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Dept of Social Security

Answer

Mr. Eric Clarke: To ask the Secretary of State for Social Security if he will estimate the cost in 1996-97 of paying a basic pension supplement to all pensioner units whose total pension income from all sources is less than the level of income support plus £5 for a single pensioner and £8 for a couple, raising their pension incomes to the income support level plus £5 for single pensioners and £8 for pensioner couples; and what would be the annual cost of maintaining pensioners' pension incomes at that level in real terms for each year until 2001-02, assuming the 1996-97 income support regime and giving costs net of any effects on tax/benefit revenues. [6703] Mr. Mitchell: The estimated cost in 1996-97 of raising the total pension income from all sources of all pensioner units to income support levels plus £5 for a single pensioner and £8 for a pensioner couple is £3.05 billion. It is not possible to give estimates of this cost to the year 2001-02 as reliable forecasts of future levels of pensioners' incomes are not available for this period. Notes: 1. It has been assumed that the pensioner supplement would be paid as an increase in income support levels. Maintaining the current income-related benefit system involves aligning the thresholds and income for assessment purposes in the other income-related benefits. As a result, there are increased costs in the housing benefit and council tax benefit included in the total. 2. To raise pension-only income to the levels specified implies that other income would be disregarded. The costs reflect this assumption also. 3. No account has been taken of any additional costs that would arise from the abolition of the existing capital limits in the income-related benefits which would be necessary to ensure that those above these limits also received any required increase in pension income. 4. Income support is not taxable for claimants over 60 years of age so there are no net tax effects from the increased payment in income support. 5. The costs have been estimated using data drawn from the May 1994 income support quarterly statistical inquiry and the 1991, 1992 and 1993 family expenditure surveys, uprated to 1996-97 prices and benefit levels and rounded to £50 million.

Secondary information

Type

Written question

Reference

6703; 269 c163-4W

Session

1995-96

Subjects

Income support Expenditure Personal income Social security benefits State retirement pensions Levels

Contains statistics

Yes