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Mr. Norman Lamont : Estimates are available for single people aged 65 and over and married couples in which one or both members are aged 65 and over. In 1988-89, 2.6 million of these tax units are liable to income tax, approximately one third of all aged tax units. This estimate is based on a projection of the 1985-86 survey of personal incomes and is therefore provisional.
- |£ million ------------------------------ 1983-84 |62.4 1984-85 |66.3 1985-86 |71.4 1986-87 |81.1 1987-88 |91.7 Note: Based on 1988-89 Estimates provision of £113.2 million = 100.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer whether he will publish in the Official Report the relevant allowances referred to in annex 7 of Cmnd. 9756 in each case in terms of local currency and as a percentage of average adult male earnings or the nearest available equivalent together with the marginal and
Column 53average rates of tax for single persons and one-earner married couples with such earnings ; and if he will add (a) the average and marginal rates for a two-earner married couple where the wife's earnings are the average for an adult female and (b) the amount of child benefit or child allowance.
Mr. Norman Lamont : This information could be provided only at disproportionate cost. Information on the level of tax thresholds and on the marginal rates of tax in some of the countries mentioned in annex 7 of Cmnd. 9756 is published in the Inland Revenue's note "International Comparisons of Direct Tax on Employment Income" a copy of which is available in the Library.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer what is the current married man's tax threshold as a percentage of adult manual workers' average earnings currently as calculated in chart 2.4 of Cmnd. 9756 ; and what is his latest estimate of the number of families who would now receive at least 80 per cent. of their present income if they did not work at all.
Mr. Norman Lamont : In 1988-89, the married man's tax allowance is 37.3 per cent. of average adult manual earnings. The number of families who would receive at least 80 per cent. of their current income if they did not work is a matter for my right hon. Friend the Secretary of State for Social Security.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer in what respect his latest proposals for separate taxation of husbands and wives differ in principle from those given in paragraph 3.4 of Cmnd. 9756 ; and what is the gain or loss to the Revenue from the change at current tax and allowance levels.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer what is the net gain or loss to the Revenue from (a) reducing the standard rate of income tax by 5p, (b) raising the ceiling for means-tested income support by 25 per cent. and (c) increasing the state pension by 10 per cent.
Mr. Norman Lamont : The direct revenue cost in a full year, at 1989- 90 income levels of a 5p reduction in the basic rate of tax is about £7.5 billion. If introduced for 1989-90 the change would reduce tax receipts by about £7 billion in that year. A 10 per cent. increase in the basic state pension would lead to an increase of about £2 billion in the amount of pensions paid in 1989-90. An estimate of the cost of increasing the level of income support could be provided only at disproportionate cost.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer (1) whether he has come to a decision on the option in paragraph 4.16 of Cmnd. 9756 of restricting the additional personal income tax allowance to those in receipt of one-parent and other appropriate benefits ; and if he will publish in the Official Report a table showing what the effect of such a change would be in terms of the number of allowances claimed and the savings to the Revenue ;
Column 54(2) if he has come to a decision on the option in paragraph 4.15 Cmnd. 9756 of converting the additional personal income tax allowance into increased social security provision ; and if he will provide an estimate of (a) the amount of revenue which could be transferred to the social security budget in this way and (b) what increase in benefits would be required to ensure that nobody is worse off as a result of the change.
Mr. Norman Lamont : Section 30 of the Finance Act 1988 changed the rules for the additional personal allowance so that from April 1989 unmarried couples with children will be able to quality for only one additional personal allowance between them. No consequential changes in social security benefits were made and there are no plans for further changes in the allowance.
Mr. Anthony Coombs : To ask the Chancellor of the Exchequer what tax reliefs are available towards the costs of company employees studying for vocational or professional qualifications in the United Kingdom ; and what information he has on such allowances in France and West Germany.
