IDS is right. There is a culture of benefit dependancy, but it's

(44 Posts)

businesses that depend on benefits.

If 80% of state benefits are given to people who work because they aren't paid a living wage then the welfare state is directly subsidising companies that pay their workers minium wage. Many of these are even vast, national companies that make huge profits.

So could the welfare bill be cut if businesses are forced to pay their staff a living wage? It's unlikely to happen though; too many CEOs and company directors are pally with the current government.

I don't know if I'm making much sense (it's past my bedtime) but it's something I've been thinking about since watching IDS on the Andrew Marr show yesterday.

cheddarcheeselover Mon 05-Nov-12 22:30:57

I agree.

NewFerry Mon 05-Nov-12 22:32:57

Yes, I've thought for a long time that large employers, eg, employ over 100 employees, should have a higher NMW imposed, eg £8 ph.

Brycie Mon 05-Nov-12 22:36:15

I thought most benefits went on pensioners, that's what moaners-about-benefits are always told.

Boggler Mon 05-Nov-12 22:42:19

PeahenTailFeathers you're spot on, one of the worst misuse of public money is the need to 'topup' full time wages to enable people to live because large companies will only pay the bare minimum that they have to. A good example is way that companies such as tesco only contract their employees for a few hours per week but expect them to regularly work extra often up to full time, however if staff are sick they only get sick pay based on their contractual hours, the difference is paid by the DSS and often housing benefit as well. So companies such as tesco et al receive more in subsidies for their staff than many people realise.

SecretNutellaFix Mon 05-Nov-12 22:42:29

The current living wage in the uk(excluding London) is £7.45 an hour.

The current Minimum wage is £6.19. I am on above minimum wage, but am just under a pound an hour less than Living wage. This accounts for at least £30 a week.

Put plainly, it works out quite a lot per year doesn't it?

MummysHappyPills Mon 05-Nov-12 22:47:19

I agree. It is ludicrous that a family where both parents are working may need their income topped up by working/child tax credits. It is especially so in areas like mine (south west) where house prices/rents are ridiculously high and wages shockingly low. Either houses prices need to come down or wages need to go up.

CogitoErgoSometimes Tue 06-Nov-12 07:55:43

"So could the welfare bill be cut if businesses are forced to pay their staff a living wage?"

If all employers paying £6.19/hour paid £7.45/hour that would equate to a 20% increase in their wage bill, not counting any additional extra costs of NI or new things like employer pension contributions. Chances are that, to meet that cost increase they would employ 4 instead of 5 people. Whilst I think employers should pay a fair wage and whilst I've never been a fan of Tax Credits full stop, it may not necessarily result in the savings to the welfare bill that campaigners seem to think.

UniversalCredit Tue 06-Nov-12 19:35:46

If people are prepared to work the least that they deserve is a living wage.

I created a blog back in 2010 that may be of interest and hopefully provides everyone with the latest news regarding welfare reform, please have a look and tell me what you think?
www.universalcredit.co.uk/

Brycie Tue 06-Nov-12 19:52:52

Labour introduced the minimum wage, no? But also tax credits - almost entirely an aim to get as many people as possible on the benefits register so that they had a vested interest in the welfare state and returning Labour to power. By all means end tax credits. Is that what you want? Labour created this corrupt system.

Boggler Tue 06-Nov-12 21:00:13

Actually tax credits have existed in one form or another for many years beforevLabour came in. They were previously called FIS (family income supplement) all Labour did was rename them and rejig the criteria a bit. So successive governments have all propped up big businesses that didn't pay their employees a decent wage.

Cozy9 Tue 06-Nov-12 21:10:15

If businesses employing over 100 people had to pay a higher minimum wage, you would get a lot of businesses that employed 99 people.

wasabipeanut Tue 06-Nov-12 21:17:28

I think Ed Milliband might hit a nerve with the living wage campaign. There are some very distorted wage markets in this country. Mind you, I do think Labour fucked up massively with the whole tax credit concept.

Option 1: Tax less low paid people less, more money in economy, more spending, virtuous circle.

Option 2: Tax people more and make them apply to get some back again. Whole shebang costs a fucking fortune to adminster and allows companies to pay people a rubbish wage secure in the knowledge that the tax payer makes up the balance. Millions of people become dependent on tax credits and a Labour government.

Genius.

