The 12k figure I am using in my example is based on a full-time worker on NMW, who would earn £11,856 before tax. I rounded up to £12k for simplicity. If they are only earning £12k, they will be on full Tax Credits, be getting Council Tax Benefit to cover most of their Council Tax, and be getting Housing Benefit to cover the majority of their rent.
Then they will get FULL Child Tax Credits, and a significant chunk of the maximum allowable Working Tax Credits too. If they are a single parent, then they will be getting lots of Working Tax Credits, childcare element. THEN the child benefit too.
Under Universal Credit, they apply the elements in a particular order - Housing costs first, then what would be the 'personal allowances' that would be what is CURRENTLY Child Tax Credits and Working Tax Credits, then they add on any help you receive for childcare costs, and only then will they include the child benefit under the Universal Credit Cap - so if they get MORE than £26k with their help with housing costs (UC Housing costs element) + Personal allowance for an adult (UC Personal Allowance) + Personal allowances for up to 4 dc (UC Child Allowance)+ Help with childcare costs (UC Childcare element), then they WILL LOSE THEIR CHILD BENEFIT.
Which is likely if, say, you are a Lone Parent with 3 dc, two pre-school age, working Full-time for NMW, paying two sets of Nursery fees, plus wrap-around care for a school-age child, living in the SE, paying high rental costs too.
THEY are the people who will lose out in the change-over to Universal Credit - the very people that David Cameron promised not to hurt, those trying to do the right thing by working, but who will end up losing their Child Benefit if it takes them over the benefit cap, despite only earning £12k pa.
David Cameron seems to forget that there are LOTS of people who will lose out in this reform, hard-working people who will lose money PURELY because their EARNINGS aren't high enough to survive in the UK. NMW is WAY below a liveable wage in this Country, and has been propped up by the Tax Credits system.
Tax Credits are and were a Business Subsidy that allowed employers to pay their workers LESS than a living wage, safe in the knowledge that the state would pick up the bill. As Tax Credits have been around in one form or another for nearly 18 years, (longer than Labour were in office, incidentally - they first form of Family Credits came in under John Major), do you REALLY think tat the employers are going to rush all at once to start paying their employee's a living wage?
Or do you think that the dismantling of the Tax Credits system BEFORE wages have caught up to the figure that is a LIVEABLE amount is highly likely to be removing the one thing that KEPT people in work, but not starving or homeless?
People can talk for years about how the low-paid in the UK should be thankful for the wage they get when those in the developing world are paid about 30p a day - but do those people have to pay for rent and council tax just to keep a roof over their heads? Or do they build their own homes, unfettered by the current UK planning regulations?
What would people DO if the low-paid started building shanty towns in the UK? Contact the planning department and demand they were knocked down for being an eyesore? What if they were built on your village green, or in your local country park?
You CAN'T compare te situations in the developing world with the UK, and it DOES cost more than NMW to live in the UK, whichever way you look at it.
Or do you think that the workers in NMW jobs should be living in shacks, with no running water like those in the developing world? Is that REALLY what you want for the low-paid in the UK?
WAGES DON'T MATCH LIVING EXPENSES FOR THIS COUNTRY. Without state top-ups, people in NMW jobs are going to face the choice of carrying on in a job that doesn't cover their living expenses, without enough of a top-up from the state to do so, or give up work and be ineligible for beneffits anyway.
It's a way of getting people to work for LESS than a living wage, because the alternative is starvation if they choose to give up work.
And as for the 'transitional protection' - HA! They don't expect ANYONE to still be receiving it past April 2015, due to 'changes in circumstance' that are tenuous at best, like a child's birthday! That is despite the fact that there will still be people transferring over until October 2017...
It's just a sop to the masses that were complaining about people being so much worse off - it's a VERY short-term measure, intended to be paid for no more than 6 months per case, and the JCP staff will have guidelines to FINDING 'changes of circumstances' for each of their clients that receive 'transitional protection' to get that 'transitional protection' stopped.
It's horiffic.
SaintGeorge - only the first bit was addressed to you, as you seem to be under the impression that Universal Credit will be fine, because they ave offered to protect anyone getting Working Tax Credits - but that protection isn't intended to be for longer than 6 months after their switch-over to Universal Credit. It's all there in the Universal Credit Policy Briefing Notes, The DWP Impact Assessment for the Introduction of Universal Credit, and the Welfare Reform Bill.