HC Deb 08 February 1978 vol 943 cc576-8W
Mr. Ralph Howell

asked the Secretary of State for Social Services if he will publish the tables enclosed with his letter, dated 13th December 1977, to the hon. Member for Norfolk, North, showing the effects of the poverty trap on the spending power in and out of work of a single mother with two children; and if he will extend table 2 to include the level of gross earnings at which the mother is free of the poverty trap.

Mr. Orme,

pursuant to his reply [Official Report, 16th January 1978 Vol. 942, c. 85], gave the following information:

It is a matter of judgment as to what level of marginal tax rate by way of tax, national insurance contributions and withdrawal of means-tested benefits constitutes the poverty trap. While not accepting that the poverty trap extends to anywhere near the points at which free school meals are withdrawn, which occur over, and above, a wide band of earnings where only the basic tax rate and the ordinary national insurance contributions apply, the tables are reproduced below. The tables in any event relate only to the assumptions made by the hon. Member and have no general validity.

TABLE 1
Net weekly spending power (£) of a single mother with two children aged 4 and 6; receiving supplementary allowance and earning £6 a week
Supplementary allowance Child benefit Net earnings Rent Rates Free school meals Free welfare milk Net weekly spending power
28.35 3.00 6.00 5.60 2.20 1.25 0.81 31.61

TABLE 2
Net weekly spending power (£) of a single mother working full-time with £10 work expenses; same family constitution and rent/rates
Gross earnings Tax NI Child benefit FIS Rebated rent Rebated rates Work expenses Free school meals Free welfare milk Net weekly spending power
31.22 … … … — 1.80 3.00 8.30 0.76 0.41 10.00 1.25 0.81 31.61
30.00 … … … — 1.73 3.00 8.90 0.60 0.36 10.00 1.25 0.81 31.27
35.00 … … … — 2.01 3.00 6.40 1.23 0.56 10.00 1.25 0.81 32.66
40.00 … … … 1.69 2.30 3.00 3.90 1.85 0.76 10.00 1.25 0.81 32.36
45.00 … … … 3.39 2.59 3.00 1.40 2.40 0.94 10.00 1.25 0.81 32.14
50.00 … … … 5.09 2.88 3.00 — 3.01 1.15 10.00 1.25 0.81 32.93
55.00 … … … 6.79 3.16 3.00 — 3.86 1.45 10.00 1.25 0.81 34.80
60.00 … … … 8.49 3.45 3.00 — 4.71 1.75 10.00 1.25 — 35.85
65.00 … … … 10.19 3.74 3.00 — 5.60 2.05 10.00 1.25 — 37.67
67.00 … … … 10.87 3.85 3.00 — 5.60 2.20 10.00 1.25 — 38.73
90.00 … … … 18.69 5.18 3.00 — 5.60 2.20 10.00 1.25 — 52.58
91.00 … … … 19.03 5.23 3.00 — 5.60 2.20 10.00 — — 51.94

Notes:

NI= National Insurance Contribution.

FIS=Family Income Supplement.

The value of free welfare milk is now 89p a week.

Back to