§ Mr. Meacherasked the Chancellor of the Exchequer, in the case of married men with two children under 11 years of age earning, respectively, £1,000, £2,000, £3,000, £5,000, £8,000, £10,000, and £20,000 a year in October 1970, what are their respective take-home pay, net of tax, and national insurance contribution, both at current prices and in real terms at October 1970 prices, at October in 1971, 1972, and 1973. respectively.
§ Mr. Nott,pursuant to his reply [OFFICIAL REPORT, 17th January 1974], gave the following information:
The figures are:
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§ Mr. Meacherasked the Chancellor of the Exchequer what was the take-home pay in real terms at October 1970 prices of a married man with two children under 11 years of age, after deductions of income tax and national insurance and assuming all income is earned, in the years 1970–71, 1971–72, 1972–73 and 1973–74, respectively, where he earned £1,000, £2,000, £5,000, £10,000, and £20,000 respectively; and, in each case, what was the percentage annual change in post-tax real income for each year.
NET PAY (£) Annual Earnings 1970–71 1971–72 1972–73 1973–74 A A B A B A B £1,000 … 862.14 820.61 −4.8 793.14 −3.3 734.13 −7.4 £2,000 … 1,522.57 1,427.03 −6.3 1,368.37 −4.1 1,265.14 −7.5 £5,000 … 3,524.15 3,326.40 −5.6 3,132.13 −5.8 2,912.28 −7.0 £10,000 … 5,906.90 5,721.52 −3.1 5,307.46 −7.2 5,187.03 −2.3 £20,000 … 7,591.21 8,791.86 + 15.8 7,887.69 −10.3 7,976.29 + 1.1 Notes:
Column A shows the net pay after applying the tax rates in force for the relevant year and converting the post-tax figure to October 1970 prices. Column B shows the percentage annual change in take home pay in real terms. Where appropriate, surtax and also the 10 per cent. surcharge on 1972–73 surtax liability have been deducted in calculating net pay.
The general index of retail prices has been used in all these calculations. For 1971–72 and 1972–73 the conversion has been made by reference to the average for the year; for 1973–74 the index used has been based on the average for the first eight months.
It has been assumed that the men with £1,000 and £2,000 per year are not contracted out of the Graduated Pension Scheme, and that those with £5,000 and above are contracted out.
The figures of net pay do not include family allowance (£46 80 all years), nor Family Income Supplement but the tax on the family allowance and "clawback" have been taken into account. Where it is to the taxpayer's advantage to forgo family allowance, tax has been calculated on that basis.