Mr. R. C. Mitchellasked the Secretary of State for Social Services if she will estimate how many families having received a £6 per week pay rise find themselves worse off than before the increase due to increased income tax and the elimination or reduction of benefits such as family income supplement, free school meals, rent and rate rebates; and if she will make a statement.
§ Mr. O'Malley,pursuant to his reply [Official Report, 5th February 1976; Vol. 904, c. 730], circulated the following information:
It is estimated that in December 1974 less than 20,000 families with children and with the head in full-time work could theoretically have been worse off after a pay rise of £6 a week. In practice, the number is likely to be much smaller than this figure. This is mainly because benefits such as family income supplement, free welfare milk and free school meals are awarded for periods of 52 weeks and hence do not normally change immediately following a pay rise. The effect of any upward changes in tax allowances and in the income limits for benefits which fall inside the award period is to reduce still further the likelihood of any 336W net loss of income in such cases. This is the most recent estimate available, and is derived from the 1974 Family Expenditure Survey. The assumptions on which it is based are the same as those given in my hon. Friend's reply to the hon. Member for Wallasey on 5th December.—Vol 901, c. 765–6.]