HL Deb 04 February 1975 vol 356 cc756-7
Lord SHINWELL

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether any estimate is available on the financial effect arising from increased unemployment on Exchequer contributions to the National Insurance Fund.

Lord WELLS-PESTELL

My Lords, an increase of 100,000 in the level of unemployment would reduce the Treasury supplement to the National Insurance Fund by about £7 million a year.

Lord SHINWELL

My Lords, I am obliged to my noble friend for that reply, but if there is an increase in the level of unemployment will this not make exacting demands on the Exchequer contribution, or, alternatively, will it not increase the National Insurance contribution for both the employers and employees?

Lord WELLS-PESTELL

My Lords, increased unemployment affects the Fund in two ways: the Fund has to meet the cost of additional unemployment benefit at the same time as the fall in the number of people in employment causes a drop in the contribution income. The combined effect on the Fund in the next financial year 1975–76 would be to alter the balance of income and expenditure by £105 million for each 100,000 unemployed throughout the whole year. Of the £105 million, a sum of £60 million would be additional benefit paid to the unemployed. The sum of £38 million would be loss of contributions and the Treasury suplement is always 18 per cent. of the contribution level; so that means that there would be a £7 million loss of Treasury supplement consequent upon it, and that totals £105 million.

Lord SHINWELL

My Lords, in view of that somewhat complicated reply, which I should like to study before making any comment upon it, may I ask my noble friend whether it does not amount to the fact that with an increase in the unemployment level there would be further Exchequer contributions, or, alternatively, an increase in the National Insurance contribution for employers and employees?

Lord WELLS-PESTELL

My Lords, the best way I can answer my noble friend is to say that even if unemployment rose to such an extent that the benefit cost could not be met from the current income of the Fund, the Fund balances, which at the present moment stand at about £1,500 million, could be made available for use in that way.

Lord TAYLOR of MANSFIELD

My Lords, can my noble friend give the percentage of the contribution from the Exchequer at the initiation of the scheme in 1948 and what it is today?

Lord WELLS-PESTELL

I am afraid not, my Lords. I think that is another Question and I should need to have notice of it.