Tuesday, 29 May 2012

The effect of the National Minimum Wage on benefits expenditure

Anyone who knows anything about the benefits system, knows that means tested benefits and tax credits decrease when earnings increase.

Therefore, it follows that an increase in the National Minimum Wage of £x an hour would reduce benefits expenditure by £y million and tax credits expenditure by £z million.

Given the significance of this I asked both DWP and HMRC, using the Freedom of Information Act, to provide me with any information they have about this.  Replies have now come back and they both state they do not hold such information.

Of course research into this subject would not be straightforward and estimates which came out of it would be subject to uncertainty.  But am I missing something by expressing surprise that neither the DWP nor HMRC have done any research about this?

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