Social Security (Contributions) (Re-rating and National Insurance Funds Payments) Order 2007

rose to move, That the draft order laid before the House on 24 January be approved. The noble Lord said: My Lords, for the convenience—and, I hope, with the will—of the House, I shall speak also to the other orders in my name on the Order Paper. In my view, the regulations and orders are compatible with the European Convention on Human Rights. First, the order concerning national insurance contributions increases contribution rates and thresholds for the self-employed and the weekly rate of voluntary class 3 contributions, broadly in line with inflation. The review of contribution rates is accompanied by a report from the Government Actuary detailing the effects of the draft order and the draft order up-rating benefits laid by my right honourable friend the Secretary of State for Work and Pensions on the National Insurance Fund. I am pleased to say that, for the eighth year in a row, there is no expectation that the fund will need a Treasury grant. Nevertheless, a prudent provision of 2 per cent of all benefit expenditure is made. Northern Ireland has a separate national insurance scheme from Great Britain, but the two schemesare closely co-ordinated and maintain parity of contribution rates. This draft order covers both Great Britain and Northern Ireland. On the other orders, tax credits, together with child benefit, deliver financial support to the vast majority of families with children in the UK and are vital to our commitment to tackle child poverty. I am pleased to introduce the regulations and orders, which increase certain elements and thresholds of tax credits and raise the rates of the child benefit and guardian’s allowance. Turning to the Tax Credits Up-rating Regulations 2007, tax credits play a major role in ensuring that work pays and in helping people to move up the employment ladder. Overall, nearly 6 million families containing nearly 10 million children are benefiting from tax credits. These regulations increase the child element of tax credit by £80, in line with earnings, to £1,845 a year from 6 April 2007. This element has increased by £400 since its introduction in April 2003, benefiting 6.8 million children. In addition, the regulations increase the disabled child elements of child tax credit in line with inflation. The elements of working tax credit will also increase in line with inflation. The working tax credit provides support to low-income working families, including people who do not have children. The tax credit system has been designed to offer support to people as they move between jobs and as their circumstances change. Building on the lessons from the first two years of tax credits, the 2005 Pre-Budget Report announced a package of measures to improve the system. These measures will ensure that the system strikes the right balance between providing a stable award and maintaining the ability to respond to changes. I turn to the Child Benefit Up-rating Order 2007 and the guardian’s allowance orders. Child benefit is payable to 6.7 million families for around 13 million children and young people, providing almost all families in the UK with a worthwhile contribution towards the cost of bringing up their children. These instruments increase rates in line with inflation. From 9 April 2007, child benefit will be worth £18.10 per week for the first child and £12.10 for each subsequent child. The Government are committed to increase child benefit in line with prices. As a result of these increases, the rate payable for the oldest qualifying child remains more than 25 per cent greater in real terms than the rate payable in 1997. The guardian’s allowance will increase to £12.95 per week. With the increases effected by these instruments, we will be delivering even more support next year. We remain committed to the Government’s long-term aim of eliminating child poverty within a generation and halving it by 2010. Tax credits and child benefit will remain a key part of this. Indeed, in his Budget, my right honourable friend the Chancellor of the Exchequer made a commitment to increase the child element of the child tax credit at least in line with average earnings until the end of this Parliament. I commend these regulations and orders to the House. I beg to move. Moved, That the draft order laid before the House on 24 January be approved. 8th Report from the Statutory Instruments Committee.—(Lord Davies of Oldham.)