HC Deb 07 July 1998 vol 315 cc442-3W
Mr. Webb

To ask the Secretary of State for Social Security how many people will lose(a) zero, (b) more than zero but less than 10 per cent., (c) more than 10 per cent. but less than 20 per cent., (d) more than 20 per cent. but less than 30 per cent., (e) more than 30 per cent. but less than 40 per cent., (f)more than 40 per cent. but less than 50 per cent., (g) more than 50 per cent. but less than 60 per cent., (h) more than 60 per cent. but less than 70 per cent., (i) more than 70 per cent. but less than 80 per cent., (j) more than 80 per cent. but less than 90 per cent. and (k) more than 90 per cent. of the rise in family income resulting from a minimum wage set at £3.60 for adults and £3 for those aged 21 or under, as a result of offsetting reduction in means-tested and other benefits. [47524]

Mr. Keith Bradley

[holding answer 25 June 1998]: The measures announced in the budget reduce substantially the number of people facing high marginal deduction rates. The Working Families Tax Credit will reduce the rate of withdrawal from 70p in the pound in Family Credit, to 55p in the pound. As a result, over half a million families will see their marginal tax rates reduced and the number of families with rates over 70 per cent. will fall by two thirds. All families facing higher marginal tax rates will be better off, and they will see improved returns from working compared with being on benefit.

The number of beneficiaries in receipt of each benefit who experience an off-set of that benefit following the introduction of a minimum wage
Number of benefit units with reduction
Percentage of increase in earnings offset by reduction in net income Income Support/Jobseeker's Allowance (income-based) Working Families Tax Credit Housing Benefit Council Tax Benefit
0–10 * * * 5,000
10–20 * * 5,000 5,000
20–30 * 5,000 5,000 20,000
30–40 0 10,000 5,000 10,000
40–50 0 10,000 5,000 10,000
50–60 0 60,000 5,000 5,000
60–70 * 100,000 15,000 10,000
70–80 0 20,000 45,000 15,000
80–90 * 30,000 100,000 55,000
90–100 5,000 20,000 20,000 15,000
100% 30,000 0 0 0
Greater than 100% * 0 0 *
Total 40,000 255,000 195,000 145,000

Notes:

1. Estimates are based on the 1995–96 Family Resources Survey, uprated to 1998–99 levels of caseloads, but with the October 1999–2000 tax and benefit structure imposed.

2. Figures are rounded to the nearest 5,000, * denotes a figure less than 2,500. Figures may not sum due to rounding. Figures for Working Families Tax Credit are full year averages.

3. These estimates exclude a small number of recipients with a reduction in benefit due to an increase in non-dependant deductions, as a result of an increase in earnings of another household member in another benefit or non-benefit unit.

4. Estimates are based on the first-round effects of the minimum wage, no other factors are taken into account.

5. The information is not directly comparable with published data on marginal deduction rates within the tax/benefit system for a number of reasons, including (a) it measures the full effect of the minimum wage, not the marginal effect—it therefore includes floaters off benefit (b) it gives estimates for each benefit separately, rather than the overall impact on benefit units who may be in receipt of more than one benefit; and (c) it includes benefits paid to people working under 16 hours a week.