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One of the things my right hon. and learned Friend Mr Clarke did not mention was the income tax threshold when tax credits were introduced. Low earners who were earning just above £4,615 would have paid 20% tax on that income. I have heard the pleas from Opposition Members about allowing wages to increase before these tax credit changes take effect, but the changes in the personal tax allowance between 2003 and now mean that there is, in effect, an extra £1,197 in a family’s pocket if they earn up to the income tax threshold. That is the difference between paying tax on £4,615 as opposed to the current level of £10,000. That benefit cuts across all low earners. The important statistic that has not been quoted from the Library research is that between 58% and 64% of adults earning near the minimum wage do not receive tax credits or benefits, yet those earners, who very often are women, do receive the benefit of not paying that 20% on their income because of the rise in the income tax threshold.
My right hon. and learned Friend also described the introduction of the system and the complicated overpayments. I was a single parent when those changes were introduced. I did not claim because I spent my working days sorting out the debts of people who were claiming and who had built up huge arrears with Her Majesty’s Revenue and Customs.