National Insurance Surcharge

Part of Ways and Means – in the House of Commons at 12:00 am on 5 July 1978.

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Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey 12:00, 5 July 1978

The Chancellor knows perfectly well that it is true, and the House and the country know that it is true. Interest rates have been going up steadily since the Budget was introduced. They went up on Budget day and that is why we face these measures now.

I want to ask the Chief Secretary, or whoever is to reply to the debate, some questions about the Government's proposals. I understand that these measures impose a burden on the cost of employing people in the public sector. For example, the Chancellor made great play in his Budget Statement about a decision to give £50 million more to the National Health Service, but the cost of the surcharge to the NHS will be more than that. It will increase costs by £54 million. It has a similar effect in local government. The cost of employment there will be increased by about £42 million.

The Chief Secretary has given an indication of the consequences of this measure on the borrowing requirement. Does it take account of the offsetting expense to the public sector? Will there be a corresponding change in the cash limits for the NHS or will it be this much light as a result of the Government's proposals? Will there be any change in the rate support grant or in any other way to help local government?