HC Deb 11 January 1993 vol 216 cc545-7W
Mr. Wicks

To ask the Chancellor of the Exchequer if he will publish a table which sets out for a two-child family on(a) half average earnings, (b) three quarters average earnings, (c) average earnings, (d) one and a half average earnings, (e) twice average earnings, (f) five times average earnings and (g) 10 times average earnings the increase in net income to be derived from (i) a 1p cut in the standard rate of income tax in the 1993–94 financial year, (ii) an increase in personal allowances, over and above indexation, which incurred the same cost as a 1p cut in the

Increase in income after tax1 (£ per week) compared with indexation2 in 1993–94 for a married man3 with two children
Multiple of average earnings4
½ ¾ 1 1½ 2 5 10
Increase derived from
(i) 1p cut in basic rate 0.39 1.29 2.20 4.02 4.31 4.31 4.31
(ii) 10.25 per cent. increase in personal allowances 1.16 1.16 1.16 1.16 1.84 1.84 1.84
(iii) increase in child benefit
(a) £3.35 per week per child5 6.70 6.70 6.70 6.70 6.70 6.70 6.70
(b) £2.15 per week per child6 4.30 4.30 4.30 4.30 4.30 4.30 4.30

Notes:

1 Disregarding any change to entitlement to social security income—related benefits except in item (iii)b.

2 Calculations based on the standard assumption that 1992–93 allowances' lower rate band and the basic rate limit have been indexed by 3.25 per cent. for 1993–94.

3 Assumed to have no tax reliefs and allowances other than the personal allowance and the married couple's allowance.

4 Average earnings assumed to be £363.3 per week.

5 Assuming no change in income support and family credit children's rates.

6 Assuming corresponding changes in income support and family credit children's rates.

Mr. Wicks

To ask the Chancellor of the Exchequer if he will provide figures for 1979 and 1989 showing, on an equivalent income basis, the proportion of households consisting of(a) one adult with children, (b) two adults with children, (c) non-retired without children and (d) retired in each quintile of (a) original income and (b) post-tax income, as defined in the annual articles in Economic Trends on the effects of taxes and benefits.

Percentage of household types within each quintile group of eqivalised disposable income, 1979 and 1989
Quintile groups of equivalised disposable income
Household type Bottom 2nd 3rd 4th Top All households
1979
1 adult with children 6 3 2 2 1 3
2 adults with children 16 32 43 33 18 28
Non-retired without children 11 23 33 51 73 38
Retired 65 33 10 4 4 23
3 or more adults with children 2 8 12 10 5 8
100 100 100 100 100 100
1989
1 adult with children 10 6 3 1 1 4
2 adults with children 15 20 33 29 22 24
Non-retired without children 19 24 40 55 67 41
Retired 52 45 17 9 7 26

standard rate of income tax and (iii) an increase in child benefit which incurred the same cost as a 1p cut in standard rate income tax, both assuming and not assuming similar increases in the income support and family credit children's rates separately.

Mr. Nicholas Brown

To ask the Chancellor of the Exchequer if he will estimate, on the same basis as the ready reckoner published in the autumn statement, what is the effect on a one-earner, two-child family of spending in 1993–94 the same sum on(a) a 1p cut in the basic rate of income tax, (b) raising income tax thresholds above their indexed levels, (c) raising child benefits assuming (i) no change in income support and family credit rates and (ii) corresponding changes in income support and family credit rates.

Mr. Dorrell

The effects of the various changes to income tax and child benefit on a married man with two children are shown in the table. Each of the changes would cost £1.5 billion a year, that is the cost in a full year of a 1p cut in the basic rate of income tax. Estimates are based on projections of the 1990–91 survey of personal incomes.

Mr. Nelson

The information is not available in the precise form requested because only one method of ranking is used to produce the annual article inEconomic Trends and this uses equivalised disposal income. The data for 1979 were first published on an unequivalised basis and have been reworked on an equivalised basis. The figures are given in the table:

Quintile groups of equivalised disposable income
Household type Bottom 2nd 3rd 4th Top All house holds
3 or more adults with children 3 6 7 6 3 5
100 100 100 100 100 100

The figures in the table are rounded and may not add up to 100.

Source: Central Statistical Office, based on Family Expenditure Survey.

Mr. Wicks

To ask the Chancellor of the Exchequer how many(a) working families with children and (b) childless people in work had incomes below the tax threshold at the latest date for which information is available.

Mr. Dorrell

There are an estimated 450,000 working families with children and 1.1 million childless people at work who have incomes below the income tax threshold and are therefore not liable to income tax in 1992–93. For this purpose, income is calculated as total income for income tax purposes, excluding any non-taxable social security benefits, less tax reliefs and is compared witht he appropriate levels of personal tax allowances. The estimates are based on information projected from the 1990 and 1991 family expenditure surveys and are therefore provisional.