§ Mr. Ralph Howell
asked the Secretary of State for Social Services if he will publish figures on the same basic assumptions as in his reply to the hon. Member for Norfolk, North Official Report, 1 May, comparing annual net spending power for a married man with two children aged 12 and 14 years in each of the following circumstances (a) when working throughout the current tax year and earning £5,500, (b) when working for the first six months, earning £2,750, and drawing supplementary benefit for the last six months and (c) when dependent on supplementary benefit assuming, in each case, first that supplementary benefit is tax-free and secondly that the adult rates are reckonable for tax and assuming maximum earnings disregards of £6 per week in addition to the scale rates.
§ Mrs. Chalker
[pursuant to her reply, 3 July 1980, c. 689–90]: The information requested is set out below and in the accompanying tables. This information has proved to be far more costly to provide than had been envisaged. Indeed, if the extent of the staff resources that had 601W to be put into compiling the answer had been known in advance, I would certainly have declined to reply on the ground of disproportionate expense. I must, therefore, advise my hon. Friend that I would be quite unable to justify the cost of answering any future questions on similar lines.
In any event, the figures given in this reply must be treated with the greatest caution. There are a number of features about the particular circumstances described in my hon. Friend's question which tend to overstate the man's probable income when receiving supplementary benefit. For example, official statistics suggest that it is rare for an unemployed man receiving supplementary benefit to have part-time earnings: indeed, only about 1 per cent. are recorded as having such income. Furthermore, a man who left his job voluntarily and immediately claimed supplementary benefit would be liable to have his benefit reduced for up to six weeks. The comparison of incomes is also distorted to some extent by the fact that the man receives no rise in pay while in full-time work, whereas his entitlement to supplementary benefit increases at the time of the general uprating in November. Thus the figures cannot he quoted out of the context of the question devised by my hon. Friend or without reference to the following notes:
- 1. for the purposes of calculation, it has been assumed that the tax year began on 7 April 1980;
- 2. the new rates of benefit in force later this month have been taken into account;
- 3. in order to allow £6 maximum disregards on part-time earnings throughout the period in question, it has been assumed that the man has £2 a week net part-time earnings while in receipt of supplementary benefit, and that his wife must therefore have £4 a week net earnings (although from 24 November the disregard on the part-time earnings for anyone other than a lone-parent will be £4). To keep the figures comparable, it has been assumed that the wife has £4 a week net earnings throughout the year in every case;
- 4. tax refunds have been taken into account in calculating annual net spending power. It is understood that the normal practice of the Inland Revenue when refunding excess tax is based on payments of four weeks' rebate at a time. The first refund is made six weeks after employment ceases, and refunds continue at four week intervals. For the purposes of the calculations at (b) (i) and (ii) below, the annual figures assume that the whole of any tax refund due is paid in full in the six months following the end of employment;
- 5. if the adult scale rates of supplementary benefit were reckonable for tax, the effect would be to reduce the amount of any tax refund due; and
- 6. it is assumed that, up to 24 November, the amount of rent payable is £8.20 a week plus rates of £3.55 a week; child benefit of £8 a week is in payment; and when the man is working full-time, travel-to-work expenses are £3 a week. From 24 November, these amounts are assumed to be rent £8.80 rates £3.55; child benefit £9.50; travel-to-work expenses £3.55.
Subject to the above, it is calculated that the annual net spending power of a married man with two children, aged 12 and 14, would be as follows:
(a) when working throughout the year and earning £5,500 gross
£ Net weekly spending power: 33 weeks at 76.52 19 weeks at 76.87 (see table 1 below)
(b) when working for first six months of the tax year and earning £2,750 gross, and drawing supplementary benefit for the rest of the tax year (no deduction for voluntary unemployment)
(i) Supplementary benefit not counting for income tax:
£ First six months: 26 weeks at £76.52 (see table 1 below) 1,989.52 Second six months: 7 weeks at £57.25 400.75 19 weeks at £66.90 (see table 2 below) 1,271.10 Total without tax refund 3,661.37 Plus tax refund (see note 4 above) 321.86 3,983.23
(ii) Adult rates of supplementary benefit counting for income tax:
£ Total without tax refund (as in (i) above) 3,661.37 Plus tax refund (see note 5 above) 62.27 3,723.64
(c) when dependent on supplementary benefit throughout the tax year
£ Net weekly spending power: 33 weeks at 57.25 19 weeks at 66.90 (see table 2 below)
TABLES SHOWING NET WEEKLY SPENDING POWER (£) OF A MARRIED MAN WITH TWO CHILDREN, AGED 12 AND 14, ON THE BASIS OF THE ASSUMPTIONS OUTLINED ABOVE TABLE 1—EARNING £5,500 (GROSS) A YEAR Period Gross earning Tax NI Rent Rates Expenses CB FIS Rent rebate Rates rebate Free school meals Wife's net earnings Net weekly spending power Up to 24 November … … 105.77 19.36 7.14 8.20 3.55 3.00 8.00 — — — — 4.00 76.52 From 24 November 105.77 … … 105.77 19.36 7.14 8.80 3.55 3.55 9.50 — — — — 4.00 76.87
TABLE 2—RECEIVING SUPPLEMENTARY BENEFIT Period Supplementary allowance Rent Rates CB Free school meals Part-time earnings Net weekly spending power Up to 24 November … … … 50.50 8.20 3.55 8.00 4.50 6.00 57.25 From 24 November … … … 59.25 8.80 3.55 9.50 4.50 6.00 66.90 Abbreviations:— NI National insurance contribution. CB Child benefit. FIS Family income supplement.