§ Mrs. Ray MichieTo ask the Secretary of State for Social Security what incentives his Department give to encourage the unemployed to take up short-term employment; and if he will make a statement.
§ Mr. Peter LloydThe Government do not draw a distinction between short-term work and other work. We are concerned to encourage individual independence and enterprise by improving incentives to work generally.
The 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 25 per cent. and since 1979 personal tax allowances have been 335W increased by 25 per cent. in real terms. 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 credit and housing benefit can be provided for those re-entering employment.
The introduction of the reformed social security system in April helped to alleviate the unemployment trap by bringing more generous help through family credit. Alignment of the assessment rules for income-related benefit means that people with similar incomes are being treated equally whether in or out of work. The worst features of the poverty trap have been removed under the reformed structure. Family credit and housing benefit are being assessed using net, rather than gross, income. This means that the withdrawal of in-work income-related benefits no longer creates a fall in net income when gross earnings rise.