Mr. Norman Lamont [holding answer 29 November 1988] : There are tax reliefs for employees' job-related training which exempt from income tax training costs met by employers and by employees themselves provided certain conditions are satisfied. Last year we were able to introduce a new relief for employees whose employers pay for the cost of retraining in new skills and for self-employment. Details of the tax reliefs for training available in France and Germany, together with those of a number of other major industrial countries, including the United Kingdom, are available in a report published last May by the PICKUP programme of the Department of Education and Science. I believe that my hon. Friend already has a copy.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer what is his estimate of the amount of the mortgage taken out by the median mortgagor claiming mortgage interest relief, the increase since May in the rate of interest, the amount of interest payable in a full year, and the total amount of relief at the standard rate payable in a full year at the standard rate of income tax.
Mr. Norman Lamont : In 1988-89 the estimated median mortgage is £22,000. The mortgage interest rate has increased since May from 9.75 per cent. to 12.75 per cent. ; and increase of three percentage points. The gross amount of interest payable in a full year at 1988-89 levels by the median mortgagor is £2,550 ; the amount of relief at the basic rate of income tax is £640 leaving a net interest payment of £1,910 in 1988-89.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer how much is paid by the top 5 per cent. of taxpayers in employees' national insurance contributions ; and what would be the gain to the Revenue by removing the upper earnings limit.
Column 55insurance contributions in 1988-89. I refer the hon. Member to my reply to him on 31 October at columns 500-01 for the Revenue effect of abolishing the upper earnings limit.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer whether he proposes to extend the proposed married couples' income tax allowance to single parents in the form of an additional personal income tax allowance when separate taxation of husbands and wives is introduced in 1990-91.
Mr. Norman Lamont : The additional personal allowance for those with single-handed responsibility for children will continue to be available after independent taxation is introduced in April 1990. The additional personal allowance and the new married couple's allowance will be equal in value.
Mr. Austin Mitchell : To ask the Chancellor of the Exchequer whether he will publish in the Official Report a table showing for (a) banks, (b) building societies and (c) other licensed depositors the percentage of advances to gross deposits together with the percentage held in, respectively, cash, call money and discounts, special deposits and investments ; and if he will provide corresponding figures for 1958, 1968, 1976 and 1978.
No figures are available for 1958.
b. for Building Societies--in the BSA (Building Societies Association) Bulletin, Table 6, and also in Financial Statistics, Table 7.7. Figures for earlier years are available in "A Compendium of Building Society Statistics", published by the Building Societies Association.
c. for other deposit takers--no separate information is available.
Mr. Norman Lamont : Receipts in 1987-88 from capital gains tax from individuals and trusts were £1,380 million. It is estimated that 40 to 50 per cent. was derived from ordinary shares quoted on the United Kingdom stock exchange, about 20 per cent. from other shares and securities, and the rest from other property. I regret that finer analyses to isolate the yield from the sale of shares in unquoted companies are not available. Analyses are not available for the yield within corporation tax from gains on the sales of such shares by companies.
Mr. Ian Bruce : To ask the Chancellor of the Exchequer if he will make a statement on the detection of fraud by the Inland Revenue ; and what tax has been recovered by such fraud investigations in the last financial year for which figures are available.
Mr. Norman Lamont : Since 1979 more Inland Revenue resources have been deployed, not just on fraud detection but on tax investigation work generally. This, together with improved case selection and working methods, has increased the yield--tax, interest and penalties--from such compliance work from £111 million in 1979 to £877 million in 1987-88. In the year to 31 March 1988 tax of £495 million was recovered through fraud investigations.
Mr. Teddy Taylor : To ask the Chancellor of the Exchequer if he will make a statement outlining the powers which are available to the European Economic Community to seek overdraft loans from member states ; and under what powers such demands have been met by Her Majesty's Government.
Mr. Brooke : The Commission is empowered to request overdraft facilities under article 12(2) of Council regulation 2891/77. This article allows the Commission to overdraw its accounts with member states to meet a prospective cash deficit. The member states share the overdraft in proportion to the estimated budget revenue due from each of them.
