§ Dr. Owenasked the Chancellor of the Exchequer what is the net weekly spending power from gross earnings of £45, £65 and £85 for the latest date available for (a) a single person, (b) a married couple, (c) a couple with two children and (d) a couple with four children; and, in the case of the difference between the figures for £45 and £85, what is the implied marginal tax rate.
§ 63 Mrs. Chalker[pursuant to her reply, 15 December 1981, Vol. 15, c. 99]: The following table shows the net weekly spending power, as at November 1981, for the types of family specified by the right hon. Gentleman. It relates only to the particular illustrative situations described and has no general application. It should not be quoted out of context and without stating the assumptions on which it has been based. The assumptions are as follows:
- 1. the ages of the children are as shown;
- 2. rent and rates are payable at the following weekly rates:
Rent Rates £ £ a single person 10.00 3.65 b married couple 10.00 3.65 c married couple with two children aged 4 and 6 12.10 4.45 d married couple with four children aged 3, 8, 11 and 16 13.90 5.10;
- 3. travel to work expenses are £4.40;
- 4. the wife has no personal income from earnings or social security benefits—apart from child benefit;
- 5. there are no tax allowances apart from personal allowances;
- 6. means-tested benefits are taken up in full; and
- 7. the charge made for school meals is 45p.
Net weekly spending power of a single person and of married couples with no, two and four children of particular ages Normal gross earnings (a) Single person (b) Married couple (c) Married couple with two children aged 4 and 6 (d) Married couple with four children aged 3, 8, 11 and 16 £ £ £ £ £ 45 28.59 35.98 67.70 87.85 65 35.68 44.90 66.85 89.60 85 43.53 52.16 66.10* 88.77 * Assumes that local authorities continue to award free school meals on grounds of low income, applying the November 1979 conditions of entitlement. The table shows that the implied "marginal tax rates", for which the right hon. Gentleman has asked, are (a)76W per cent., (b) 60 per cent., (c) 104 per cent. and (d) 98 per cent. Such high marginal tax rates are, however, more theoretical than real, because certain benefits continue unchanged even when income rises. For example, family income supplement, with the free school meals and free welfare milk to which it acts as a "passport", runs on for a year irrespective of any change. Taking this factor into account, the marginal tax rates for the families with children which are previously quoted would be (c) 54 per cent. and (d) 66 per cent.