AIBU to think benefits are needed to push earners up from avg. wage to increase equivalent of 10k p.a. in salary?

[williaminajetfighter]

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.

[Maryann1975]

We are in the position that our tax credits will stop. DH works full time and I am a childminder. Due to one of my own children starting school, I can take on another child, so I am earning more and have now passed the threshold for tax credits. So I am working doubly hard, for hardly any extra money. The difference between what the tax credits were and my new raised income is tiny. I am only doing it as the new child I look after is a sibling, so I couldn't really say no. I don't feel we are well off, we get by, but there are no luxuries in our lives once the mortgage, bills, food and petrol are paid for. The system sucks.

[NeverGetTheBestOfMe]

Agreed on small business. My dh pays above minimum wage but if the government decide to boost it up alot (how do you determine a living wage as it depends on so many factors) then it would be likely a member of staff would have to go to make up the short fall. Not because he is rolling in it, tight or mean, it would be because wages are the biggest expenditure in a business usually so making that bill even bigger is not viable and as a small business it cuts into already decreasing profit there is. For small businesses especially, people forget our costs go up too. Electricy, phone, materials, all have gone up for us too in business. All the while we are trying to absorb it as best we can but a big pay rise for staff means a bigger pay cut for us. It would get to a point where things are just not worth having a small business anymore because you put your whole life into it for little reward so it would be better to just throw in the towel.

[JakeBullet]

I wonder if the HB is down to a privately rented place (didn't see the programme so I don't know) but with a salary I bought in 1100 a month and got no housing benefit at all. I paid my rent (social housing) from my salary as I did with private rent and when I had a mortgage. I reckon he has got to be privately renting to get HB on that salary.

[ssd]

does anyone know what the thresholds will be for the new tax credits?

[Wallison]

[Madamecastafiore]

Maryann why in gods name do you think you should not have to work for your money?

Do you think it is preferable that society just keeps on subsidising you?

[NeverGetTheBestOfMe]

Maryann, you see your case is exactly why the tax credit system has screwed things up in the country (not saying it is your fault.) You were earning so much, then due to your child starting school you could take in another child child minding and thus earning more so your tax credits stopped.

So you get the situation with people where they don't want to take on extra work because they can get the same, if not more, money from tax credits and they can work less for it so it costs the Government more money. And I suspect Maryann, if the child hadn't been a sibling you would have not taken on another child and been better off for it, less work for you and more money. The system is wrong and this situation shouldn't even be the case, you should be able to take on extra work and be better off without feeling like you are missing out or be better off with the tax credits.

Benefits should be a safety net and the aim should be if you get the chance to better yourself or take on more work to lift you out of the safety net you should take it, even if you are only a little bit more better off. Until that mentality is adopted we will have this problem.

Maryann - maybe think yes I am out of the safety net now and don't need to rely on top ups rather than "I would be better off not taking on the sibling because i would earn less and get more in tax credits"

[janey68]

Madame- to be fair I don't think Maryanne was complaining about working harder: she was pointing out the ludicrousness of a system which means she will be working harder (ie taking on one more child to have charge of all day) yet because she'll reach a particular threshold, she'll lose tax credits and be only marginally better off


This is the crux of the issue. The vast majority of people need a financial incentive to work. Yes, there will be some genuinely altruistic people who choose to work simply because the reward is enough in itself, but the vast majority are incentivised by knowing that if they work more hours, there will be some tangible advantage, and that if they take on more challenging, harder work, there will be some tangible advantage. If you know that by remaining in an easier job or working fewer hours you will end up only marginally better off, where is the incentive?

People's natural instinct is often to think short term- and I would say this is even more the case in the 'instant gratification' culture we now exist in. And people measure their financial well being by the money they actually have in their pocket- whether that's through tax credits, housing benefits or the fringe benefits like free prescriptions, dental treatment etc which stack up massively.

I am in my 40s and long enough in the tooth and in the workplace to know that actually, it's really short term to think like this. I know that all the tax credits in the world will mean jack shit when they are done away with, or when I come to retire and actually want a reasonable standard of living. But many younger people don't think like that and in a way you can't blame them because if they've been brought up thinking of tax credits as the norm, they honestly have no conception of what life will be like without them.

So, it's easy to blame the individual for not working 5 days instead of 3 etc but actually the system is the real problem here, which encourages that way of thinking- and which won't think twice about dropping people in deep shit when tax credits are done away with and when these people's children grow up so CB won't be received and when god forbid these people want to maybe retire at 65 or 70 and realise they are up shit creek

[NeverGetTheBestOfMe]

janey - are the scrapping tax credits all together then? I know there is Universal credit coming in to force but is that all part of what was tax credits and other benefits merged into one?

[DuelingFanjo]

Fuck me! Do people really get Housing benefit when they Ren £1,600 a month? What am I doing wrong! I am all for the benefit's system, vote labour, hate the cuts but it does make me a bit sick to know that some people are getting £10,000 top ps when I am on less than the average wage.

Am I missing something.

[janey68]

Never - I strongly suspect tax credits won't exist in any recognisable form in the not too distant future, just as I doubt state pensions will exist. The country cannot afford these things- it's not 'real' money, it's just spending on a massive scale on a national 'credit card' and it will all have to come crashing down at some point.

