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Low Pay

Volume 405: debated on Thursday 15 May 2003

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To ask the Chancellor of the Exchequer what measures he is taking to increase the take-home pay of those in low paid work. [113276]

The Government introduced the first ever National Minimum Wage in April 1999 and has recently announced that, from October 2003, the National Minimum Wage will increase from £4.20 to £4.50. Subject to an assessment of the future economic situation, it will increase again to £4.85 in October 2004. At least 1.3 million workers stand to benefit from the 2003 increase, and 1.7 million from the 2004 increase. Since the introduction of the National Minimum Wage in 1999, low paid workers will have seen their wages increase by 25 per cent, by October 2003.The Government have reduced taxes for lower-paid workers. As a consequence of the introduction of the lOp rate of income tax in 1999, and the subsequent to the basic rate down to 22p in 2000, 3 million low paid workers now pay lower taxes. The reforms to the National Insurance Contributions have removed the unfair "entry fee" and have raised the point at which employees start paying NICs from £66 in 1999 to £89 per week now, while leaving their entitlement to contributory benefits protected.In 1999 the Government introduced the Working Families Tax Credit, which reached nearly 1.4 million families with children, helping around 550,000 more families than the old Family Credit at its peak. Building on this success, from April 2003 the Working Tax Credit improves support for workers on low and moderate earnings and for the first time extends support to single people and couples without children, provided they are aged 25 or over and they work at least 30 hours per week. Alongside the Working Tax Credit, the Government have introduced the Child Tax Credit, that supports families with children and it is paid in and out of work. The Child Tax Credit is expected to benefit 5.75 million families, and will channel £13 billion in support to families, most of them on low and moderate incomes.As a consequence of the reforms illustrated above, from October 2003 a family with one child and one adult working 35 hours per week at the National Minimum Wage will be guaranteed an income of £241 per week, while a couple without children and one adult working 35 hours a week will take home at least £187 per week. These figures compare with £182 in April 1999 for a family with one child and £117 for a childless couple. Before the introduction of the National Minimum Wage, no minimum income from work could be guaranteed.