HC Deb 11 June 1974 vol 874 cc512-3W
Mr. George

asked the Secretary of State for Social Services if she will list in the OFFICIAL REPORT the number of poor families who have a marginal tax rate—combining tax and loss of social benefits—in excess of 50 per cent.: and if she will break this number down according to the gross weekly earnings of the families concerned.

Mr. Robert C. Brown

, pursuant to his reply [OFFICIAL REPORT, 23rd May 1974; Vol. 874, c. 249–50], circulated the following information

It is estimated that from August 1974—i.e., after the updating of social security benefits and increase in graduated national insurance contributions—about 450,000 families will be subject to a potential marginal tax rate of more than 50p in the pound. The breakdown of this number by gross weekly earnings is as follows;

Gross weekly earnings of Family Estimated number of families with a potential marginal tax rate of more than 50p in the pound, as at August 1974 Thousands (Great Britain)
Less than £20 … … 28
£20 to £29.99 … … 221
£30 to £39.99 … … 156
£40 to £49.99 … … 42
£50 to £59.99 … … 3
Above £60 … … 0
Total … … 450

Notes:

  1. (i) Only families with children with the head in full-time employment have been considered. These include both one-parent and two-parent families. In the population there are about 6.5 million such families.
  2. (ii) Estimates are subject to sampling error.
  3. (iii) The calculation has taken account of income tax, national insurance contributions, family income supplement, rent and rate rebates, and the value of free school meals and free welfare milk.
  4. (iv) Families subject to higher than the standard rate of tax have been excluded.
    5. 513
  5. (v) The estimates are based on the assumption that tax and benefits change immediately the pay rise is given. This is unlikely to happen in practice; for example, family income supplements, free school meals and free welfare milk are awarded for periods of 52 weeks. The practical effect over time of an increase in earnings will also depend on other factors including any intervening changes in tax rates or allowances, national insurance contributions and the income limits for benefits.