Lower Paid (Fiscal and Social Policy) (Hansard, 24 February 1986)

§ The Prime Minister

This is a matter of great concern, and we therefore ensure that there is close co-ordination between Departments on fiscal and social security policy towards the lower paid. A number of important measures have recently been introduced or announced. For example:

The new family credit, now before Parliament, will provide substantial extra help to low paid working families with children and will therefore improve the relationship between the income a family would receive in and out of work. It will be paid through the pay packet, in effect as an offset against tax and national insurance payments.

The planned reform of income-related benefits will end the position where the combination of tax, contributions and loss of benefits can leave individuals worse off as their gross income rises.

Successive Budgets have ensured that many of the lowest paid have been taken completely out of tax.

The reformed structure of national insurance contributions, introduced in October 1985, has relieved the burden of contributions on the low paid.

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Moving the uprating date of social security benefits to April from next year will enable changes in benefits to be synchronised with changes in tax and contributions.

Together, these changes mark a major advance in coordinating and streamlining the systems of tax and social security. The computer systems being developed by Inland Revenue and DHSS are also designed to ensure compatibility. The scope for closer alignment in the longer term will be discussed in the forthcoming Green Paper on personal taxation.