§ Mr. Kenneth Clarkeasked the Secretary of State for Social Services what is the most recent estimate of the number of people on low earnings who may be worse off for each £1 increase in their earnings after taking into account their tax liability and loss of means-tested benefits.
§ Mr. OrmeIt is estimated that at December 1974, the latest date for which information is available, about 20,000 families could theoretically be worse off after a £1 pay rise.
Notes:
1. The estimate is based on Department of Health and Social Security analyses of the family expenditure survey data and is subject to very considerable sampling error.
2. The estimate includes families with and without children where the head is under pension age and in full time work, either as an employee or self-employed. There are about 16,800 thousand such families in Great Britain.
3. The estimate assumes that all benefits and taxes are revised immediately on receipt of the pay rise. In practice this is very unlikely to happen, since, for example, family income supplement, free school meals and free welfare milk are all awarded for 52 weeks, irrespective of changes in circumstances, and upward changes in tax allowances and in the income limits for benefits which occur within the award period greatly reduce the likelihood of actually facing such a high marginal tax rate.