George Osborne's Autumn Statement - your reactions please!

(224 Posts)
CatherineHMumsnet (MNHQ) Wed 05-Dec-12 10:30:59

The Chancellor George Osborne will begin making his Autumn Statement in Parliament today at 12.30. Thought we should start up a thread so Mumsnetters can comment as it happens.

LoopsInHoops Wed 05-Dec-12 12:18:37

I can hardly contain myself

LoopsInHoops Wed 05-Dec-12 12:18:50


sieglinde Wed 05-Dec-12 12:22:57

It will be timid, ineffective, and full of very tiny bonbons for targeted voting cohorts. He really is the worst chancellor I've ever known.

Electricblanket Wed 05-Dec-12 12:26:40

You of course mean after Mr Brown!

JakeBullet Wed 05-Dec-12 12:27:54

It will contain certain phrases and comments such as:

"recovery slower than expected"
"austerity measures must continue"
"Further austerity measures ate needed"
"I will freeze/cut (insert some benefit or other).

Just a guess......

Varya Wed 05-Dec-12 12:32:35

Nothing for families needless to say.

I don't want to look to be honest, as working poor we are on tipping edge already.

LoopsInHoops Wed 05-Dec-12 12:40:34

Should we play "we're all in this together" bingo?

We3bunniesOfOrientAre Wed 05-Dec-12 12:41:46

Well ds (3) just shouted 'I don't like him, I don't like him' coontinuously as soon as I turned it on, obviously a good judge of politicians already. Will have to rely on MN for a synopsis!

LoopsInHoops Wed 05-Dec-12 12:44:58


MrsjREwing Wed 05-Dec-12 12:52:24

Marking my place.

Marking place

HenriettaTurkey Wed 05-Dec-12 12:57:25

It's just all terribly depressing.

yellowvan Wed 05-Dec-12 13:01:03

yes to bingo. how about "the mess the last government left" for starters and 2Gordon Brown's fiscal irresponsibility" and " why should the tax payer foot the bill for [insert some vital benefit here]

yellowvan Wed 05-Dec-12 13:02:15

oh, and benefits as "lifestyle choice"

LoopsInHoops Wed 05-Dec-12 13:04:37

Is it on? Not in UK so can't listen.

JakeBullet Wed 05-Dec-12 13:04:53

I think we3bunnies DS should be political correspondent lol. Much better than Andrew Marr......grin

"Don't like him, don't like him"grin

LoopsInHoops Wed 05-Dec-12 13:07:06

OK, bingo. Guesses for amount of times...

"recovery slower than expected"
"austerity measures must continue"
"Further austerity measures ate needed"
"I will freeze/cut (insert some benefit or other)"
"we're all in this together"
"the mess the last government left"
"why should the tax payer foot the bill for [insert some vital benefit here]"

Are said during the speech. How long is the speech? You do realise I'll need someone to either type it out word for word or link a youtube so I can verify. grin

JakeBullet Wed 05-Dec-12 13:08:49

He said "all in this together" at 1:46 according to the Telegraph live feed. grin

JakeBullet Wed 05-Dec-12 13:09:59

Whoops....meant 12:46 of course.

LoopsInHoops Wed 05-Dec-12 13:10:45


MsElleTow Wed 05-Dec-12 13:12:04

I'm nearly in tears from the pain my disability causes, ATM. I am too scared to watch, I know he is going to be a bastard to the disabled as per usual!

LoopsInHoops Wed 05-Dec-12 13:12:06

oh, forgot 'britain is healing' <vom>

LoopsInHoops Wed 05-Dec-12 13:13:11

'We are on the side of those who want to work hard and get on,'

evilhamster Wed 05-Dec-12 13:13:25

Autumn statement? In December? Yet another thing he's confused about...

LoopsInHoops Wed 05-Dec-12 13:13:35

Twittermeadwaj @meadwaj
I think they are actually just pulling figures out of their bottoms at this point. 2.8% growth by 2015? Did I hear that right? #as2012

LoopsInHoops Wed 05-Dec-12 13:14:14

Chancellor says he would have to hit the UK with £17 billion extra cuts per year to meet supplementary debt target. BINGO!

LoopsInHoops Wed 05-Dec-12 13:14:40

Oh, I forgot all the 'on course, can't give up now' bullshit

JakeBullet Wed 05-Dec-12 13:15:10

Douglas Carswell (Tory MP) on Twitter is just on fire lol.

"So we missed the target then....why not just say so".

LoopsInHoops Wed 05-Dec-12 13:15:20

'turning back now would be a disaster' BINGO!

JakeBullet Wed 05-Dec-12 13:17:07

"Families out of work should not get more than those in work".....he has said that twice now....double BINGO

LoopsInHoops Wed 05-Dec-12 13:17:45

'Osborne repeats the mantra "we are all in this together" - to cheers from coalition MPs and jeers from Labour.'


78bunion Wed 05-Dec-12 13:21:14

No real cuts. No real change. Nothing for enterprise. Tinkering at the margins.

niceguy2 Wed 05-Dec-12 13:29:18

Agreed. Biggest announcement was probably the scrapping of the 3p fuel duty rather than another delay which is probably the right thing to do. Another delay just brings another round of bad press nearer the time.

TBH I don't think he's got much room for manoeuvre.

Electricblanket Wed 05-Dec-12 13:29:36

What an awful response from Balls! He can't speak.

PPPop Wed 05-Dec-12 13:32:58

Ed balls conquered a stammer. I think he's doing pretty good, it sounds like a bear pit.

claig Wed 05-Dec-12 13:33:28

Ed Balls keeps asking "Mr Speaker" questions, and "Mr Speaker" doesn't reply to him. What's that all about? If he wants to have a discussion with "Mr Speaker", why do teh whole house have to listen in?

Balls' reply to Osborne is a mishmash, it;'s meandering all over the place and getting nowhere.

MrsjREwing Wed 05-Dec-12 13:35:40

Mr Speaker has no spare time, too busy saying calm down and being exasperated by Sally.

claig Wed 05-Dec-12 13:35:41

ElectricBlanket, I agree with you. Balls' speech is a load of all with bells on. I thought he was better than this. Even the Labour benches are falling asleep, having well and truly lost what little thread there was.

mrscogon34thstreet Wed 05-Dec-12 13:38:30

Heard Ed Balls going on about the USA's 4.1% growth since 2010. The problem is that they have achieved this by harvesting loads of natural gas and thus bringing their energy prices down so that their consumers have more $ to spend.

This is something we could do (North Sea gas), alas EU rules don't allow it - which party is it again that love the EU? Oh yes, Labour! So hypocritical!

claig Wed 05-Dec-12 13:39:02

Labour are lucky that Balls did not become leader. This is almost incoherent and insignificant, and appealing to "Mr Speaker" for help is making it worse.

hoodoo12345 Wed 05-Dec-12 13:43:30

George Osborne- the Devil in a suit, makes my skin crawl.

CinnabarRed Wed 05-Dec-12 13:48:08

I'm a tax policy adviser for one of the big professional services firms. I've got 20 mins before my next press interview - if anyone's got any questions on tax then I'm happy to do what I can to answer.

Which tax avoidance loopholes have been closed? He talked a lot about it without saying anything at all.
I'm not talking tax evasion, which is illegal, but "aggressive tax avoidance".

StiffyByng Wed 05-Dec-12 13:51:30

Claig, all speeches in the House are directed at Mr Speaker. All the other people making speeches will do the same. It's a formality.

MrsjREwing Wed 05-Dec-12 13:52:21

how many people put 40k a year into a pension?

claig Wed 05-Dec-12 13:55:46

Thanks, StiffyByng. I'm all for tradition, but it just seems a bit archaic to mention "Mr Speaker" neraly every sentence. Osborne didn't seem to do it as often, and it just seemed so noticeable in Balls' speech.

Electricblanket Wed 05-Dec-12 13:57:11

My husband does Mrs Ewing. Its That or pay 50% tax on his bonus. It's a huge amount of money, we know that!

CinnabarRed Wed 05-Dec-12 14:00:43

There are three corporate tax loopholes that have been closed, all highly technical and very much a minority sport to do with dodgy financing between group companies (their names are mismatch schemes, property return swaps and manufactured payments, if you're interested. Net effect to the Exchequer of their closure estimated at £nil - which shows you how minority they are.

There's also a measure to stop UK banks who have paid bank levies overseas from claiming double tax relief - that's worth around £340m per annum.

Significantly less than 1% of the population pay more than £40k into pensions per annum. The main people affected will be those in defined benefit schemes earning more than £80k, who maybe haven't earned much in the past but have been awarded promotions and now want to top up their pensions. The big question is who pays the extra tax - the employee or the pension fund?

DB schemes earning over £80k. Who pays the tax? Employee or pension fund?

Viviennemary Wed 05-Dec-12 14:15:35

It said absolutely nothing. That was my interpretation. But I am not exactly an economist! I was disappointed they didn't raise the basic tax allowance by a lot more. I think it should be raised to £10,000 minimum or more and that would take a lot of low paid people out of income tax altogether. Why should they pay tax on this pittance.

Bramshott Wed 05-Dec-12 14:17:14

Rise in personal allowance is good, but how on earth can he afford to do that??

claig Wed 05-Dec-12 14:30:34

VivienneMary, I think the personal allowance will be £10000 by the time of teh next election. He can't do it all in one go. He needs to reach teh headline figure by the election date. It is moving in the right direction and I am sure there will be more good news over teh next two years.

What good news are you expecting Claig? Osborne's resignation?

78bunion Wed 05-Dec-12 14:42:46

It will be something like £9100 which means a married couple could earn nearly 20,000 without paying a penny of tax.

mam29 Wed 05-Dec-12 14:45:02

Did i hear right that pensioners get 2%increase?

Also had no idea what drawback thing is assume its something to do with savings accounts and isas.

I was in building soceity other day paying in a measly £10 into child account.

The pensioner infront of me was asking how much more he could add to his isa.

The lady informed him his current isa up to its limit.

she reccomended a new isa with £5000 min deposit.

to which he said sounds good and wrote a cheque from his current account for 5grands.

we all in this together.

claig Wed 05-Dec-12 14:50:18

'What good news are you expecting Claig? Osborne's resignation?'

Certainly not!
Why should a man in full control of his brief resign?

I am hoping that all of the talk is not just jot air. I am hoping that what Nick Boles said about building on an extra 3% of land in order to meet housing expectations will actually happen. I hope that very soon they will actually invest hugely in growth and infrastructure. There are only a few years left until the election, so if it is going to happen, then it will have to happen soon.

claig Wed 05-Dec-12 14:52:21

mam29, that pensioner has worked all his life. I am pleased that he has managed to accumulate savings over a lifetime.

Miggsie Wed 05-Dec-12 14:52:25

I love the "better than 50% chance" statement - he means he hasn't a clue

autumnlights12 Wed 05-Dec-12 14:52:56

Ed Balls didn't have anything to say, because there is nothing to say.
It was a good speech. good measures, good all round.

Miggsie Wed 05-Dec-12 14:55:08

I wish they would introduce "pay as you drive" on the major raods - to stop people living 300 miles away from where they work.
Then those who use roads the most pay for the repairs.

