HL Deb 23 March 1993 vol 544 c11WA
Earl Russell

asked Her Majesty's Government:

What would be the effect on the Rossi index and the consequent cost to the Exchequer, if social security benefits were raised to cover any imposition of VAT on: (a) electricity charges; (b) gas charges and (c) water charges.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

The effect is given in the tables.

Table 1: VAT at 8 per cent.
Imposition of VAT on: Percentage increase in Rossi Cost in terms of income-related benefits (£ millions)
Electricity charges 0.2 80
Gas charges 0.15 60
Water charges 0.1 30
Total 0.45 160

Table 2: VAT at 17.5 per cent.
Imposition of VAT on: Percentage increase in Rossi Cost in terms of income-related benefits (£ millions)
Electricity charges 0.5 170
Gas charges 0.3 120
Water charges 0.2 70
Total 1.0 350

Notes:

1. The tables show the effect of VAT at 8.0 per cent. and 17.5 per cent. in line with the Budget statement. VAT was not extended to water in the Chancellor's statement.

2. Assumes that increases are fully passed on to consumers in the form of higher prices.

3. Cost estimates are rounded to the nearest £10 million and may not sum. 1993–94 levels of caseloads, prices and benefit rates.