Member states are legally obliged to comply with properly constituted requests under article 12(2). The Government therefore meet such requests directly from the Consolidated Fund in accordance with article 2(3) of the European Communities Act 1972. Repayment of any drawing under the overdraft facility is made by deduction from future own resources payments. The article 12(2) facility does not affect the total amount which the Community is authorised to spend during the year.
Mr. Teddy Taylor : To ask the Chancellor of the Exchequer on what date the IGA payments failed to be made in consequence of the recent European Council decision ; what member states have failed to make the necessary payments ; what sums are involved ; and if such member states are obliged in terms of the agreement to pay interest on late payments.
Mr. Brooke : Member states are not obliged to make payments under the 1988 IGA until they have obtained the necessary approval from their national legislatures. This means that there is no fixed date on which the initial payments are due. Information relating to the timing of payments by individual member states is not generally available. There is no explicit provision in the IGA for interest charges. It would be for the Commission to consider whether to claim interest in the event of any default.
Mr. Teddy Taylor : To ask the Chancellor of the Exchequer why Her Majesty's Government agreed to make an advance payment to the EEC of their non-value added tax own resources because of the EEC's cash flow problems created by the non-payment of IGA by certain member states ; what other member states were invited to make such advance payments ; and under what powers the EEC has asked for such facilities from individual states.
Column 57experiencing cash flow difficulties because most member states, including the United Kingdom, had not paid their contributions under the IGA. The Government were satisfied that the Commission's request for this advance--as for advances made earlier in the year--complied with article 10(2) of Council regulations 2891/77. All such requests are made simultaneously to all member states ; none is singled out.
Mr. Teddy Taylor : To ask the Chancellor of the Exchequer what is the total amount of the expenditure authorised in the EEC budget for the EEC's current financial year ; what measures have been introduced to prevent the EEC from overspending its budget by means of seeking advance payments under regulation 2891/77 or in delaying payments to member states which would normally fall to be made ; and if he will make a statement.
Mr. Brooke : The 1988 budget, as amended, provides for expenditure of 43,820 mecu (around £29,213 million). In its amending letter to the 1989 preliminary draft budget the Commission estimates that there will be underspending of some 1,300 mecu (around £867 million) in 1988. Advance payments made under article 10(2) of regulation 2891/77 do not increase the total amount which the Community is authorised to spend in any given year. The Brussels European Council in February agreed on measures to improve budgetary management and to strengthen the principle of annuality.
Mr. Meacher : To ask the Chancellor of the Exchequer what has been the level of (a) industrial investment and (b) manufacturing investment in each of the last 20 years, including the latest information for 1988, at current and at 1988 prices.
Fixed capital expenditure-£ million at 1985 prices |Industrial investment<2>|Manufacturing (including |leased assets<1> ---------------------------------------------------------------------------------------------------- 1968 |15,499 |9,195 1969 |16,599 |10,026 1970 |17,730 |10,808 1971 |17,352 |9,865 1972 |16,388 |8,582 1973 |18,019 |9,178 1974 |18,933 |10,053 1975 |16,849 |9,666 1976 |16,601 |9,263 1977 |17,778 |9,828 1978 |19,558 |10,716 1979 |21,546 |11,157 1980 |19,892 |9,920 1981 |17,692 |7,735 1982 |18,525 |7,603 1983 |18,751 |7,541 1984 |22,059 |8,923 1985 |25,057 |10,259 1986 |24,697 |9,576 1987 |27,603 |10,050 Seasonally adjusted 1988 Q1 |7,299 |2,638 Q2 |8,016 |2,873 <3>Q3 |7,529 |2,721 <1> Separate figures for assets leased to manufacturers were only collected from 1975. <2> Manufacturing, construction, distribution and financial industries. <3> Provisional. Source: DTI capital expenditure press notice.
Table file CW881205.037 not available
Mr. Harry Greenway : To ask the Chancellor of the Exchequer what was the average annual rate of inflation between March 1974 and May 1979 and for the last five years ; and if he will make a statement.
