Select Committee on Work and Pensions Written Evidence

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 Benefit—because 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

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