§ Mr. A. J. Irvine (Liverpool, Edge Hill)
I beg to move, in page 4, line 15, to leave out from "employment" to the end of line 17 and to insert:which is a non-participating employment under Part II of this Act".This Amendment is designed to clear up an ambiguity in the present wording of the Bill and to spell into the Bill an explanation which the Joint Parliamentary Secretary gave in Standing Committee. To that extent, I hope that the Amendment will be welcome to the Government.
The paragraph which it is sought to amend deals with the case where more than one payment is made to an employee, and it provides for the aggregation of separate weekly payments before the amount of the contribution is determined. Separate payments may take place where there is a single employment and also, as specifically provided for in the Bill, where there are separate employments under the same employer and in respect of which separate wages are paid.
As we understand, it is the intention that in such cases the remunerations shall be aggregated. To take the simplest example of all, where there are two employments under the same employer and each employment is paid for at £8 a week, those sums are to be aggregated and the remuneration for the purpose of the Bill will be treated as being £16 a week. An explanation to that effect was given with perfect clarity by the Joint Parliamentary Secretary.
We think that that is a correct intention and that that is how it should be. The question is whether that intention is effected by the wording of the Bill. The Bill provides for an exception. There is one class of employment remuneration in respect of which will not be aggregated. That is an employment such that graduated contributions are not payable in respect of it. The doubt I feel, and it is a substantial doubt, is that when one looks at that and applies the example 702 I have already referred to in respect of which £8 is paid for each employment, in my reading of the matter, each would be employment such that graduated contributions were not payable in respect of it. That would seem to be the effect of Clause 1, which clearly provides that there will be taken into account a payment in respect of remuneration in any one employment only where it exceeds £9.
There is an ambiguity here which can be readily disposed of. We are told that the purpose of the exception is to except non-participating employments but the wording of the paragraph goes wider than that. There is a little more to it, for this reason. If my construction of the paragraph is correct, the result would be, to take an example, that where there were two employments under the same employer, one for £10, and the other for £7, the employer could spread the remuneration and pay, instead, £8 10s. in respect of each of the employments. There would be no difference in the total of remuneration, but the result would be that in respect of neither employment would there be any obligation to pay graduated contributions.
It is undesirable that the Bill should pass with avoidable ambiguity. The courts, seeing the background of what has been said about the intention here, would probably up to a point stress the interpretation of the paragraph in the direction intended, but in my view they would have to stretch it rather far, and undesirably far, before they could find that the £8 a week job was anything other than an employment in which graduated payments were not payable.
In Committee, the Joint Parliamentary Secretary gave an undertaking that this would be further considered. I have no doubt that it has been, and it would appear that it has been concluded that there is no substance in this criticism. It is because I believe that there is substance in it, and that there is a wholly undesirable ambiguity, that I have ventured to this extent to insist on the proposition.
§ Mr. Reynolds
I beg to second the Amendment.
I have not the legal knowledge of my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine), but my impression from reading the Clause was that it would be possible for someone to be employed by the same person in two jobs, both under £9, and escape paying graduated pensions. It was not until the debate in Standing Committee that I realised that that was not the intention in the Minister's mind when drafting this Clause.
I feel that the Amendment will put the matter clearly and I hope that he is in the position of being the first hon. Member on this side of the House who will have an Amendment to the Bill accepted.
The hon. and learned Gentleman the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) raised this point in Committee as he said, and my right hon. Friend has fulfilled the undertaking he gave and has had the point looked into very carefully. The criticism of the wording as drafted was, first, that it could be clearer. I think that we all felt that when we were considering the Bill, which must, by its very nature, be complicated, where we could make any sentence read more simply we should endeavour to accept simple rather than technical words.
Secondly, it was suggested that it might provide an unintentional loophole whereby a man with two employments under the same employer, each of which was below £9 a week, would be exempted or relieved from paying graduated contributions when it was the intention that such two employments should be added together and graduated contributions paid on the amount by which the sum of those two remunerations exceeded £9.
My right hon. Friend has carried out his undertaking and confirmed that the present words could not have the effect suggested since the employments to be left out of account are described in terms which make no reference to the amount of remuneration they yield. There is another factor which we should consider. Although the main reason for this exemption is to exclude non-participating employment such as we have been re- 704 ferring to here and previously in Committee, it would be an advantage if it were left as it is so that it would go a little further. I will now try to explain because cases exist—and this is something like the first Amendment I had to speak to—where it is generally accepted that two employments are under the same employer and both remunerations are assessed for Income Tax under Schedule E and subject to P.A.Y.E., yet one ranks as self-employed.
This may happen in the Parliamentary and Governmental field, and I will give an example to show that this is not merely imagination. There really is some substance in asking for the Clause to be left with this exception in such a form that it goes a little wider than precisely describing non-participating employment and stopping there.
Within the Church of England it is possible for the director of religious education of a diocese also to be an incumbent of a parish whose stipend is augmented by funds from the diocese. One there has two employments where the remuneration stems in one case in whole and the other in part from diocesan funds, yet the second, his duty as the incumbent of a parish, ranks as being self-employed.
If the hon. and learned Gentleman's words were preferred one would find that in a case like that graduated contributions would be assessed on a certain income which, in point of fact, should be excluded. One would then have to cover those cases by regulations and I am advised that it would be simpler to leave the words in the Clause with their wider meaning than to insert the words of the hon. and learned Gentleman. This would spare us from having to provide for this class of case in the regulations which I am told would be a longer and more cumbersome way of achieving this end.
I hope that the hon. and learned Gentleman will see, and I am sure all hon. Members will agree, that though it was right to draw our attention to the apparent ambiguity that although the main class intended to be exempted by those words is non-participating employment, there is a small group of others which falls outside that grade which it is really our duty to cater for.
