David Cameron said he was horrified by the fact that young mums trying to go back to work only keep 4p in the £1 that they earn because of the withdrawal of benefits and additional taxes.

Labour has just pointed out that in 1998 (a year after the Tories were removed from power) there were 130,000 families facing marginal deduction rates (the technical definition) of over 90 per cent.

That has fallen to 60,000 thanks to the minimum wage, tax credits and lower income tax.

In fact, in 1998 there were 5,000 families facing 100 per cent deduction rates. Every £1 they earned was then taken in tax. The number is now more or less zero. (See page 90 of the Red Book for full details).

October 8, 2009 5:32pm in UK politics | Comment