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Family Incomes

Volume 885: debated on Wednesday 5 February 1975

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asked the Secretary of State for Social Services if she will publish in the Official Report the net weekly spending power today—after taking into account income tax, national insurance contributions, rent, rates, family allowances and means-tested benefits—of a man with a wife and four children earning a gross weekly wage of £30; 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 a family with four children aged 4, 8, 10 and 12 would have a net weekly spending power of £32·03. To raise this by 20 per cent. today to £38·44 an increase in the man's gross wage of 80 per cent. to £54·00 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.


1. The definition of net weekly spending power is that given in my reply to the hon. Member's Question on 28th January.—[Vol. 885, c. 95–6.]

2. Rent £5·00; Rates £1·60; Expenses of work £0·65.

The figure for rates in my reply on 28th January should have been £1·60. The error is regretted.