Taxation: Income Tax

Lord Greaves Excerpts

Wednesday 6th March 2013 Lords Chamber

Asked By

[Lord Greaves]

To ask Her Majesty’s Government what measures they will take to ensure that wage-earners who are below the income tax threshold will benefit from any future increases in the personal allowance.

[Lord Newby]

My Lords, since 2010 the Government have announced successive increases in the personal allowance totalling £2,965. Taken together, these changes will ensure that more than 2.2 million low-income individuals will be removed from income tax altogether. The Government are also taking other measures that will benefit those who are below the income tax threshold, including the introduction of universal credit, support on childcare and the pupil premium.

[Lord Greaves]

My Lords, some 4,300,000 employees already earn too little to benefit from the increase in the personal allowance this year—which I fully support—and this will rise to nearly 5 million workers in 2013-14, about 17% of the labour force, of which two-thirds will be women. How can it be right or fair that a policy trumpeted as helping low-paid workers does nothing for the lowest-paid 5 million? Will the Government look seriously at new ways to end this unfair situation?

[Lord Newby]

My Lords, some of those 5 million were paying income tax until we took them out of income tax, so they have benefited significantly from the changes that we made. The vast bulk of those 5 million are people in work who are not working full time, so one of the key things that we have to try to ensure is that more people are working full time. One of the better statistics on the labour market—which had a good year in many respects last year—is that 32,000 people who were working part time and who wanted to work full time got full-time jobs in the last quarter of last year.