§ First, I have to report to the House on the operation of the scheme which I introduced last year under which improvements in family allowances were confined to those without sufficient income to pay tax at the standard rate. The long-term aim was to arrange matters in such a way that people who are not in real need of family allowances do not draw them at all.
§ I have come to the conclusion that it would not be right to do this by extend 1010 ing the claw-back arrangements so as to extinguish altogether the value of family allowances to standard rate tax-payers. To do so would involve in effect a substantial increase in the tax burden on families with two or more children relative to that on tax-payers with one child or with no children. Until, therefore, some satisfactory overall solution can be devised I intend to leave the arrangements introduced last year as they stand. It is, however, necessary to adjust the claw-back for 1969–70 so as to reflect the fact that the 3s. extra on family allowances, which was paid for only half a year in 1968–69, will be paid for a full year in 1969–70. I therefore propose that the £36 reduction in tax allowances per child which applied last year, shall become £42 this year. A £42 reduction has already been announced and taken into account in fixing P.A.Y.E. code numbers for 1969–70.