HC Deb 30 January 1974 vol 868 cc120-2W

asked the Chancellor of the Exchequer, regarding his answers on 18th January to two Questions from the hon. Member for Oldham, West concerning real take-home pay at different gross income levels, what would be the real take-home pay levels for each year after 1970 on the basis that the gross incomes of men earning at each of the stated levels in 1970 increased each year in line with the percentage rise in national average earnings.

 I Annual Earnings Net Pay (£) (at October 1970) October 1970 October 1971 October 1972 October 1973 £ A A B A B A B 1,000 … 863.00 964.26 881.33 1,126.69 955.43 1,229.06 947.61 2,000 … 1,524.09 1,701.61 1,555.27 1,964.96 1,666.29 2,169.00 1,672.30 3,000 … 2,217.10 2,485.10 2,271.38 2,866.81 2,431.05 3,184.07 2,454.92 5,000 … 3,527.68 3,981.41 3,639.01 4,574.96 3,879.57 5,072.85 3,911.17 8,000 … 5,064.20 5,732.32 5,239.34 6,283.05 5,328.03 7,190.71 5,544.04 10,000 … 5,912.81 6,672.11 6,098.31 7,212.68 6,116.35 8,277.96 6,382.31 20,000 … 7,598.81 10,138.66 9,266.74 10,355.82 8,781.74 12.289.81 9,475.44

Column A shows the net pay at October each year on the basis that the gross incomes at October 1970 have increased each year in line with the percentage rise in national average earnings. Column B shows the net pay at October 1970 prices. The general index of retail prices for October in the years referred to has been used in all these calculations.

 II Annual Earnings Net Pay (£) (1970–71) 1970–71 1971–72 1972–73 1973–74 £ … A A B A B A B 1,000 … 862.14 881.33 + 2.2 952.05 + 8.0 952.24 0.0 2,000 … 1,522.57 1,555.27 + 2.1 1,658.38 + 6.6 1,674.59 + 1.0 5,000 … 3,524.15 3,639.01 + 3.3 3,859.48 + 6.1 3,908.86 + 1.3 10,000 … 5,906.90 6,098.31 + 3.2 6,112.68 + 0.2 6,432.67 + 5.2 20,000 … 7,591.21 9,266.74 + 22.1 8,786.63 − 5.2 9,554.62 + 8.7

Column A shows the net pay for each year on the basis that the gross earnings for 1970–71 have increased each year in line with the percentage rise in national average earnings and after applying the tax rates in force for the relevant year and converting the post tax figure to October 1970 prices. Column B shows the percentage annual change in take-home pay in real terms. The general index of retail prices has been used in all these calculations. For 1971–72 and 1972–73 the conversion has been made by reference to the average for the year; for 1973–74 the index used has been based on the average for the first nine months.

Notes:

In both I and II it has been assumed that for all years those with £1,000 and £2,000 per year in 1970–71 are not contracted out of the graduated pension scheme and that those with £3,000 and above are contracted out.

Where appropriate, surtax and also the 10 per cent. surcharge on 1972–73 surtax liability have been deducted in calculating net pay.

The figures of net pay do not include family allowances—£46.80 for all years—but the lax on the family allowance and the family allowance deduction ("clawback") have been taken into account Where it is to the taxpayer's advantage to forgo family allowance, tax has been calculated on that basis.

, pursuant to his reply [OFFICIAL REPORT 28th January 1974; Vol. 868, c. 20], gave the following information:

Figures calculated in the way requested are largely meaningless in that the pay limits in stages 2 and 3 of the counter-inflation policy have produced smaller than average percentage increases for the higher paid, and larger increases for the lower paid; and the increases for the higher paid have furthermore been subject to the individual pay limits of £250 in stage 2 and £350 in stage 3.

The figures are: