asked the Minister for Social Welfare the effect in terms of weekly payments on a worker of the Government's decision to reduce pay-related benefit to 25 per cent and to extend the waiting period to 18 days for (a) a single worker earning £9,500 a year in his third week of disability or unemployment benefit compared with the position which applies at present and (b) a similar worker earning £13,000 if these two changes had not been made.
Written Answers. - Social Welfare Benefits.
208.
When the waiting period for pay-related benefit is extended to 18 days that benefit will not be payable in the third week. Flat-rate benefit of £31.65 weekly (£34.80 from the end of June 1983) will be payable. From the fourth week of the claim the reduction of pay-related benefit from 40 per cent to 25 per cent would result in maximum weekly payments of £61.93 and £76.41 a week for single workers with earnings of £9,500 and £13,000 respectively (£65.08 and £79.56 respectively from the end of June next). At present, these workers could receive maximum weekly payments of £81.70 and £94.85 respectively.
The changes in the pay-related benefit scheme from April next are designed to maintain a more realistic relationship between the level of benefits and the recipient's normal take home pay. The existence of tax rebates, which can be significant in some cases, was taken into account in the reappraisal of benefit levels. I might add that the previous Government had decided to make cuts in pay-related benefit from January 1983.
From April, single workers with earnings of £9,500 and £13,000 will, from the fourth week of their claim, receive overall benefit amounting to some 55 per cent and 57 per cent respectively of their normal take home pay. A married man with two children earning £9,500 will receive £98.33 per week representing some 73 per cent of his take home pay while the same man earning £13,000 would receive £112.80 per week representing 66 per cent of his take home pay. These replacement ratios will increase to 79 per cent and 70 per cent respectively following the increases in flat rate benefits from June next.
209.
asked the Minister for Social Welfare the savings he expects to make in 1983 and in a full year by extending the waiting period for pay-related benefit from 12 to 18 days.
210.
asked the Minister for Social Welfare the savings he expects to make in 1983 and in a full year by reducing pay-related benefit from 40 per cent to 25 per cent.
I propose to take Questions Nos. 209 and 210 together.
The reduction in expenditure due to the extension of the waiting period for pay-related benefit from 12 to 18 days from April 1983 is estimated at approximately £4.5 million in 1983 and £6 million in a full year.
The reduction in expenditure due to the change in the first phase of pay-related benefit from 40 per cent to 25 per cent from April 1983 is estimated at approximately £17 million in 1983 and £22.7 million in a full year.
I should point out that the previous Government decided on 22 October 1982 to reduce the first phase of pay-related benefit from 40 per cent to 30 per cent with effect from January 1983 with an estimated saving of £13.3 million in 1983.
The effect of the various changes being made in the case of married worker with two children on estimated 1983. average earnings of £145 a week who is in receipt of disability benefit would, allowing for the increase in flat-rate benefit from June 1983, be to provide him with 86 per cent of his net earnings as total benefit during the first phase of pay-related benefit.
The estimated expenditure on pay-related benefit in 1983 as compared with 1981 and 1982 is as follows: 1981, £58.5 million; 1982, £77.8 million (estimated); 1983, £61.3 million (estimated).
211.
asked the Minister for Social Welfare the savings he expects to make as a result of the Government's decision to defer social welfare increases from 1 April to the end of June for (a) old age pensioners, (b) widows, (c) the disabled, (d) the unemployed and (e) all other beneficiaries.
If the social welfare rates increases had been introduced from the beginning of April 1983 instead of from end-June 1983 the additional cost would have been as follows:
|
£ million |
|
|
(a) old age pensioners (including retirement pensioners) |
15.5 |
|
(b) widows |
5.5 |
|
(c) the disabled (i.e. recipients of disability benefit and invalidity pension) |
5.5 |
|
(d) the unemployed |
10.7 |
|
(e) all other beneficiaries |
2.1 |
|
Total |
39.3 |
I should point out that the estimated cost to the Exchequer of the increases in rates of social welfare payments provided for in the budget for the five categories of beneficiaries referred to is £80.6 million in 1983 and £157.2 million in a full year.