Social Security Benefits
Work and Pensions

Photo of Ann Coffey

Ann Coffey (Stockport, Labour)

To ask the Secretary of State for Work and Pensions if he will estimate the total household income including working tax credit, child tax credit, child benefit and council tax benefit of a couple working 18 hours a week on the minimum wage living in their own home and paying £1,000 in council tax (a) currently, (b) after changes to qualifying requirements for working tax credit on 1 April 2012 and (c) including out-of-work benefits.

Photo of Chris Grayling

Chris Grayling (The Minister of State, Department for Work and Pensions; Epsom and Ewell, Conservative)

On the assumption that this couple has two children:

(a) Prior to April 2012, this household would be entitled to working tax credit and they would have income of around £339 per week. This includes around £16 a week in council tax benefit.

(b) In 2012-13, this household would not be entitled to receive working tax credit and would have income of around £269 per week. This includes around £19 a week in council tax benefit.

(c) If this household was out of work their income would be around £271 per week. This includes around £19 a week in council tax benefit.

The Government are reforming the welfare system through the introduction of universal credit in October 2013. Universal credit is designed to improve financial work incentives. And in this example the couple will be around £107 per week better off working 16 hours a week compared to being out of work.

Notes:

1. Part (a) is based on the tax/benefit system in 2011-12

2. Parts (b) and (c) are based on the tax/benefit system in 2012-13

3. Universal credit is based on the tax/benefit system in 2014-15

4. Income is defined as net earnings in addition to any benefits or tax credits.

5. Council tax of £1,000 a year has been equated to approximately £19 a week.

6. All numbers have been provided in 2011-12 prices and where necessary deflated by the GDP Deflator. All numbers have been rounded to the nearest £1.

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