§ Amendment negatived.705
§ 7.0 p.m.
§ Miss Pitt
I beg to move, in page 4, line 46, to leave out from "and" to the end of line 49 and to insert:may include provision for modifying subsection (2) of this section; and regulations may also, for the purpose of graduated contributions, make provision as to the intervals at which a person's remuneration or any part of it is to be treated as paid where it is not all paid at the same intervals of a week or longer and in the amounts due for those or for corresponding intervals.The Amendment implements an undertaking given by my right hon. Friend in Committee, following the Amendment moved by my hon. Friend the Member for Aylesbury (Sir S. Summers). The purpose of the Amendment is to take power to deal with bonus or other occasional lump sum payments made as additions to normal remuneration—in other words, to spread payments. The Amendment moved by my hon. Friend in Committee was withdrawn on the undertaking that my right hon. Friend would consider whether subsection (5) gave the full regulation-making powers which he agreed were desirable. It was after consideration that my right hon. Friend tabled the Amendment to make sure that he had the necessary powers.
If subsection (5) is enacted in the terms proposed, the object of my hon. Friend and other hon. Members, expressed in Committee, will be achieved. There will be power to provide in the graduated contribution regulations that payments not related to the week or other pay period in which they are made shall not be limited in their effect on the contribution liability to the period of payment, but can be spread over a longer period. We are dealing with the adequacy of regulation-making powers. Their practical application, is a complicated subject which must be left for consideration and discussion at a later stage.
Under the Bill the liability for contributions is tied to earnings and, in the vast majority of cases, it will be tied to weekly remuneration. Liability for graduated contributions will fall upon the amount by which the earnings exceed £9, up to a limit of £15. The first part of subsection (5) enables the Minister to make regulations prescribing "equivalent amounts" for remuneration which 706 is not paid weekly—such as remuneration paid at regular intervals longer than a week—in which case the "equivalent amounts" will be proportionate to those laid down in the Bill. Perhaps I may give an example. In the case of a man who is paid fortnightly, the equivalent amounts will be contributions due on payments between £18 and £30—double the amounts we have fixed for the weekly paid. As amended, the subsection will leave the regulations to determine how remuneration, not all paid at regular weekly intervals, will be brought within this pattern; cases may include bonus payments in addition to regular pay, all pay at irregular intervals, and weekly payments made regularly, but with additions in respect of overtime, for instance, added at fortnightly or other intervals.
Because this is a regulation-making power, it means that there will be full opportunity for consultation with the interests concerned before the regulations are brought into effect. The Minister must submit a preliminary draft of the regulations to the National Insurance Advisory Committee and, as hon. Members know, in that case representations may be made to that Committee by anyone, including employers or organisations representing employees, and other bodies of people or individuals. The Committee, having received those recommendations, must lay its report, with the regulations, before Parliament, where the regulations may be prayed against if it is thought desirable.
The Amendment follows the one moved by my hon. Friend the Member for Aylesbury. When we discussed it in Committee he was supported by my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth), the hon. Member for Islington, North (Mr. Reynolds)—who, made it quite clear that he supported it for different reasons—and the hon. Member for Bradford, South (Mr. George Craddock). I hope, therefore, that with that measure of support and with my explanation that the Amendment implements a promise given by my right hon. Friend, the House will be prepared to accept it.
§ Mr. Houghton
This seems to be a coalition Amendment—and a very sensible one. The hon. Members concerned did a service to the Bill when 707 they probed subsection (5) to find out whether we should run into difficulties in cases where people are receiving substantial payments, possibly at irregular intervals, on account of bonuses, commissions, and so forth. If a large bonus were treated as remuneration for the week in which it were paid the graduated contribution upon it would be limited to the £15 wage band, and both the contribution and the graduated pension to be earned later would be smaller on that account.
Some persons may approach the Amendment feeling that higher benefit would be achieved and others may think that a higher contribution would be imposed. The two will come together with the higher contribution and the higher benefit which will be achieved by the spread of the bonus and commission payments over a period, which will even the matter out. That is desirable. If a person is receiving fixed pay of a certain amount, but a very substantial part of his earnings is paid by bonus or commission, it is obviously sensible and fair that some spread should be made, so that his total contribution and total benefit are related to his total earnings on a sensible spread and not left to the hazards of occasional payments of different sums.
The Amendment will give the Minister more power than he had previously. When the regulations come before the House, later, we shall see how the Minister has solved the problem. In the meantime, I have no doubt that those who may have employees in vocations of this kind will have views as to how the spread should be made, and that will lead to a general satisfaction with the way in which the scheme will be administered.
§ Mr. Wade
It would be ungracious not to express approval at finding something of which I can approve. This provision will meet some of the difficulties which have been causing considerable concern among firms who will have to operate the scheme, particularly when they pay bonuses at uncertain periods of time. The Amendment will go some way towards easing the situation. I therefore welcome it and join this coalition. It is the only one that I have been able to join during the course of the debates on the Bill.
Mr. J. T. Price
When I hear the word "coalition" being bandied about I become a little uncomfortable. I do not wish to introduce an incongruous note into this discussion, in which mutual bouquets have been awarded, except to ask one question. When the regulations are made, will the Minister bear in mind the fact that there should be, in principle, a maximum period over which an average is taken? Since this proposal envisages the averaging out of earnings on bonuses and commissions over a period, many undesirable consequences might flow if there were some such application as one for a three-year average, which applies to certain matters of taxation.
I suggest modestly, and without making heavy weather of it, that in any regulation of this kind there ought to be a reasonable maximum, not exceeding, let us say, twelve months. If it is extended beyond that period there will be other complications which no other hon. Member would like once he began to consider them.
§ Amendment agreed to.