Select Committee on Social Security Minutes of Evidence

Annex A.1

Example 1: One child aged seven. Father earns £315 net (equivalent to £400 pw gross in 1998); Housing costs £50 pw. Mother earns net as below, with £50 pw housing costs.

 Mother net 0 50 100 150 200 300 400 800 6th April 1998 79.27 79.27 79.27 74.02 66.85 58.00 47.93 26.43 Green Paper 47.25 47.25 47.25 47.25 47.25 47.25 47.25 47.25 Reduction 32.02 32.02 32.02 26.77 19.60 10.75 .68 (20.82) Per cent reduction 40.4 40.4 40.4 36.2 29.3 18.5 1.4 -78.8 Example 2: Two children aged seven and 12: Father earns £315 net (equivalent to £400 pw gross in 1998); Housing costs £50 pw. Mother earns net as below, with £50 pw housing costs. Mother net 0 50 100 150 200 300 400 800 6th April 1998 92.91 92.91 92.91 92.54 83.22 72.22 65.94 44.71 Green Paper 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00 Reduction 29.91 29.91 29.91 29.54 20.22 9.22 2.94 (18.29) Per cent reduction 32.2 32.2 32.2 31.9 24.3 12.8 4.5 -40.9 Example 3: Three children aged seven, 12 and 15: Father earns £315 net (equivalent to £400 pw gross in 1998); Housing costs £50 pw, mother earns net as below, with £50 pw housing costs. Mother net 0 50 100 150 200 300 400 800 6th April 1998 94.50 94.50 94.50 94.50 94.50 86.98 79.34 67.05 Green Paper 78.75 78.75 78.75 78.75 78.75 78.75 78.75 78.75 Reduction 15.75 15.75 15.75 15.75 15.75 8.23 .59 (11.70) Per cent reduction 16.7 16.7 16.7 16.7 16.7 9.5 0.7 -17.4 The gross income figure taken for the father is £20,800, being mid-way between the average male manual and non-manual earnings figures given by the Department of Employment's New Earnings Survey 1997. The figure given for housing costs is arbitrary but, it is suggested, unlikely to be unrealistic. No other factors capable of allowance in the formula have been included.