§ Mr. Kenneth Clarkeasked the Secretary of State for Social Services what 801W is the Government's estimate of the cost to public funds, net after drawback of taxation and other factors, of complete abolition of the earnings rule for retirement pensioners in April 1976; what is the Government's estimate of the net cost of easing the earnings rule in line with the existing legislation; and what is the Government's estimate of the net cost of their latest proposals for the earnings rule.
§ Mr. O'MalleyAfter allowing for tax at present rates on the extra pension that would be payable, and on current pension rates, it would cost about £80 million extra in 1976–77 to abolish the earnings rule compared with increasing the limit to £35 in April 1976. Increasing the limit to £35 under existing legislation will cost about £40 million extra in 1976–77. The increase to £50 in April 1977 provided under existing legislation would have cost £35 million more in 1977–78 than leaving the limit at £35 increased in line with earnings. It is that amount which, after tax, will be saved under the Government's latest proposals. All these amounts assume that the proposed earnings limits would also apply for the purpose of benefit for adult dependants of retirement pensioners and invalidity pensioners, and take account of resulting changes in contribution liability.