The claim
“I just don’t think it makes sense, really, at a time when money is tight, that someone even on my salary, which is a really good MP salary, could be entitled to the family component of tax credits.”
Nick Clegg, Leaders’ debate, 29 April 2010
The background
Labour is campaigning as the party that would save tax credits – a tax reduction which benefits the vast majority of families with children, as well as some childless people on lower incomes.
The Lib Dems, however, want to restrict tax credits to those on lower incomes. They say this would help reduce spending at a time when the country is massively overdrawn. (See this FactCheck for more details on the three main parties’ tax credits policies.)
Yesterday during a campaign trail question and answer session, the Lib Dem leader donned his hairshirt and used himself as an example of why tax credits were far too generous.
“I’m on a really good salary, an MP’s salary, yet I’m entitled to tax credits,” Nick Clegg told Sky News.
Clegg said he was entitled to the payment, despite his generous salary. He made a similar claim – not once but twice – during the final Leaders’ debate last night. Is he correct?
The analysis
An MP’s basic pay (duck houses not included) is £65,738. Although Clegg is one of a number of senior parliamentarians who opted to stick with last year’s £64,766 rather than take the recent pay rise.
Child tax credits are calculated based on a family’s total earned income – so salaries of both parents, if they both work, are taken into account. And for most families, that combined income can hit £58,175 before the tax credits are cut off.
That’s a good few grand below the wage packet of Clegg and his parliamentary colleagues, meaning most would miss out.
However, there are exceptions: the threshold at which the credits are withdrawn is increased if the family has a disabled child, or a child aged less than 12 months.
For families with a new baby, the income threshold rises to £66,350. And that is indeed higher than an MP’s pay – even for those honourable members who took the recent pay increase.
But does Clegg himself actually benefit from this Treasury largesse, as he suggested yesterday morning? His third son, Miguel, is now 14 months old – meaning the family would no longer qualify for the higher threshold.
A year ago, Clegg could have got the tax credit if he were the only earner in the family. But his wife Miriam is a lawyer, pushing the total income of Casa Clegg above the limit.
A Lib Dem official conceded this, but said Clegg was trying to make the broader point that it is possible for MPs to be eligible for child tax credits despite the fact their income puts them easily within the top 10 per cent of earners.
The verdict
Someone on a parliamentary wage of nearly £66k would qualify for tax credits if they had a child aged under one year old. The amount they’d get – less than £30 – is pretty small, and they would cease to qualify as soon as the child’s first birthday candles were blown out.
In Clegg’s case, his wife’s salary pushes the family’s income above the threshold, meaning they didn’t get the extra payment when their youngest son was born.
But his central point about an MP’s potential eligibility is correct, despite their high salary. Most MPs do not have a child aged under 12 months – but then, many voters may be surprised to hear that someone on such a high wage could qualify at all. On that basis, we rate Clegg’s claim fact.
