Mr. Ted Fletcher
asked the Chancellor of the Exchequer if he will itemise the cost to the State that would arise if a married man with two dependent children and earning £3,000 per year and having worked for 20 years became unemployed, under the following headings: (1) loss of income tax, (2) loss of national insurance contribution, (3) cost of flat rate benefit, (4) cost of earnings-related benefit, (5) cost of supplementary benefit and (6) cost of redundancy pay.
§ Mr. Joel Barnett
On the assumptions given below, the figures for a full year would he as follows:
£ (1) Loss of income tax 569 (2) Loss of national insurance contributions employee's 165 employer's 255 (3) Cost of flat rate benefit 1,285 (4) Cost of earnings related benefit 244 (5) Cost of supplementary benefit 92 (6) Cost of redundancy pay 577 Total 3,187
It is assumed that the man is unemployed for a full tax year. He is under 40 and has two children aged between 11 and 15. He has worked for 20 years with the same employer. Current rates of income tax, tax allowance and national 132W insurance have been assumed. The calculation of ERS is based on reckonable earnings in the 1974–75 tax year, which are assumed to be £2,400.
The figures relate to a particular case which is not typical of those on the unemployment register. Entitlement to unemployment and supplementary benefit and redundancy pay differs widely, while the average spell spent unemployed is considerably less than one year. Many employees receive allowances for mortgage interest, etc., and therefore pay less income tax than assumed.