§ Mr. Fieldasked the Chancellor of the Exchequer what would be the cost of abolishing the personal tax allowance while increasing the one-parent family benefit to a level which ensured that no single parent was worse off.
§ Mr. RidleyI take it the hon. Member has in mind the additional personal tax allowance for lone parents. The estimates available are in terms of 1982–83 incomes, benefit rates and tax allowances. In 1982–83 the additional 417W personal allowance was worth £5.08 a week to a basic rate taxpayer. Conversion to an additinal cash benefit at this level, payable to all existing recipients of social security benefits as single parents, and allowing for savings in supplementary benefit, and assuming an improvement in one-parent benefit take-up from 70 to 80 per cent., could have been achieved at no net cost or saving to the Exchequer. However, to ensure that no single parent paying income tax at the basic rate was worse off it might be necessary to assume 100 per cent. take-up of one-parent benefit. A conversion on this basis would have cost about £40 million in 1982–83. Even so, the very small number of single parents paying higher rate tax, and those who would lose a full year's tax allowance in exchange for a part year cash benefit might still lose in the conversion.
§ Sir Brandon Rhys Williamsasked the Chancellor of the Exchequer if he will estimate the net cost, after taking into account savings on means tested benefit, if the additional personal allowance for lone parents were converted into a cash benefit payable at £5 per week.
§ Mr. Ridley[pursuant to his reply, 2 February 1983, c. 113]: I regret the delay in this reply, which resulted from the lengthy calculations required to produce the estimate. The calculations have been carried out in terms of 1982–83 incomes, benefit rates and tax allowances, since the 1983–84 rates and so on were not known at the time they were begun. Conversion of the additional personal allowance into a £5 cash benefit for all existing recipients of social security benefits as single parents, allowing for social security savings only in supplementary benefit, and assuming an improvement in take-up of one parent benefit from 70 to 80 per cent. would have led to a net saving to the Exchequer of something under £5 million in 1982–83. However, a higher increase in take-up of one parent benefit would have led to an overall net cost.