§ Mr. WillettsTo ask the Chancellor of the Exchequer further to Table 4.2 of the Red Book, HC346 p. 79, how many families experienced marginal deduction rates of(a) 55 per cent., (b) 50 per cent., (c) 45 per cent. and (d) 40 per cent. or more (i) before the 1998 Budget and (ii) after the 2000 Budget. [116853]
§ Dawn Primarolo[holding answer 4 April 2000]: The available information is contained in the table. It illustrates the combined effect of tax and benefit reforms in the last three Budgets. These will reduce the number of households facing marginal deduction rates of over 70 per cent. by two thirds, significantly relieving the poverty trap.
The post Budget 2000 figures take into account all announced measures to be implemented by 2001–02, including the introduction of the Children's Tax Credit.
500W
Marginal deduction rate 1 Before Budget 1998 1 After Budget 2000 1 100 per cent. or more 5,000 0 90 per cent. or more 130,000 30,000 80 per cent. or more 300,000 210,000 70 per cent. or more 740,000 250,000 60 per cent. or more 760,000 950,000 55 per cent. or more 760,000 1,100,000 50 per cent. or more 760,000 1,100,000 45 per cent. or more 780,000 1,130,000 40 per cent. or more 800,000 1,150,000 1 Figures are for working households in receipt of income-related benefits or the WFTC where at least one person works 16 hours or more. The before and after figures are based on 1997–98 and 1999–2000 estimated caseload and take-up rates. The increased generosity of the working families tax credit (WFTC) compared with family credit will see an extension of in-work support for families with children. Even those whose marginal rate increases as a result of this change will be better off in cash terms and see an increased return to work compared to being on benefit. On average WFTC will give low earning families an extra £24 compared with family credit.