HC Deb 02 November 1995 vol 265 cc380-1W
Mr. Frank Field

To ask the Secretary of State for Social Security what is his estimate of the current replacement ratio of(a) a single person, (b) a married couple, (c) a married couple with one child, (d) a married couple with two children and (e) a married couple with three children and jobs paying at (i) 25 per cent. of median wages, (ii) 50 per cent. of median wages, (iii) 60 per cent. of median wages, (iv) 75 per cent. of median wages, (v) 80 per cent. of median wages and (vi) 90 per cent of median wages. [41079]

Mr. Roger Evans

The information is set out in the table.

Replacement ratios show potential out-of-work income as a percentage of in-work income. It should be noted that the figures provided for couples assume that only one partner is in work. The replacement ratio is likely to be significantly lower if both partners are in work.

Changes made to the tax and national insurance systems and to the structure of income-related benefits since 1985 have led to a significant reduction in the

Replacement ratios at various percentages of median earnings
Percentage of median earnings
Family Type 25 per cent. 50 per cent. 60 per cent. 75 per cent. 80 per cent. 90 per cent.
Single person 85 52 42 33 30 27
Married couple 94 79 64 50 47 41
Married couple with 1 child aged 3 83 80 80 68 63 56
Married couple with 2 children aged 4 and 6 87 86 85 79 74 65
Married couple with 3 children aged 3,8 and 11 91 90 88 83 82 77

Notes:

1 Figures have been rounded to the nearest 1 per cent.

2 Median earnings are £323.20 gross per week, based on all males in full-time work at April 1995 (New Earnings Survey 1995).

3 Replacement ratios shown are based on in work and out of work income after the payment of housing costs. Out of work income figures used include the cash value of milk tokens and free school meals where appropriate.

4 All family types shown are assumed to live in local authority accommodation and pay average rent, appropriate to family size, and average council tax. Families with children are assumed to work for 30 or more hours per week and have no childcare costs.

5 Married couple examples assume only one partner working. All examples assume no income other than earnings, income-related benefits and, where appropriate, Child Benefit.

6 All benefit rates used in the calculation of replacement ratios are for 1995–96.