§ Mr. Rooker
asked the Secretary of State for Social Services what are the estimates of average prices and earnings upon which his estimate of £500 million of savings in the 1982–83 social security expenditure as a result of the Social Security Act 1980, given in the answer of 28 January, Official Report, column 433, is based.
§ Mrs. Chalker
As indicated in my original reply and in my reply of 2 February—[Vol. 17, c.122]—the figure of £500 million was intended to give no more than a broad indication of the savings arising from the decision to uprate pensions and long-term benefits in line with prices rather than the higher of prices or earnings and was not, therefore, recalculated in detail. To estimate the savings from this measure precisely it would be necessary to make hypothetical assumptions about what forecasts of prices and earnings the Government would have made and what action they would have taken if these estimates had turned out to be too high or too low.
During the period between the 1979 and 1980 upratings, earnings rose by about 19 per cent. and prices by about 151/2 per cent. The 1980 uprating reflected a forecast price rise of 161/2 per cent. though the 1 per cent. "overshoot" was subsequently adjusted at the 1981 uprating. During the period between the 1980 and 1981 upratings, earnings rose by a little over 11 per cent. and prices by 12 per cent. The 1981 uprating was based on a forecast movement in prices of 10 per cent. The figure of £500 million quoted in the original reply assumed that pensions and other benefits would have been about 4 per cent. higher during 1982–83 if the change had not been made, though 1 per cent. of this difference was attributed to the recovery of the 1 per cent., "overshoot" which 415W appeared separately in the table. An increase of 3 per cent. in pensions and other long-term benefits would cost about £500 million in a full year.
§ Mr. Rooker
asked the Secretary of State for Social Services if, pursuant to the answers to the hon. Member for Birmingham, Perry Barr, of 28 January, Official Report, column 433, and 2 February, Official Report, column 122, he will make a statement showing how the deferring by two weeks of the November 1980 social security uprating has the effect of cutting £100 million from the 1982–83 social security budget.
§ Mrs. Chalker
The effect of deferring the uprating in 1980 as permitted by the Social Security Act 1980 means that the 1980 and 1981 upratings took place two weeks later than they would have done under previous legislation. Since the Social Security Act 1975 the uprating dates had crept forward and in 1980 would have been a full week earlier than intended. The correction of this effect in the Social Security Act 1980, together with the one week deferment of the uprating, means that the 1980 and 1981 upratings took place two weeks later than they would otherwise have done. The 1982 uprating will also be two weeks later than it would have been under the previous arrangements. On this basis, the saving in social security expenditure in 1982–83 is of the order of £100 million. The exact saving will also depend on the details of the 1982 uprating to be announced with the uprating date in due course.