Memorandum submitted by Citizen's Income
Trust (CP 04)
The April 2003 Tax Benefit Model Tables (DWP,
2003) show that families with children (whether with one parent
or two) experience marginal deduction rates of over 60% on gross
earnings at least up to £300 per week and often beyond £400
per week, and some family types experience marginal deduction
rates of over 80% on gross earnings up to £300 per week.
This situation makes it difficult for families with children to
remove themselves from poverty by increasing their earnings.
The tables and graphs in the publication make
it particularly clear that the one benefit which both reduces
child poverty and does not contribute to marginal deduction rates
is Child Benefitbecause it is paid unconditionally, and
thus invariably in relation to gross earnings.
To increase Child Benefit would reduce child
poverty because (1) it would increase the net income of families
with children, and (2) it would reduce the marginal deduction
rates for families with children and thus enable families to remove
themselves from poverty by increasing their earnings.
For these same reasons, to reduce Child Tax
Credits and considerably increase Child Benefit would have an
immediate and major impact on the levels of child poverty.
Child benefit is not only effective against
child poverty; it is also inclusive, it is highly efficient, and
it is resistant to fraud. It should be the centrepiece of the
government's efforts to tackle child poverty.
Dr Malcolm Torry
2 September 2003