CinnabarRed Wed 05-Dec-12 14:56:20

The personal allowance will rise to £9,440 from April 2013. That's a further £235 on previous announcements. Worth about £1 per week to a basic rate tax payer.

The fuel duty rise has been scrapped, which is also worth about £1 per week for the average motorist.

Although small for individuals, the two together cost around £2.6bn per annum to the Exchequer. They're being paid for by more tax collected from UK residents hiding money in Switzerland smile.

JamNan Wed 05-Dec-12 14:56:39

The only Chancellor in the course of British history to spend his way into a double possibly triple dip recession. What a cruel, ineffectual and incompetent man he is. General Election NOW please!

CinnabarRed Wed 05-Dec-12 14:57:42

Pensioners, as a group, have been the most protected from spending cuts by some margin (the IFS did an interesting study proving it). Whether that's an appropriate policy is a separate matter.

claig Wed 05-Dec-12 14:59:30

Miggsie, they will unfortunately do that. People live miles away and commute in because they can't afford to live in cities like London. They can't flip their homes.

Dilivery companies, hauliers and commuters drive to work. Penalising drivers, penalises business. It is the type of thing that anti-growth greens welcome, but it is pro toffs, who can afford to drive on empty roads, and anti the people who need to drive to make a living.

claig Wed 05-Dec-12 15:01:10

'Pensioners, as a group, have been the most protected from spending cuts by some margin'

But what is the average income of pensioners?
They can't increase their earnings and have to pay huge care costs etc.

Viviennemary Wed 05-Dec-12 15:05:49

Well I don't begrudge pensioners the extra. A lot of them will have had quite poor childhoods and may have grown up during the war and suffered deprivation. From what I've heard from older people we don't know the meaning of poverty these days.

CinnabarRed Wed 05-Dec-12 15:17:46

Oh, I agree Claig and Viviennemary. I'm merely stating as a fact that pensioners have been protected so far.

mam29 Wed 05-Dec-12 16:03:23

I dont know I dident asked the pensioners how he earnt his money.

What bugs is

child benefit can be mean tested

yet fuel allowance /free bus passes too expensive so therefore go wealthy pensioners.

In addition to that their state pension goes up, some have private pensions too back in the day when they had full and final salary.
Unclue works for royal mail as postman and due a very good pension when he retires.

They had lower retirement age then working people now.
lower housing costs.My inlaws brought their house for 3grand.

im not saying they dont work hard.

But everyone I know right now is working hard and gets a lot less.

some pensioners are poor and in need.

just none round my way they all live in huge houses and have expensive cars.

just dont think focussed very well on need.

but pensioners vote and we have aging population with rising nhs /care costs.

Oblomov Wed 05-Dec-12 16:03:44

I don't know why we are all surprised. He is just tinkering and the whole thing is just a joke. He is a bit of a tit, isn't he?

mam29 Wed 05-Dec-12 16:11:26

I think labour are useless.

I dont think theres much they could offer we have no money, growth is slow.

Im hoping some of the measures that attract business may eventually pay off.

The eurozone is still a mess and they main trading partner so we will be affected and usas due another downturn despite their huge stimulus and their is no welfare state there/safety net not like osbournes trying to replicate usa and have 99weeks jsa only then thats it and we have free healthcare and other benefits.

I think when people watch budget they wonder how it will affect them.
child benefit rise -not even inline inflation at 1% but pleased we got to keep ours but lost tax credits in april.

Income tax allowance mere £235 a year not much difference.

Petrol no increase-good but still blooming expensive.

no change vat.

I dont particuarly warm to osbourne but unsure what else could have done.

WildWorld2004 Wed 05-Dec-12 16:16:07

What osbourne could have done was sort out all those pensioners who live abroad and get winter fuel payments or state pensions.
Osbourne is a smug smug fool.

malinois Wed 05-Dec-12 16:22:28


This is something we could do (North Sea gas), alas EU rules don't allow it - which party is it again that love the EU? Oh yes, Labour! So hypocritical!

Do you have any more info/links on this? Genuinely interested as I had no idea that EU rules prevented the UK from harvesting gas in the North Sea.

CinnabarRed Wed 05-Dec-12 16:24:05

Hmm. Well, I'm a Labour voter but on the whole I think he's doing a reasonable job in a very, very tough gig.

I think the cuts announced and implemented are too harsh - my economics are more Keynsian than his - but who can tell whether I'm more right than he is? Maybe if I were in charge we'd be in even deeper shit with massively increased interest rates on our national debt because we weren't seen as a safe economy.

Whoever was Chancellor has some horrendous decisions to make.

CinnabarRed Wed 05-Dec-12 16:25:44

North sea oil and gas producers pay an additional tax on top of the normal corporation tax - their effective tax rate is something like 60%.

Viviennemary Wed 05-Dec-12 16:31:04

I thought it was only £235 up on what it is now which is about £8,100 I think. So it's good that he has raised it more. On the whole I think it was a fair budget. And no disability benefits to be cut which is also good.

MoreBeta Wed 05-Dec-12 16:31:12

Just a load of tinkering.

He could have junked the entire tax code and done the following:

Removed all income tax allowances, capital gains tax allowances, ISA allowances, tax credits and Child Benefit but give out a generous personal allowance of £10k for every adult and £5k per child to be pooled in a family if one person does not work. A 2 adult 2 child family could have an income of £30k before tax if that happened.

Corporate income tax, capital gains tax and personal tax at a flat rate of 35%.

Shut down DTI, DfiD, Scottish, Welsh, NI departments.

Stop paying subsidies or special tax breaks to any industry including 'green' industries.

There are loads of simple measures that would massively reduce tax complexity and reduce Govt spend.

mrscogon34thstreet Wed 05-Dec-12 16:31:38

malionis It was on Radio 4 a couple of weeks ago - I think it was John Redwood talking about it on Any Questions. I think it is the rate at which we can extract it which is governed by EU rules from what was said, so the market can't be flooded with cheap gas or something.

The US's use of this strategy is one of the main reasons they've had growth when we have stagnated, but the point remains that the economy needs to be stimutated as well as cuts in order to get us out of this financial hole.

malinois Wed 05-Dec-12 16:31:49

CinnabarRed - oh, I know that, but that's a levy imposed by the Treasury - nothing to do with the EU. All oil and gas producing countries have a levy on production - that's why Norway and the Gulf states are so rich! (not sure where we messed up on that one)

CinnabarRed Wed 05-Dec-12 16:34:03

The problem with taking benefits from overseas pensioners is that the amounts are too small to make a difference. It would raise a couple of million at most. (And that's not factoring in the cost of administration.)

Last year we borrowed £159bn, and our spending was around £650bn - to give you an idea of the scale of the problem.

So overseas pensioners are a drop in the ocean.

Although taking their benefits would be satisfying.

CinnabarRed Wed 05-Dec-12 16:35:52

We messed up by spending all of the revenue from the North Sea (present and future) in the '80s and '90s.

mrscogon34thstreet Wed 05-Dec-12 16:44:38

I think one of the main problems is the cost of living. There is very little governments can do over the cost of 'natural resource' based things such as energy and food, but someone could do something over the cost of housing. If housing costs were reduced by 30% or so then it would make a huge difference to everyone.

Unfortunately (and this is why I don't trust Labour although I'm not very impressed with the current government either) the last government buried their heads in the sand about the over inflating/ed rental and sale property markets and allowed every tom dick and harry get in on the 2nd homes/BTL market therefore allowing those who already owned propery to get richer and make it harder for the young and poor to get on the property ladder.

The problem is now a double edged sword as allowing 30% deflation would leave a lot of people in -ve equity and increase the problem of banks having lent money which they wouldn't get back but also, I think governments are relieved that the high price of housing will mean some relief on the issue of lack of pensions/funds for elderly care, as in the future the baby boomers (who have benefitted the most from the housing inflation) will have to sell to fund their retirements/care.

malinois Wed 05-Dec-12 16:46:26

mrscogon34thestreet - hmm, I'm not really buying that I'm afraid. The EU is pretty hot on anti-competitive practice on the whole and I can't find anything that suggests it has any remit over regulating oil and gas extraction (other than a proposal to harmonise safety standards on production platforms.) But if you can provide me with some links to prove otherwise I'm willing to be convinced.

The major oil producing countries do operate a nice little cartel (OPEC) however, to do exactly as you describe.

sieglinde Wed 05-Dec-12 16:47:12

MoreBeta, those are interesting ideas, but what fascinates me is that Osborne is clearly far too timid to try the drastic means clearly needed. One imbecilic thing is that we still take tax form the low-waged, and then give it back as tax credits... Why not axe some waged benefits AND AT THE SAME TIME raise the tax thresholds, a lot?

CinnabarRed Wed 05-Dec-12 17:06:19

"we still take tax form the low-waged, and then give it back as tax credits... Why not axe some waged benefits AND AT THE SAME TIME raise the tax thresholds, a lot? "

Because it's too blunt an instrument.

There are too many differences in outgoings and opportunities between, say, a single parent with income from all sources of, say, £20k pa including benefits and credits; a graduate on £20k; and a pensioner household with no mortgage on their property with pensions of £20k.

niceguy2 Wed 05-Dec-12 17:12:47

I would agree that Osborne (& the rest of them) wussed out of doing what was necessary.

If you look at other nations who have had to go through harsh austerity measures, the ones which recovered the quickest seem to be the ones which cut quickly and deeply. So for example Canada in the 1990's. More recently Iceland, Latvia.

For me it would have been better to rip the plaster off quickly, take the pain and move on. Rather than slowly slowly ease the plaster off over the next 5-10 years and have constant pain.

sieglinde Wed 05-Dec-12 17:21:58

Cinnabar, I'm on your side as a Keynsian, but is the growth of tax office bureaucracy really the best way forward? I also wonder if the differentials you describe could be resolved by different thresholds for the unwaged, which one of your examples is.

ttosca Wed 05-Dec-12 18:05:45

Fawcett's response to the Autumn Statement 2012

Fawcett's response to the Autumn Statement 2012: Women will continue to act as shock absorbers for the cuts.


Ceri Goddard, Chief Executive of the Fawcett Society said:

“As austerity continues, women are bearing the brunt of spending cuts. We are in the grip of a 24 year high in women’s unemployment, while measures to reduce the deficit have seen welfare cuts fall primarily on women’s shoulders – to date, women have paid for some two thirds of the savings made from changes to the tax and welfare system since 2010. (1)

“Not only did today’s statement fail to address this skewed impact, the various policies unveiled in the name of growth offer little to support women's greater participation in the labour market or wider economy. While further investment in roads and other big infrastructure projects is welcome, few of the 1.01 million unemployed women will find jobs as a result.

“In signalling his continued commitment to an eighty twenty split between cuts and taxes when it comes to paying down the deficit, the Chancellor has reaffirmed that women will continue to act as shock absorbers for the cuts. It’s vital the forthcoming Spending Review considers the differing impact these measures will have on women and men. In particular government will need to go further than just a household income level impact analysis if they are to gauge the likely impact of their policies on every day women's lives in any meaningful way.

“Holding benefit payments down below the rate of inflation means forcing many of the country’s poorest people to manage on less money. Women will be worse hit by this move – benefits typically make up a fifth of women’s incomes, as opposed to a tenth of men’s.

"At the same time, keeping public sector pay rises at below inflation levels – a real terms pay cut – will also affect women disproportionately as they make up the bulk of the public sector workforce.

