AIBU to think benefits are needed to push earners up from avg. wage to increase equivalent of 10k p.a. in salary?(152 Posts)
So I'm watching very bad tv 'Rip Off Britain' and they cover someone who is having debt problems. They show him reviewing a spreadsheet about his debt and and it shows his income:
Wages - 1,600
Tax credits - 280
Housing benefit - 200
CSA - 190
Child benefit - 80
TOTAL - 2350
Assuming he works FT then his income is circa 24,600 which is pretty typical of the average wage in the country. Removing the income from CSA, his new income is 2,160 which works out to what your take home income would be FT at a salary of 34,000. So essentially benefits have given him a 10k salary increase!
I don't know a great deal about the benefits system and obviously have no idea of his personal circumstances - can glean that he has a child and is getting ex-spousal support.
But what I'm struggling to understand is that his salary is pretty much the average across the country so I wonder -- are most parents on an average wage in need of such a significant top up? I'm sort of blown away by the fact that an average wage does not provide enough to live on and that benefits can increase someone's 'salary' so significantly.
My benefits (CB, CTC, HB) top me up to around the 2,160 mark as a single working parent. I earn 24K and live in London. I am pretty skint even with this, so in answer to your question, yes I am in need of such a top up.
You need to remove the CB from your calculation too surely since someone on your example of 34k with one child would get that too.
Anyway, I'm presuming he's a lone parent which would make a difference. We weren't entitled to any tax credits when dh wasn't working and I was on a similar income.
Did it say how old his child is? If he works full time he would be paying childcare costs if the child is under 3? That does eat up a lot of wages. A friend of mine pays over £800 a month in childcare, so if he was paying that it would leave him with about £1500. Once you've paid the rent, bills, council tax, food, car if he has one, etc, there's not a massive amount left.
His childcare costs were listed as 300 per month. I seriously wasnt trying to be goady --- It just to me seems nuts that the average salary can't really keep people afloat and that even an equivalent salary of 34k seems to be not significant. Sigh.
I kept CB in because it's no longer a 'universal benefit' for people with children so worth including.
" I seriously wasnt trying to be goady"
Yes, you were. That's why you posted it in AIBU.
His childcare costs were listed as 300 per month. I seriously wasnt trying to be goady --- It just to me seems nuts that the average salary can't really keep people afloat and that even an equivalent salary of 34k seems to be not significant. Sigh. How lucky you are that you don't have to live our lives and have to think about these things from a theoretical perpective hey
This is the problem. It's sort of a catch-22. Benefits are needed because employers don't pay enough and employers don't pay enough because they know any low salary will be topped up with tax credits. The same with housing benefit. Both benefits are subsidies to the rich - big business like Tesco's, Sainburys and rich landlords.
What it means is that those who don't get any benefits now have to compete with those who do, so it almost cancels out any wage rises or career progression since benefits will equalise low pay. Maybe it was Labour's warped version of equality where equality means equality of outcome rather than equality of opportunity. It has devalued the work ethic whilst making landlords pots of money and Tesco shareholders and CEO richer.
I get what you mean. Pre children we didn't have any benefits help and when we did need it I was shocked how much child tax credits were etc. so I know from the outside it looks a lot. But from my perspective now ( v similar to the amounts you outlined above) it just about allows us to get by. We live in SE and all of DH salary goes on housing and basic bills ( no debts no holidays no car/tv purchases etc.). The benefits we get allow us to buy food nappies, petrol and occasional pair of shoes etc.
the housing benefit would only be payable in an area with higher housing costs. I doubt someone is the North would get housing benefit on that type off salary. Our rent here is 1160 and is cheap for this area. Not sure people who bought homes a while ago or live in cheaper areas understand rental costs in SE these days.
william, you are always toady when it comes to benefits. It is tiresome.
Welcome to AIBU william, where you can't ask a question without someone getting offended or angry. No welcome needed, OP is a regular on the benefits threads.
His income has to cover all his living expenses. There won't be much (if anything) left over especially as he has debts.
I also would read the OP as simply, "Is the average wage in Britain a fair wage?" and I also would have answered, no, it isn't. This is why I feel that in some very real sense, most benefits should be seen as a subsidy to EMPLOYERS who underpay, rather than to benefits recipients.
