§ Mr. Ralph Howellasked the Secretary of State for Social Services what actual increase and what percentage increase in gross carnings a man with a wife and two children presently earning £25 per week would require in order that his net weekly spending power, after taking into account income tax, national insurance, rent at £5 and rates at £1.60, together with any benefits to which he may be entitled, be increased by 20 per cent.
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§ Mr. O'Malley, pursuant to his reply [OFFICIAL REPORT, 8th November 1974; Vol. 880, c. 277], circulated the following information:
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 20 per cent. over their net weekly spending power a year earlier, the corresponding figure for October 1973 would have been £20.23, which would have required the husband to have gross weekly earnings of £20.50. Thus, taking into account the intervening budget and benefit changes, an increase in earnings of 22 per cent. in the period October 1973-October 1974 would have resulted in an increase of 20 per cent. in net weekly spending power.
Notes
(1) Net weekly spending power is earnings plus family allowance plus family income supplement less tax less national insurance plus rent rebate plus rate rebate less rent less rates plus the value of free school meals and welfare milk less work expenses.
(2) Housing costs and working expenses are assumed to have risen between October 1973 and October 1974 in accordance with, respectively, the housing and transport components of the Retail Prices Index. The full assumptions are:
October1973 October1974 £ £ Rent 4.50 5.00 Rates 1.44 1.60 Expenses of work 0.55 0.65