News story

25th February 2002

Government Sits On £2.5 Billion Windfall

Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, today released research on Government figures showing that the Government is sat on almost £2.5 billion in its National Insurance Fund. The Government had estimated that they would collect £56.9 billion in National Insurance revenues, which are spent on pensions and benefits. The latest report however, reveals that they actually collected £59.3 billion - a huge £2.4 billion more than estimated.

Mr Webb will use today's House of Commons debate on the setting of Benefit rates to press the Government to use this windfall, to scrap the antiquated rules that mean a stay in hospital of longer than six weeks results in pension reductions. Pensions are slashed despite the fact that many costs continue whilst pensioners are in hospital. The Treasury saves £175m every year under these rules, whilst 34,000 pensioners lose out in any given week. With a £2.4 billion surplus, the Government could afford to scrap these rules for almost 14 years at a stroke.

Mr Webb will say:

"The Government has suddenly found itself with a £2.5bn National Insurance bonanza. It should use the money to help the elderly and most vulnerable people in our society.

"With this unexpected windfall, Ministers could easily afford to scrap the harsh rules which cut pensions and benefits for those in hospital - not just this year but for the next 14 years.

"It is high time that the Government stopped taking money off sick people, and this surplus gives it the opportunity to put its money where its mouth is and prove that it cares about Britain's pensioners."

ENDS

Notes to editors:

· The House of Commons is to discuss the uprating of Social Security benefits today. The benefits are set using the latest report by the Government Actuary's Department. This report shows the £2.4 billion surplus in the NI Fund.

· The Government currently saves £175 million each year by cutting the benefits and pensions of those in hospital for longer that 6 weeks. This affects 34,000 people each week. Therefore, £2.4 billion would enable the Government to scrap this practice for 13.7 years.