“Whilst raising the personal tax allowance will help some women, those who do gain will actually gain less on average than higher earners - more of whom are men. What's more, this measure does nothing to help neither the record numbers of women currently out of work , or those who earn too little to pay tax.

“Further cuts to local government budgets are also bad news – there’s ample evidence to date that without ring fencing, services that women rely on often seen as soft targets in council cuts.

“In announcing tax relief for employee ownership schemes, the government has signalled this disastrous policy may go ahead, something we and many of those in the business community are very concerned by. Many of the rights up for grabs are in fact vital protections afforded women in the workplace.”


Notes for Editors

(1) To date, a total of £14.9 billion worth of cuts per year have been made to benefits, tax credits, pay and pensions, with 74% of this taken from women’s incomes (see

ttosca Wed 05-Dec-12 18:10:49

If you look at other nations who have had to go through harsh austerity measures, the ones which recovered the quickest seem to be the ones which cut quickly and deeply. So for example Canada in the 1990's. More recently Iceland, Latvia.

You're an idiot. In Iceland they arrested all the bankers implicated in the financial crisis, and spent all the money bailing out people, not banks. They forced the government out of power.

The Icelanders refused to pay off the debt caused by the financial crisis. It is the exact opposite of what you're trying to say:

Google: 'Iceland revolution'.

Why do you keep posting ignorant assertions?!

mrscogon34thstreet Wed 05-Dec-12 18:19:29

mali sorry - it was on this episode in reposnse to a question about the economy, any questions

It may be a rubbish point after all - there were some interesting points in general though.

mrscogon34thstreet Wed 05-Dec-12 18:23:01

I think the statement from the Fawcett society is interesting, but does the cause of women's rights no favours really.

They are correct that the cuts/budget etc. disproportionately affect women. However, I don't believe (and I think there would be many people who agree with me) that this is due to some evil 'let's do women out of lots of extra money' conspiracy, and that's what all these statements seem to imply to a 'lay' person.

The real issue is that women are generally not the higher earner/have low paid jobs etc. because of their place in society. It would be better IMO for the Fawcett Society to focus entirely on how to raise the aspirations and earning potential of women rather than going on about how this is the 'anti woman' recession.

expatinscotland Wed 05-Dec-12 18:24:42

Typical Tory BS: no cuts for pensioners at all, cuts for everyone else of working age.

JugglingWithPossibilities Wed 05-Dec-12 18:27:53

Just to say loved Stephanie Flanders fab analysis of this on BBC news just now.
I always think her explanations are so helpful, and thought she struck just the right balance this evening between quite complex economics and the impact on "ordinary households"

MoreBeta Wed 05-Dec-12 18:28:05

sieglinde - "One imbecilic thing is that we still take tax form the low-waged, and then give it back as tax credits... "


In fact when Osborne announced some pidlding measure relating to the level of tax credits as some sort of bid deal I was actually shouting exactly that sentence you wrote at my TV. grin

JugglingWithPossibilities Wed 05-Dec-12 18:52:33

Annoyed though that in the BBC headlines they actually said that "the rich and the low paid will be hardest hit by the measures".

Maybe more forgivable if they'd put that the other way round, but surely it's obvious the low paid will be "hardest hit" - I doubt the rich will suffer much !

StNickHasHisXmasTeakozyOn Wed 05-Dec-12 19:08:52

At least Clegg had the good grace to look embarrassed at the utter shite spewing from Gidiot's mouth. The economy is healing gringrin. Obviously he likes his recessions triple dipped.

The Tories are going to borrow over £200Bn by the end of this parliament. Probably more, because he is cutting and the private sector is not investing, meaning there is less money to spend, growth (ha!) reduces.

Just spotted a lie: "People on benefits have seen their income rise more than those in work". Conveniently glossing over the fact that most benefits go to those who work. How do they get away with lying to the house? Cunts.

JuliaScurr Wed 05-Dec-12 19:20:34

Viviennemary Wed 05-Dec-12 19:23:35

Well I think raise child benefit for people with low incomes for first two children. Stop this topping up part time jobs with tax credits. I don't really agree with that. What annoys me is places like Starbucks employ people on low wages. These people might get their wages topped up by the state. Whilst Starbucks avoids billions in taxes. Somebody somewhere is profiting from this and it's not the poorly waged people of the UK.

JuliaScurr Wed 05-Dec-12 19:24:00
ttosca Wed 05-Dec-12 19:25:52

Howard Reed (Co-Editor of Plan B and Director of Landman Economics) writes for us about what he sees as a malicious Autumn Statement from a failed Chancellor determined to spend five years assaulting the UK’s poor and vulnerable.

Today’s Autumn Statement marked a point just beyond the halfway stage in this parliament – and therefore, of George Osborne’s tenure at Number 11 Downing Street. He’s virtually guaranteed five years in the job because David Cameron has shown extreme reluctance to get rid of any members of his “inner circle”, no matter how badly they are performing. But at that point, it looks increasingly likely (based on current polling) that in May 2015, the British electorate will say “enough is enough” and eject Cameron and Osborne from office. Given what Mr Osborne has managed to “achieve” so far in economic policy, this is very far from being surprising.

Firstly, let us consider Mr Osborne’s macroeconomic record. In its first set of projections published just after the Coalition Government came to office in 2010, the Office for Budget Responsibility forecast that Gross Domestic Product would grow by 2.8 percent in real terms in 2012. In today’s Autumn Statement, the equivalent forecast was minus 0.1 percent. In June 2010 the OBR forecast that the spending plans of the last Labour government – caricatured by Osborne as spendthrifts incapable of getting the deficit in the public finances under control – would reduce the cyclically-adjusted budget deficit from 8 percent of GDP in 2010/11 to 2.8 percent of GDP in the 2014/15 tax year. Osborne dismissed this rate of deficit reduction as far too slow and announced £40 billion of additional fiscal consolidation (spending cuts and tax rises) between 2010/11 and 2014/15, aimed for a cyclically-adjusted surplus on current budget by 2014/15. And the results? The latest OBR projections show that the cyclically adjusted budget deficit is projected to be 2.9 percent of GDP in 2014/15 – actually slightly worse than the previous government’s projections for the same time period! In other words the net effect on the UK’s medium-term fiscal outlook of the £40bn of extra austerity (on top of Labour plans) announced by Osborne in the 2010 Emergency Budget was zero – or even slightly worse than zero.

Apologists for austerity (of which there are increasingly few) protest that the apparent failure of Mr Osborne’s “Plan A” is due to circumstances outside the UK’s control. Over the last two years the OBR has a range of villains on which it has tried to pin the blame including higher-than-expected inflation (last year), and poor UK export performance (this year). What these diversionary tactics ignore, however, is the fundamental role of the UK as a cheerleader for austerity over the last three years. Under the previous government Gordon Brown and Alistair Darling played a key role in persuading most developed economies to coordinate a fiscal stimulus in response to the 2008 financial meltdown – a stimulus which had started to produce promising results by 2010. By the same token, Osborne and Cameron played a key role in persuading most developed economies (with the partial exception of the US) to implement co-ordinated austerity. The economic consequences have been disastrous – turning a severe recession into a depression which threatens the survival of Europe as an economic entity. Even an organisation as staid as the International Monetary Fund now admits that co-ordinated fiscal tightening in an economic depression can be self-defeating. Thus, below-par UK economic growth and export performance are not surprise factors emerging from left-field, but are an indirect consequence (via Europe) of the austerity mania which has been Britain’s only successful export industry these past three years. Unfortunately this message has still not got through to die-hard followers of orthodoxy in the Coalition Government – and indeed the OBR, which still insists on using a discredited set of multipliers in its economic forecasts (which are, consequently, predictably and repeatedly over-optimistic).

But if austerity has done nothing to improve the UK’s fiscal position, it has done all too much to make low-to-middle income families worse off, with the biggest losses for those at the bottom of the pile. The Coalition’s main strategy on tax and benefits is to relentlessly reduce benefits for the most vulnerable children and people of working age in our society - most recently with an announcement that increases in most benefits and tax credits will be limited to 1% per year for the next three years. At the same time the Government also hammered these families with a 2.5 percentage point increase in VAT in 2011. This helps pay for increases in the income tax personal allowance that give most benefit to middle-to-high income families, and a 5p-in-the-pound income tax cut for people earning over £150,000 per year. Meanwhile, as my analysis for the TUC has shown, large-scale reductions on spending on public services such as education, social care, housing and active labour market policies tend to hit the poorest hardest – including pensioners, who are being shielded from most of the benefit cuts. Today’s decision to increase capital investment spending by £5 billion over the next two years would be a welcome acknowledgement of the folly of cutting essential spending on infrastructure in a depression, were it not for the fact that this £5 billion is being diverted from other spending, and will hence have no effect on the overall pace or depth of austerity, but will excerbate the squeeze on service delivery. Meanwhile, the weakness of the UK economy – coupled with the fact we are outside the Eurozone – means that the UK Government could borrow at record low interest rates to fund infrastructure investment, but sadly Mr Osborne has chosen to totally ignore this opportunity.

Any reasonable Chancellor of the Exchequer who took notice of the evidence base on the effects of his or her policies would have given the current austerity drive up as a bad job a year or more ago, and would now be grasping for a “Plan B” along the lines set out by Compass one year ago (we’ll be updating this publication by the end of this year). However, Mr Osborne is neither reasonable nor evidence based – his version of “Plan B” is to do “Plan A” for longer. Thus, the UK public has nothing to look forward to from the present administration except more of the same – permanent austerity and ever-more-regressive tax and spending measures, until either Mr Osborne’s term expires, or the poorest and most vulnerable in society do. Fortunately Mr Osborne appears to have only just over two years left to inflict further damage on the UK economy. Sadly, for anyone with the misfortune to be sick, disabled, unemployed, earning minimum wage or a child in a low income household, two years is going to seem like a very long time.

JuliaScurr Wed 05-Dec-12 19:58:12

<waves to ttosca>

only applies if you believe what the Condems say they're trying to do. I think they want to marketise the Welfare State and destroy it. Which is going well.

78bunion Wed 05-Dec-12 20:44:14

There are a lot of polarised views on this thread. The rich are hit most as they have been generally throughout the recession with much higher taxation, huge stamp duty costs which have all but killed the upper end of the market, the massive assault on their pensions and many more people being pulled into the 42% upper tax/NI bracket. The unemployed are having a rise in benefits, albeit low when most of those in work have not had any rises for years.

I agree with beta that it is a missed chance for all kinds of simplications of the complex system which works so badly. As someone said above we spend 650bn a year and we are borrowing about 150bn of that. We are in a huge mess and spending far too much even now.

mam29 Wed 05-Dec-12 21:20:32

sorry if being thick.

c4 news tonight said extra 400,000 in 40%tax bracket?


has upping the lower rate income tax effect those at top?
Is 40k still the threshold?

ttosca Wed 05-Dec-12 21:34:35


"There are a lot of polarised views on this thread. The rich are hit most as they have been generally throughout the recession"

They haven't been.

Even in recession the rich get richer: Savers have been hit for £70bn as printing money 'helps rich' admits Bank of England

Independent analysis suggested that each of the richest 2.5million households in the country has enjoyed a windfall of anywhere between £100,000 and £300,000 since QE was launched in March 2009.


