Benefits

Mr. Brazier
To ask the Secretary of State for Social Security what would be the cost in a full year of abolishing the capital rule and deemed income and basing benefit on actual income only for (a) housing benefit, (b) community charge benefit, (c) family credit and (d) age premium for retirement pensioners.

Mrs. Gillian Shephard
The cost in a full year of abolishing capital limits and tariff income for the income-related benefits and basing benefit on actual income from capital is estimated to be: -----------------------------
|                           |
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|a. Housing benefit         |
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|b. Community charge benefit|
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|c. Family credit           |
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|d. Income support          |
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It is estimated that there would be no cost if the change was made only to income support for those receiving a pensioner premium.

Source: Modelled using data drawn from the 1985, 1986 and 1987 family expenditure surveys. Estimates of capital holdings are uncertain because they are imputed from reported income from investment and savings. The estimated costs quoted assume particular interest rate levels and patterns of capital asset holdings.

Mr. Brazier
To ask the Secretary of State for Social Security what would be the cost in a full year of abolishing the capital rule and deemed income and basing benefit on 10 per cent. of annual income only for (a) housing benefit, (b) community charge benefit, (c) family credit and. (d) age premium for retirement pensioners.

Mrs. Gillian Shephard
The expenditure effect in a full year of abolishing capital limits and tariff income for the income-related benefits and basing benefit assessment on an assumed interest on savings of 10 per cent. is estimated to be: ------------------------------
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|(a) Housing benefit         |
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|(b) Community charge benefit|
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|(c) Family credit           |
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|(d) Income support          |
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It is estimated that if the change were applied only to income support for those receiving pensioner premium there would be a saving of £30 million. Savings arise because 10 per cent. income would be assumed on the first £3,000 of savings, whereas at present there is no tariff income at this level, and because a 10 per cent. assumed income is higher than the present tariff income in the lower saving brackets above £3,000.

Source: Modelled using data drawn from the 1985, 1986 and 1987 family expenditure surveys. Estimates of capital holdings are uncertain because they are imputed from reported income from investment and savings.