David Cameron made a passionate speech last autumn where he claimed that it was a scandal that thousands of low-paid workers could only keep a few pence of every pound that they earned. This phenomenon, for the fiscally uninterested, is called a “marginal deduction rate”.
So what is the impact of today’s Budget on these folk? Perhaps alarmingly, people with a marginal deduction rate of over 90 per cent (they keep less than 10p in the pound) is set to nearly double – although not entirey as a result of today.
In the current financial year there are 70,000 people in this sorry position. As of Darling’s March Budget the figure would have risen to 110,000 next year. Now it will be 130,000 – the equivalent of an 20,000 increase.
To gently paraphrase David Miliband’s quote from the other day: sometimes the poetry of ideas is hard to translate into the prose of actual policy.
Jim Pickard
Kiran Stacey