What recession?: How Britain's billionaires just keep getting richer despite economic downturn

Billionaires in Britain are getting even richer.

Their wealth has shot up 18 per cent in a year.

While the rest of us worry about our jobs and battle to pay bills, the UK's 1000 richest people are now worth £395.8billion, according to the 2011 Sunday Times Rich List.

They have continued to recover from the economic crisis, which wiped £155billion from their wealth in 2009. Last year's total was £333.5billion, a record 30 per cent increase.

with much higher taxation, huge stamp duty costs which have all but killed the upper end of the market, the massive assault on their pensions and many more people being pulled into the 42% upper tax/NI bracket.

The poor have suffered disproportionately. Whilst the upper-middle class worry about the loss of their house prices, the poor and middle-classes worry about having enough money to pay for food and bills, sometimes having to make a choice between either.

The unemployed are having a rise in benefits, albeit low when most of those in work have not had any rises for years.

The 'rise' in benefits is below inflation. It's a real-term cut. This 'rise' is for the remaining benefits which still, as we speak, survive. Meanwhile, the Tories are doing everything they can to remove as many people off benefits as they can, even when it means killing disabled people.

I agree with beta that it is a missed chance for all kinds of simplications of the complex system which works so badly. As someone said above we spend 650bn a year and we are borrowing about 150bn of that. We are in a huge mess and spending far too much even now.

We are spending far too much 'even now' because the austerity measures have increased the deficit. This is because Osborne is wrecking the economy and prolonging and exacerbating the recession caused by the financial crisis.

Electricblanket Wed 05-Dec-12 22:08:26

It depends I guess what is classed as rich.

78bunion Thu 06-Dec-12 07:03:32

There were different views on the thread - those pressing for lower flat taxes (yes wonderful we need it) and tax simplification and those going on about the effect on the less well off.

Yes, 400,000 will move into the 40% (really 42% when you add NI on) tax bracket. You add your personal allowance to the level so if the level is about £40,000 you add on your £9k or whatever it is and if you earn more than £49k you pay 42% on earnings over £49k. That is how it works. If the band went up with inflation then those people would not pay 42% on their upper earnings. Not increasing allowances much also affects those earning quite a bit more too as year on year more and more of their income is taxed at the 42% or 52% (and from April 47%) upper rates. In fact it is more than 52% as you loose all personal allowances at a certain income level so your effective tax rate is more like 60%.

CogitOCrapNotMoreSprouts Thu 06-Dec-12 07:13:27

"has upping the lower rate income tax effect those at top? Is 40k still the threshold?"

For the tax year 2013-14 the Personal Allowance will increase to £9,440 and the basic rate limit will be set at £32,010. (HMRC site link here)

That means higher rate tax starts to apply at £41,450. The corresponding numbers for 2012/13 are a personal allowance of £8,105 and a £34,370 basic rate limit. Higher rate tax begins at £42,475.

In cash terms it breaks down like this for various salary levels. (Ignoring NI)

- £100,000 p.a. = £29,884 tax in 2012/13. In 2013/14 = £29,822. £62 less
- £50,000 p.a. = £9,884 in tax 2012/13. In 2013/14 = £9,822. £62 less
- £30,000 p.a. = £4,379 tax in 2012/13. In 2013/14 = £4,112. £267 less
- £15,000 p.a. = £1,379 tax in 2012/13. in 2013/4 = £1,112. £267 less

So more people will be in the higher rate tax band but the total personal tax bill is going down.... the lower the income, the more you get to keep.

JugglingWithPossibilities Thu 06-Dec-12 07:26:12

But I think anything we gain through the increase in the personal allowance threshold will be almost exactly taken away again through lower child tax credits.

Mind you I'd rather just hold onto it in the first place, as slightly simpler.
But still, it's all just tinkering.

Still £9,440 before they start taxing you is something I guess.

TheDoctrineOfSnatch Thu 06-Dec-12 07:30:44

Cinnabar, did you get to the bottom of the tax charge on the £80k DB scheme? DH and I were wondering (not that it s

CogitOCrapNotMoreSprouts Thu 06-Dec-12 07:40:03

"Still £9,440 before they start taxing you is something I guess"

This year it is £8,105. 2011-12 tax year it was £7,475. 2010 - 11 tax year it was only £6,475. That's almost £3000 more of earnings each year kept in our pockets rather than given to the Treasury since 2010. Balls is on the radio right now saying things like 'people on lower incomes are paying more tax' and 'raising more taxes from people on middle incomes'. That's not just spin, that's a lie.

78bunion Thu 06-Dec-12 07:51:32

April 2013 9,205 per person. which is £18,410 a couple can earn before paying tax. I much prefer high personal allowances and fewer tax credits/housing benefit as it is purer and simpler. Silly for the state to give with one hand and then just take back. If you go back a few generations most people paid no tax ever.

mam29 Thu 06-Dec-12 09:03:32

Thanks cogit for explaining. hubbys 41k for some reason we thourght he was already paying 40%on anthing over 40k anyway and anything under basic rate.

Thank god the child benefit wasent set as low as initially suggested as with 3kids we be scrwed as lost tax credits.

so am I right in thinking middle earners be worse off.

I dont think increase in tax allowance will make huge diffrence to our lives but its something.

CogitOCrapNotMoreSprouts Thu 06-Dec-12 09:55:39

"so am I right in thinking middle earners be worse off."

Those with children and earning £41,450+ will be worse off eventually as any CB claimed is taken back through their tax-code and on a sliding scale. However, it's going to be a delayed effect because HMRC can't do anything until they start getting the first self-assessment forms back next summer.

Mazoe Thu 06-Dec-12 10:07:17

Spoke to an accountant yesterday... if you get childcare vouchers from work and are about to go into higher earning bracket with a pay rise watch it. You might be worse off and should go ask the boss to freeze your pay. It's ludicrous but probably affects a lot of us. So cross I wrote a bit about it

sieglinde Thu 06-Dec-12 10:59:00

I still maintain that the only thing likely to help is a much much more radical rethink.

A MASSIVE rise in tax ceilings, and at the same time take everyone who is in work of any kind off benefits, ALL benefits including housing benefit and child benefit, while raising benefits for those NOT in work in line with inflation. This should actually safeguard social security, as opposed to the current imbecilic plan to cut back and back on the worst-off.

Those on family tax credit should wind up NO worse off. Because people in work will keep more of their earnings, there will be a bigger incentive for people to get work. Small businesses - more than half UK workers are employed by them - will also be no worse off - better off, if NI ceilings are raised too. The short term pain will be a big reduction in civil servants. GOOD. And government will be much smaller.

FFS. Just do it, George. You are unelectable now - take a real risk, and stop poncing about.

I know most will not agree...

Viviennemary Thu 06-Dec-12 11:09:57

I agree up to a point with some of what sieglinde says. Completely slash the tax bill for lower earners. But I think the tax credits for part-time workers have to be completely rethought. People can't do more hours because there wouldn't be any point as they would lose money. This is a mad situation. All these extra benefits for working people are only encouraging companies to pay lower and lower wages. Whilst avoiding tax themselves. This shouldn't be allowed to continue.

niceguy2 Thu 06-Dec-12 11:15:59

And that's one of the main aims of the new Universal credit. To end the bizarre situation where people turn down work because it puts them in a worse position.

A good friend of mine recently was asked to do more hours at work. She works 3 days a week and gets quite a big chunk in tax credits. So she looked into what the effect was if she did an extra day. Basically it wasn't worth it. Maddening really.

sieglinde Thu 06-Dec-12 11:20:54

Exactly, VivienneMary. And niceguy2. It has to stop because it's actually endangering the whole welfare system. But I'm not sure universal credit will do it UNLESS it comes WITH raising the tax threshold.

Viviennemary Thu 06-Dec-12 11:36:16

Glad somebody agrees with me. I've got a left wing friend who knows loads more about politics than I do. When I said lower tax thresholds for poorly paid people and cut down on te welfare she said oh these people feel they are contributing to society by paying tax. hmm I think the welfare state should be cut right back. It has grown to ridiculous proportions. The welfare state is for people in need or who can't support themselves or who have lost their job. Not to prop up places like Tesco's and Starbucks so they can pay ever lower wages. Grrr. It all makes me so mad.

niceguy2 Thu 06-Dec-12 12:04:44

I think UC will do a better job but it wont be perfect. Inevitably some will find specific scenarios where certain people lose out and use that to argue the entire system is flawed whilst simultaneously ignoring the fact the current system is even more deeply flawed.

picketywick Thu 06-Dec-12 12:12:59

Like most chancellors George in in a world of his own. Any women on here who have dreams about Mr Osborne?. I am told it happens.

Yermina Thu 06-Dec-12 12:16:55

"And that's one of the main aims of the new Universal credit. To end the bizarre situation where people turn down work because it puts them in a worse position".

Of course the other option would be increasing minimum wage, improving public transport subsidies, and widening access to affordable housing, so that people can take work in the confidence that they can pay their rent, travel to work, and feed their children.

But it's much easier just to make sure that low benefit levels mean that people getting state support will always be the worst off in society, no matter how poorly paid workers are, and no matter how high the cost of living.


sieglinde Thu 06-Dec-12 12:24:27

Yermina, I don't think those aims are incompatible. That is, the idea of raising the tax threshold in place of supplementary benefits would make low-paid workers much better off too.

Cutting benefits without doing that is the problem. Both low pay and the ridiculously inflated housing sector - a problem to which you allude - are being upheld by the existing benefits system. If housing benefits to the waged were abandoned, the market would fall, and overnight housing would become more affordable.

If some such move isn't made soon, there will be no benefits to speak of - they will just be ratcheted down and down as the UK's economic position worsens.

Viviennemary Thu 06-Dec-12 12:28:49

Well that's what my left wing friend said. Are you her. grin It's pie in the sky. Labour were in power for a good innings and the same problems have got worse. Widening access to affordable housing. What exactly does that mean? It's all very well coming up with these trite phrases but a different thing putting them into practice. That's why people lost faith in Labour. Because they haven't got the answers to this country's problems.

Yermina Thu 06-Dec-12 12:41:42

"Both low pay and the ridiculously inflated housing sector - a problem to which you allude - are being upheld by the existing benefits system"

The property market in the UK has made a lot of speculators and pensioners rich, and has fuelled the economy for years and years. High rents reflect high house prices generally. The only way to circumvent this is not to expect private landlords to rent their expensive properties out for vastly less than it costs to service the mortgage, but for the state to BUILD affordable rented housing. You know - like we did in the 1950's (and which the Tories then sold off in the 1980's).

"Widening access to affordable housing. What exactly does that mean?"

It means building council houses basically. And then renting them out, rather than selling them.

Scrazy Thu 06-Dec-12 12:44:51

Pensioners won't be taking a hit for some time. Bear in mind that women my age started paying into ours and were promised it at aged 60 and now we won't get it until aged 67 or something ridiculous. That's around £50,000 in todays money stolen of of us. Same with male workers working longer before they get it.

Viviennemary Thu 06-Dec-12 12:57:41

Private landlords should rent their houses out for whatever people are prepared to pay for them. But that doesn't include the state in my opinion. It isn't the state's problem if landlord investment goes wrong. I don't agree with people occupying council houses if they can afford to buy their own property. I certainly don't think the answer is to build more council houses for rent.

