National Insurance Fund (Hansard, 11 January 1977)

§ 13. Mr. Skinner
asked the Secretary of State for Social Services if he will take steps to reduce the surplus in the National Insurance Fund.

§ Mr. Ennals
No, Sir, for reasons which I have explained in a note available to all hon. Members.

§ Mr. Skinner
Does my right hon. Friend agree that at present there is a surplus of about £900 million in the fund? I am told that it could be calculated at about £2.5 billion over the next three years. Will my right hon. Friend take the advice of his hon. Friend the Under-Secretary, who suggested that local authorities should reallocate resources within their departments? My right hon. Friend could do the same. He should reallocate some of this National Insurance Fund to get rid of prescription, teeth and spectacle charges, to raise old-age pensions, and to restore the £10 Christmas bonus.

§ Mr. Ennals
It is not as simple as that—I wish that it were—because spending all the surpluses would require either that we spent less on other things or that we raised more from other sources. A third possibility is that we should borrow from elsewhere. My hon. Friend will see, therefore, that this simply is not on. The balance in the fund now amounts to about three months' expenditure. It is proper and fair, and good housekeeping, that we should make certain that we can meet any demands that might come upon us in the event of, say, an influenza epidemic, or something like that. There was time when the National Insurance Fund held as much as two years' payments. Now it holds only three months' payments, so that as the payments go up the surplus must go up too.

§ Mrs. Chalker
Will the right hon. Gentleman confirm that the reserve in the fund now totals about £3,000 million?

§ Mr. Ennals
The figure is about £2,200 million. I shall be answering a Question today giving the precise figures, which show a marginal and not a dramatic increase. In any case, these are matters that can be taken up by the House in the debate this evening on the re-rating order.

§ Mr. George Cunningham
I accept the general point about public finance, but how can my right hon. Friend justify charging a higher national insurance contribution in 1977–78 than is necessary to meet the due payment out of the fund, especially to people who expect to retire at about the end of that year? Surely they will be paying an amount beyond what is required to pay for their benefits?

§ Mr. Ennals
Let me ask my hon. Friend how one could justify, in this year, exempting from increases in payment those people who receive more than £95 a week. He is suggesting that the general tradition by which those who receive more should pay more should somehow be ended. One of the effects of the order is that we are raising not only the ceiling but the floor, and this will exclude from payment some of those who are very low earners.