[NeverGetTheBestOfMe]

Watching parts of the Labour conference and thinking about them getting in next time scares the crap out of me. I truly believe if they had won in 2010 we would have gone bankrupt. No one like cuts but Labour just do not know how to manage finances and they think throwing money at people and encouraging people to work less actually helps people when actually it makes things worse.

[janey68]

It's just short term, vote winning thinking. Make life seem a bit easier for People in the short term, and then leave them shafted in the long term.

[dashoflime]

"Housing benefit - 200"

This bit is key^^

Housing Benefit is really steeply "tapered" so someone on Housing Benefit will be paying 65% of their income above benefits level on rent. Housing Benefit pays anything not covered by that.

So another way of looking at the problem would be to say that rents in the south east are too high for anyone to afford on an average wage.

[celestialsquirrels]

minimum wage should be higher too
and unpaid internships should be banned. or time limited - maximum 2 weeks work experience otherwise paid at minimum wage or above

this whole idea of making young people work for free is anathema to me. and making taxpayers subsidise working people because employers don't pay enough to raise full time workers above the poverty line is completely nuts

20 years ago we had no tax credits and the world didn't end

[sydlexic]

Why do they not collect child support through the tax system, from the NRP. With the same penalties for non-payment.

I know someone who receives £1600 from her ex DH, he is a banker. This is free as she gets all the benefits and tax credits and works 24 hrs a week. It is a crazy system.

[HoopersGinger]

Well said ophelia. Do not get thee to a nunnery.

[ivykaty44]

So another way of looking at the problem would be to say that rents in the south east are too high for anyone to afford on an average wage.

and this is due to council housing being sold in the 1980's and never replaced, there is a small amount of housing association but this is tiny in comparison to the housing that was sold.

you can't though count child benefit and child maintenance, CSA payments are not regular and can stop at any time. CB is received by someone earning up to 50 odd k per year

[utreas]

Its just evidence of the excesses of the welfare system giving people money we don't have

[tombliboouun]

& whose idea was it to sell off the council housing in the 80's?

Margaret Thatcher of course!

Employers need to pay more, nmw raised, more full time positions, personal tax allowance raised, funded hours for childcare increased to 25hrs+ & tax credits scrapped. As a result most would take on more hours & be able to 'plan ahead'. I know I would. I would love to be off tc, work full time & have more money in my pocket.

[tombliboouun]

Why are tc recipients made out to have low aspirations? That's just bs. My aspirations are stifled by the cost of childcare & the fact most jobs offer obscure part time hours!

[utreas]

The national minimum wage cannot just be put up and I don't understand why people keep suggesting that it is. If we put the nmw up then we increase the labour cost of our low skilled workers beyond that of others countries, what extra value added do our low skilled workers offer that outher countries do not which can offset this naegative effect on competitiveness.

[Sparrowp]

For jobseekers the support is so bad you are literally starving and can't turn the heating on - and then, when you get a job, then they start throwing money at you ?!?

You need it when you are unemployed - because you dont have a wage FFS!

But now in london, even a single person on £34000 would struggle to rent a single room with no benefits. The whole system is nuts.

[racmun]

The system is crazy and it's going to be a long painful road to fix it.

We are heading down the road of government subsidy for everything, housing, income, childcare, feeding children at school where will it stop. Economics is based on supply and demand the benefits system at the moment has put this out of balance and it needs to be addressed urgently.

From what I know the labour government bought in these credits and have created a house of cards. There does seem to be a culture of entitlement these days, not sure if its the rise of the celebrity culture/ social media that has encouraged it but some seem to think that having a nice lifestyle is a right. I was taught you have to work hard for nice things but you also need to make the right life choices. I heard a comment on the radio the other day 'everyone once a range rover sport but no one wants to work for it'. This isn't a stab at benefit claimants but generally the whole of society lived on the back of debts which has artificially inflated the cost of living which means that people need to be subsidised just to survive.

I'm sure there are enough clever economists out there that could fix the system but no political party has the balls to do it.

I think that it is an urgent issue in this country that needs to be depoliticised (a bit like the back of England was) so that a sensible long term action plan can be put in place.
The whole CSA thing is a red herring. DH's ex get £700 a month for step son, it's as reliable as long as dh keeps his job. On what ex earns she still gets cb, we don't- we're above the threshold but what if that £700 a month took us in effect below it- how is that in anyway fair??

[janey68]

Tombliboouum - I agree with your post except I don't think anyone is suggesting people on wtc All
Have low aspirations. What we are saying is that the system is a disincentive for people. Many of us see examples around us in RL... Eg friends (with school age children) who will only work 3 days a week - and I'm talking about situations where extra hours are available but would not result in the employee being much better off because what they would gain in wages would virtually disappear in loss of tax credits. Ditto for people who have the skills to aim for better paid work ( maybe a promotion to managerial level) but they see that extra hours and degree of challenge won't result in being substantially better off

How on earth can a system operate people can choose to be 'underemployed' and get topped up just so that there's only a marginal difference to what they'd get through working more?