That might sound goady, and an invitation to abuse benefits recipients, rich people, immigrants or whatever. I hope not.
But feeling a lot of people are suffering unfairly is one thing, trying to force wages up by diktat is another. Classical economic theory says it shouldn't be necessary to force, that it should happen by the invisible hand of the market. I'd like some explanation of why that isn't happening now. Was there a previous time in history when it did happen, or has classical economic theory always been wrong, or has something changed, and if so, what?
No, I don't want the political positions, I want to know if anyone else knows of websites and sources that aren't biased by political preconceptions and really try to crunch the numbers? When did wages and cost of living start to run off track, and what else was changing then? Is it REALLY that working-class people in the 19th century took it for granted their children would run around barefoot and no one had mobile phones, and that our expectations have risen too high? (Are rising expectations unreasonable per se? Seeing that mobile phones didn't exist in the 19th century and we none of us really want children running around barefoot?) Isn't it also true that my DH's Victorian predecessors working middle-class white-collar jobs like his would have worked 10 a.m. - 2 pm., and not only been able to support a non-working wife and horde of pre-birth-control children but also servants and even leave an inheritance?
I'd love to see a MN thread where we all try really hard not to yell at one another. We seem to keep degenerating into slagging matches where some MNers call others lazy or extravagant, and are in turn accused of being entitled and out of touch with reality. This gets boring to us bystanders.
I agree with CHJR and Olivia - there must be something wrong if average incomes need to be supplemented. I'd definitely agree that much of the benefits / tax credits paid is really just a subsidy on corporations and landlords, and it would be great if, as a country, we were able to discuss this sensibly rather than descending into the oft-repeated benefit scrounger / entitled argument.
Personally, I think it would be interesting to look at making a greater link between the benefits paid and the underlying cause - eg can tax policy be constructed such that landlords are impacted proportionally with the level of housing benefit? Should companies be taxed more on their earnings in order to pay for working tax credits?
Without knowing the outgoings of this person, it's hard to know if he actually needs benefits.
If his childcare is £300 a month and his tax credits are £280, then the simple solution to me is that we provide free childcare for working parents. The HB he claims is a separate issue, but with the cost of housing being so high, he probably does need that.
Tax credits should be scrapped in favour of free childcare for working parents IMO.
He is on the same money as someone on 40k by the time they have been taxed etc
Assuming the person on 40k has a student loan to pay back they get £2,324.29 a month.
So infact he get a little more!
Is the average wage a living wage? No its not. Discount the csa because it's not a reliable income so look at other things. Rent could be £900 in some places or even more, childcare £300 travel £200, utilities £200. Starting to add up isn't it and not even one loaf of bread has been bought yet. Should he need benefits to top up his wage? No but how do you force people to pay more? Increase the nmw? Can we afford that as a nation, the government is an employer too plus jobs will be cut increasing benefit payouts.
If anyone has a workable answer please can you take over the country
Only a small percentage of Child Tax Credits cover childcare - this is the working tax element and you have to have very high childcare costs or a pretty low salary to qualify for much from this. Although you receive both payments together they are worked out separately.
I think mine was an honest question because a lot of people on MN will say that 34k is a GOOD salary and bark at people who are making over 30k saying '...they wish' and yet we have a system which supplements people's incomes to quite a high amount that some MNers would find exorbitant.
There is also something highly unmotivating about a system that can so dramatically increase an employees take home. Why would companies offer higher wages or why would staff bother applying?
Expat not everyone is goady just because they are asking questions and challenging the norm on MN. That said I just moved back to Scotland and did you know they now demand that you join the Labour Party when you cross the border?!
34K as a single person living in London with a child to pay for isn't really a good salary though. It's ok for a single childless person but would still make you by no means well off.
People expect one average wage to be enough to support children nowadays though, and it just isn't. Families need two wages or one very high wage to be able to afford children nowadays.
This is why tax credits have created so many problems, because people think they should be able to afford so much more than they actually can.
You can't discount CSA, it's perfectly reliable from plenty of NRPs, as it should be.
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