78bunion Thu 06-Dec-12 13:18:53

Yes, many of us started working on the basis we would draw a state pension at 60 and now it will be 67. They keep changing the rules.
Many pensioners live in poverty but the press does not often seem to want to write about that. They like to pretend most pensioners are on high private pensions. The old are less fit. Many fought in WWII for us and most do not complain and often do not even claim benefits they are entitled to. I think it's right they do not bear the brunt of the current situation.

As for landlords plenty would never go near a housing benefit tenant and they just want to operate in the free market with those whose salaries can afford the rent. One of my children is about to buy to let and will not make a profit but hopefully will eventually have a place in which they might in due course afford to live. It is not a gravy train buying to let and you take on the risk of property prices dropping so much you lose all the savings you put into it.

edam Thu 06-Dec-12 13:50:22

It's quite a feat for a chancellor to turn up, have to admit his policies have failed and that he's strangled the economy, and then to claim with a straight face that we are on track and 'turning back' would be a disaster.

I love the many and varied excuses Osborne and the Office for Budget Spin come up with for the entirely predictable failure of his self-defeating addition to austerity. It's the Europeans' fault. It's China's fault. It's America's fault. It's everyone's fault apart from George, apparently.

And he appears to think no-one can see through his pretend plugging of the most glaring gap by fudging the figures on what he imagines he might make out of selling the 4G mobile phone network.

niceguy2 Thu 06-Dec-12 13:54:11

It means building council houses basically. And then renting them out, rather than selling them.

I hear this all the time as though it is some sort of magic bullet. But where would the money come from the build the numbers needed? Not to mention the billions which would be needed to keep them in a good state of repair afterwards.

Contrary to popular belief, private landlords aren't all raking it in. Maybe some are. Most are not. There's a BIG difference between the rent paid and the PROFIT made. Often landlords make next to nothing on the monthly rents and are banking on house price rises in the future to pay for their retirement. That may have worked pretty well in the past....not too sure how reliable a plan that is now.

I agree with those who say the whole tax credits thing is a load of nonsense. Many working family get it because of the cost of their childcare. Adding a complex means tested payment system to deal with that is just a sticking plaster. Other countries manage to have low cost but good quality childcare, look at France.

Yermina Thu 06-Dec-12 14:55:51

"I don't agree with people occupying council houses if they can afford to buy their own property."

The average cost of a property in the SE is about £250K. Most people on an average wage have NO HOPE of ever owning a property. What do you suggest is the answer for these people? Carry on paying hugely high private rents for the rest of their lives? How is this good for the country or for the exchequer, in times of high unemployment?

Viviennemary Thu 06-Dec-12 17:58:40

There are other places in the country to live rather than the SE although you wouldn't think so if you read some of those threads. People who can't afford property in London move out of London. Don't expect tax payers struggling on poor wages in other parts of the country to subsidise extortianate rents and prices in the south east. Sorry but I really do think this attitude has got us in the mess we are in.

78bunion Thu 06-Dec-12 17:59:04

They can start at the bottom on the grottiest tiny bed sit they can like most of us have had to do in the nether reaches of the worst bit of town and work their way up.. but no... they need to have that designer 4 bed whether rented or not.

A move to higher personal allowances and many fewer tax credits and less housing benefit is a much cleaner better route to go. It might also hvae the advantage of getting more women into work so they cease to be at the ecnoomic mercy of a man and have no escape route if things go wrong because they maintain full time careers which give them a chance over a 40 year career span to do better and better.

Viviennemary Thu 06-Dec-12 18:03:24

They must live in Chelsea and Kensington on housing benefit whilst other people in the north east struggle on run down council estates. Talk about entitlement!

Yermina Thu 06-Dec-12 18:54:43

"There are other places in the country to live rather than the SE although you wouldn't think so if you read some of those threads."

So, if it was me having to claim housing benefit (it's not, but anyway), it'd be better for me to take my children out of their outstanding OFSTED rated school, and move to an area where there are very few jobs and where wages are massively lower. Because it's these areas where housing costs tend to be lowest. It'd also be reasonable to expect me to leave behind both mine and DH's elderly and infirm parents who currently live nearby and tell them to shift for themselves?

You really think it's reasonable to remove people from their communities, take them away from their support systems and family networks, uproot their children from school, make it more difficult for them to find permanent, well-paid work, to save money on housing benefits?

"They can start at the bottom on the grottiest tiny bed sit they can like most of us have had to do in the nether reaches of the worst bit of town and work their way up.. but no... they need to have that designer 4 bed whether rented or not."

What are you talking about? Whole families in a tiny bedsit? Who gets a 'designer 4 bed home' on housing benefit? Round here £800 would pay for a small 2 bed flat in one of the grimmer parts of outer London.

Anyway, you're going to get your wish about poor people claiming housing benefit being removed from central London. Apparently some schools are losing up to a third of their pupils as the hard up families are uprooted from their communities and sent to live in cheaper areas. Hey ho, I know if it was me and my children I'd be utterly devastated, but if it means we can carry on paying rich pensioners their fuel allowance then it's got to be worth the distress and upheaval it'll cause to some of the most disadvantaged families in the country.

Rock on Thatcher's children!

Viviennemary Thu 06-Dec-12 19:09:51

This is total entitlement. Please don't expect the taxpayer to pay so you can send your children to a good school. Poor people can't afford to live in central London. I am not poor and I can't afford to live in central London. If people can't afford to live in expensive houses then they simply cannot expect other people to subsidise them. I am so glad that at last this dreadful unfair system is coming to an end.

Yermina there is a middle ground between living in London with extortionate housing costs and moving to the cheapest part of the country (probably parts of the North East) which has high levels of unemployment. How about Leeds or Nottingham or hundreds of other towns and cities. Why should we subsidise you?

I asked on a similar thread recently what these jobs are that people have to be in London for because that's a common theme. The best anyone could come up with is that some publishing is still based in London. No lawyers in Newcastle? No accountants in Sheffield?

Schools are losing a third of their pupils? Really? So why is there a forecast 90,000 shortfall of primary school places in London in the next couple of years?

sieglinde Thu 06-Dec-12 19:44:13

I can't afford to live in central London either, or in the catchment area of ANY good school near my place of work. And if you can't afford to live somewhere nice, you can't.

But my point is that all this should anyway come from WAGES, not benefits. Take away the benefits and massively hike up the tax thresholds. Why does this victimise anyone in work? It does the opposite. It gives them power over their own wages.

Viviennemary Thu 06-Dec-12 20:59:30

I found an article on the Guardian website about somebody getting £800 a week housing benefit. shock She has no job. So that's £3,200 a month. So 32 people earning a measley £12,000 per year paying tax at approximately £100 per month to support this one woman to live in central London. It's insanity.

HappyMummyOfOne Thu 06-Dec-12 22:30:32

I'd like to see them scrap benefits and raise the personal tax allowance considerably. Hardly any fraud, people only working part time if they can afford to do so and the luxury of having an adut in the household being just that - a luxury afforded due to another adult working rather than the state paying for that choice.

Tax credits was one of the worse things ever introduced and the sooner its scrapped the better.

Haing no child related benefits may mean a return to personal responsibility and people financially planning for their choices.

Viviennemary Thu 06-Dec-12 23:13:05

I totally agree with the abolition of tax credits. I hope they are completely scrapped eventually. They are totally distorting people's view of what they can afford on their salaries. And raise the personal tax allowance again. And if there are two people in a household and one doesn't work then let that person's tax free allowance be claimed by the other partner. That would help SAHM's considerably.

niceguy2 Thu 06-Dec-12 23:13:57

You really think it's reasonable to remove people from their communities, take them away from their support systems and family networks, uproot their children from school, make it more difficult for them to find permanent, well-paid work, to save money on housing benefits?

The other side of the coin is do you think it's reasonable for others to pay higher taxes to allow a family to live in an area which the tax paying families can't afford on an indefinite basis?

For me there is a middle ground. I'd be happy with a system which paid the prevailing rate for x amount of time before tapering off.

So what i mean is say a family live in Chelsea cos they had great job(s) and could afford the £3k a month (for example) rent. They then lose their jobs. Shit happens. As a taxpayer I'd be happy to contribute towards the full cost of their rent for a period of time whilst they try to get back on their feet. But I'm not happy to subsidise their housing forever. If they then get a lower paid job and can't afford to live in Chelsea.....sorry but it's time to move!

Viviennemary Fri 07-Dec-12 00:03:44

If people fall on hard times then they should be helped for a limited period. But is living in Chelsea an option for everyone. Why can't people from the North East move to Chelsea in search of work and claim housing benefit to live there. If it's open to one it should be open to all. It's called equal opportunity. But of course it isn't. It's some entitled folk who think they should be subisidised by tax paying people who could never dream of affording the houses they are subisidised to live in.

Yermina Fri 07-Dec-12 07:37:10

What is the fixation with Chelsea?

ANY private sector home big enough to accommodate a family will cost £800+ a month ANYWHERE in the South East but particularly within the M25.

You are suggesting moving possibly 10s of thousands of the poorest people in the SE hundreds of miles away from their communities into areas of usually high unemployment to access cheaper housing.

Xenia Fri 07-Dec-12 07:40:47
Virtuallyarts Fri 07-Dec-12 07:58:59

The root of the problem seems to be that the south east is so much more economically buoyant than many other parts of the UK therefore house prices and rents so high there. We would be better off if economic activity were more evenly spread throughout the uk. Government has tried some relocation of civil service etc, but it has not had a huge impact. How to persuade the private sector - banking etc, to move out of the south east- is it impossible?
Actually that is one root - i'm sure there are more!

sieglinde Fri 07-Dec-12 08:15:39

Thanks, Xenia. I agree with all of that. Why doesn't anyone see that the low-waged are the key? I am tired of hearing about the people who live in London, wail wail. I was in Warsaw a few months ago; that city was rubble after WW2, and then they had really brutal communist rule, and are they sitting around asking to be on benefits in Krakov? Nope, they are out there hustling, setting up businesses and working from 6 am.

Virtuallyarts Fri 07-Dec-12 08:30:42

Do you agree with lowering min wage as suggested there though, sieglinde? It seems pretty low for under 25s already! Some politicians have suggested it isn't a london living wage. result is, it has to be topped up by taxpayer with benefits. is the economic analysis that if consumers are not prepared to pay the living wage for their americano, the taxpayer should not be subsidising it? (i know some outlets pay higher than mw, so just using this is as an example) but then maybe subsidising wages is cheaper than paying for unemployment, and better for the barista. No simple answers!

Xenia Fri 07-Dec-12 08:52:31

Presumably state benefits in Poland are so low that people instead work even if that means moving to London to find that work (although Poles currently are leaving London as work has dried up).

On the UK regions the Government has tried. There are grants for industry moving to poor areas. There are areas with lots of business - the Chemiicals companies ICI etc up wherever they are ELlesmere Port etc. The met office I think moved down to Devon or somewhere. The bBC has just moved up teo Salford. Huge numbers of companies have moved out of Central London to the regions although plenty have preferred a move from Central London to places like Slough, Reading, Woking.