Darkesteyes Tue 06-Nov-12 21:40:19

Going by some of the threads ive read on the Relationships board and some other boards there is also a contingent of financially abusive DHs/DPs who have a culture of benefit dependency. They rely on the SAHP getting Child Benefit and child tax credits so that they (the DP) can keep most of their wages.
Ive seen so many disturbing threads where the SAHM says that the CB and child tax credits is the only money they are getting.

MrJudgeyPants Tue 06-Nov-12 23:35:47

Bloody hell, here we go again! Why the flippety-gibbet are you asking already hard pressed employers to pay more in wages when we have plenty of people who cannot find work in our economy? Make it harder for businesses to employ people and you will have fewer jobs and even more unemployment - exactly what we don't want as we try and get our shit together after a colossal recession which is still blowing its icy wind across our land.

Stop to think for a moment - why are British jobs being exported to the developing world? Is it because there is a fundamental failure with the British workforce, or could it be that it is cheaper to get Johnny Foreigner to do intensive manual labour? Now, take it one step further - what will be the effect on the low skilled / easily exported jobs that we do still do if you hike up the workforce’s wages by 20%? Now ask yourself if that outcome is beneficial to Britain or not. Bingo, we are now on the same page!

Now, let’s crunch some numbers. If you work a 40 hour week and earn £7.45 you will be pay almost £2.5k per year in tax. Your take home pay (after tax) will be around £13k.

If you currently earn £6.19 per hour and work a 40 hour week you will earn around £13k per year BEFORE tax.

It is therefore true to say that if you were on the current minimum wage but didn't have to pay tax you would be earning (more or less) the living wage. It therefore follows that the thing that impoverishes you in a minimum wage job is the fact that you have to pay tax.

The answer to the problem, without causing further unemployment, is to stop taxing the lowest paid and to let them keep more of the money that they have earned.

Making the personal allowance £13k would achieve this at a stroke. That Miliband can't see this confirms that the myopic tit is too fond of authoritarian solutions to problems that the state causes.

Brycie Wed 07-Nov-12 03:05:28

"myopic tit"

that's awfully good

I should say something intelligent about the rest of your post but I do like myopic tit

CogitoErgoSometimes Wed 07-Nov-12 08:12:24

"all Labour did was rename them and rejig the criteria a bit"

That rejigged criteria meant that families on incomes up to £55k qualified for benefits (Child Tax Credit). I think that went well beyond rejigging and well into the realms of cash bribery...

Brycie Wed 07-Nov-12 08:27:37

It's crazy that you be on that much money and recieve benefits. Just tax people less, isn't it.

So whatever the dependency, OP, it was created by Labour.

Sparrowp Thu 08-Nov-12 15:41:52

The good thing about making the personal allowance 13,000 is that it will apply to everyone who earns up to £100,000 a year! yay tax break for everyone.

Unless you're a mum who works part time. You don't get the living wage until you work full time, you lazy bums.

And if you're a cheapskate employer who just wants to keep all his profits to himself so he can spend it in a sunny tax haven, or perhaps you just don't feel like paying tax, well that's fine too!

MrJudgeyPants Thu 08-Nov-12 22:05:33

SparrowP Feel free to correct me but your second paragraph seems to suggest that those who work part time should get the same salary as someone who works full time. Whether that is your belief or not, that isn't what Miliband is pressing for with this living wage bollocks. Under his proposal you still won't earn the living wage if you are working part time in a low paid job.

To look at it another way, Miliband is looking to employers to top up the wages of the hard pressed to compensate for the actions of the state. It has nothing to do with cheapskate employers or sunny tax havens.

OddBoots Thu 08-Nov-12 22:10:55

Whichever way I try to look at this it always seems to boil down to excessive housing costs, a big part of why the living wage is higher than the minimum wage is that it costs so much to just put a roof over your head.

niceguy2 Fri 09-Nov-12 12:32:27

The thing to bear in mind is that most employers are not Tesco & multinationals who are making millions of profit each year and could 'afford' to pay a bit more. Most employers are small businesses. Many businesses are struggling at the moment. See Comet for example for a shining example that big isn't always profitable.

So now we want to FORCE employers to pay more. Sure, those lucky businesses who are making millions can either take a hit on their profits or increase prices.

But what about all those businesses struggling? Your local plumber/newsagent who employs a couple of people? A 20% rise could be the straw that breaks the camels back. What about the next business like Comet who are trying desperately to turn their business around who are suddenly hit with a 20% rise in wages?

