AIBU about Tax Credits cuts,

[Weathergames]

Commons back Osborne plan for tax credit cuts
www.bbc.co.uk/news/uk-politics-34260902

I don't claim anymore because I now earn enough to support myself - because I could work and progress my career as well as my life while being a single parent.

AIBU to think this is a total travesty and so many single parents are going to have their life's devastated by this - and what about people in domestic abuse situations who will now be more unable to leave?

Maybe I some benefits scrounger - but the tax credits enabled me to be a good parent and role model to my kids - without their feckless father affecting that .... AIBU?!

But HB has been cut and capped already, how do you propose to slash it further?

Umm, on op cost, surely you realise that the issue with analysing any of it is how wide and far do you do the analysis? Most HB does not actually cover market rate in London anyway so..

What is the opportunity cost of NOT paying HB?

What is the opportunity cost of NOT paying HB?

I don't know. I think you think crime will sky rocket. The other negative consequences are already being felt by people being forced to commute from far out.

You have stated that there are some tangible benefits of HB re: community, childcare etc etc. But only those lucky enough to win the central London lottery get that benefit. The rest of the people, poor or not, must commute from the outskirts. Furthermore, I think it's odd to think that consequences of breaking up communities (and they will reform elsewhere) are so devastating, despite this being a scenario faced by most immigrants to this country.

I think the difference here is we fundamentally disagree about the role of welfare and the state. Ideally, in my view there would be no HB. There would be enough housing that even the poor would be able to afford something and certainly those working full time could.

But that would mean no poor people in central London. That's ok in my view as role of the welfare state is to provide necessities, not luxuries. That extra money can then be used to unscrew the generation that is no coming up who is going little to no state help (which people here seem to have absolutely no regard for, and are perfectly fine with). This axing of services for the young is not going to go away as this is not a Tory problem. It's a long term demographic problem.

But my impression is that wouldn't be good enough for you. We would still need to subsidise housing for people in central London in my fantasy glut of houses scenario.

Housing benefit should be capped at say £500 a month. Not at once but over a period of three or four years. What would happen to house prices and rents. They'd fall instead of being propped up by taxpayers money.

Calculating the opportunity cost is easy - as I did up thread for Kensington. When looking at corporates, you need to remember, they do all have owners. There is an argument for removing corporation tax and taxing owners more highly on income from the corporate or 'excess' cash held in the corporate. Thus those that invest in growth can do so, but tax is raised from profits paid out/not invested.

I didn't understand the conversation re: taxing corporations. Was the suggestion to tax turnover or gross profits? Many companies net profit is dwarfed by turnover. Taxing turnover would completely wipe out profits.

caroldecker, you're only including the amount the council could get from selling off its homes. It is a very large amount - K&C has 8,000 council homes, mostly rather small (the 30,000 is people, not households, and includes Housing Associations). I think it would be fair to estimate £500,000 for each flat because some really are tiny and council housing always goes for less than private, partly because it tends to have very old bathrooms and no double glazing (I know that the council housing in K&C is like that because I work there and you can see the lack of double glazing). When ex-council flats go for a fortune it's after they've been considerably improved by the owners.

So that does add up to a huge amount, £4billion! But you can't just take that cost and treat it as free money. For a start, it means no continuing income from renting out those homes. At a conservative estimate, that's about £70million a year. So over twenty years that's £1 billion 400 million lost (with no inflation).

Social housing tenants tend to actually live in their homes. They are not second homes with the second home council tax discount, and they are not left empty for large parts of the year. The tenants spend money at local shops and do jobs that would be difficult for a commuter to be able to afford. That's an opportunity cost, too.

And it doesn't include the costs of relocating people to other parts of the country. Many of them will be in vulnerable groups, elderly or disabled or with young children, and will legally (and morally) entitled to be rehoused. The other tenants have contracts that state that they cannot be evicted for no due cause. I don't think changing the law to break those contracts would be a good idea at all - it'd be terrible for private tenants whose rights would end up being even further eroded too.

The other councils will not pay for those homes - K&C would. Or even if the other poor bastard councils ended up footing the costs, the costs would still exist. So somebody would have to provide 8,000 homes elsewhere and pay for relocation costs. Let's assume a very conservative £150k per tenancy, assuming some could be housed in properties that already exist but many couldn't. That's £1 billion 600million.

