AIBU to think benefits are needed to push earners up from avg. wage to increase equivalent of 10k p.a. in salary?(152 Posts)
So I'm watching very bad tv 'Rip Off Britain' and they cover someone who is having debt problems. They show him reviewing a spreadsheet about his debt and and it shows his income:
Wages - 1,600
Tax credits - 280
Housing benefit - 200
CSA - 190
Child benefit - 80
TOTAL - 2350
Assuming he works FT then his income is circa 24,600 which is pretty typical of the average wage in the country. Removing the income from CSA, his new income is 2,160 which works out to what your take home income would be FT at a salary of 34,000. So essentially benefits have given him a 10k salary increase!
I don't know a great deal about the benefits system and obviously have no idea of his personal circumstances - can glean that he has a child and is getting ex-spousal support.
But what I'm struggling to understand is that his salary is pretty much the average across the country so I wonder -- are most parents on an average wage in need of such a significant top up? I'm sort of blown away by the fact that an average wage does not provide enough to live on and that benefits can increase someone's 'salary' so significantly.
I am in the lucky position of not qualifying for those benefits, so I don't know much about them or how they work. But it seems utterly bonkers to me that we have a system that takes money away from people in tax, then gives it back to them in WTC and CTC. Surely it would make more sense, for workers and government admin efficiency, to raise the tax threshold for the basic rate? Say, to 15000 or even a bit higher. And then just get rid of tax credits in all their forms. And maybe reintroduce the 50% higher rate, to ensure that very high earners don't benefit disproportionately.
I have no problem with benefits but I think it's bizarre to have a system where workers on even average (not low) wages get supplements from the government. Just don't take the tax from them in the first place!
You can't discount CSA, it's perfectly reliable from plenty of NRPs, as it should be. Problem is that there are too many private arrangements and too many self employed people who hide their incomes. If a single parent is being dicked about with CSA and getting less benefits because it's been put in the calculations, then ultimately it's the child that suffers.
You're right, and it's just accepted that that's what happens because there are tax credits to put a plaster on the problem. But it doesn't solve it.
If there was more public outrage at parents not paying for their children, then something old be done about it. But all the time we have tax credits, no ones going to bother.
"People expect one average wage to be enough to support children nowadays though, and it just isn't. Families need two wages or one very high wage to be able to afford children nowadays.
This is why tax credits have created so many problems, because people think they should be able to afford so much more than they actually can.
You can't discount CSA, it's perfectly reliable from plenty of NRPs, as it should be."
I agree and people are very unrealistic in what they can afford nowadays. I had 2 children because that is what I can afford, people who are in shit circumstances already think nothing of having another child then complain they cannot afford to live. That is not saying poorer people shouldn't have kids, that is saying if you choose to have 3 kids you have to sacrifice in other areas like generations ago always did.
People nowadays think it is realistic to have a nice lifestyle doing 16 hours per week. It doesn't work like that.
Tax credits were an exceptionally misguided idea. The intention was to encourage people to work (though not too much) and we are now reaping the consequences. Many people have no motivation to work more than part time or to push themselves for promotions because what is given by one hand will be taken away by another.
They also encourage people to think very short term in the here and now. Someone doing a lower paid job, perhaps working part time hours may feel little incentive to take on more hours or push themself to a more challenging role, but have they actually thought about their future and making pension provision etc?
The next massive shock the UK is in for is when tens of thousands of workers who rely on tax credits reach 60+ and realise that while tax credits have enabled them to get by, they are doing bugger all in terms of investing for their old age. We're going to have a generation having to sell their homes or move out of their rented home because they won't be able to survive otherwise. Either that or work literally til they drop.
The system is failing millions of people by lulling them into believing they are earning a decent wage (thereby encouraging them to spend and live beyond their means) when in reality they are being propped up by the state and 'kept down' in lower grade or part time jobs.
I wish tax credits had never been invented, and that NMW was higher, and that for every hour people work they are tangibly better off, rather than having to question 'is it worth me working 4 days a week rather than 3, or going for a more interesting higher paid job, because I may not be any better off.'
The tax credits are for childcare though so your post makes no sense op
I agree - I understand that if you're better off financially not working or working shorter hours, there is no incentive to find a full time job.
I have no answers but believe that any system should ensure that those in full time work do not lose out financially via a significant reduction in benefits. I would also like to see more affordable childcare offered, to assist people in obtaining work and saving for their retirement.
Firstly, you can't discount CSA is a nonsense. 60% of single parents receive nothing from either CSA or private arrangements. SEcondly, of those who do use the CSA nearly half get £5 per week or £0. That is why maintenance was removed from 'income' when calculating means-tested benefits. It was too unreliable.
SEcondly, a large part of those tax credits will presumably be a contribution towards childcare, rather than actual cash for living expenses, because otherwise those figures have been misquoted. No way would someone on £1600 take home get that amount otherwise.