Lastly yes...tax credits sort of existed in the past under a different name but eligibility was much tighter and claimants minuscule in comparison.

NewFerry Fri 09-Nov-12 17:24:08

Whilst there are certainly more small employers than large, tesco alone employs over 400,000 fte equivalent staff. Add in the other supermarkets and the large retail shops, and you have well over a million employees many of whom are on or just above NMW.
Making these large employers pat their staff a living wage from the outset is much more efficient, and rewarding, than trying to get these companies to pay all their tax.
Starbucks coffee anyone?

amicissimma Fri 09-Nov-12 21:10:26

"Whichever way I try to look at this it always seems to boil down to excessive housing costs,"

This is really tricky, though. I understand (posted a link on another thread and too tired to search for it, sorry) that there are a lot of people from Greece and other southern Eurozone countries buying property in London to escape the Euro risks in their own countries. This pushes up prices in London, which pushes up prices round London and so on, ever outwards.

Just as jobs can be moved abroad, if employers find the UK too expensive, and EU citizens can freely come and work here, our wages and housing costs reflect that we are just one country within the world economy. I don't think anyone realistically suggests we pull up the drawbridge.

What's the solution? Fiddle about with taxation? Give back tax to some people, but not others? Make sure our population are so well educated/trained that employers are desperate to pick them and pay for the privilege? If it were easy surely we'd be doing it!

niceguy2 Fri 09-Nov-12 22:05:30

Newferry. But you cannot wave some legislative magic wand and somehow make large employers pay their staff a living wage but not smaller employers. Where do you draw the line?

Especially considering the law of unintended consequences means you are likely to discourage medium size businesses from growing and people prefering to work for a large company rather than a small. The latter of which we desperately need for new blood in the economy. Remember, all companies start off somewhere. Amazon/HP both started in someone's garage. IIRC John Caudwell started off selling mobile phones door to door until only years later becoming rich through phones4u.

amic. I think we need to more than fiddle with taxation. Personally I favour a much simpler, much leaner tax system. Easier to administer, harder to evade. Then we lower our corporation tax rates to attract companies to set up here. Whilst we lose corporation tax (which isn't our biggest earner anyway), we will make that up in additional income tax from the new jobs created.

We give time bound incentives for companies to set up here. So for example one country my company invested heavily in, they gave us two years of subsidies for IT equipment (ironic since we're an IT firm) and laid on transport to make it easier for staff to get to our offices. Another country has created a HUGE special economic zone where any profits you make are completely tax free. That's right...0% tax. Unsurprisingly we've just created several thousand jobs out there. And where are those jobs coming from? The US & EU.

That's the sort of cut throat global market place we are competing in. It frustrates me when I hear of people bashing companies all the time when I can see that the UK is steadily declining as a place people want to come & do business. There's no tax advantage. Our education is pretty piss poor now compared to our competitors. Esp. our asian competitors who are churning out graduates and high tech engineers in their millions whilst we navel gaze and think 'professional footballer' or 'reality TV star' is a great career.

Because I tell you, unless we change our ways now to compete in the world we are in, rather than the world we'd like to be in. I can see in the next couple of decades our standards of living will just keep getting lower.

MrJudgeyPants Sun 11-Nov-12 23:17:37

Spot on niceguy.

ttosca Tue 13-Nov-12 21:11:03

'nice'guy-

Newferry. But you cannot wave some legislative magic wand and somehow make large employers pay their staff a living wage but not smaller employers. Where do you draw the line?

It doesn't need to be 'magical' - why would it? There is already a great deal of legislation which is required of larger firms but not smaller firms. You draw the line wherever you choose.

Especially considering the law of unintended consequences means you are likely to discourage medium size businesses from growing and people prefering to work for a large company rather than a small. The latter of which we desperately need for new blood in the economy. Remember, all companies start off somewhere.

A business is not going to stop growing on the account of having the pay its workers a fair wage, especially considering many businesses already do pay a fair / living wage. It's not the burden you make it out to be.

amic. I think we need to more than fiddle with taxation. Personally I favour a much simpler, much leaner tax system. Easier to administer, harder to evade. Then we lower our corporation tax rates to attract companies to set up here. Whilst we lose corporation tax (which isn't our biggest earner anyway), we will make that up in additional income tax from the new jobs created.

The UK nominal corporation tax is already lower than most of europe, and many large multinational companies pay NO CORPORATION TAX AT ALL in the UK. It isn't possible to suck corporate cock any more enthusiastically.