Mr. Lilley : The average rate of retail price inflation between March 1974 and May 1979 was 15.5 per cent. per annum. Inflation between October 1983 and October 1988 has averaged 4.9 per cent. per annum.
Mr. Michael Brown : To ask the Chancellor of the Exchequer (1) if his Department will be supporting the clauses within the European Community draft directives on the approximation of taxes on cigarettes, to subject all tobacco products to excise levy ; and if he will support
Column 59amendments to exempt any specific categories of tobacco products which are currently subject to United Kingdom excise tax ; (2) what is his policy towards the implementation of the European Community draft directives on the approximation of taxes on cigarettes and manufactured tobacco other than cigarettes which would result in a reduction of the retail price of cigarettes and other tobacco products.
Mr. Lilley [holding answer 2 December 1988] : We have made it clear that we do not consider the European Commission's proposals for the approximation of indirect taxes to be necessary for the completion of the internal market. As such changes require the unanimous agreement of the member states before becoming law, there is no question of these proposals being forced upon us.
Mr. Nicholas Bennett : To ask the Chancellor of the Exchequer if he will make a statement on proposals by the European Commission to end value added tax zero rating on voluntary activities conducted in village halls.
Mr. Lilley [holding answer 1 December 1988] : There is no value added tax zero rating for voluntary activities in village halls, as such. What I think my hon. Friend has in mind is the judgment of the European Court of Justice published on 21 June which found that certain of the United Kingdom's zero rates were not permissible under EC VAT law ; this may affect goods and services bought by village halls. We have been consulting widely with interested parties, including representatives of village halls, about how best this judgment can be implemented. All the representations that we have received will be taken fully into consideration in reaching decisions. An announcement will be made in due course.
Sir Ian Gilmour : To ask the Chancellor of the Exchequer if he will give figures showing the net incomes, including family credit, of a married man with two children aged four and six years, where the father's weekly earnings are £100, £150, £200, £250, £300, £400, £500, £750, £1,000 and £2,000, assuming no mortgage or superannuation tax reliefs and in each of the following circumstances (a) existing system, 1988-89, (b) child benefit abolished, £500 million of the savings on child benefit put into family credit and the rest used to finance a further cut in the standard rate of income tax, (c) child benefit abolished, £1,000 million of the savings put into family credit and the rest used to finance a further cut in the standard rate of income tax, and (d) ditto, but with all the savings from child benefit used to finance a further cut in the standard rate of income tax.
Mr. Lawson [holding answer 30 November 1988] : The table below shows the net income of a married man with two children aged four and six at the various levels of gross earnings specified. The first column relates to the tax and benefit system in force in 1988-89 ; the second column reflects the position which would have arisen in 1988-89 if child benefit had been abolished and all of the savings had been used to finance a cut in the basic rate of tax.
I regret that it is not possible to provide comparable figures under the other two options requested since insufficient information has been provided about the way in which the family credit system would be changed.
Net weekly income<1> (£ per week) Gross earnings £ per week |Current tax and benefit |Child benefit abolished |regime |and basic rate of tax |reduced -------------------------------------------------------------------------------------------------------- 100 |121.02 |118.20 150 |133.19 |120.54 200 |166.19 |154.84 250 |199.19 |189.14 300 |232.19 |223.44 400 |306.74 |300.59 500 |374.22 |369.37 750 |524.22 |519.37 1,000 |674.22 |669.37 2,000 |1,274.22 |1,269.37 <1> Net weekly income equals gross earnings less income tax less national insurance contributions plus child benefit plus family credit plus housing benefits based on the assumption that the family are local authority tenants paying average rent and rates.
Mr. Flannery : To ask the Secretary of State for Social Security whether he will adjust the weighting of private sector housing benefit claims to reflect the complexity of the liaison between the local authority and the rent office.
Mr. Peter Lloyd : Discussions on the allocation of housing benefit administration costs subsidy for 1989-90 are currently taking place between the Department and the local authority associations. It has been agreed in those discussions that the weighting used for private sector housing benefit cases for 1989-90 should not be adjusted to take account of the new rent officer arrangements. For future years, the weighting used will be reconsidered in the light of data on the operation of the new arrangements.
Mr. Alton : To ask the Secretary of State for Social Security, pursuant to his reply to the hon. Member for Liverpool, Mossley Hill, Official Report, 28 November, concerning stolen pension books, if he will now reinstate the urgent needs allowances for pensioners left destitute after their pension is stolen.
Mr. Peter Lloyd : No. A pensioner whose pension has been stolen and is unable to manage until his next payment of pension is due may apply for a crisis loan from the social fund in the same way as can any other person who has had money stolen and has insufficient means to meet their immediate needs.
Mr. Kirkwood : To ask the Secretary of State for Social Security if he will make a statement on the projected costs of the computer operational strategy ; whether the costs conform to budget ; and if he will make a statement.
Mr. Robin Cook : To ask the Secretary of State for Social Security (1) what is his Department's (a) original and (b) latest estimate of the cost of the operational strategy computerisation project ; (2) what are his Department's (a) latest and (b) original estimates of the annual savings from implementing the operational strategy computerisation project.
Mr. Peter Lloyd : The 1982 publication "Social Security Operational Strategy : A Framework for the Future", a copy of which is in the Library, provided broad estimates that, at November 1981 prices, the operational strategy would cost £720 million and produce net savings of £1,160 million over the 20 years to 2001-20. Our latest estimate, at 1987-88 prices, is that the Department's total investment will be in the order of £1,200 million. These costs have been, and are expected to be, contained within the moneys allocated to the Department annually and as shown in the Public Expenditure White Paper. The strategy is already producing small savings in administration costs and these are expected to rise to around £150 million per annum by 1995.
These estimates are not directly comparable because the original figures were calculated for a group of projects significantly different in scope and content from those now under development or in operation.
Mr. Madden : To ask the Secretary of State for Social Security what contact has been made with those concerned with the supply to local Department of Social Security offices of computer equipment and software since the social fund was introduced ; and what penalty payments manufacturers or suppliers have been required to make because of dissatisfaction with equipment and software.
Mr. Peter Lloyd : The Department maintains regular contact with its suppliers by means of monthly contract meetings. The principal contractor has assigned staff to support the Department and they frequently attend at the development centre. Initial bedding-in problems are not uncommon with new systems and those experienced by the social fund computer systems are now being satisfactorily resolved. No circumstance has arisen in which it has been necessary to consider the imposition of penalty payments.
Mr. Madden : To ask the Secretary of State for Social Security what complaints he has received from local Department of Social Security offices about the breakdown rate of computers ; and how many complaints from Department of Social Security offices in Bradford have been received.
Mr. Peter Lloyd : A number of complaints have been received from local offices about the social fund microcomputer system. These include instances of system non-availability due to software problems and malfunc- tions due to hardware faults which do not result in total system failure because of the availability of back-up computers. The release of new software in July 1988 has led to significant reductions in software difficulties.
Offices in Bradford have reported faults on the computer since April 1988 but none of these has resulted in a complete breakdown in the system.
Mr. Madden : To ask the Secretary of State for Social Security what complaints he has received about difficulties experienced by local Department of Social Security offices about problems in inputting data about crisis loans into computer systems.
Mr. Peter Lloyd : A number of complaints were received from local offices in the early stages of the new social fund microcomputer system. These related mainly to the unreliability of the early versions of software. There have been no specific complaints about inputting crisis loans data to the computer system.
Mr. Madden : To ask the Secretary of State for Social Security if he will list, by type and system, microcomputer equipment issued to local Department of Social Security offices ; what is the total cost, to date, of supplying such equipment ; and in how many cases such equipment has been supplemented or replaced.