I wish tax credits were not invented either because they are stopped minimum wage increasing and have crippled families financially because now they cannot survive without then.
I hate labours idea of helping families is to give them top ups instead of encouraging people to better themselves. Now people do not want to better themselves in work because they will be worse off doing so. So you get people doing 16 hours struggling where as before they may have gone for more hours or a promotion and advance themselves.
What a generation to have, not wanting to do extra in fear their tax credits will decrease. We have people at work who turn down extra hours because it will effect their money they get. Before they would have worked those extra hours to get the extra money in their wages.
But the issue still remains that wages should be higher and that the more hours someone works, the more the more they should be remunerated
Even if tax credits are covering childcare, they are not an earning which is contributing to the worker's future. There is a vast difference between having enough to get by in the here and now, and enough to actually stop working, keep a roof over your head and feed yourself when you're 65/70 years of age.
We know for a fact that a frightening percentage of the population doesn't have anywhere near enough pension provision. They may be managing, not having a wonderful lifestyle but managing on low wages topped up by tax credits, but it provides a totally false sense of security because the moment they stop working (or govt policy changes!) they are screwed.
Also tax credits are not based on hours worked or hourly rate, they are based on annual income. So someone doing part time on £10 an hour could have the same annual income as someone working full time on minimum wage. Yet both get the top up.
The system is flawed and it is wrong that someone choosing part time in a good well paid job is entitled to the same as someone working all hours god sends on minimum wage.
The labour government fucked it all up by artificially inflating income with tax credits etc. the economy needed to sort itself out without money being pumped in that way.
This is the problem. It's sort of a catch-22. Benefits are needed because employers don't pay enough and employers don't pay enough because they know any low salary will be topped up with tax credits. The same with housing benefit. Both benefits are subsidies to the rich - big business like Tesco's, Sainburys and rich landlords.
completely agree. and ideas like Workfare are the same only worse.
the question is, what would happen if benefits were reduced. Would salaries have to go up? or would employers just find people who were willing to work for the low salaries without the benefit top up? and if so... is that a good or a bad thing?
It's a thorny issue and relies on balancing a number of factors. Make things too difficult for employers (I'm thinking smaller businesses here) and they'll simply close down and entrepreneurs will have no incentive to start up businesses. Already small businesses have to cope with things like the increased maternity rights (which are great for mums but a headache for employers) and if they suddenly have to hike up wages then there is no doubt that some businesses will go under which helps no one economically. BUT long term higher wages have got to be the answer, and certainly many bigger employers with huge profits ought to be paying better. I also think people need to adjust their expectations back to when a normal working week was 5 days- not feeling entitled to work 2 or 3 and be topped up to virtually a full time equivalent. I'm not suggesting making people wage slaves who live to work, but honestly, a 37 week is not going to kill anyone. It really shows how shocking the state of the nation is that our young people are given DISincentives to work hard
Agree. Those with higher wages are taxed to the Hilt and given no help, those,with low wages are topped up, and those who don't work at all get benefits all resulting in the same end disposable income. It's loopy.
If the person in the op was offered a manager position at there place of work for 40k , but the had to pass training programmes and exams, by the time they had worked out they would be no better off on 40k than what they receive now why would they bother?
Though of course long term they would be shooting themselves in the foot as the CB will stop one day and I imagine so will most of the tax credits when they no longer have young children.
If 60% of people get nothing in maintenance, then that leave 40% who are getting free money that they don't need.
Doesn't that strike you as wrong in a country that can't even provide decent provision for disabled people?
Seems like quite a lot to me. DH and I earn about £2500 a month between us and get child benefit.
We are not eligible for any other benefits.
I guess he is getting the benefits because he is a single parent?
I don't think its money they don't need. Tax credits do not cover many extras. I struggle to buy clothes we both need, usually going without myself and things like a holidays are simply not an option. There seems to be a myth that people on benefits are rolling in it. If they are I don't know any and that's far from the case for me and my daughter. If you don't get maintenance payments you tend to get into debt with extras your child may need. As I said before, the equivalent of 34k in London to house,
feed, clothe two people is very little. Especially with small children who are constantly growing out if shoes,
That's not the point at all Kelly.
that sounds a lot to me
he earns more wages than us and gets £100 per month more tax credits...also we get no housing benefit (or csa)....
don't really get the figures in the op??
I think all benefits for working people should be scrapped.
Then employers will have to pay decent living wages instead of the taxpayer doing it
Why am I subsidising Tesco's employment costs?
It is madness. Scrap tax credits. Lets be honest about wages and pay honest wages
And tbh that would cause a fall in house prices too. Those are artificially raised because people get mortgage approvals on the back of tax credits. Insane. We need lower house prices.
Scrap em all
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