HC Deb 24 January 2002 vol 378 cc986-7W
Mr. Willetts

To ask the Chancellor of the Exchequer if he will extend table 4.3 on the pre-Budget report by showing comparable figures for marginal deduction rates of(a) 50 per cent. or more and (b) 40 per cent. or more. [19649]

Dawn Primarolo

[holding answer 30 November 2001]: Before Budget 1998, an estimated 760,000 households faced marginal deduction rates (MDRs) of 50 per cent. or more, while 800,000 faced MDRs of 40 per cent. or more. After Budget 2001, an estimated 1.1 million households faced MDRs of 50 per cent. or more while 1.12 million faced MDRs of 40 per cent. or more. These figures, which cover the number of households in receipt of either income related benefits or WFTC where at least one person works 16 hours or more, include the effects of income tax and national insurance contributions, and the withdrawal of housing benefit and council tax benefit. The effect of tax and benefit changes introduced since Budget 1998, including the working families tax credit (WFTC), has reduced the number of households facing MDRs in excess of 70 per cent. by around half a million. As the WFTC is more generous than the family credit that it replaced, more families benefit from it, hence the larger numbers of households now facing MDRs at 40 and 50 per cent.