bracket 4 (article 2).

The Order increases the rates of Class 2 and Class 3 contributions specified in sections 11(1) and 13(1) of the Act from £6.05 to £6.15 and from £5.95 to £6.05 respectively. It also increases from £3,430 to £3,480 the amount of earnings specified in section 11(4) below which an earner may be excepted from liability for Class 2 contributions (articles 3 and 4).

The Order increases, from £6,860 to £7,010 and from £23,660 to £24,180 respectively, the lower and upper limits of profits or gains specified in sections 15(3) and 18(1) of the Act between which Class 4 contributions are payable (article 5).

The Order provides for section 2(2) of the Social Security Act 1993 to have effect for the tax year 1997–98. It also provides that the amount of money provided by Parliament to be paid into the National Insurance Fund in that year shall not exceed in aggregate 4 per cent. of the estimated benefit expenditure for the financial year ending 31st March 1998 (article 6).

In accordance with sections 142(1) and 144(1) of the Social Security Administration Act 1992, a copy of the report by the Government Actuary (Cm. 3547) giving his opinion on the likely effect on the National Insurance Fund of the making of the Order in so far as it amends sections 9(3), 11(1) and (4), 13(1), 15(3) and 18(1) of the Act, was laid before Parliament with the draft of this Order.

Articles 3(b), 4, 5 and 6 of this Order do not impose any costs on business. The effect of article 2 will be to impose an administrative cost on business.

An assessment of the costs to business of applying articles 2 and (3a) has been placed in the Libraries of both Houses of Parliament. Copies can be obtained by post from the Department of Social Security, Deregulation Unit, 11th Floor, Adelphi, 1–11 John Adam Street, London WC2N 6HT.