§ Mr. Hannam
asked the Secretary of State for Social Services in what circumstances reduced rates of short-term benefits are paid; and whether he has any plans for changing them.
§ Mr. Newton
Payment of short-term benefits at the full rate depends on the claimant having paid or been credited with national insurance contributions on earnings of 50 times the lower earnings limit, below which contributions are not payable, in the relevant tax year. In the current year the lower limit is £35.50 so that to qualify for full benefit a person needs to have paid contributions on earnings of at least £1,775 in the year. People who cannot meet this condition but have paid contributions on earnings of £887.50 or more receive half-rate benefit and those who have paid on £1,331.25 or more receive three-quarter rate.
The half rate of employment benefit for a single person is £15.23 and the three-quarter rate is £22.84. The rates for sickness benefit and maternity allowance are slightly lower. The administrative costs of paying such reduced rates of benefit are high—over 20 per cent. Over half the recipients receive no financial advantage from the benefit because they also draw supplementary benefit. The rest are likely either to have partners who are working or to have other resources of their own.
The Government have concluded that these arrangements are an unjustified complication of the social security system and do not represent a sensible use of resources. We therefore propose in the forthcoming Social Security Bill to abolish the power to make regulations for the payment of these reduced rates. Subject to parliamentary agreement to this proposal further consideration will be given to the date of implementation. Transitional protection will be given to people who are receiving the benefit at that date. The change will save about £20 million net in a full year.