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Social Security Reform

Volume 129: debated on Wednesday 9 March 1988

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To ask the Secretary of State for Social Services what proportions of those working families who are eligible for family credit are (a) tenants paying rent, (b) mortgagors, (c) outright owner-occupiers and (d) non-householders; and if he will illustrate the effect on net weekly spending power of introducing the reformed structure of income-related benefits for the following categories (i) a married couple with one earner and two children aged 13 and 16 years and (ii) a married couple with one earner and three children aged three, eight and 11 years, assuming, where appropriate, that the families (A) pay average local authority rent and rates, (B) have a £13,000 outstanding mortgage and pay appropriate weekly mortgage interest, (C) own their own home outright and pay average local authority rates and (D) are non-householders and pay no rent, mortgage interest, or rates, in each example showing both current and post-reform net weekly spending power, and any change between the two, for earnings ranging from £70 to £200 in £10 steps.

The tenure composition of the family credit eligible population is as shown:

Family credit eligible population tenure
Per cent.
Rent paying tenants50
Mortgagors38
Outright owners8
Non-Householders4
Total100
The information on net weekly spending power is provided in the tables. Overall two thirds of family credit recipients are expected to gain or be unaffected.
Table 1 Married couple, one earner—2 children aged 13 and 16 Average local authority rent and rates 1988–89 Net weekly spending power £
Gross earningsPre-reformPost-reformIncrease (+)/Decrease (-)
7096·5597·65+1·10
8097·9898·00+0·02
9097·9398·39+0·46
10097·8899·86+1·98
11094·98101·18+6·20
12094·08103·10+9·02
13095·66105·02+9·36
14094·91106·94+12·03
15096·11108·86+12·75
160102·51110·78+8·27

Gross earnings

Pre-reform

Post-reform

Increase (+)/Decrease (-)

170108·91112·70+3·79
180115·31115·31
190121·71121·71
200128·11128·11

Table 2 Married couple, one earner—2 children aged 13 and 16 £13,000 mortgage, average local authority rates Net weekly spending power £

Gross Earnings

Pre-reform

Post-reform

Increase ( + )/Decrease ( - )

70
80
90
10086·67100·11+13·44
11085·42101·43+16·01
12086·17103·35+17·18
13090·92105·27+14·35
14096·02107·19+11·17
15096·36109·11+12·75
160102·76111·03+8·27
170109·16112·95+3·79
180115·56115·56
190121·96121·96
200128·36128·36

Note:

Below £100 gross weekly earnings a borrower would be unlikely to get a £13,000 mortgage.

Table 3 Married couple, one earner—2 children aged 13 and 16 outright owner, average local authority rates Net weekly spending power £

Gross Earnings

Pre-reform

Post-reform

Increase ( + )/Decrease ( - )

70100·46113·99+13·53
80103·14115·92+12·78
90104·34117·51+13·17
100105·54118·98+13·44
110104·29120·30+16·01
120105·04122·22+17·18
130104·69124·14+19·45
140109·79126·06+16·27
150115·23127·98+12·75
160121·63129·90+8·27
170128·03131·82+3·79
180134·43134·43
190140·83140·83
200147·23147·23

Table 4 Married couple, one earner—2 children aged 13 and 16 Non-householder: No rent, mortgage or rates Net weekly spending power £

Gross Earnings

Pre-Reform

Post-Reform

Increase ( + )-Decrease (- )

70104·25122·40+18·15
80107·33124·82+17·49
90108·93126·80+17·87
100110·53128·78+18·25
110109·93130·10+20·17
120111·33132·02+20·69
130112·23133·94+21·71
140118·63135·86+17·23
150125·03137·78+12·75
160131·43139·70+8·27
170137·83141·62+3·79
180144·23144·23
190150·63150·63
200157·03157·03

Table 5 Married couple,·one earner—3 children aged 3, 8 and 11 Average local authority rent and rates Net weekly spending power £

Gross Earnings

Pre-Reform

Post-Reform

Increase( + )-Decrease ( -)

70111·80100·13-11·67
80113·23100·55-12·68
90113·18102·53-10·65
100113·13104·51-8·62
110110·65105·83-4·82
120109·75107·75-2·00
130108·85109·67+0·82
140108·54111·59+3·05
150110·34113·51+3·17
160112·31115·43+3·12
170116·16117·35+1·19
180122·56122·56
190128·96128·96
200135·36135·36

Table 6 Married couple, one earner—3 children aged 3, 8 and 11 £13,000 mortgage, average local authority rates Net weekly spending power £

Gross Earnings

Pre-Reform

Post-Reform

Increase ( + )/Decrease ( - )

70
80
90
100101·11104·76+3·65
110100·02106·08+6·06
120100·77108·00+7·23
130101·52109·92+8 40
140104·35111·84+7·49
150109·45113·76+4·31
160112·56115·68+312
170116·41117·60+1·19
180122·81122·81
190129·21129·21
200135·61135·61

Note: Below £100 gross weekly earnings a borrower would be unlikely to get a £13,000 mortgage.

Table 7 Married couple, one earner—3 children aged 3, 8 and 11 Outright owner, average local authority rates Net weekly spending power £

Gross earnings

Pre-reform

Post-reform

Increase ( + )/Decrease ( - )

70114·90118·13-3·23
80117·58119·67+2·09
90118·78121·65+2·87
100119·98123·63+3·65
110118·89124·95+6·06
120119·64126·87+7·23
130120·39128·79+8·40
140118·12130·71+12·59
150123·22132·63+9·41
160128·88134·55+5·67
170135·28136·47+1·19
180141·68141·68
190148·08148·08
200154·48154·48

Table 8 Married couple, one earner—3 children aged 3, 8 and 11 Non-householder: No rent, mortgage or rates

Net weekly spending power £

Gross Earnings

Pre-Reform

Post-Reform

Increase ( + )/Decrease ( - )

70118·43127·05+8·62
80121·51129·47+7·96
90123·11131·45+8·34

Net weekly spending power £

Gross Earnings

Pre-Reform

Post-Reform

Increase ( + )/Decrease ( - )

100124·71133·43+8·72
110124·11134·75+10·64
120125·51136·67+11·16
130126·91138·59+11·68
140125·88140·51+14·63
150132·28142·43+10·15
160138·68144·35+5·67
170145·08146·27+1·19
180151·48151·48
190157·88157·88
200164·28164·28

Notes to tables:

1. All main assumptions as in "Impact of the Reformed Structure of Income Related Benefits", October 1987, copies of which are held in the Library.

2. Net weekly spending power is defined after payment of income tax and national insurance, receipt of benefits, payment of net housing costs and work-related expenses (travel costs).

3. Average weekly local authority rents for these family types are assumed to be £19·12, local authority rates £8·02, water rates £1·78. A £13,000 mortgage is assumed to imply a net (after tax) mortgage interest payment of £18·87 per week.