HC Deb 25 June 1998 vol 314 c620W
Mr. Redwood

To ask the Secretary of State for Social Security what is her Department's estimate of the likely savings in benefits paid to people in work from the introduction of the minimum wage. [47520]

Mr. Keith Bradley

The information is set out in the table.

Estimates of the effect on the Department's benefit expenditure of the introduction of the minimum wage
£ million
Benefit Savings 1999–2000
Income Support 10
Jobseeker's Allowance (Income-based) 10
Housing Benefit 110
Family Credit/Working Families Tax Credit 185
Council Tax Benefit 25
Total 340

Notes:

  1. 1. Savings figures are calculated by raising the earnings of current benefit recipients to the level of the minimum wage. No other factors are taken into account
  2. 2. Estimates are based on the 1995–96 Family Resources Survey, imposing the 1999–2000 tax and benefit structure, assuming 1998–99 levels of caseloads, prices, benefit rates and earnings. Estimates are rounded to the nearest £5 million
  3. 3. Family Credit will be replaced by Working Families Tax Credit in October 1999, assuming the approval of relevant legislation

Mr. Redwood

To ask the Secretary of State for Social Security if the rates of benefit withdrawal are to be altered when the minimum wage is introduced. [47522]

Mr. Keith Bradley

The national minimum wage is a key element in a range of policies introduced by the Government to help make work pay. There are two other main measures in this area:

First, a more generous Working Families Tax Credit will be introduced, subject to the passage of the necessary legislation, to replace Family Credit from October 1999. The Working Families Tax Credit will reduce the rate of benefit withdrawal from 70p in the pound in Family Credit, to 55p in the pound; and is accompanied by a child care tax credit which provides significant extra help with child care costs for low and middle-income working families with children.

Secondly, the introduction of major changes in the National Insurance system from April 1999 will reduce contributions for lower paid workers and simplify the system.

There are no plans to make further changes to the Social Security system as a consequence of the introduction of the national minimum wage.