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Family Incomes

Volume 885: debated on Tuesday 28 January 1975

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asked the Secretary of State for Social Services what percentage of reference earnings, net of tax and national insurance contributions, will an unemployed man with a wife and two children earning the national average wage receive on average during the first six months of unemployment in Great Britain and the United States of America taking into account in each case income tax rebates, national insurance contributions credits, and assuming in each case that he had been in the same job at the same wage for one year.

The figures requested could be estimated only at the cost of a disproportionate amount of staff time, and, since a number of assumptions beyond those given by the hon. Member would have to be made, they would in any event be of very doubtful validity.

asked the Secretaary of State for Social Services what is the net weekly spending power, after taking into account income tax, national insurance contributions, rent, rates, family allowances and selective benefits, of a man with a wife and three children earning a gross weekly wage of £25; and what percentage increase in his gross wage would be necessary today in order to raise this net weekly spending power by 20 per cent.

On the assumptions in the hon. Member's Question the family with three children aged 4, 8 and 12 would have a net weekly spending power of £27.54. To raise this net weekly spending power by 20 per cent. today to £33.05 an increase in the man's gross wage of 88 per cent. to £47.12 would be necessary, but this is on the assumption that all benefits would be instantaneously reassessed, though in practice this would not happen. This percentage increase is seriously misleading. The reason for this is that, to arrive at any realistic figure, benefits must be treated as being reassessed over a period of up to a year. Furthermore, it is not possible to take into account any possible future changes in the tax threshold and increases in income levels for benefits; these changes have the effect of increasing the family's net weekly spending power. The answer, therefore, greatly exaggerates the increase in gross income required to obtain a given increase in net weekly spending power.NOTES—1. Net weekly spending power is earnings plus family allowance plus family income supplement less tax less national insurance plus rent rebate plus rate rebate less rent less rates plus the value of free school meals and welfare milk less work expenses.2. Rent £5.00; Rates £1.44; Expenses of work £0.65.