To ask the Chancellor of the Exchequer what estimate he has made of the amount by which the increased revenues from changes in taxes and duties announced in his Budget Statement will be offset by additional expenditure on benefits and other payments linked to the retail price index; and if he will make a statement.
The direct impact on the retail price index of the changes in taxes and duties announced in the Budget is estimated to be an increase of 0·4 per cent. The cost of a corresponding increase in social security benefits linked to the index from April 1989 is estimated to be about £165 million in 1989–90. Other payments directly affected by changes in the retail price index include public sector pensions. However, these costs are not additional to the Government's public expenditure plans set out in the public expenditure White Paper Cm. 288 for two reasons: