§ 54. Mr. Roweasked the Secretary of State for Social Services what steps his Department is taking to help overcome the poverty and unemployment traps.
§ Mr. ScottThe Government have already taken the following measures to help improve work incentives. The basic rate of income tax has been reduced from 33 per cent. to 27 per cent. and since 1979 personal tax allowances have been increased by over 22 per cent. in real terms. Family income supplement prescribed amounts have been increased by a minimum of 13 per cent. in real terms and extra help has been given to families with older children. Since October 1985 national insurance contributions have been reduced for those with low earnings and for their employers. In addition, the Department of Employment's claimant advisers explain to job-seekers that rapid access to family income supplement and standard housing benefit can be provided for those re-entering employment. All these measures help to overcome either the poverty trap or the unemployment trap.
Looking ahead, the introduction of the reformed social security system in April 1988 will help alleviate the unemployment trap by bringing more generous help through family credit to double the number of working families that presently receive family income supplement. The alignment of the assessment rules for income-related benefits will also mean that people with similar incomes will be treated equally whether in or out of work. The poverty trap will be eased under the reformed structure because family credit and housing benefit will be assessed using net income. This will mean that it will no longer be possible for the withdrawal of in-work income related benefits to create a fall in net income when gross earnings rise.