On the contrary, any company operating in the UK must pay its fair share of corporation tax, and the tax burden on citizens (especially those below the median) should diminish.

That's the sort of cut throat global market place we are competing in. It frustrates me when I hear of people bashing companies all the time when I can see that the UK is steadily declining as a place people want to come & do business. There's no tax advantage. Our education is pretty piss poor now compared to our competitors. Esp. our asian competitors who are churning out graduates and high tech engineers in their millions whilst we navel gaze and think 'professional footballer' or 'reality TV star' is a great career.

You're just ignorant of the facts, once again. The Financial sector has caused the worst financial crisis and recession in 100 years, and have been accused of money laundering, rate-rigging, and mis-selling products to consumers, and other immoral/fraudulent behaviour - and you're complaining that it 'frustrates you' to hear people bash companies?

Again, many multinationals pay 0% corporate taxes. Not only that, but we subsidise poor pay on behalf of employers so that pitiable UK workers have enough money to feed their kids.

You must exist in a place called the 'UK' on another planet. It doesn't seem to be the same planet as the rest of us.

Because I tell you, unless we change our ways now to compete in the world we are in, rather than the world we'd like to be in. I can see in the next couple of decades our standards of living will just keep getting lower.

Our drop in standards of living is the result of precisely the kinds of things which you a proscribing: low tax regimes for corporations, deregulation, and more corporate cock-sucking. We've had that for 30 years. What we have now, crisis, recession, and steady drop in living standards is what happens when you follow through on 30 years of neo-liberalism.

If we continue along this line, people's living standards will certainly continue to drop. Wages will stagnate or drop, and wealth inequality will continue to skyrocket. Meanwhile, the services we expect from a civilised society, like health and education will be further eroded thanks for the cuts needed to pay for this loss of revenue from corporate cock sucking.

You are utterly clueless. It's shameful that you keep spouting ignorant drivel over and over again on these boards.

CogitoErgoSometimes Wed 14-Nov-12 07:13:32

"many multinationals pay 0% corporate taxes."

That would generally be the ones making a loss.

niceguy2 Wed 14-Nov-12 11:17:10

Personally I think it's you who lives in an alternate world Ttosca.

Like I said, my job takes me to other countries where we are creating jobs in their thousands because of incentives other governments are giving us to do so.

Your idea of a 'fair' world involve the usual socialist nonsense of taxing the 'rich' until the pips squeek except you fail to accept the world has changed.

I do agree that people's living standards are dropping but that's because our economy hasn't been competitive against others, most notably the Asian economies. The answer is to be competitive, we cannot tax our way back into prosperity.

MiniTheMinx Wed 14-Nov-12 11:21:22

Taxman admits Government powerless to force multinationals to declare profits

www.independent.co.uk/news/uk/politics/taxman-admits-government-powerless-to-force-multinationals-to-declare-profits-8282771.html

"Companies now see tax dodging as a legitimate part of their business operations even though companies benefit directly from education, infrastructure, healthcare etc that is provided by the state. The cost of tax dodging is staggering! Developing countries lose an estimated £250 billion every year as a direct result of corporate tax dodging - money which could be used to reach the UN's Millennium Development Goals several times over.

And it's not just developing countries that lose out. Britain also loses up to £120 billion a year through tax dodging and uncollected tax. That's enough to double funding for the entire NHS. Alternatively, the same sum could cover the full state pension, eradicate student fees and enable Britain to reach the UN international aid target of 0.7% of gross national income overnight"

www.waronwant.org/campaigns/tax-not-cuts/tax-dodging

I agree Cog, many appear to be making a loss. As MD of a small company if I were to pay myself a large salary I would be laughing except for one thing. It is illegal to "bankrupt" your own business under UK law. These GLOBAL giants _are not_ making a loss for their shareholders and bosses, they are a great cash cow and no one holds them to account for riffling through the company coffers. The extreme end of this is the public equity firms shadowy dealings.

It appears that businesses are not in profit so we think their shareholders and bosses are also feeling the pinch, this is not so.

"A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network"

www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy

More than $1 in every $6 worldwide is not subject to tax in any country because those who have earned it have sought to hide it. Some $3.1 trillion is not taxed which is about 5.2% of the worlds GDP. This is the real reason welfare needs are growing as they go unmet whilst government income falls.

MiniTheMinx Wed 14-Nov-12 11:27:14

Oh Nice guy the world has changed........but has it changed for the better?