Then those tenants who are on HB or unemployment benefits - which would increase after the currently-working tenants were moved away from their jobs and into areas where there are fewer jobs (which they would be, because rehousing in areas with lots of jobs would cost even more) - would have to claim HB at roughly the same rate they were getting in Kensington and Chelsea because they don't tend to be cheaper in other parts of the country. Almost all new social housing is affordable rent, which is far higher than social rent, and some would go to private housing, which also costs more. That extra housing benefit - from affordable rent, private rent and lost jobs - would eat up an awful lot of the rest of the sale value.

That £4billion quickly becomes a couple of hundred million, i.e. less than two years of the council's budget. And I am being very conservative with all my figures here and only taking twenty years' lost rent into account. If you want to, you can halve my costs, and then the council would have its budget covered for maybe four years.

Is displacing 8,000 households, many of them with people in vulnerable groups, really worth that little? All so some rich people have a shorter commute? If the low-income, disabled locals don't "need" that housing, why do the rich people?

I'm not even taking extra caring costs into account - from moving disabled people away from their support networks - and they can get expensive very quickly.

A lot of other boroughs have sold off their housing stock to Housing Associations, so any money they made from selling the properties would go to the Housing Association, a private company, not to the exchequer.

It's also not a lottery. It depends on you already living in the borough for a very long time. It also depends on you having extra needs like a disability - an able-bodied person just will not ever get a K&C council flat these days (though they might be the child or partner of someone who does, of course - wahey, lucky them!).

If it is a lottery so is simply being born in the UK rather than Eritrea - that's pure luck too, but I, for one, am not moving to Eritrea to balance things out.

I'm not for taxing turnover, and the Owen Jones article doesn't mention that.

I do wonder about giving tax breaks on capital investment to firms when coporation tax is so low and the benefits to firms of the society they are in is so high. We are not a country run for the benefit of business, or at least we shouldn't be.

Viv I'll quote from an article:

"Chartered Institute of Housing. Chief executive Grainia Long said: "We have shown that LHA does not push up rents and so it cannot be used to bring them down again. It is imperative that the government does all it can to tackle the high and unaffordable rents currently seen in the private rented sector, but this is not the way to do it and will cause more hardship in the process."

www.theguardian.com/housing-network/poll/2012/mar/06/poll-housing-benefit-rent-increase

Viv, £500 a month wouldn't get you anywhere in London, not even a room in a house in zones 1-4.

Carol, to show opportunity cost you have to show it at the "cost of the next opportunity forgone" you didn't do this, what was the other thing that we haven't spent the money on?

Red, what would be good enough for me is that people recognise that as taxpayers we subsidise huge amounts through spending/tax breaks etc etc, and that the drive to kick the poor is simply because they are the easiest target.

Fine clense London of the poor, but then MN will be full of people whinging that they can't afford goods and services cause the prices have gone up cause no one is going to travel from zone 7 to work in Sainsbury's/work as a carer/work in childcare/sweep streets/work in local government for low or menial wages, that or they will be here whinging about immigration etc etc.

I think we should actually stop London from being an effective tax haven and then that would change things, but oh no, its not fair blah blah blah.

Apologies if this has already been answered, but I've only made it half way through the thread and it's making me too angry.

Single parent, pt but doing all hours offered, care assistant.

Currently get a small amount of HB and no CTS. When will we actually have our Tax Credits changed? Will it be in April 2016 or within a month of it? I am hoping a small amount of the cut will be made up in HB and possibly CTS, but as the back-dating of HB is changing to 4 weeks max I will need to have my revised statement from Tax Credits within 4 weeks of April 2016 and I don't think this is the way it works at the moment is it?

If the tax credit cuts start from April 2016, yet renewals don't generally get sorted until a few months later, I can see a lot of people being overpaid unless they are going to reduce payments based on information they already have regarding people's earnings. I guess some people will stop receiving tax creidts altogether then have to pay some back.

Even I have never been able to live in zones 1 - 4. I don't particularly see why we full time working single parents should be working so hard (and yes I've been working today Sunday as well as all week) to ensure others can.

re £500 a month rent here is one in Wembley - closer into London than I can afford to live
www.gumtree.com/p/double-room-flatshare/double-bedroom-for-two-professionals/1136284893 It is £150 for two people so £75 a week divided by two. so each in the couple pay £325 a month and yes I accept together it is over £500 but not that much and I it was the first hit I found.

Don't know about you Grazia but I just got back from work and did so on a Sunday because I really like buying paintings.

Fuck all to do with other people and what they do

longtime why is deducting the cost of staff before calculating corporation tax acceptable to you, but not the cost of the machine they are using?

