§ Mr. BettsTo ask the Secretary of State for Social Security if he will calculate the cost of extra payments in housing and poll tax benefits if the income assumed to be realised on capital owned by benefit claimants had been reduced in line with the fall in base rates since 17 September 1992; and how much of this cost would have fallen on the national Exchequer.
§ Mr. Burt[holding answer 11 March 1993]: The formula applying to capital, introduced on the reform of the income-related benefits in April 1988, makes no assumptions about the level of any return on capital invested.
Base rates have both risen and fallen since that time and the formula has remained the same. Had the formula assumed a return and had it proportionately reflected only those changes in the base rate since 17 September 1992, the estimated cost to the Exchequer to the end of 1992–93 financial year would be £50 million; £30 million in housing benefit and £20 million in community charge benefit.
Source—Modelled at 1992–93 prices and benefit levels using data from the 1987–88–89 Family Expenditure Surveys.Note: Figures have been rounded to the nearest £10 million.