HC Deb 19 July 1979 vol 970 cc1970-1
6. Mr. McCrindle

asked the Chancellor of the Exchequer if he will make a statement on the taxation of short-term unemployment benefits.

Mr. Biffen

As our pre-election manifesto made clear, it is our aim to bring short-term unemployment benefits within the tax system. We are at present examining ways of overcoming the administrative difficulties which have up to now stood in the way of taxing short-term benefits, and when this examination is complete I shall let the House know of our conclusions.

Mr. McCrindle

I accept that there are administrative difficulties, but does my right hon. Friend agree that there is considerable resentment among those who are employed against those who choose to stay unemployed, even when jobs are available? Will my right hon. Friend confirm that the taxation of short-term unemployment benefits would provide a considerable incentive to take up jobs where they were available?

Mr. Biffen


Mr. Dubs

How many extra civil servants will be needed to bring that about?

Mr. Biffen

Extra staff costs in relation to taxing short-term benefits for the unemployed would be relatively modest, but it is true that the wider-scale scheme would involve quite substantial increases in staff. That is precisely why an examination is now being undertaken, so that a proper and up-to-date evaluation can be made.

Mr. Cockeram

Does my right hon. Friend accept that when social security and unemployment benefits are raised in line with inflation it produces distortions with those whose wages are not rising in line with inflation, and that when those distortions are magnified by the failure to tax the former while taxing the latter it produces the encouragement to stay out of work?

Mr. Biffen

I very much accept that point, and it underlines the necessity for the review.

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