The current arrangements were devised during the Second World War at a time when working patterns were much less varied than now. Employees tended to stay in the same job for much longer, worked full time, most wives did not work, and internationally mobile employees were rare.

A striking feature of the current system is that two employees with precisely the same package can suffer different tax and national insurance liabilities, simply because of the form and timing of their remuneration.

When employers operate the system correctly they still find it difficult to explain to staff the results, when those results do not appear to make common sense. A system that gives a more consistent liability for employees on the same overall pay will appear fairer and so may generate fewer difficult queries.

The government has started a long period of consultations, so my predictions are very tentative. However, it is already clear that most reform will move national insurance into line with income tax, rather than in the opposite direction. Tying earnings for NIC purposes more closely to the rules for income tax purposes could mean employee NICs being applied to benefits in kind. If so, lower paid staff would face a significant rise in what they pay – 12 per cent is the current NIC rate – whilst higher paid staff would incur a more modest two per cent employee NIC charge.

A second probable reform is to calculate national insurance on a tax-year basis as is the case with income tax. Currently it is calculated by reference to ‘pay periods’ for most people, for example monthly or weekly.

A more difficult area is where people have multiple employers. Currently, national insurance is usually paid separately in respect of each employment. It would be fairer if employments were consolidated in order to calculate the liability. Although, this may prove very difficult to achieve in practice.

Any changes will have implications for the operation and qualification for certain state benefits, including pensions and job seekers allowance. So the consequences are potentially far reaching.

One risk is that the up front costs do not reap the hoped for long-term benefits – a major reason why previous governments have been cautious to reform.

Any changes are going to produce complex outcomes. It is not just a question of individual net pay, but also the social security benefit implications. There will be winners and losers; and losers tend to be more vocal than winners. While there are obvious risks for the government, there may also be impacts on employers. Employees who perceive they have lost out may seek to recover the loss from their employer.

I can foresee circumstances where certain low paid groups may seek to become self-employed to lessen the increased charges. It is notable that there are no significant proposals to reform the national insurance liability for the self-employed.

Any changes are unlikely to come into effect until 2017 at the earliest. A long lead-time is needed because what is being proposed will be very complex to implement. Given the changes the government alone will have to make to its systems for social security, it needs to be pretty confident that they are going to work. So it may take until 2015 to agree and legislate for the changes.

Most companies currently need only remain aware of the ongoing process and that the likely period of implementation will be in 2015/2016. Knowledge of potentially significant changes in the foreseeable future may inform current system developments.

Employers who may be most affected – for example because they have an unusually high turnover of staff, many part-time or seasonal workers, or who employ significant numbers of internationally mobile staff in the UK – may wish to get more involved in the process. The government is still seeking evidence both in support of and against change.