§ Mr. AllenTo ask the Secretary of State for Social Security if he will make a statement on the steps taken by his Department since 1979 to eliminate the poverty trap as defined in paragraph 44 of Cm 1514.
§ Mr. JackThe Department has introduced a number of changes—including the assessment of income-related 249W benefits using net, rather than gross earnings and a major restructuring of national insurance in 1989. These measures, together with the reduction since 1979 in the basic rate of income tax from 33 to 25 per cent. and the increase in income tax personal allowances of 25 per cent. in real terms, have virtually eliminated the worst effects of the poverty trap and significantly reduced the numbers facing very high combined marginal deduction rates.
§ Mr. AllenTo ask the Secretary of State for Social Security what further proposals he has to eliminate the poverty trap as defined in paragraph 44 of Cm. 1514; and if he will make a statement.
§ Mr. JackAs indicated in paragraph 7 of the DSS departmental report—Cm. 1514, February 1991—potential changes in benefits are assessed according to a range of criteria including the effects on work incentives. The effect on marginal deduction rates is, and will continue to be, one of the many factors taken into consideration when formulating policies.