§ By far the largest single element in public spending is social security. In 1982–83 it will account for £32 billion, over a quarter of the total. About half of this goes to the elderly, who deserve our special consideration. The Government have been determined to preserve the full purchasing power of the social security retirement pension. We shall accordingly raise the pension rates, to cover the expected increase in prices for the 12 months to next November.
§ When I published the Industry Act forecast last December, I expected that increase to be 10 per cent. That was an appropriately cautious central forecast. But the outlook for inflation has clearly improved since December. My similar forecast now is that prices will go up by only 9 per cent. in the same 12-month period.
§ But I do not propose to raise the pension rates by only 9 per cent. We intend also to compensate pensioners for the fact that last year's increase was based on a forecast of the rise in prices that was 2 per cent. below the actual rise. Retirement pensions will thus go up next November by a total of 11 per cent. The standard rate will be increased by £3.25 to £32.85 a week for a single person, and by £5.20 to £52.55 for a married couple.
§ There is, of course, no Government commitment to full price protection except for the retirement pension and associated benefits. During the debate on the Government's public expenditure plans we said that a decision about the 2 per cent. shortfall in the value of other benefits would be announced at Budget time.
§ The main ones are unemployment benefit and supplementary allowance, sickness and injury benefit, and maternity allowance. I have received many representations that the 2 per cent. shortfall should be restored on these benefits also. We have decided that it should be.
§ This means that the rate of unemployment benefit will rise from £22.50 a week to £25 for a single person, and from £36.40 to £40.45for a married couple. Details of the other benefits will be announced tomorrow by my right hon. Friend the Secretary of State for Social Services. We have also decided on some changes in the rules governing payment of benefits. These are in response to representations we have received, and will be widely welcomed. My right hon. Friend will give details in his announcement tomorrow.
§ There are, however, some further changes which I should announce today. First, child benefit, which is an important source of income for many—especially the lower paid with large families. From next November it 739 will go up by 60p a week, from £5.25 to £5.85. It will thus have been increased by 23 per cent. over two years, and so fully protected against inflation.
§ The additional one-parent benefit will be increased by 35p to £3.65. In the case of the family income supplement, the prescribed amount for a one-child family will go up from £74 to £82.50.
§ I shall have something to say a little later about the mobility allowance.
§ The full year public expenditure cost of all the changes in the social security field which I have mentioned will be some £3,000 million. The extra cost in 1982–83 will all be accommodated within the public expenditure totals I have just announced.
§ I turn now to help for charities.
§ The Government are deeply conscious of the contribution to our national life that is made by many of our charitable organisations. Two years ago I introduced substantial new tax relief for covenanted donations to charities. I also doubled the exemption from capital transfer tax for charitable bequests or gifts made within one year of death.
§ We have been urged to relieve charities from VAT on their purchases. The attractions of this are obvious, but it raises substantial difficulties. The more one studies how it might be done—we have looked into it exhaustively—the more insuperable appear the problems of definition, of administration, and of equity that stand in its way. So, reluctantly, I have had to be satisfied with other ways of helping charities instead.
§ First, I propose to take the capital transfer tax exemption for qualifying gifts to charities a stage further, by increasing it, for gifts made within a year of death from £200,000 to £250,000.
§ Secondly, I intend to abolish stamp duty completely on transfers of assets to charities.
§ Thirdly, as the National Council for Voluntary Organisations has suggested, I propose to remove beyond all doubt any liability to development land tax where a charity disposes of property which has been subject to rollover relief.
§ Taken together, these measures constitute worthwhile new assistance to charities and voluntary organisations. They build still further upon the significant benefits which charities have derived from earlier action by this Government. Our record continues to be one in which we can justifiably take pride.
§ I now come to the particular problem of the disabled, which we have always had very much in mind. Last year, the International Year of the Disabled, I introduced a range of value added tax reliefs for charities concerned with the disabled. I am now able to announce three further measures of help.
§ First, there will be some extension of the existing VAT reliefs for disabled people and the charities serving them.
§ Secondly, the rate of mobility allowance will be increased—by more than the expected rise in prices—from £16.50 to £18.30 a week. This will mean that mobility allowance has risen by over 80 per cent. since the Government took office. This represents a considerable increase in real terms.
§ In addition, I propose this year to respond to a particularly important request made on behalf of the disabled to successive Governments in recent years. I 740 propose that from 6 April the mobility allowance should be wholly exempt from income tax. This is a major step: it means an increase in net income of up to £5 a week for the working disabled. They deserve every encouragement, and the change will, I know, be widely welcomed.