JugglingWithPossibilities Fri 07-Dec-12 09:04:07

This thread seems to have taken a worryingly harsh direction against supporting those on low wages - though agree employers should pay more and not rely on people getting child tax credits as they do in my sector (early years and child-care)

Do agree though that people on benefits should have to consider moving just as many of us do to find work. Personally I've been happy to settle in many different parts of the UK for study, mine or partner's work, lower cost housing, pleasant environment for raising a family. We wouldn't be asking people to live on the moon !

niceguy2 Fri 07-Dec-12 09:35:16

Juggling, it's not as simple as 'employers should pay more'. They have always had to pay whatever the rate is to attract the employees they need. But tax credits distorted the playing field. All of a sudden certain groups got hundreds each month and could suddenly work part time or for NMW or both. and get their wages topped up by tax credits. So which employer in their right mind would now say "Oooh, no no. Don't take that....let me give you more money instead!"

Employers didn't ask for tax credits. They didn't demand this benefit. Labour introduced it as a naive way to tackle child poverty and to get the masses hooked on benefits (and therefore more likely to vote Labour).

I would also argue the sharp increase in childcare costs is also directly attributable to tax credits and has in many cases priced middle income earners out whilst allowing lower earners to work. Now you may argue that's a good thing because middle earners earn enough to pay for it themselves but from a tax revenue point of view it makes no sense whatsoever.

Viviennemary Fri 07-Dec-12 10:12:56

Yermina. Most people have to live where they can afford to live. I do. A lot of young people on reasonably good wages might like to buy a house where they grew up or where they went to university and they can't afford to. So they have to move away from their support system and freinds.. It's already happening. People on housing benefit are protected from hard decisions the rest of the population have been making for years.

sieglinde Fri 07-Dec-12 10:22:14

Yes, niceguy. Tax credits are a big part of the low wage problem; they distort the wage economy, just as housing benefit artificially inflates rents and housing costs. There has to be a return to reality sometime, and it would ultimately BENEFIT those at the lower end.

Yes, xenia, benefits in Poland are low, but the Poles aren't moaning; they are willing to move to smaller and squintier accommodation in the Uk, away from community and family, in the search for work, and their economy is growing very nicely now. By contrast, we've already seen on this thread that many English people of the left think moving to Salford is a disaster. Frankly, everyone - low, middle or high - has to be willing to move if they are looking for work.

JugglingWithPossibilities Fri 07-Dec-12 10:35:45

I realise it's not simple niceguy, I realise there are lots of economic and social factors at work here. But I was just agreeing that it would be good if more of my pay as an early years practitioner (when I'm in work sad) came from my employers rather than being supplemented through the fact I have children myself (child tax credits)
Obviously you'd have to make that happen through a combination of measures - change is unlikely to happen just by people desiring it.
I also think you'd have to be careful to protect families from hardship when implementing any changes.

Yermina Fri 07-Dec-12 10:45:50

"Yermina. Most people have to live where they can afford to live. I do. A lot of young people on reasonably good wages might like to buy a house where they grew up or where they went to university and they can't afford to. So they have to move away from their support system and freinds.. It's already happening. People on housing benefit are protected from hard decisions the rest of the population have been making for years."

People need to live where the jobs are. It's as simple as that. You can't have it both ways. Areas of high employment have expensive housing. Areas with low employment have cheap housing.

If you want people to work and support their families and not claim benefits then there needs to be affordable housing provision in areas where there are also employment opportunities. If people are forced to move to areas where there are vastly fewer job opportunities in pursuit of cheap housing then you are going to find more will need to claim subsistence benefits to feed their children.

Would also add, if there is a widespread 'cleansing' of the low waged in receipt of housing benefit in the SE, the government had better gear up for a whole generation of elderly people in the region who will be reaching the end of their life with no support from their children who will no longer live near by.

Yermina Fri 07-Dec-12 10:48:27

sieglinde - the answer is for the government to invest in high quality, heavily subsidised, universal childcare, as they do in other European countries. This frees women to work, raises attainment for the most disadvantaged children, and would massively simplify the benefits system.

niceguy2 Fri 07-Dec-12 10:53:09

Oh do jog on with the evocative "cleansing". It's an insult to those people who actually suffered real 'cleansing' under threat of violence.

This is not cleansing. This is about whether or not it is fair that those on benefits are protected from the same harsh decisions the rest of us must make. And I've yet to hear a coherent argument as to why someone on HB should be subsidised to live in an area a working family cannot afford.

Viviennemary Fri 07-Dec-12 11:03:21

Why is it always about the folk in the SE. This is really annoying me now. If they are to be subisidised where the jobs are then every single person who can't get work in the rest of the country should have the opportunity to be subsidised to live in the SE.

The house prices are inflated because of subisides. Let the house prices find their own level and then everybody will benefit. Except those entitled folk who think the rest of us should pay tax to enable them to live in an expensive house we couldn't afford ourselves.

Xenia Fri 07-Dec-12 11:06:04

The £500 a week benefits cap is not going to drive many people away from where they live, when it comes in. In the real world of people who work we all move away to where we can afford to live. I left familyh to move hundreds of miles for work. Secondly I have never been able to afford to live in Central London so we have to trek in there for work. it is how life is. People all over the planet and at all times except in cloud cuckoo Lbourland circa 2006 or whatever where the hard working tax payers unable to live where they choose fund the lifestyles of the idle who couldn't possibly move more than 2 streets away from their mother. Those days are over as the coffers are empty.

'People need to live where the jobs are. It's as simple as that. You can't have it both ways. Areas of high employment have expensive housing. Areas with low employment have cheap housing.'

I think you're mixing up employment levels and wages. There is really pretty high employment in regional cities and people on lower wages live in the less nice areas and those on higher wages live in the nicer areas which tend to be closer to town, have better schools and lower crime.

Agree that child tax credits have inflated the cost of childcare. I'm always staggered by how much people on MNet pay for nurseries, especially in London and the South East. But niceguy is right, supply and demand affects wage levels. If people also get tax credits, they can afford to take lower paid jobs. That means you lose the upward pressure on wages.

StNickHasHisXmasTeakozyOn Fri 07-Dec-12 11:26:38

And I've yet to hear a coherent argument as to why someone on HB should be subsidised to live in an area a working family cannot afford.

How about the fact that most housing benefit is claimed by those in work? Or is this another fact that you've chosen to ignore? Just as Gidiot did when he lied to the House on Wednesday.

sieglinde Fri 07-Dec-12 11:26:58

yy xenia - it takes me 45 minutes to get to work, and that's because I can't afford a 4-bedroom house in Oxford within the ring road. You just have to be a bit real, yermina. Why TF should my taxes subsidise others to live where I can't afford to live myself?

and yes, queen ofwhatever, that's exactly my point - benefits are bucking the labour market AND the housing market is ways that disadvantage the low-paid...

Yermina Fri 07-Dec-12 11:54:00

"Oh do jog on with the evocative "cleansing". It's an insult to those people who actually suffered real 'cleansing' under threat of violence."

Sorry - but removing large numbers of poor people from an area to save money on services is 'cleansing' in my view. They are seen as an expense and a burden and therefore must be got rid of.

" And I've yet to hear a coherent argument as to why someone on HB should be subsidised to live in an area a working family cannot afford."

Because businesses in areas of high housing cost need workers, many of who will be poorly paid and in receipt of housing benefit. Who will clean hospitals and schools in the SE? Work in retail? Work as TA's in schools? Work as carers and health care assistants? People who do these jobs in the SE could not afford to rent in the private sector without the support of a housing benefit subsidy. And given that so much of the SE is incredibly expensive the option of commuting in from areas where housing is cheaper is simply not feasible (in part because travel is so expensive in the UK).

"yy xenia - it takes me 45 minutes to get to work, and that's because I can't afford a 4-bedroom house in Oxford within the ring road. You just have to be a bit real, yermina. Why TF should my taxes subsidise others to live where I can't afford to live myself?"

Look - anywhere in the SE, ANYWHERE, is massively expensive for families on low or even average wages. It's absolutely fair to say to someone who works in London that HB won't subsidise them to live in a posh bit of Kew, when they could rent an equivalent property in Croydon for half as much, but even in the CHEAPEST parts of SE the rental of a property large enough to sleep 4 people will cost £800 upwards. That is going to be unaffordable to someone on a minimum wage who is also paying high commuting costs.

The problem is the lack of public sector housing. There will always be people on low wages working in areas where housing costs are high. There needs to be some mechanism for providing homes for these people which don't involve the tax payer putting money into the pockets of private landlords.

Seriously - what would you say to a cleaner or care assistant working in central london who was struggling with housing costs? Jack your job in and move to Sunderland? These jobs are ESSENTIAL to the running of the health service. Who should be doing them? Or are you saying that there is no need for low paid workers in London? We can make life unaffordable for them by removing housing benefit and then they'll have to bugger off somewhere else? Who will do these jobs then? And where and how will they live?

Viviennemary Fri 07-Dec-12 11:56:49

It doesn't matter who claims housing benefit. What does matter is who is paying for the housing benefit. The tax payer. And the tax payers are sick to death of subsidising people to live in houses they can't afford themselves. Houses costing more in rent that the national average wage.

Yermina Fri 07-Dec-12 11:57:39

"If people also get tax credits, they can afford to take lower paid jobs. That means you lose the upward pressure on wages."

People will take lower paid jobs when they're compelled to by the withdrawal of benefits. In an economy where millions of people are unemployed and being threatened with the removal of subsistence level benefits, there isn't going to be an upward pressure on wages. In fact there'll be a downward pressure on wages. Thank fuck for the minimum wage. :-(

Viviennemary Fri 07-Dec-12 12:04:46

Didn't see your last post. Wake up Yermina. The days of housing benefit for expensive houses are numbered. Not before time. If there are so many poor people in the SE why are houses so expensive. Who can afford them. It's a tired old argument and it isn't working any more.

Yermina Fri 07-Dec-12 12:06:05

"And the tax payers are sick to death of subsidising people to live in houses they can't afford themselves. Houses costing more in rent that the national average wage."

Have you got figures showing the average claim for HB in the SE?

Because you seem to be convinced that there are large numbers of families claiming 25K a year and more in housing benefit costs.

The average monthly rent across London is 1K.

What are your thoughts on a cleaner or HCA working in a central London hospital, living in the capital or just outside it and claiming HB to subsidise their housing costs? Do you think this is unfair and should be stopped? How do you expect people on minimum wage jobs in London to live? Or do you think they should live in tent cities in Hyde park or something?

sieglinde Fri 07-Dec-12 12:09:52

Well, I can offer my thoughts. The NHS outsourcing cleaning to the lowest bidder is actually the villain of this particular piece. If it is impossible for said cleaner to live in London, London hospitals to will be forced to do one of three things 1. raise the wages for cleaners 2. bus cleaners in in groups from outlying areas c. break the law and get their arses sued off. Next!

Yermina Fri 07-Dec-12 12:10:06

"The days of housing benefit for expensive houses are numbered"


<bangs head against wall>

sieglinde Fri 07-Dec-12 12:14:31

And I should have added that if there IS NO HB then housing costs will fall a LOT.

Viviennemary Fri 07-Dec-12 12:17:58

Then they should move to a house they can afford to live in. And in any case the last thing I heard was housing benefit was to be capped at £1,600 per month. So if you're saying rents are £1,000 there shouldn't be a problem. Houses are expensive because nobody can afford to buy them or rent them except people on benefit or the very rich. Bangs head against wall.

