The Lord Bishop of Durham: To ask Her Majesty’s Government, in the light of the Households Below Average Income statistics revealing that 3.2 million adults in working families were in relative poverty in 2015–16, what action they will take to reduce in-work poverty. [HL6346]
Lord Henley: Latest statistics to 2016 show 3.2 million working-age adults in working families living in relative low income before housing costs. This compares with 2.8 million in 2010. In terms of percentages, in 2016 this equates to 8% of all working-age adults and similarly in 2010 this was also 8% of all working-age adults.
However there are currently record numbers of people in work – 2.8 million more since 2010. As a consequence, this has resulted in some increases in the number of individuals in work and in low income. We realise that some people first moving into work might be in low income in the short term. But by being in work they have the opportunity of increasing their earnings, rather than just being left to live a life on benefits.
We are introducing Universal Credit and this is revolutionising the welfare system by making work pay. Universal Credit contains structural incentives to encourage people to work more and earn more. It is simple and as people’s earnings increase their payments reduce at a steady rate (there are no cliff edges), so it is clear to them that they will always be better off working
and earning more.
We have also increased the tax free Personal Allowance so that people can earn more and keep more of what they earn and introduced the National Living Wage. The taxfree personal allowance will be £11,500 in April 2017, a major step towards our goal of reaching £12,500 by 2021. As of April 2017, a typical basic rate taxpayer will pay over £1,000 less income tax, compared to 2010-11. This will be an income tax cut for over 30 million people and will mean taking 4 million of the lowest paid out of income tax completely during the last Parliament. The introduction of the National Living Wage, means a fulltime worker previously on the national minimum wage is now £900 a year better off.
These changes, combined with the highest employment rate on record – mean that work continues to be the best route out of low income. Just 6% of working-age adults in households where everyone is working are in relative low income before housing costs, compared to nearly half (46%) of adults in workless households.