We are in competition to countries that are A) state capitalist or B) also not collecting it's fair share of tax revenue and they too in time will travel the road we have been on.

Rising wages & living standards over the short term whilst those costs are borne by businesses seeking to exploit what is still CHEAPER labour. After which wages will fall because of the falling rate of profit. It is inevitable and unavoidable.

Tax avoidance is just one shovel the Grave diggers use!

niceguy2 Wed 14-Nov-12 19:20:44

Mini, I would argue the world as a whole has changed for the better.

We are no longer living in fear of a nuclear war or another world war. We have energy security for the forseeable future.

Millions, if not billions have been lifted out of poverty by the world economy. Think of all those people in China which once upon a time their government's couldn't feed. Think of the millions of Indian families now who are in the middle classes thanks to outsourcing of jobs.

Right now the world is going through a recession and turbulent times but this has not always been the case. We'll get through it. It will pass.

The world isn't perfect. Of course it's not. But to answer your question as to if it is better....yes I would argue on balance it is.

laughtergoodmedicine Thu 15-Nov-12 13:54:03

Good post Niceguy. But I am more interested in those people who are already at the bottom of the pile. Like the disabled who are pressurised by duncan Smiths work interviews. Which can leave them nine months waiting to appeal against decisions. (and often winning)

Darkesteyes Thu 15-Nov-12 18:04:04

If the stress doesnt kill them in the meantime.

MiniTheMinx Thu 15-Nov-12 19:09:22

Yes on balance the world is becoming a better place, people are becoming more caring, just look at the policies of this caring sharing Government hmm

laughtergoodmedicine Fri 16-Nov-12 13:20:09

I spot Irony

B1ueberryMuff1n Fri 16-Nov-12 13:21:58

I agree with you. If I could earn enough to live on I wouldn't be on benefits. it's all messed up.

laughtergoodmedicine Sat 17-Nov-12 13:33:35

Niceguy2 Good comprehensive post.

Looking at long-term unemployed. Bosses call the shots. So a boss advertises a job at minimum wage. He gets 50 replies. He is not likely tO take on a long_termer with so many to choose from. welfare to work is meant to solve that problem have they? can they? will they?

losingtrust Sat 24-Nov-12 17:41:38

The only way is to up the personal allowance. I would go right up to 20k and then tax the rest at 40%.

NicholasTeakozy Sat 24-Nov-12 19:23:36

Stop to think for a moment - why are British jobs being exported to the developing world?

It's down to globalisation. Allowing well paid manual jobs to be exported was that bitch Thatchers worst work. That's why we're losing jobs to developing countries.

We are no longer living in fear of a nuclear war or another world war.

Righto. Israel are probably going to bomb Iran with the backing of the US. Unfortunately, unlike Iraq and Afghanistan Iran are equipped to fight back. Israel has nukes, which is a bit unfortunate really, as they're seriously deranged.

We have energy security for the forseeable future

Hahahahahahahahaha ad infinitum.

picketywick Mon 03-Dec-12 13:05:33

NEW IDS IDEA Compulsory unpaid work for the disabled from today (Monday 3RD)

Victoria derbyshire Radio 5-Live did an item on this this morning.

It seems vindictive and pointless. But the Coalition works in unfathomable ways

niceguy2 Mon 03-Dec-12 14:28:03

Oh do get a grip NicholasTeakozy. I've heard Thatcher get the blame for many things but globalisation?

Just how was she supposed to stop globalisation from happening?

MiniTheMinx Mon 03-Dec-12 21:26:46

Actually Thatcher is partly responsible. She implemented the ideas of neo-liberal economists, she cozied up with Regan who did the same, they rampaged over some of south america, exporting their special breed of freedom, remember Chille? Of course we had exports and imports, but deregulating financial markets meant the easier flow of capital (that is different to the easier flow of goods in case NiceGuy is wondering)

niceguy2 Mon 03-Dec-12 23:02:53

Personally I think the whole Thatcher thing has been done to death and given she's not been in power for 22 years and under 13 years of Labour rule they did absolutely nothing to change the city that any 'blame' is tenuous at best. You may as well go a bit further back and blame Neville Chamberlin for appeasing Hitler with 'peace in our time' which ultimately ended up plunging us into WW2, killing millions!

Life in the UK in 1979 wasn't exactly utopia. And I'd argue that by any measure that as a nation we were stronger in 1990 than we were in 1979.

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