Select Committee on Social Security Minutes of Evidence


Supplementary Note submitted by Mr Nicholas Mostyn QC (CS 42)

  1.  I was taken to task on the figures that appeared Annex A.2 of my paper by Mr Pond MP.

  2.  I should point out that this is an Annex to my 1998 response to the Green Paper and is thus a year out of date.

  3.  It was suggested that in taking the median point between the average 1997 male manual and non-manual earnings I had in some way created an unrepresentative hypothetical non-residential parent, and that 70 per cent of the working population would earn less than him.

  4.  I do not want to be drawn into an argument as the point can be equally well made over a range of figures.

  5.  I insert a table that analyses liability over a range of incomes. The table specifies the exemplified income in question.

TABLE ILLUSTRATING REDUCTIONS IN PAYMENTS

Assume one child age 7, mother (carer), has no income

Father has housing costs of £50 per week


Gross
Pay
Net
pay
Net weekly payEmployment
example
Present liabilityProposed
liability

Difference
Percentage
Difference

8,327 7,000 134.62 Nursing Auxiliary (£8,705)5.15 14.00 (8.85)-171.8%
15,869 12,000 230.77 Teacher Grade 3 (£16,383)64.69 35.00 29.69 45.9%
18,886 14,000 269.23 Average male

manual earnings

1998 (£17,082)
74.94 40.00 34.94 46.6%
24,920 18,000 346.15 Average male

non manual earnings

1998 (£26,317)
86.48 52.00 34.48 39.9%


  6.  The figures throw up a very interesting point which I had not previously noticed, and that is that at the very bottom of the economic scale the proposed reforms will very substantially increase liability. The nursing auxiliary with a net weekly pay of £134 will see his liability increase by 172 per cent from £5.15 to £14.00.

  7.  Around average national earnings there will be substantial reductions in liability of around 46 per cent. The extent of the reduction decreases at levels above average earnings.

  8.  I would suggest therefore that Mr Pond's criticism of my thesis is misplaced. The reality is that the proposed reforms will in cases involving average earnings result in substantial reductions. In non-benefit cases this will redound to the disadvantage of the child; in benefit cases it will be the tax-payer who loses.

15 September 1999


 
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