§ Mr. Ralph Howellasked the Prime Minister what would be (a) the loss of revenue if income tax thresholds and national insurance thresholds were raised to £3,250 for a single person and £4,250 for a married couple and additional tax allowances of £780 were given for each child and (b) the saving in expenditure if all benefits, including family income supplement, child benefit and all housing benefits and tax allowances were abolished; and what would be the net weekly spending power of a man with two children earning £110 per week with a rent of £25 and rates of £5 per week: (i) now and (ii) assuming all these changes have been made simultaneously.
§ The Prime Minister[pursuant to her reply, 28 January 1985, c. 261]: (a) The cost of increasing the single person's income tax allowance to £3,250, the married man's allowance to £4,250 and of introducing child tax allowances of £780 per child would be about £10 billion in a full year at 1984–85 levels of income. The reduction in national insurance contributions if the lower earnings 76W limit was raised to £3,250 per year for single people and to £4,250 per year for married couples, in relation to their joint earnings, would be about £1.25 billion in 1984–85. This estimate assumes no change in the contracted-out rebate in respect of people remaining liable to contributions.
(b) If all benefits including those paid to people not in work were abolished, the annual saving in expenditure in 1984–85 would be £38 billion. If, in addition to the changes in (a), tax relief for mortgage interest relief was withdrawn, there would be an increase in revenue of about £3 billion in a full year.
On the stated assumptions, a married man with two children would currently have a net weekly spending power of £78.49 (based on the general assumptions in the November 1984 DHSS tax and benefit model tables). After the changes specified in (a) and (b) above, his net weekly spending power would become £62.95.