The following table shows the estimated cost of assuming different illustrative Bank of England rates of around 0.5 per cent. and 5 per cent. (averaged over a year), with and without the £10,000 capital disregard for pension credit, housing benefit and council tax benefit.
Illustrative BoE rate (percentage) Rate applied to income above the disregard (percentage) (i) Cost keeping current disregard (£ million) (ii) Cost removing current disregard (£ million) 0.5 1.5 300 170 5 6 130 -220 Notes: 1. These estimates have been calculated using the Policy Simulation Model (PSM) which uses data from the Family Resources Survey (FRS). Estimates are subject to sampling and modelling uncertainty. 2. Estimates are given for two possible average rates to illustrate their sensitivity to actual Bank of England base rates. 3. Income taken into account is rounded up to the next £1. 4. In column (i) the interest rate is applied to capital above the capital disregard. 5. Estimates do not include the cost of applying the rules to those in care/nursing homes. 6. Costs have been rounded to the nearest £10 million.