Mr. Peter Lloyd : The Department uses British Telecom Merlin M4000 microcomputers in its local offices to help with the administration of the social fund and income support. Local offices also use a small number of microcomputers to provide general administrative support. The equipment was supplemented earlier this year to enable the systems to handle the newly introduced income support in place of supplementary benefit, its predecessor benefit. In addition, the part of the system which helps local office staff locate beneficiaries' casepapers is currently being upgraded to provide additional memory and other enhancements. The total costs of these systems to date is £27 million.
This investment has brought significant improvements in efficiency and has provided local offices with useful computer assistance whilst our mainframe computerisation programme has been under development.
Mr. Kirkwood : To ask the Secretary of State for Social Security if he will publish in the Official Report the proportion of each of the main benefits paid to recipients by credit transfer over the last five years.
` Proportion of retirement pensioners and child benefit recipients paid by credit transfer |Retirement Pension per |Child Benefit per cent. |cent. ------------------------------------------------------------------------------------------------ December 1984 |8.63 |2.57 December 1985 |10.75 |4.45 December 1986 |12.95 |6.30 December 1987 |14.65 |8.00 December 1988 |17.30 |11.11
Mr. Kirkwood : To ask the Secretary of State for Social Security what steps he is taking to promote credit transfer as opposed to post office counter transactions ; what budget is allocated to the promotion of credit transfer ; what recent representations he has received from the Post Office about the potential effect on the financial viability of rural sub- post offices ; and if he will make a statement.
Mr. Peter Lloyd : All existing retirement pensioners have been invited by letter to opt for payment by credit transfer. By February 1989 similar invitations will have been sent to all recipients of child benefit. New claimants to retirement pension and child benefit are offered a choice of payment by credit transfer or order book. No specific
Column 63budget is allocated to the promotion of credit transfer. Any such costs are met from the social security publicity budget of £12.77 million for 1988-89. No representations have been received recently from the Post Office about the potential effect of credit transfer on the viability of rural sub post offices.
Mr. Scott : From next April people in lodgings, including supported lodgers, will receive normal income support and housing benefit in place of the present special payments of income support which include help with accommodation costs. These changes will mean that many disabled people in supported lodgings will be better-off, after meeting charges for accommodation and the provision of care, than under existing benefit arrangements. Existing claimants who might otherwise lose benefit overall will be given cash protection whilst they remain in a supportive environment. The overall effect will be to provide an estimated £1 million extra for supported lodgers as a whole. There will thus be no overall reduction in the level of help to this group.
(2) if he has any plans to allow self-employed applicants for family credit to provide documentary evidence other than audited accounts as proof of income.
Mr. Peter Lloyd : I refer my hon. Friend to my reply to the hon. Member for Caernarfon (Mr. Wigley) on 19 October at columns 895-96. The Family Credit (General) Amendment No. 4 Regulations 1988 which were laid before Parliament on 14 November to come into force on 5 December remove the requirement that only audited accounts are acceptable. In respect of claims for family credit made on or after 5 December a profit and loss account which has not been audited will be acceptable provided that it covers a period of not less than six months and not more than 15 months and is for a period ending not more than 12 months prior to the date of claim.
Mr. O'Brien : To ask the Secretary of State for Social Security what are the guidelines set down by his Department for consultation between Social Fund officers or his Department and local authority social services officers for the allocation of community care grants.
Mr. Peter Lloyd : Guidelines on consultation between the Department and local authority social services and social work departments are contained in paragraphs 1046-1050 of the social fund manual. A copy of the manual is in the Library.
Column 64provisions for people being transferred from health authority accommodation to local authority accommodation ; and if he will make a statement.
The guidance makes it clear that community care grants may be awarded to people being resettled in the community but not to those moving from one form of residential care to another. It also emphasises the importance of liaison between the Department and local authorities.
Mr. Madden : To ask the Secretary of State for Social Security what manual checks are being made by local Department of Social Security offices on social fund expenditure ; when such checks were introduced ; and in how many local offices such checks are being made.
Some local offices may maintain clerical records as an aid to local management but no information is available as to the extent of such unofficial record keeping.