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Earnings-Related Supplement

Volume 982: debated on Wednesday 16 April 1980

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asked the Chancellor of the Exchequer if, in view of the fact that earnings-related supplements to unemployment and sickness benefits payable in 1982 will be based on contributions in 1980–81, he will make a statement explaining the dates used by the Financial Secretary, Official Report, 31 March, column 162.

[pursuant to his reply, 14 April 1980, c. 519]: I was referring to the effects on the national insurance funds of the abolition of earnings-related supplement. Contribution rates are set for each tax year, taking account of expected expenditure from the funds over that year. Thus, the effects of the abolition of ERS from January 1982 will be taken into account when setting the contribution rates for 1981–82. The questioner, in referring to the ruler governing entitlement, is assuming that the system operates on strict insurance lines rather than "pay as you go". If that were the case the contributions paid in the past would have had to be substantially higher or alternatively present benefit levels would be lower than they are now. In any event, as I said in the Budget debate, contributions relate to national insurance benefits as a whole, not just ERS.