§ Mr. Alan HowarthTo ask the Secretary of State for Social Security what is his estimate of the cost of increasing current(a) earnings disregards and (b) capital limits to each benefit by (i) earnings and (ii) prices; and what would have been the cost at 1996 prices had these been uprated every year since their introduction. [34273]
§ Mr. Roger EvansThe information requested is set out in the tables.
285W
Table 1: Estimated costs of increasing earnings disregards Change to earnings disregards Cost 1996–97 (£ millions) Increasing disregards by prices. 10 Increasing disregards by earnings. 10
Table 1: Estimated costs of increasing earnings disregards Change to earnings disregards Cost 1996–97 (£ millions) Increasing disregards by prices since their introduction. 120 Increasing disregards by earnings since their introduction. 160 1. Estimates are modelled on the 1994 Quarterly Statistical Enquiry and the 1991/1992/1993 Family Expenditure Surveys uprated to 1996–97 levels of prices, benefits and earnings. Costs are rounded to the nearest £10 million.
2. Factors for uprating are based on the ROSSI and earnings indexes of the year prior to the year in question and have been applied to earnings disregard levels at April 1996.
3. Figures for Income Support contain unemployed cases who will be included in Jobseekers Allowance from October 1996. The effect on the Back to Work Bonus has not been estimated as the future behavioural response is very uncertain.
4. It has been assumed that no behavioural effects take place. The estimates which involve larger changes to the earnings disregard should in particular be treated with caution.
Table 2: Estimated cost of uprating capital limits since their introduction, or at the April 1996 uprating, at 1996–97 prices and benefit levels Income related benefit Current year Since introduction Uprated by: Prices or earnings Prices (ROSSI) £ million Earnings £ million Income Support (including Jobseekers Allowance (Income Based)) * 60 70 Housing Benefit * 50 70 Council Tax Benefit * * * Family Credit * 30 40 Total estimated cost * 140 190 1. Estimates are rounded to the nearest £10 million: * indicates a cost less than £5 million.
2. The lower and upper capital limits (except in residential care and nursing home cases) which apply in the calculation of income-related benefits are currently £3,000 and £8,000 respectively for Income Support and Family Credit, and £3,000 and £16,000 for Housing Benefit, Council Tax Benefit and Disability Working Allowance. The lower £3,000 limit was introduced in 1988. The upper limits of £8,000 for Income Support and £16,000 for Housing Benefit were increased in 1990. The Housing Benefit capital limits were applied to Disability Working Allowance and Council Tax Benefit when these benefits were introduced in 1992 and 1993 respectively.
3. Estimates are based upon data drawn from the 1991, 1992 and 1993 Family Expenditure Surveys, uprated to 1996–97 prices and benefit levels.
4. Estimates exclude cases in residential care and nursing homes.
5. Adjustments to these estimates are made using data drawn from the May 1995 Income Support Quarterly Statistical Enquiry; the Family Credit database at July 1995; and the May 1994 Housing Benefit/Council Tax Benefit Management Information System.
6. It is not possible to give separate costs for Disability Working Allowance as there is insufficient information on likely claimants to effectively model their entitlement.
7. Figures for Income Support include Jobseekers's Allowance (Income-Based) from October 1996,
8. ROSSI is the Retail Prices Index excluding the rent, mortgage interest and local tax components, and is used to uprate income-related benefits.
9. After rounding the capital limits to the nearest £250, uprating by earnings or prices is the same for the one year uprating at April 1996.
10. Totals may not sum due to rounding.
286W