HC Deb 01 April 1976 vol 908 cc1560-1
11. Mr. Peter Bottomley

asked the Chancellor of the Exchequer if he will list for a two-child family the combined value of family allowance and child tax allowance for a standard rate taxpayer as a percentage of the average industrial take-home earnings for the years 1968 to 1976.

Mr. Denzil Davies

With permission, I will circulate the full information in the Official Report. Although there has been some fluctuation, the combined value of the family allowance and child tax allowance as a percentage of average industrial take-home earnings has declined slightly from 10.6 per cent. in 1968–69 to 8.7 per cent. in 1975–76.

Mr. Bottomley

Will the Government recognise that this is at the heart of the whole problem of incentive to work, and that a person on average earnings with two children is only £12 a week better off than if he were not working?

Mr. Davies

We have recognised that. As I said, there has been some reduction in the real value of these allowances. In framing taxation policy that is one factor of which we have to take account.

Mrs. Hayman

In view of that reply, will the Minister undertake to raise family allowances in the Budget?

Mr. Davies

I am sure that my right hon. Friend will note my hon. Friend's suggestion.

Sir George Young

Does the Minister accept that over the past 10 years there has been a shift of the burden of taxation away from families without children to those with children? Does he intend to reverse that shift in the forthcoming Budget?

Mr. Davies

The figures that I mentioned show that there has been some shift and that the real value of the child allowance has fallen. I accept that there has been some shift of the burden from people without children to people with children.

Following is the information:

Assuming that the children are not over 11, the figures are as follows:

Year Combined value of FAM and CT As as % of average industrial take-home earnings
1968–69 … … 10.6
1969–70 … … 9.9
1970–71 … … 9.1
1971–72 … … 10.2
1972–73 … … 8.8
1973–74 … … 7.9
1974–75 … … 7.8
1975–76 … … 8.7

1. Take-home earnings are the annual equivalent of the average earnings—less tax and National Insurance contributions—of full-time male manual workers aged 21 and over in manufacturing and certain other industries at October of each year. The National Insurance contributions relate to an adult male worker not "contracted out" of the Graduated Pension Scheme, and include graduated contributions.

2. The calculations take account of the family allowance deduction for income tax