§ Mr. Freudasked the Chancellor of the Exchequer what percentage of a pay increase of (a) £1, (b) £5, (c) £10 and (d) £20 per week is kept by a full time worker with two children under 11 years of age receiving (i) the national average wage, (ii) three-quarters of the national average wage, (iii) two-thirds of the national average wage and (iv) one and a half times the national average wage, after deductions have been made for income tax, national insurance contributions and loss of any benfits (a) now, (b) in November 1981 and (c) for each of the last five years.
§ Mr. Peter Rees[pursuant to his reply, 6 May 1981, c. 59]: The figures are as follows:
Percentage kept of increase Average Earnings 3¾ Average Earnings ⅔ Average Earnings 1½Average Earnings Period Increase of£l, £5, £10 or £20 Increase of£l, £5, £10 or £20 1981/82 (Currently and in November 1981) 62.2 70.0 1976–77* 59.2 65.0 1977–78 60.2 66.0 1978–79 60.5 67.0 1979–80 63.5 70.0 1980–81 63.2 70.0 * The figures for an increase of £20 in average earnings and 1½ x average earnings are 59.3 per cent, and 63.3 per cent, respectively. The proportion retained of each of the increases does not normally depend on the amount of the increase or the precise earnings level. The amount deducted from the increases equals basic rate tax plus national insurance contributions for average earnings, three-quarters and two-thirds average earnings, and equals basic rate tax only at one and a half times average earnings—which normally exceeds the upper earnings limit for NIC.
The exceptions noted in the table occur in 1976–77 where a £20 increase takes earnings above the upper earnings limit for NIC at average earnings, and into higher rate liability at one and a half times average earnings. The earnings figure used for these calculations is taken as the average over all occupations for full-time men in the new earnings surveys of April 1976 and April 1977.
National insurance contributions are calculated at the not contracted-out rate.