§ Mr. Squire
asked the Chancellor of the Exchequer what percentage increase in personal allowances would be possible if the whole of the £1.5 billion fiscal adjustment predicted in his autumn statement were used in this way; 321W how many families with children would be lifted out of tax by such an increase; and what would be the impact on the numbers caught in the poverty trap.
§ Mr. Moore
A full answer would require a complete economic simulation. However, a reasonable approximation can be obtained from the direct revenue cost of the change in 1985–86. An increase of just under 10 per cent. on top of indexation in personal allowances (including age allowance) would have a direct revenue cost of about £1½ billion in 1985–86. This would give increases of £310 in the married man's allowance, and of £200 in the single person's and wife's earned income allowance, above the indexed values in table 4.1 of the autumn statement. Such increases would take about 850,000 people out of tax compared to indexation of allowances in 1985–86, including about 75,000 families with children. Of these, about 15,000 would be receiving family income supplement.