Skip to main content

Family Earnings

Volume 129: debated on Wednesday 9 March 1988

The text on this page has been created from Hansard archive content, it may contain typographical errors.

To ask the Chancellor of the Exchequer if he will publish a table setting out for a two-child family on (a) half average earnings, (b) three quarters average earnings, (c) average earnings, (d) one and a half average earnings, (e) twice average earnings, (f) five times average earnings and (g) 10 times average earnings, the increase in net income derived from (i) a 1p cut in the standard rate of income tax in 1988–89, (ii) an increase in personal allowances, over and above indexation, incurring the same cost as (i), (iii) an increase in child benefit incurring the same cost as (i), both assuming and not assuming similar increases in the supplementary benefit children's rates, (iv) the introduction of a reduced rate tax band of 25 per cent. at the same cost as (i) showing what band of income the reduced rate would cover, and (v) the introduction of a reduced rate tax band of 20 per cent. at the same cost as (i), showing what band of income the reduced rate would cover.

[holding answer 18 February 1988]: The effects of the proposed changes on a one earner, two child, family are shown in the table. The table contains information based on direct revenue or expenditure cost in a full year at 1988–89 levels of income, based on projections from the 1984–85 survey of personal incomes in line with forecasts in the Autumn Statement. On this basis, each of the measures would cost £1·4 billion in a full year—that is the full year figure underlying the first year cost of a 1p cut in the basic rate of income tax, £1·25 billion, shown in the Autumn Statement. The income tax changes are compared with the 1987–88 tax regime indexed to 1988–89 according to the statutory provisions. The income tax calculations assume that all personal allowances and higher rate thresholds would increase by the same percentage and disregard any changes in social security income-related benefits to which the family may be entitled. It has also been assumed that the only tax relief or allowance available to the married couple is the married man's allowance and that the wife has no earnings.

1 Average earnings assumed to be £244·7 per week, an increase of 6·5 per cent. on 1987–88 in line with the assumptions used by the Government Actuary for reviewing national insurance contributions (paragraph 3.02 of the Autumn Statement 1987).

2 Assuming no change in income support rates.

3 .Assuming a corresponding change in income support.