§ 3 p.m.
§ Lord Eltonrose to move, That the draft regulations laid before the House on 25th January be approved.459
§ The noble Lord said: My Lords, under the Social Security Act 1975, mariners on board merchant ships are in general liable for national insurance contributions in the same way as other employed persons. Because they serve at sea, sometimes on long voyages which begin and end in different tax years, the Act gives the Secretary of State power to make regulations modifying certain of its provisions in their application to mariners, including those relating to contributions. Such regulations are subject to a draft having been approved by a resolution of each House.
§ As your Lordships know, national insurance contributions are usually collected with income tax under the PAYE arrangements. However, since the inception of PAYE, certain mariners have had their tax collected under a special system known as the Marine Tax Deduction Scheme. The mariners concerned are those who are paid their earnings as a lump sum at the end of a voyage, or series of voyages, instead of at regular weekly or monthly intervals like other employed earners. The special scheme has naturally also been used to collect their contributions. However, because it is disproportionately expensive to administer, and the numbers paying tax under it have sharply declined, the Inland Revenue have revoked the regulations providing for it with effect from 6th April 1982 and brought all mariners within the scope of PAYE. In consequence, the parallel regulations covering contributions fall also to be revoked and new statutory provisions are needed.
§ The draft regulations before the House apportion the earnings included in the lump sum paid at the voyage end to an "earnings period" within the voyage. Where a new tax year starts during a voyage or there is a relevant change in the mariner's circumstances—that is to say, one which affects his level of contribution, for example, if he achieved his 65th birthday while still at sea—the draft regulations create a fresh earnings period. The draft regulations continue the broad effect of the existing regulations subject to certain modifications. The main difference is that earnings will in future be apportioned to earnings periods according to the amount earned in each, and not on an average basis, as at present. This will fit in with the new tax arrangements. At present, employers who operate the Marine Tax Deduction Scheme make a return at the end of each voyage period. A further effect of the regulations is that in future they will make a return at the end of each tax year only, like any other employer, except that if a voyage begins and ends in different tax years, a separate return at the end of the voyage period will be required.
§ The draft regulations have been considered by the Social Security Advisory Committee and their report indicating general approval to the provisions was laid before Parliament with the draft regulations. My right honourable friend the Secretary of State for Social Services also laid, with the draft regulations, a statement in accordance with Section 10(4) of the Social Security Act 1980. Your Lordships will see from the statement that the one recommendation of the committee—about the insertion of a specific provision on leave pay—has been put into effect.
§ This is a quite technical piece of legislation. Rather 460 than deploy the whole of its technicality to your Lordships, I thought the House would like to have the generalities, and if there are particular points to be taken up, I will do the best I can to elucidate them in reply to what noble Lords have said. To do otherwise would take me at least 25 minutes. My Lords, I beg to move.
§ Moved, That the draft regulations laid before the House on 25th January be approved.—(Lord Elton.)
§ Baroness Llewelyn-Davies of Hastoe
My Lords, while thanking the noble Lord very much for that explanation of what is a highly technical matter, may I ask him a few simple questions. First, how many mariners are likely to be affected by this? Secondly —this is important—does this affect the interests of men who are employed in foreign ships or ships with flags of convenience? Thirdly, has the National Union of Seamen been fully consulted about it? If the Minister needs time to consider the matter, I shall perfectly understand the position.
§ Lord Banks
My Lords, I join in thanking the noble Lord for his explanation of the order. He has made clear that these regulations governing the collection of national insurance contributions from mariners are made necessary by the change in the method of collecting income tax; the abandonment of the Marine Tax Deduction Scheme and its replacement by normal PAYE. As the noble Lord said, the order is technical and non-controversial. I join the noble Baroness in asking how many are likely to be covered by the regulations. I gather that the numbers covered by the Marine Tax Deduction Scheme have sharply declined recently. The Government appear to have dealt satisfactorily with the points raised by the Social Security Advisory Committee, including the question of the treatment of leave pay, and we on these Benches support the approval of the order.
§ Lord Kilmarnock
My Lords, I too thank the Minister for explaining the draft regulations, but may I ask him to clarify paragraph (6) (a) and (b) in which I think I detect that if a voyage straddles two tax periods and the end of one tax period is less than a week (say, four days) and the beginning of the next tax period is also less than a week (say, four days also) the mariner in question would, if the contributions are always rounded up to the week, be paying something like an additional week's contribution.
§ Lord Elton
My Lords, I thank noble Lords for the reception they have given to the order. I understand the number of seamen involved is thought not to be more than 15,000. The National Union of Seamen were taken into consultation. As for the question of flags of convenience, I shall have to write to the noble Baroness; as indeed I shall have to write to the noble Lord, Lord Kilmarnock, on his point. I hope the House will be satisfied with those explanations and approve the order.
§ On Question, Motion agreed to.