HC Deb 23 December 1976 vol 923 cc332-3W
Mr. Newton

asked the Secretary of State for Social Services why the estimated number of families facing an effective marginal rate of taxation of 75 per cent. or over, by a combination of income tax and loss of means-tested benefits, has fallen from 200,000 in August 1974 to 90,000 in December 1975.

Mr. Orme

It is estimated that at December 1975 there were about 90,000 families with children theoretically subject to a marginal tax rate of 75 per cent. or over on a pay rise of £1, and that at December 1974 the comparable figure was 60,000 families. This latter estimate was given in my hon. Friend's reply to the hon. Lady the Member for Wallasey (Mrs. Chalker) on 6th May 1976 and was intended to replace the estimate of 200,000 such families at August 1974 which was given in reply to my hon. Friend the Member for Stockport, North (Mr. Bennett) on 9th July 1975 and to the hon. Member for Woolwich, West (Mr. Bottomley) on 27th January 1976.

All estimates are based on Department of Health and Social Security analyses of Family Expenditure Survey data. The estimates for August 1974 were based on 1972 data updated to August 1974. The estimates for December 1974 were based on 1974 data. The simulation of receipt of means-tested benefits and of the interactions between such benefits used for the earlier estimates was shown to have resulted in an over-estimate when the analysis of 1974 data was made.

Estimates made from Family Expenditure Survey data are subject to sampling error and the difference between the estimate of 60,000 at December 1974 and 90,000 at December 1975 is not statistically significant. They are moreover subject to the qualifications set out in my reply to the hon. Member for Norfolk, North (Mr. Howell) on 22nd November 1976.—[Vol. 910, c. 434; Vol. 895, c. 209; Vol. 904, c. 224–25; Vol. 919, c. 1005–6.]