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

(44 Posts)
PeahenTailFeathers Mon 05-Nov-12 22:30:00

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?

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.


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 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.

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