Family Income Supplement was a
means-tested benefit
A means test is a determination of whether an individual or family is eligible for government assistance or welfare, based upon whether the individual or family possesses the means to do without that help.
Canada
In Canada, means tests are use ...
for working people with children introduced in Britain in 1970 by the Conservative government of
Edward Heath
Sir Edward Richard George Heath (9 July 191617 July 2005), often known as Ted Heath, was a British politician who served as Prime Minister of the United Kingdom from 1970 to 1974 and Leader of the Conservative Party (UK), Leader of the Conserv ...
, effective from August 1971.
[ It was not intended to be a permanent feature of the ]social security
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
system and was abolished by the Social Security Act 1986, which replaced it with Family Credit
Family Credit was a social security benefit introduced by the Social Security Act 1986 for low-paid workers with children in Great Britain that replaced Family Income Supplement.
The benefit was designed for families with children if at least one ...
.
Half of the amount by which the claimant's income fell below £15/week was paid, plus £2 for each additional child, to a maximum of £3/week (revised to £4/week). In addition, those in receipt were given entitlement to free school meals
A school meal or school lunch (also known as hot lunch, a school dinner, or school breakfast) is a meal provided to students and sometimes teachers at a school, typically in the middle or beginning of the school day. Countries around the world ...
and passported to the NHS Low Income Scheme
The NHS Low Income Scheme is intended to reduce the cost of NHS prescription charges, NHS dentistry, sight tests, glasses and contact lenses, necessary costs of travel to receive NHS treatment, NHS wigs and fabric supports, i.e. spinal or abdo ...
. Claimants were required to provide payslips to prove that they were in remunerative full-time work for a minimum of 30 hours per week, or 24 hours for single parents. In 1985, differential rates for children under 11, from 11 to 15 and over 16 were introduced. There was a maximum payment to prevent abuse from claimants or employers deliberately reducing or understating earnings.
Once entitlement was established, it continued for 52 weeks regardless of changes in circumstances.
Entitlement was calculated with respect to gross income, which exacerbated the poverty trap
In economics, a cycle of poverty or poverty trap is caused by self-reinforcing mechanisms that cause poverty, once it exists, to persist unless there is outside intervention. It can persist across generations, and when applied to developing count ...
. Each extra £1 a week in gross earnings would reduce weekly Family Income Supplement by 50p, on top of which most claimants would be subject to income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
and National Insurance Contributions
National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...
of at least 30p, which produced a very high marginal withdrawal rate The effective marginal tax rate (EMTR) is the combined effect on a person's earnings of income tax and the withdrawal of means testing of state welfare benefits. The EMTR is the percentage of an extra unit of income (extra dollar, euro, yen etc.) t ...
.[ Additionally, the loss of entitlement took with it entitlement to health and education benefits.
The take-up of the benefit was initially poor, with less than half of those eligible claiming.][Documents on Health and Social Services: 1834 to the Present Day - Brian Watkin]
See also
*Child benefits in the United Kingdom Child benefits in the United Kingdom are a series of welfare payments and tax credits made to parents with children in the UK, a major part of the welfare state.
The child tax allowance
The first modern child tax credit was introduced in David Lloy ...
References
{{reflist
Child welfare in the United Kingdom
Government-provided school meals in the United Kingdom
Social security in the United Kingdom