§ Mr. Nottasked the Chancellor of the Exchequer whether he will estimate the extent to which firms will be able to recoup the increase in employers' national insurance contributions in 1977–78; and what proportion of the amount recouped will be from exports.
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§ Mr. Denzil DaviesFirms will be able to treat the additional national insurance contributions as an allowable cost under the Price Code. Most firms will probably seek to adjust their domestic prices to meet these extra costs, though no doubt some will be constrained by market conditions. The estimate my right hon. Friend gave in the House of the effect on the Retail Price Index—a little over 1 per cent. by early 1978—was based on the assumption that virtually all the increase would be passed on by then. The proportion of the amount recouped from exports, as opposed to domestic sales, is assumed to be about 20 per cent.