Aboutlastnight Fri 07-Dec-12 12:36:37

People have always moved around for work - practically all of DPs friends have moved from Glasgow to London, it's practically a rite of passage.

I've a friend whose partner is a bricklayer and moves around the country wherever he can get work. He is away for weeks at a time. She is a working mother with two small children. Many, many people do this.

I would add that many people on low incomes also have illicit health and caring responsibilities. Many people I work with do shifts so they can work all night and then care for relatives with MS/dementia/cancer during the day. These people are in council housing. They have family commitments and cannot just uproot. There are many people like this.

Aboutlastnight Fri 07-Dec-12 12:37:31

Illicit? iPhone is joining in...

Xenia Fri 07-Dec-12 14:03:33

The benefits cap from next April is £26000 or so if you are a family or single parent and £18,200 if you are single without children. That is pretty high and includes housing benefit costs. it does not include council tax benefit or free school meals and does not apply at all if you work enough hours to obtain working tax credit or something like that.

I agree with About - people have always had to move for work. I did. My grandmother moved to India for work in the 1920s. 3 of my uncles moved to Canada/US after the 20s crash (and were living rough and did badly). Other relatives escaped the Irish potato famine when I think 1 in 5 Irish people left Ireland and 1 m died. Moving for work is nothing new. It also opens up the world for people, gets them out of their habits, allows them to see a different life. It's a social good on the whole, not a bad thing.

Bonsoir Fri 07-Dec-12 14:05:42

sieglinde - in Paris, hospital cleaners live miles out of the city. They commute in for the night and back out in the morning.

sieglinde Fri 07-Dec-12 17:57:47

Bonsoir, just to be clear, we are on the same side. I see no reason whatever for hospital cleaners to live near the hospital. I have in my time commuted over three hours for work, spent two nights, then back home. At one point my husband was commuting to Edinburgh every day, and I to Exeter - both of us from Oxford. You do what it takes.

sieglinde Fri 07-Dec-12 17:59:12

And yes, xenia, my grandparents and my parents both moved for work, not to mention all my forbears' emigration. The wails about it amaze me.

Bonsoir Fri 07-Dec-12 18:06:05

The world's richest cities are always those which have plenty of immigrants - people who had the guts to up sticks and move to make a better life for themselves. Families that stay in the same place for generations always end up complacent and lazy (in all strata of society) - economists and politicians are well aware that immigrants are necessary to shake things up and keep moving onwards and upwards. The worst thing a parent can do for their child is to expect him or her to live around the corner as an adult.

Xenia Fri 07-Dec-12 18:11:06

I suppose the bottom line is that those who do what it takes do well and those who aren't prepared to move more than a few streets from their mother and find it even hard to get out of bed each day never mind hold down a job tend not to do so well and the squeezed hard working middle earners of the UK have got a bit sick of supporting those not prepard to "get on their bikes" and of course we have run out of money.

Also genetically it pays to mix genes. Those who stay in the same village have difficulties. In some bits of Leeds I think 25% of children with disabilities come from the 5% who are families from Pakistan who all marry their first cousin; royal families of Europe were beset with disabilities as they only inter bred; the FDLS - small fundamenalist mormon group in the US - 3 wives, loads of children have a high incidence etc etc. The natural imperative to forth and spread seed as it were does mankind good long term in building strong people with mixed genes. SO a boot up the bottom of the non working British poor which sends them to a bit of the UK with a bit more work might indeed be all to their good.

JugglingMeYorkiesAndNutRoast Fri 07-Dec-12 18:54:23

It was fantastic for me to go and live in Japan for a year with DP - but I must say I was very willing ! But I agree traveling does broaden your horizons and increase your confidence.

TheDoctrineOfSnatch Fri 07-Dec-12 19:50:01

Sieglinde I suppose it is a balance of wages, commuting costs and child care costs, with more hours required for longer commutes.

Aboutlastnight Fri 07-Dec-12 20:06:14

I think relocating your family for work can also have negative effects. For example, my mum's family emigrated to Canada and it was great until airbase where my grandfather was an engineer, closed down. He then left his family and went back to UK to find more work leaving his family struggling financially. He then died. My grandmother was left with nothing - a worthless house, no benefits ( this was the 60's) She moved to the UK, to the USA and back to UK again, always chasing work. The effect on her and my mother's mental health was significant.

Another friend's husband has left her and two small children to find work in Australia. He hopes to set them up a better life. She is very depressed.

It's hard on people -the less control you have over your circumstances, the tougher it is on your mental health.

niceguy2 Fri 07-Dec-12 20:20:28

And I should have added that if there IS NO HB then housing costs will fall a LOT.

Exactly! If people cannot afford it then house prices will drop and landlords can then charge less since their mortgage costs are also less.

£1600 per month is a bloody lot of money to be giving someone. And that's just HB. That doesn't even include the other benefits they may be entitled to such as tax credits. At some point we do have to say "Hang much as we'd love to help you, we can't sustain this level forever".

Yermina Fri 07-Dec-12 20:29:47

Just out of interest, the children of diplomats and those in the forces living abroad are funded by the tax payer to attend UK boarding schools, even if completely adequate schools are available locally.

Are those people on this board who are OK for the children of HB claimants to be removed from their schools and sent to live in cheaper parts of the country in agreement that the tax payer paying for diplomats and soldier's children to attend boarding school is reasonable?

And I should have added that if there IS NO HB then housing costs will fall a LOT.

"Exactly! If people cannot afford it then house prices will drop and landlords can then charge less since their mortgage costs are also less."

But house prices in the SE have have continued to go up, despite the dearth of buyers in the last few years, so maybe this doesn't hold true. Mortage approvals are the lowest they've been in YEARS and yet within the M25 house prices continue to rise.

Yermina Fri 07-Dec-12 20:33:39

"Bonsoir, just to be clear, we are on the same side. I see no reason whatever for hospital cleaners to live near the hospital. I have in my time commuted over three hours for work, spent two nights, then back home. At one point my husband was commuting to Edinburgh every day, and I to Exeter - both of us from Oxford. You do what it takes."

Private rental housing even within a two hour commute of London is still generally more than someone living on a minimum wage could afford without subsidy. Especially if they are paying £200 to £300 a month in commuting costs. And that's not even considering whether these people have childcare costs to meet, which would obviously be completely unsupportable if they had to be out the house working and travelling for 12 hours a day.

What is reasonable for people on £40K a year isn't reasonable for those earning 15K.

Xenia Fri 07-Dec-12 22:35:13

The benefits cap from April is £500 a week = £2166 a month including housing benefit( £26k a year). I think if you just claim HB there is now a benefits cap of £20,800 so I a not sure from April whether that cap rises (presumably not) if the only benefit you claim is HB.

There is not much spent on school fees for the army. it's neither here nor there compared to the entire benefits bill so not really worth worrying over although I would certainly support a massive reduction in our armed forces and a Switzerland type UK position on defence.
It is very unlikely a lot of HB tenants will be moving.

Average pay in london is £33,500. Manchester and Birminghma about £26k - £25k.

Viviennemary Fri 07-Dec-12 22:58:16

What the army gets for their children is neither here nor there. MP's apparently are getting £168 a week for groceries. Should we all get that. If somebody earns £15,000 a year they simply can't afford to live in a house where the rental is thousands of pounds per month. And it's as simple as that. I find the thought the rest of us should subsidise this quite frankly totally ludicrous.

MyNutcrackerSuiteAudrina Fri 07-Dec-12 23:54:21

Speaking of the armed forces and the benefits cap I know of a young couple who are expecting their first child who receive quite a bit in state handouts.

They do some P.R work every now and again but I'm worried that if you include the cost of housing, that they might struggle on £500 per week with the additional expenses they are bound to incur. Sadly it's been going on for generations and they are trapped in the cycle.

edam Sat 08-Dec-12 00:07:36


I wonder how much MPs can claim per week? And how that compares to what they think the plebs can manage on...

Yermina Sat 08-Dec-12 08:14:19

" If somebody earns £15,000 a year they simply can't afford to live in a house where the rental is thousands of pounds per month."

Never mind 'thousands of pounds a month'. If someone earns that sort of money they can't afford to live ANYWHERE within the M25 without subsidy as there is precious little private rental property to be had for less than 800 quid a month.

Except in places like this: here

Virtuallyarts Sat 08-Dec-12 08:31:07

there's a vicious circle though - it may be the subsidy itself that keeps rents in the south east so high. if people can't afford to pay current rents once the hb cap is introduced, landlords will have to reduce them. We don't yet know how much impact on rents the cap on hb will have, but theoretically it should lead to a fall.

sieglinde Sat 08-Dec-12 09:10:23

edam, like army schoolfees, this is not big enough to be relevant. It might reconcile pdople to the system for MPs to give it up, but it would make virtually no difference to the overall economic situation.

virtually - yes, exactly my point. The whole housing sector in the Se is artificially inflated by HB. Getting rid of HB would therefore ultimately help people on 15k and on 40k, though I admit there would be a hard landing first.

Virtuallyarts Sat 08-Dec-12 09:26:12

I suppose whether the cut in hb has much effect on rents will depend on how big a proportion of rented properties are affected - if in reality only a small proportion are paid for by above-cap hb, then there may not be much of a fall in rents. I don't know the figures - on the one hand people say masses of families wil have to move as a result of the cap; on the other, people say there aren't that many getting over the cap anyway. Which is correct?

economically, if people want their buildings cleaned and healthcare provided they will have to pay a wage that enables people to commute in. That may be expensive if you want them to start at 5 am, finish at 2.30 am or whatever (taxis etc) - but it does mean that the people who want the service pay for it (rather than the taxpayer subsidising companies' cleaning costs, the price of our cappuccinos etc. which is what you could say is happening at the moment with tax credits topping up low wages, hb etc.)

The problem though is: might it be better to have those indirect subsidies to employment than to have people unemployed because it turns out people are not prepared to pay the 'true' price of coffee, cleaning etc? (ie the amount wages would have to be if they weren't topped up?)

Bonsoir Sat 08-Dec-12 11:27:19

In Paris, commuting costs (season tickets) are met in part by employers. But they certainly don't send cleaners home in taxis at the end of their shifts. Armies of cleaners wait for the first train at Gare du Nord.

Virtuallyarts Sat 08-Dec-12 11:41:57

Bonsoir that's prompted me to ask- presumably it is worth people's while to work or they wouldn't be shivering on the platform at 4 am or whenever to do it? How does the french system work? Is there a similar system to tax credits, toppingup low wages? Or are wages higher because of stronger trade unions etc?

Viviennemary Sat 08-Dec-12 11:45:18

I know somebody who has lived in New Zealand for a while. They said there is no benefits culture there. Their expression not mine. But lower paid and seasonal workers get help. That's fine. But not help to the extent that they can afford to live in houses that much higher paid people can't afford to live in. That's where the UK system is absolutely wrong.

Xenia Sat 08-Dec-12 11:48:05

This is the big problem to be solved.