Indeed. I am sick of newspapers thinking turnover is profit. If I buy goods for £100 and sell them for £101 my profit is not £1.

A lot of PAYE employees don't seem to understand. It is not a tax fiddle that before I work out my self employed income I deduct my costs yet if you don't allow that then people are taxed on money they don't have.

Grazia - "What I am more concerned about is that councils are not properly enforcing the benefits cap and it is about double what it ought to be."

Firstly, what is your evidence of this?

However, I think there were some cases when the total cap could not be applied because the housing element (which is reduced first as far as I understand was too large and would leave any family subject to the cap with virtually nothing to live on). For example, a family living in Kensington, claiming the maximum in housing benefit for a 4 bed private rental would be getting approx £412 per week so would leave them too little from other benefits to survive.

But Grazia, surely your superior work ethic should have enabled you to do so?

I certainly love living, mortgage free, in Zone two, its fantasitc dahhhling (btw the Sunday afternoon wine in St John's Wood was awesome, celeb spotting in the bar too). DS and his DW rent just up the road in a small one bed quite reasonably. Or is it that you have certain criteria that you cannot afford in zones 1-4, many of us make allowances to live here (well not me babe cause on paper I'm minted).

I don't class turnover as profit, I do object to investments being subsidised on one hand by tax breaks, and then incentivised by low corporation tax on the other, pick one not both. I also object to blatant tax avoidance by firms.

Carol, the difference between machinery and employees is that employees pay tax on their income, ok we can write off some tax on them. Machinery does nothing but improve profit margins, its in the firms interest to invest, why do we protect their vested interests.

Right, really must get on with cooking dinner..

£412 in HB would be well over the LHA so would not happen

Thanks needs.. I couldn't find that stat.

Grazia, most salaried people pay the costs of their employment out of taxed income. Are these people "taxed on money they don't have"?

I am astounded that anyone who spends as much time on MN as you do can constantly brag about how extraordinarily hard working they are, but hey ho. Or does this count as work?

longtime so tax deduction for the energy to use the machines, but not the machines?
Employees and machines do nothing but improve the position of the company, be that profit margins or other aims.

So that does add up to a huge amount, £4billion! But you can't just take that cost and treat it as free money. For a start, it means no continuing income from renting out those homes.

don't sell it then. let it at market rates.

Here's what I think of your back of envelope computation. if it says that selling land in K&C and rehousing people isn't going to save money, then it's likely your computations are wrong.

Misti that is not quite how tax law works. If you travel at work eg a fare from work to a customer that is claimanable. If you jsut travel to your work then it isn't. Simiarly if you have a horse that needs to be looked after so you can work that's not claimable but if you buy paper as a self employed person or company that is for work that is set against profit.

I certainly would support much more tax simplicity, a flat tax at 20% combined with NI, with 20% corporation tax and 20% capital gains tax too so there was no incentive to make income gains capital gains.

Yes I could sell the house and buy a flat closer into London. I don't want to and the reason we bought somewhere out here 30 years ago was because that was all we could afford. (not interested in famous people and I don't drink so not sure if the bars of St John's wood appeal but lying in my garden listening to birds today with not much on was my equivalent).

i don't think they should get tax deductions on that either Carol, I don't get tax deductions on my transport to work, the energy that it costs to feed myself to go to work. Firms get a good deal with corporation tax.

The point being from all of this Carol, is that we all pay tax, we all pay into the system, everyone gets some kind of benefit. The more you pay, the more you benefit from society. The objections raised to HB/Ct are unfounded and picking on those who do not have a voice or much influence for the sake of political ideology. It doesn't even make much of difference to the deficit ( another economic argument for another time there), but peope are vociferous and vicious about the poor.

Cuts could be made many other places, many of those preaching free market economics and a smaller state benefit hugely from the state.

The objections raised to HB/Ct are unfounded and picking on those who do not have a voice or much influence for the sake of political ideology. It doesn't even make much of difference to the deficit ( another economic argument for another time there), but peope are vociferous and vicious about the poor.

there are very few cuts that by themselves would make a dent.

you are basically saying that 30% of the population of london has no voice (that about how many get HB). it's massive. and the 16 billion is in fact a big chunk of the deficit.

As the the £44 bn in coporate tax benefits, or the energy tax releif, blah, blah, blah, deaf ears. Or we could actually chase the tax avoiders, or we could oh god whats the point. Bring back the work house, happy now?

Bring back the work house, happy now?

again, seeing living in central London as a need? there is something in between the current and work houses.

And yes, by all means, let's go after the avoiders.