HC Deb 20 May 1991 vol 191 cc623-4
4. Mr. Alison

To ask the Secretary of State for Social Security if he has any estimate of the number of low-income families facing marginal deduction rates in excess of 100 per cent.(a) in 1978–79 and (b) for the latest year for which figures are available.

The Secretary of State for Social Security (Mr. Tony Newton)

As a result of the social security reforms, virtually no families have marginal deduction rates of over 100 per cent. in 1991–92. In 1985, 70,000 families had potential deduction rates of over 100 per cent. The 1985 figure is the earliest available.

Mr. Alison

I am grateful to my right hon. Friend for that encouraging reply. Will he confirm that the latest figures on low incomes show that families with children in the bottom fifth of income distribution received increases in income of 19 per cent. in real terms between 1981 and 1987? Does not this give the lie to much false propaganda about the poor getting poorer under the Conservative Governments?

Mr. Newton

I can certainly confirm my right hon. Friend's figure, which is drawn directly from last week's Select Committee report on low incomes. It helps to put in perspective some of the wilder and more misleading claims by the hon. Member for Oldham, West (Mr. Meacher).

Mr. Wigley

Does the Secretary of State accept that some people in the very low income groups are poorer as a result of increases in fixed costs, such as water rates, which have gone up by 50 per cent. in Wales in the past two years? Will he undertake to examine methods of helping low-income people suffering from high water rates to see whether, in parallel with changes on the introduction of the council tax, something analogous to community charge benefit might be introduced?

Mr. Newton

To take the latter part of the question first, I am not sure that I would want to go down the path of adding to the complexity of our benefit structure a water rate benefit, because it would give rise to questions whether there should be an electricity or gas benefit, or benefits for other charges. The right course is to take account of all these things when we look at the annual increase in benefits and that is something that I always keep under review.

Mr. Meacher

What is the point of boasting about lower marginal deduction rates when, according to the Select Committee figures that the Secretary of State cited a moment ago, the incomes of the poorest 5 million people have, after three periods of Tory Government, fallen by an average of 6.2 per cent? Is not it an obscenity that the numbers of people with less than half average incomes has more than doubled since 1979, yet the salaries of Social Security Ministers, who are supposed to meet the needs of such people have risen over the same period by more than 240 per cent? As the Government believe in performance-related pay, is not it high time that the Secretary of State apologised for his failure by taking a massive cut in his pay?

Mr. Newton

All that the hon. Gentleman has done in the past few seconds is to do what he did last week —use the figures on a basis that the Select Committee and the Institute of Fiscal Studies, both of which are independent of the Government, warned is not the most sensible and proper way to use the figures. The Select Committee report says: Real disposable incomes grew by more than 30 per cent. between 1979 and 1988, with increases in real income being seen at all levels of the income scale. The hon. Gentleman should acknowledge that.