Actually if most of the cost goes on the elderly we need to look at that. Perhaps accept NI doesn't really work as we never set up a "fund" and instead abolish it and for those aged about 25 now say you only get any state pension at all unless you have no other funds/savings/a house/private pension. Hoever it woudl be unfair to apply that to any of us who have paid masses of national insurance over 30 years on the basis it will get us a state pension or did Beveridge set up this system on the basis you pay NI and mostly you never benefit from it but it is just a safety net, rather than a contributory thing?

losingtrust Sat 08-Dec-12 12:10:51

If you said you would not get a state pension if you had no other funds nobody would bother saving. Why bother. We need to encourage work and saving. A flat rate pension for me would encourage saving to top up not for every penny of savings to be penalised. The same with work. More pay before tax and that gives an incentive to work. Cut NI altogether and get employers to pay amount but employees just pay one form of tax. Easier to administer too so would save admin costs. Those calling on employers to pay higher salaries can watch the jobless figures go up as jobs go abroad instead. Thought the speech went well even with slide in of 4g figures. People moaning about tax credits etc capped at 1% should remember that many workers have not had a rise at all and the rise in the pa would supplement this. Just under £50 per month for dual income family.

Xenia Sat 08-Dec-12 12:16:18

Yes and a lot of people have been moved to 4 day weeks and not had pay rises for years never mind a 1% rise, many have had cuts.

I think the current system is that couples get £200 (?) a week income and when Labour brought that in it was a problem as those who never saved got put in the same position as those who had. It's the difficulty with having a welfare state which supports those not very well off but also tries to be fair to those who went without a lot all their lives to save for retirement.

Bonsoir Sat 08-Dec-12 12:20:35

Virtuallyarts - I really cannot explain the French taxation system in a post on MN. But, yes, of course people at the lower end of the earnings spectrum are taxed much less than those at the top of the range.

losingtrust Sat 08-Dec-12 12:28:40

Especially an issue with auto-enrollment coming in this year for most companies. Without a flat/rate pension it is a potential scandal waiting to happen. The stupid thing is it was a labour policy with the main admin contract worth millions going to one company on the eve of the election without proper tender process and no thought about the interaction of tax credits. If that is typical I would rather have well-thought out u turns. The pensions minister is one of the best guys in parliament for me though. If only I was so confident with education and health?

Virtuallyarts Sat 08-Dec-12 12:38:07

losing trust, what's the scandal waiting to happen? Is it that people will be encouraged to save for a pension that is no higher than what they would get as income support if they had saved nothing at all? (I think i have read about this somewhere). What is the issue about interaction with tax credits?

I suppose there is still an advantage to saving if you think one day there may not even be income support, so that you are left with nothing at all if you don't save - admit this is unlikely! but who knows?

If government wants to promote saving for retirement, it's logical not to means test WFA - assuming you think means testing does discourage savings which to some extent I think it must, even if only at the margins.

Viviennemary Sat 08-Dec-12 12:46:40

The more means testing is applied the more people will be encouraged not to save and provide for their own pensions. Or even not declare savings. So I don't think WFA should be means tested. And elderly people in their 80's and 90's filling in forms to get it. A lot of them wouldn't and the consequences wouldn't be good.

losingtrust Sat 08-Dec-12 12:47:31

That is it Virtually. Hence why flat rate pension do necessary otherwise people enrolled in without understanding the opt out will lose out. The previous government did not even consider that aspect.

losingtrust Sat 08-Dec-12 12:51:00

Is it worth a sixty year old with no prior saving being part of a low level pension scheme - not really, better to clear mortgage or save in some other form of savings due to the credits system although hopefully this will be saved with flat rate pension and no credits.

Xenia Sat 08-Dec-12 13:53:17

This was the main issue on the recent 3 hours Radio 4 programme on benefits - do we want a contributory culture where if you contribute you draw out later - your pension etc and if you don't you have a very minimal and just about survivable but very harsh basic welfare provision which is what Beveridge set out OR do we make welfare much cheaper (and perhaps lower taxes) and say the benefits are there only if you are in dire straits which most people will never be and make it not contributory. Apparently Australia has the latter and much of the eu had a very expensive contributory scheme instead.

The new opt out pension for the low paid will probably not be worth their contributing to. I would advise them to opt straight out of it.

sieglinde Sat 08-Dec-12 15:43:18

Surely the winter fuel allowance and bus passes should be really rigidly means-tested, given only to people with no income but the state pension? If people choose to save, good for them, but I se no reason why taxes should subsidise my in-laws - he's a retired consultant, ffs. Surely the OAP should ALSO become just a safety net, going forward?

losingtrust Sat 08-Dec-12 15:47:39

However it is the cost of the means-testing that will be used as the argument. I agree why should a working family lose their child benefit when a pensioner on £50k keeps their's. it seems very unfair but promises are votes and unlikely to chane I would say. The ever age pension pot though is quite low and I have had this conversation with some well off pensioners who agree but not enough to give up these benefits!

Xenia Sat 08-Dec-12 16:04:05

I am losing all child benefit as a single mother soon but I still don't mind if the old keep their bus passes and the one off winter fuel payment which at £250 or whatever it is is not going to provide very much fuel for anyone. However we do need a debate as a nation about whether we want to retain national insurance employee and employer contributions and the like and benefits even to the rich if they paid in or whether we want to scale benefits right back and just pay them to the very needy perhaps for fairly short periods and eveyone pay in quite a bit less than they do now.

Sadly the public finances are so bad with our interest annually alone coming to £150bn on our massive debts that we probably will need to lose most of the universal benefits, reduce state pensions and have benefits only for thsoe in real need for short periods without reducing tax or NI at all I fear.

edam Sat 08-Dec-12 17:10:54

Pensions are a con for all but the well-off and very well informed. There have been repeated mis-selling scandals and even without them, the only people making money out of pensions are those who work in the industry. You pay in for decades, only to see a tiny return in the end, when other people have been doing nicely out of their commissions and fees.

Let's not forget all those companies who took 'pension holidays' in the 90s. We were told, by the Major government, that pension funds were too big and had far more money swilling around than would ever be required to meet their obligations. No-one has ever explained that one, or been held to account for being completely and utterly wrong.

losingtrust Sat 08-Dec-12 17:31:13

I hardly think they are a con and I don't work in the industry. Those with final salary pensions will be very grateful and company paid ones are well worth joining. I would rather have some form of income than rely on the state but there are other forms of saving.

losingtrust Sat 08-Dec-12 17:34:11

Prior to 2001 all personal pensions were vastly overpriced but since then many pension schemes are quite lowly priced and many company schemes are 0.5% per annum charged which is not excessive but you do need to be well infomed. Companies are now paying heavily for the price of premium holidays with the pension cost in most companies exceeding the current wages bill.

edam Sat 08-Dec-12 18:09:30

I do have four year's worth of final salary pension - scheme is now closed and seems to be dwindling ever year according to the statements I get. Scheme with current employer will give me something like £2k a year if I stay with them 20 years (and I'm paid above national average wage and my employer contributes a reasonable amount).

But that's just an example, pensions seem to be a very bad investment all round unless you are a fat cat who gets sacked for being useless.

edam Sat 08-Dec-12 18:10:52

(And isn't 0.5% fee p.a. quite a lot when interest rates are so low? What slice of the return on investment is taken up by the fees?)

losingtrust Sat 08-Dec-12 18:56:46

Say your fund was £1000 then a 0.5% fee would be £5 per annum so not a lot. This covers their administration, invesent management and etg. No real indicator to do with interest rates. The return you get depends on the investment fund you are in.

losingtrust Sat 08-Dec-12 18:59:55

Banks give you an interest rate after their investment returns so effectively if you are getting an interest rate of 2% from a bank holiday this is very different to the investment return the bank will be getting. Plus the interest rate banks pay is almost always lower than the rate of inflation so the value of your money is being gently eroded over the years.

edam Sat 08-Dec-12 19:02:00

thanks, losing.

losingtrust Sat 08-Dec-12 19:09:58

Your final salary pension should not be going down tear on year but should be increasing with inflation up to a cap of normally 5%. The overall fund will have increased but do has the cost of providing pensions due to longevity and low interest rates. Therefore your ex employer will be forced to pay more money in to keep the value of your pension, hence why companies are now spending billions more on old final salary promises so will be paying a lot more than the premium holidays they saved. To be honest looking at the openendedness of final salary promises, they would never have been used. It is like the state pension. When it was invented nobody could have predicted people would live so long. It is still disgusting when an exec leaves a company and gets a wrapping pension payout but then do do politicians. In fact the biggest pension pots who are more likely to be affected by the government cap of £1.25m are some of the senior civil servants. The execs at my company will come nowhere near and not many will be able to retire before 65 although it does depend on your lifestyle. I could probably manage on half!

losingtrust Sat 08-Dec-12 19:13:15

That's ok Edam. I will need to auto-enroll 1000s of our employees next year and it is good to hear what people think so good bit of research on public feeling for me. We will have a lot of questions to answer when we have to do this.

edam Sat 08-Dec-12 19:58:26

Odd thing is, when I first started work, I wasn't allowed into my company pension scheme - they had an age limit of 25. I've never understood that one...

Xenia Sun 09-Dec-12 09:10:37

It also depends on your career as well. If you are likely to be in one jobs for 30 or 40 years full time as many men and women have beenthan an employer contribution and your own with tax relief on the contribution was a wise way of making people save. If in retirement you were then paid half or 2/3rds of your final salary for the next 30 years or however long you live that's a good deal.

If it's not final salary (most aren't these days) and you just buy an annuity you need a very large pot to get an inflation linked pension these days. It is certainly very wise to save for old age in some manner or other.

The new opt out arrangements are what we used to have - anyone as old as I am will remember when you were automatically opted in to SERPs unless you opted out. I think it was the Tories who decided to change that so that people were opted out unless they opted in - I remember the budget that announced that as some kind of free market triumph as indeed perhaps it is. Now we are trumpeting the new forthcoming automatic opt in.

picketywick Tue 11-Dec-12 13:58:10

Its above my head. Or maybe up my exterior. Ossy may be suffering from consternation or constipation.

Xenia Tue 11-Dec-12 15:36:14

It's pretty simple - people are living 30 years into retirement not 3 so pensions cost too much.

I agree that the new upper cap on the total sum held in the pension will affect public sector workers, senior executives in the public sector, senior NHS staff and others. I read that with some glee.

So your pot cannot exceed £1.5m - I think there is some protection for those already over that sum.
so if your pension will be £50k a year then that is £1.5m pot for public sector schemes. There will be senior NHS doctors who will get £50k a year pension.

"How do I know if I have exceeded the Lifetime Allowance?

You, firstly, need to calculate the value of any money purchase or defined contribution pension savings.

This is simply the value of your fund which can be accessed online if you have a Barclays Stockbrokers SIPP. If you have your pensions with an alternative administrator, they should be able to confirm the value to you.

The valuation of final salary or defined benefit schemes is more complicated. HMRC calculates this as being the income that you would be entitled to multiplied by 20. Therefore an income of £50,000 would carry an equivalent fund value of £1 million. So if you have final salary benefits these could significantly increase the total value of your pensions.

Anyone who already holds "primary protection" or "enhanced protection" for their pension savings are not entitled to fixed protection, and the protection already held will continue to apply."

You have to apply for fixed protection by 5 April 2012 if you are due a £50k a year pension or have £1.5m pot so it seems.

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