§ Mr. Ralph Howellasked the Secretary of State for Social Services what is his estimate of the number of wage earners caught in the poverty trap now; and how many he estimates will be freed from the poverty trap as a result of this Budget.
§ Mr. OrmeThe latest estimates of numbers of families theoretically liable to very high marginal tax rates are those given in my reply to the hon. Member for Colne Valley, Mr. Wainwright on 18th July 1977.—[Vol. 935, c.351–2.] I regret that no later estimates are available. However, those one-child and two-child families which were theoretically subject to over 100 per cent. marginal tax rates before the Budget—made up of 34 per cent. tax, 5¾ per cent. national insurance contribution, 50 per cent. family income supplement and a maximum of 16½ per cent. housing rebates—have been removed from this situation due to the introduction of the 25 per cent. tax rate on the first £750 of taxable income. This 201W now gives rise to a potential marginal tax rate of 98 per cent.—25 per cent. tax, 6½ per cent. national insurance contribution, 50 per cent. family income supplement and 16½ per cent housing rebates. Some families may still be subject to the 34 per cent. tax rate. Those affected are families with three or more children who are receiving small amounts of family income supplement. Their number is estimated to be considerably fewer than 5,000.