§ Mr. Pavittasked the Secretary of State for Social Services what is his estimate of the total amount of saving to his Department if employers have to meet the first eight weeks of sickness pay for their employees; what figure this would represent if regarded as income tax in the pound; if such payment will qualify as expenses to be deducted from the total company taxable income; and if he will make a statement.
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§ Mr. Patrick Jenkin[pursuant to his reply, 13 November 1980 c. 417]: The Green Paper "Income During Initial Sickness: A New Strategy" Cmnd. 7864 explains that there will be savings to the national insurance fund in sickness benefit of about £375 million in a full year at current rates. There will also be public expenditure savings to this Department as a result of the reduction in Civil Service posts.
Employers as a whole will be fully compensated for their additional wage costs by a reduction in their secondary national insurance contribution liability. An increase of 1p on the basic rate of income tax is estimated to yield about £800 million in a year. Payment of sick pay by employers will continue to count as expenses to be deducted from a company's taxable profits.