Allowance reduced in proportion (5)
I believe the answer is:
ratio
'in proportion' is the definition.
(I've seen this before)
'allowance reduced' is the wordplay.
'allowance' becomes 'ration' (I've seen this before).
'reduced' means to remove the last letter.
'ration' with its final letter removed is 'RATIO'.
(Other definitions for ratio that I've seen before include "Proportional relationship" , "Percentage" , "One to one - maybe" , "figures in relationship" , "9 to 5, say?" .)