Its about time the Govt uprated the Capital Limits for Benefit claimants

[QuestaVecchiaCasa]

www.entitledto.co.uk/help/savings

For as long as I can remember the lower capital limit is £6000.00 and the upper capital limit is £16000.00. It hasn't been uprated in line with inflation for ages. This means if you have more than £16000.00 you aren't entitled to Means tested benefits. If you have more than £6000.00 the savings are deemed to provide a 'tariff income' so you get less benefit.

I think this is very unfair on the growing number of people who have to live in private rented accommodation who can be forced to look for new homes at short notice and whose savings can quickly be used up on house moves.

Having decent savings means that you are less likely to need to turn to loans or high cost credit.

Another thing that seems unfair is that the figures are the same whether you are single or a couple. Surely the figures should reflect the fact a couple need a greater cushion of savings than a single person?

If I was a policy maker I would perhaps have a tiered system with higher capital limits for those over say, 35 or with a family.

I agree. In as far as the tiers haven't been changed in many years - £6k is worth a lot less now than it was when those tiers were initially set. On the other hand there is the argument that perhaps people with lots of savings shouldn't be claiming benefits, though. But then how are people supposed to improve their own circumstances if they are now allowed to save? It just encourages irresponsible spending. In these days of zero interest rates they could just hide it under the bed anyway!

It's a complex issue.

If they are not allowed to save...

I disagree. Benefits are currently frozen. If we are going to spend more money on benefits I would like to see a raise for everybody who is already entitled rather than this. It’s not a priority.

An awful lot of people on benefits don’t have that sort of insulation and would have to rely on the state if they lost their home. £6k-£16k is an awful lot for moving house.

I don’t think we should be prioritising people who have their own funds above people who are really struggling with no savings.

everybody is allowed to save - a reasonable amount - just not have more than £16k if you are claiming benefits. This does not apply to tax credits
If someone has that amount of money they are not on the breadline. I agree with leahjack more money for those who have literally nothing in the way of savings.

Why should the government give money to people who have significant savings? Benefits should be a safety net

Benefits should be for people truly in need. If you have savings you're not truly in need.

Benefits are calculated per household so a couple shouldn't get double the allowance of a single. With couples, there's double the chance that one of them will get a job and it doesn't cost twice as much to be in a couple than to be a single. Couples share a bedroom so rent isn't double for starters.

£16k is a lot of money.

Given the current squeeze on public finances I can think of far better things to spend money on eg the creaking schools budget

This only applies to means tested benefits - those claimed because of financial income.

There are other benefits, such as PIP and contribution-based ESA, that don’t take savings into account.

I don’t see a problem with the current savings limits for those claiming income based benefits.

Also I can’t think of anyone I know with £16k in savings. It’s a huge amount of money to have in savings

I don't really think it should change. However I rent and without movers costs the rent in advance, deposit and fees was over £5k for my upcoming move, it is crippling

I think it penalises savers rather than spenders. No one polices what money is spent on, but if you're prudent and set some aside, you are deemed to not need support.

But if you have savings then you don’t need support.

The argument that savers are penalised plagued the first years of pension credit because it was felt to reward those who were profligate. However it was the primary reason for the massive reduction in pensioner poverty.

If there are means tested benefits then there has to be a cut off

Separate argument about whether the current system is the best way to tackle poverty

Whilst I agree in principle that those with cash savings might not need benefits because they have the cash, the reality is two families in identical circumstances are family (A) who saves up carefully and family (B) who spends it all, yet the same drop in income means that family (A) have to use savings while family (B) receive benefits.
IF family (A) bought a car or a holiday then they would get the benefits...

However, family (B) have effectively paid more in tax through spending (VAT) and supporting businesses by buying stuff, fuelling wages for staff and generating profits which mean corporation tax etc, so...

I don’t have anywhere near that amount in savings and I work full time (the joy of private renting while single)

If you have savings of £16K or more you should live on that before claiming benefits, of course you should. What else are savings for if not as a safety net?

I can't see reason that someone with £16K in savings should be given means tested benefits. £6K is a reasonable sum to cover moving costs or boiler repairs etc.

Many, many people who have no entitlement to means tested benefits do not have anything like £16K in savings.

Is 16k really a lot of savings though?

I though that given most Mumsnet posters are high earners they would consider 16k to be peanuts? Genuinely curious.

Yes it's a lot of savings . If you're out of employment that that could give you 2k for 8 months.

My annual income is circa 14K before tax - and has to cover everything!
Of course £16K is not peanuts.

It may not be used for TC but is for UC...

Why should the gov support those who have earnt and had lots of cash that they have spent/wasted?
New cars/holidays/private schools.
Or moved house and put it into the capital? Or into their pension. Given away to their kids. Saving to buy.

It is quite complex.

But mainly the assumption that you could live off the money without spending the capital is strange at the moment. Interest rates are dropping again. Lucky to get 0.5-2% on saving. You would havecto have loads to get much interest.

"If you have savings you're not truly in need."

The number of people who use the benefit system indefinitely is very small, the number of people who do so with significant savings is even smaller.

Are you saying that people who fall on times of need, should spend their savings first, and then claim from the system into which they have paid? Well then, why not make everyone pay into a system of insurance so that when they fall into hard times they .... oh :)

If you have 16k of savings you don't need to claim benefits. You have that to use.
Yes I'm saying that people should use savings before benefits.

The people should pay less in tax then so they can save for a time when they might have to use their life savings ( for a house, for a child's wedding, for for education etc) and not have to start again once they get back on track.

I agree that over a certain level people should be asked to use their savings, but £16,000 ( or £6,000) is not actually a lot, and may take a long time to build back up.