HC Deb 03 February 2004 vol 417 cc835-6W
Mr. Webb

To ask the Secretary of State for Work and Pensions if he will estimate the impact on his Department's budget of contracting the self-employed with immediate effect into the state second pension, in each of the next 20 years. [150454]

Malcolm Wicks

The following table shows the projected increase in expenditure on state second pension to pensioners, if all self-employed people with profits greater than the small earnings exception (and hence who are assumed to pay Class 2 contributions) accrue flat-rate state second pension, based on earnings at the lower earnings threshold, from April 2007 onwards. Costs are shown in £ billion, in 2003–04 prices terms, for the first 20 years in which there would be increased expenditure.

Projected increase in expenditure on state second pension, if all self-employed with profits above the small earnings exception accrue flat-rate S2P from 2007–08 to 2003–04 price terms
Cost (£ billion)
2008–09 0.0
2009–10 0.0
2010–11 0.0
2011–12 0.0
2012–13 0.1
2013–14 0.1
2014–15 0.1
2015–16 0.1
2016–17 0.2
2017–18 0.2
2018–19 0.3
2019–20 0.3
2020–21 0.4
2021–22 0.5
2022–23 0.6
2023–24 0.7
2024–25 0.8
2025–26 0.9
2026–27 1.0
2027–28 1.1

Notes:

1. The projected increase in S2P expenditure to pensioners shown in the table does not allow for (a) offsetting savings in income-related benefits, or (b) increased expenditure on S2P paid alongside bereavement benefits to those below state pension age.

2. The projected expenditure has been calculated on a consistent basis to that used for the projections in the Quinquennial Review of the National Insurance Fund as at April 2000 (Cm 6008), assuming real earnings growth of 2 per cent. a year. No allowance has been made for the effects of the most recent (2002-based) population projections, or any other information which has become available since the results underlying the Quinquennial Review were prepared.

3. The projected expenditure relates to the GB National Insurance Fund (Northern Ireland has a separate Fund).

4. It has been assumed that the self-employed would not be able to contract out of S2P.