HC Deb 19 December 2003 vol 416 cc157-60W
Mr. Willetts

To ask the Chancellor of the Exchequer what the average council tax was(a) gross and (b) net of rebates as a percentage of equivalised disposable income in each income quintile for (i) pensioner households and (ii) non-pensioner households in 1997–98. [146086]

Ruth Kelly

The information requested falls within the responsibility of the National Statistician, who has been asked to reply.

Letter from Dr. Mike Pepper to Mr. David Willetts dated 5 January 2004:

The National Statistician has been asked to reply to your recent question on the average gross and net council tax as a percentage of equivalised disposable income in each income quintile for (i) pensioner households and (ii) non-pensioner households in 1997–98 [146086]. I am replying in his absence.

Estimates for council taxes are based on the analysis "The effects of taxes and benefits on household income 2001–02" produced by the ONS and published on the National Statistics website on October 21st 2003. The analysis can be obtained from the House of Commons Library or from the National Statistics website at: http://www.statistics.gov.uk/taxesbenefits. It includes measures of income inequality for the United Kingdom as a whole based on data from the Expenditure and Food Survey. This is a sample survey covering about 7,500 households in the UK and sample sizes are only sufficient to give approximate estimates for pensioner households.

Pensioner households have been defined as those where the Head of Household is retired or unoccupied and aged 65 or more and male, or 60 years of age or more and female, and economically inactive. Answers to other recent parliamentary questions about council tax broken down by household type, relating to 2001–02, have used the definition of the Household Reference Person rather than the Head of Household. Detailed information on the definition of these identifiers can be found on the National Statistics website.

Council tax is not paid in Northern Ireland. Estimates for 1997–98 for Great Britain are shown in the following table for gross and net council tax as a percentage of disposable income for all pensioner households (single and couples) and non pensioner households, and for all households. Equivalised income has been used to divide households into quintiles. However, the estimates of Council tax as a percentage of income use unequivalised rather than equivalised income (i.e. without the adjustment for household size). Equivalisation is a standard methodology that takes into account the size and composition of households and adjusts their incomes to recognise differing demands on resources. It is used for ranking households in particular. It is more usual to analyse unequivalised income in relation to expenditure items which are unequivalised) such as Council tax. However, if the same equivalisation factors were applied to income and expenditure, the factors would cancel each other out and the percentages would remain the same.

Council tax as a percentage of disposable income for pensioner1 and non-pensioner households, 1997–98—Great Britain2
Quintile groups of all households ranked by equivalised disposable income
Households Bottom 2nd 3rd 4th Top All households
Net council tax4 as a percentage of unequivalised disposable income
Pensioner 5.8 4.4 4.2 3.4 3.1 3.8
Non-pensioner 3.0 3.0 2.7 2.3 1.7 2.3
All households 3.5 3.3 2.9 2.5 1.8 2.4
1 Household reference person is economically inactive and over minimum state pension age
2 Council tax is not paid in Northern Ireland
3 Equivalised disposable income at the boundary point between two quintile groups.
4 Net council taxes after deducting benefits and discounts.

Source:

Office for National Statistics, based on the analysis "The effects of taxes and benefits on household income," published on the National Statistics website

Mr. Willetts

To ask the Chancellor of the Exchequer what the(a) average equivalised disposable income and (b) gross council tax in money terms was for each income quintile in 2001–02; and if he will make a statement. [146153]

Ruth Kelly

The information requested falls within the responsibility of the National Statistician, who has been asked to reply.

Letter from Mike Pepper to Mr. David Willetts, dated 5 January 2004:

The National Statistician has been asked to reply to your recent question asking for average equivalised disposable income and gross council tax for each income quintile group in 2001–02 [146153]. I am replying in his absence.

Estimates in the following table are produced from the Office for National Statistics" analysis "The effects of taxes and benefits on household income" published on the National Statistics website on October 21st 2003 at http://www.statistics.gov.uk/taxesbenefits. The analysis includes measures of income inequality for the United Kingdom as a whole based on data from the Expenditure and Food Survey. This is a sample survey covering about 7,500 households in the UK and sample sizes are only sufficient to give approximate estimates. In particular, results for the lowest quintile are less reliable than for others because of greater variability and because it includes households with members in a state of occupational transition.

The table shows for 2001–02, the average disposable income and average gross council tax paid by all households in Great Britain and for each income quintile group where households are ranked by equivalised disposable income. Although equivalised income has been used to divide households into quintiles, the estimates of average disposable income and average gross council tax are unequivalised. Equivalisation is a standard methodology that takes into account the size and composition of households and adjusts their incomes to recognise differing demands on resources, and is used for ranking households in particular. However, it is more usual to analyse unequivalised income in relation to an expenditure item such as Council tax which is not equivalised.

Average disposable income and gross council tax (£ pa) by equivalised disposable income quintile, 2001–02—Great Britain1
Quintile Income boundary2 Average unequivalised disposable income Average gross council tax
Bottom 7,829 647
10,397
2nd 12,720 652
14,717
3rd 18,992 721
20,042
4th 26,915 789
28,596
Average disposable income and gross council tax (£ pa) by equivalised disposable income quintile, 2001–02—Great Britain1
Quintile Income boundary2 Average unequivalised disposable income Average gross council tax
Top 48,124 895
All households 23,011 741
1 Council tax is not paid in Northern Ireland
2 Boundary point between equivalised disposable income quintiles

Source:

Office for National Statistics, based on the analysis "The effects of taxes and benefits on household income", published on the ONS website.

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