National Insurance

- Thursday, 17th July 2003

 

Mr. Lilley: To ask the Secretary of State for Work and Pensions if he will estimate for each contributory benefit the extra annual expenditure which would result from abolition of the national insurance contribution requirement. [125118]

Mr. Pond: The available information is in the table.

Estimated additional annual cost of contributory benefits if there was no contribution condition
? million

Benefit
Estimated annual cost

Basic state pension
4,100

Incapacity benefit
600

Jobseeker‘s allowance
200

Bereavement benefits
200

Notes:

1. The costs are net of income-related benefit offsets. They are rounded to the nearest ?100 million and are given in 2003?04 prices.

2. State pension costs are for the basic state pension only and do not include the state second pension, graduated retirement benefit (GRB) or state earnings related pension (SERPS). It is assumed that all those people of state pension age and above in 2003?04 receive the maximum rate payable of the basic state pension regardless of their underlying contribution record. This is ?77.45 in 2003?04.

3. For incapacity benefit (IB) and jobseeker‘s allowance (JSA), the costs cover payments which would be made to people who are currently claiming the benefits as credits only (for IB we have assumed SDA claimants would also become entitled to IB). In practice, there would also be costs generated from people who currently satisfy the medical or actively seeking work conditions for IB or JSA, but do not claim because they fail the contribution conditions.

4. For bereavement benefits, the estimate is of the likely cost of paying a full basic or age-related rate of widowed parent‘s allowance (WPA), widows pension (WP), widowed mother‘s allowance (WMA) and bereavement allowance (BA) to all those who currently receive those benefits. Due to the limitations of the data, the estimate is likely to be an upper limit to the costs of this change. No estimate is available of the numbers of people who would become newly entitled.

5. The costs for all benefits exclude dependency increases.

Sources:

1. Costs for incapacity benefit and jobseeker‘s allowance are estimated from a 5 per cent. sample of benefit records taken in February 2003.

2. Costs for bereavement benefit are estimated from a 5 per cent. sample of benefit records taken in September 2002.

3. Costs for the basic state pension are based on estimates supplied by the Government Actuary‘s Department. Income-related benefit offsets are calculated using the Department for Work and Pensions Policy Simulation model.

17 Jul 2003 : Column 548W

 

 

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