To ask the Secretary of State for the Home Department what total financial support the Government have provided to families in the lowest income decile in each of the last 20 years. (93665)

I have been asked to reply.

The information requested falls within the responsibility of the National Statistician who has been asked to reply.

Letter from Karen Dunnell, dated 16 October 2006:

As National Statistician, I have been asked to reply to your recent question to Her Majesty’s Government, what total financial support the Government has provided to families in the lowest income decile in each of the last 20 years. (93665)

Estimates of the financial support provided to households through cash benefits are based on the ONS analyses “The effects of taxes and benefits on household income” which is published annually. The latest analysis for 2004-05 was published on the National Statistics website on 12 May 2006 at http://www.statistics.gov.uk/taxesbenefits. The analysis is based on data from the Expenditure and Food Survey, which is a sample survey covering approximately 7,000 households in the UK. The income decile groups used in this analysis are based on a ranking of households by equivalised disposable income—a widely used proxy for standard of living.

The table below shows the average receipts of cash benefits by households in the bottom income decile. Figures have been provided back to 1987, the earliest year for which comparable figures are available. They are based on the figures which have appeared annually in the taxes and benefits analysis, but have been adjusted to 2004-05 prices using the all items retail prices index. Receipts of cash benefits have also been shown as a percentage of average gross household income for households in the bottom income decile.

There has been some cyclical variation in receipts of cash benefits by this group of households, although there is no clear long term trend. However cash benefits constitute a declining proportion of gross income for these households. This is because of trend increases in real incomes from other sources such as wages and salaries and occupational pensions.

Cash benefits include contributory benefits such as the state retirement pension, and incapacity benefit, as well as non-contributory benefits such as income support, child benefit, housing benefit, and disability living allowance. Tax credits are only partially included since for households paying some income tax, the tax credits are initially treated as negative tax, rather than a benefit. Only after the tax credit has eliminated any income tax liability, is any further tax credit receipt treated as a benefit.

It should be remembered that these results are based on a sample survey and so there is some uncertainty surrounding the estimates for any one year. The bottom income decile is likely to contain some households who have low income but high wealth, and so can sustain a standard of living higher than that which would be suggested by their income alone.