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Tuesday, 16 August 1960

It is estimated that expenditure from the National Welfare Fund will rise by £31,335,000 to £330,698,000 in 1960-61.

Of this increase of £31,335,000, some £8,500,000 represents the estimated cost in 1960-61 of the proposed increase in age, invalid and widow's pensions and tuberculosis allowances and of the proposed liberalization of the means test.

To a large extent, the remaining increase of £22,835,000 in expenditure for 1960-61 reflects the growth in the number of beneficiaries and the full year effect of the pension increases granted in the 1959-60 Budget. It should be noted, however, that certain special factors affect the comparison of the expenditure estimates for 1960-61 with the actual expenditures for last year. On the one hand, for example, expenditure in 1960-61 will be increased by the need to make provision during 1960-61 for advances to the Post Office and banks for a child endowment pay-day on 4th July, 1961. An amount of £9,500,000 will be required for such advances. On the other hand, there will be one less pay-day in 1960-61 than in 1959-60 for the payment of age and invalid pensions and this will involve a saving in expenditure of some £5,000,000 in the current financial year.

Comments on particular items of expenditure, where the estimate for 1960-61 varies substantially from actual expenditure in 1959-60, are set out below: -

Age and Invalid Pensions. - It is estimated that there will be in 1960-61 a net increase in expenditure on age and invalid pensions of £10,895,000. Of this, the proposals to increase pensions and to liberalize the means test account for £6,500,000 and £1,400,000, respectively, or a total of £7,900,000. Further amounts required are: £5,000,000 to meet the cost of an increased number of beneficiaries; and £3,000,000 to meet the cost of the full-year effect of the pension rate increases granted in 1959-60. Partly offsetting these increases, which amount to £15,900,000, is a reduction in expenditure of £5,000,000 because there will be one less pay-day in 1960-61 than in 1959-60.

Widows' Pensions. - Of the estimated increase in expenditure of £1,763,000 in 1960-61, £500,000 represents the estimated cost of the proposed increases in pension rates, £100,000 the cost of the means test liberalization, £690,000 the cost of an increased number of beneficiaries, £263,000 the full-year effect of pension rate increases granted in 1959-60, and the balance of £210,000 is for an advance to the Post Office for the pay-day on 4th July, 1961.

Child Endowment. - Advances to be made to banks and the Post Office at the end of June, 1961, for child endowment payments, including a twelve-weekly payment on 4th July, 1961, account for £9,500,000 of the estimated increase of £11,468,000 in 1960-61 over expenditure in 1959-60. The balance of £1,968,000 is to provide for an increase in the number of endowed children.

Unemployment and Sickness Benefits. - Provision is made under this heading for expenditure of £3,500,000 on unemployment benefits and £2,900,000 on sickness and special benefits. In 1959-60 unemployment benefits cost £4,505,000 and sickness and special benefits £2,748,000.

Hospital Benefits. - Of the estimated increase of £3,303,000 in hospital benefit payments in 1960-61, about £1,500,000 arises from payments in respect of contributors to " Special Accounts " (which were established for persons who could not insure for normal rates), including certain patients in institutions not generally recognized as " hospitals " for the purposes of the Act. The balance of the estimated increase of £3,303,000 is due to continued growth in the membership of hospital insurance organizations, the increase in the number qualifying for the higher rate of " additional hospital benefit " and greater bed occupancy as more beds become available.

Pharmaceutical Benefits. - It is estimated that the outlay under this head in 1960-61 will be £18,644,000, or £2,117,000 less than expenditure in 1959- 60. The estimate allows for the transfer to the Pensioner Pharmaceutical Benefits Scheme of the cost of all prescriptions written for participating pensioners and dependants and for a full-year impact in 1960-61 of the 5s. prescription fee applying from 1st March, 1960.

Pharmaceutical Benefits for Pensioners. - Payments for pharmaceutical benefits for pensioners in 1960- 61 are estimated to reach £7,680,000, or £4,106,000 more than last year. The increase is due mainly to the transfer of costs from the general pharmaceutical benefits scheme.

Medical Benefits. - The cost of medical benefits is expected to rise by £1,570,000 to £10,862,000 in 1960-61. The increase is mainly attributable to higher membership of medical benefit organizations, a rise in the average yearly number of services provided for each member and the full-year effect of the higher rates of Commonwealth benefit introduced on 1st January, 1960.

Medical Benefits for Pensioners. - The estimated requirement of £4,686,000 for medical benefits for pensioners in 1960-61 is £573,000 greater than expenditure in 1959-60. An increase in the numbers of pensioners and dependants eligible under the scheme, together with an expected continuation of the upward trend in demand for services, are the factors contributing to the mounting cost of these benefits.

Nutrition of Children- For nutrition of children - the free milk to school children scheme - an amount of £3,650,000 is estimated for 1960-61, an increase of £291,000 on expenditure in 1959-60. The increase is due to the larger number of schools and of children participating in the scheme and to higher milk prices in some States.



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