§ Mr. Ralph Howellasked the Chancellor of the Exchequer how large, and what percentage, pay rise would be necessary in order that a man with a wife and two children earning £25 per week would find himself 17 per cent, better off in terms of net weekly spending power, defined in the OFFICIAL REPORT, 14th November 1973, column 211.
§ Mr. O'MalleyI have been asked to reply.
Net spending power is determined by changes in tax and benefit levels as well as increases in earnings. If the assumptions in the hon. Member's Question applied in October 1974 the family, with children aged 4 and 12, would have had net weekly spending power of £24.28. If this sum represented an increase of 17 per cent, over their net weekly spending power a year earlier, the corresponding figure for October 1973 would have been £20.75, which would have required the husband to have gross weekly earnings of £27.66. Thus, taking into account the intervening Budget and benefit changes, a decrease in earnings of 9.6 per cent, in the period October 1973— October 1974 would have resulted in an increase of 17 per cent, in net weekly spending power.
570WThe main reason for this result is that in 1974 the family is entitled to family income supplement and free school meals and free welfare milk for one child. In October 1973 the same family, with the specified level of net weekly spending power, would not have been entitled to any of these benefits, and it would also have paid more in tax and national insurance contributions. The definitions and assumptions relevant to this answer are those given in my reply to the hon. Members' Question of 14th November.— [Vol. 881, c. 211-2.]