AIBU to think that Tax Credits and subsequently Universal Credit were the worst thing to happen to the UK?

[BookkeeperBobby]

I can see how it was well intentioned as a mechanism of redistributing money, maybe, in the short term. But 22 years down the line all it means is that employers pay less, productivity drops, UK workers are worth less. Add quantitative easing into the mix which means that anyone with any money buys up assets eg property, while at the same time wages stagnate due to the above, and the country has become a low wage economy with a high cost of living. Which in the face of energy price rises that have to be paid with real money, not just shuffling benefits around, is a disaster.

And you cannot just choose not to work and be on benefits. That's not what happens.

Spot on OP. Tax credits or any form of topping up low pay is a way to artificially suppress wages. It means employers do not need to pay the going rate because the tax payer will pick up the tab. It means that they do not need to work on productivity, invest in skills or technology because low paid workers are aplenty. It means lower productivity in the economy, making everyone poorer. All the while the skill gap grows and poverty perpetuates itself.
Tax credits were a way for nu Labour to throw crumbs and charity at people rather than to create an economy that pays well. Not surprising that all labour policies lead to deep rot in the economy. Unfortunately the Tories did not course correct and the low pay culture and worse standard of living is becoming a generational problem.

Pre tax credits overtime existed.
Which means doorstep loans could be avoided by asking for overtime.

No one does overtime now. Certainly not for time and a half.

More part time working means more companies avoid national insurance payments too. And effectively tax credits subsidise companies allowing bigger profits.

[quote Villagewaspbyke]@BookkeeperBobby - what are you talking about? You think wages would rise if we cut off welfare? And then people have no other choice but to work for money? Then you think wages would fall? Emm not likely.

I have lived in places without welfare benefits. Wages are not high. It is not some sort of workers utopia. Quite the opposite.

If we cut off all welfare benefits wages would definitely fall. But there is a minimum wage. Do you think the poor should just starve?[/quote]
Supply and demand? It’s a very simple concept. As shown by in the last two years. Number of workers falls, wages go up.

I’d be a skeleton if it wasn’t the UC I work gave bills just like so many others . Thank God for benefits

Interesting thread

We used to really rely on tax credits up til a few years ago.
Haven't needed them or been eligible for years

It was awful if you got an overpayment though, a couple of times we had to pay back about 2k and it was inexplicable how they'd decided we owed it

The thing that destroyed the link between jobs and decent pay was Thatcher’s wholesale demolition of our heavy industry. Add to that selling off social housing and not replacing it and privatising everything in sight, in tandem with weakening unions and here we are.

@Blossomtoes

The thing that destroyed the link between jobs and decent pay was Thatcher’s wholesale demolition of our heavy industry. Add to that selling off social housing and not replacing it and privatising everything in sight, in tandem with weakening unions and here we are.

Yup

I think tax and benefits are all a bit of a red herring tbh. The issue is low pay and the rich hoarding profits that their workers made for them. I don't really know how you make them distribute profits better.
I don't believe taking away WTC would make bosses pay more.
I remember reading that one of Philip's Greens super yatchs cost the equivalent of the tax credits his workers were paid because they couldn't live on the wages he paid. If tax credits didn't exist I very much doubt Philip Green would have gone without his third super yatch and paid his staff more instead. His staff would have just been even poorer.

@Blossomtoes
Yes I think you're right.
All publicly owner stuff from the past is now owned by the rich, even social housing, much of it is owned by private landlords. The tenants living are the same people would would have been living in them when owned by the council, they would have a security and cheap rent. Instead they have insecure housing and high rent making someone else rich.

You're absolutely right OP! Tax credits and housing benefit massively subsidise low wages so that big business/rich landlords can make huge profits on the backs of taxpayers. Brown was an absolute idiot.

It means employers do not need to pay the going rate because the tax payer will pick up the tab

That’ll be those same tax payers out working then, right?

I also think it pertinent to point out that more women than ever left abusive partners when tax credits were introduced. Thousands of children not having to watch their father beat their mother to a pulp is fucking priceless.

By contrast, women with more than 2 children are now stuck without that much needed financial support, and who knows how many are fearful of leaving because of not being able to manage financially.

I think the minimum wage needs to go up and not by 20p or something stupid.

Let's have a minimum wage that can actually be lived on at ft hours, without the need for in work benefits, and then when companies start bleating they can't afford it, tell them they can apply for the money instead of individuals to bolster their wages to a proper level, but they'll be means tested and if they're making a shit tonne of profit or overstretching themselves (not 'living within their means') then they get told no.

YANBU

For those blaming Thatcher, obvs she was a horror but she left office 32 years ago. That's pretty much two generations and we had a labour government in power for thirteen years in the meantime. They achieved a landslide victory and had a huge majority. They could have done what they wanted in terms of addressing wealth inequality and no one would have been able to stop them. What they did was put in place a mechanism to subsidise low paying employers and create a rentier economy with guaranteed income for landlords. That's a Labour government.

@BookkeeperBobby

For those blaming Thatcher, obvs she was a horror but she left office 32 years ago. That's pretty much two generations and we had a labour government in power for thirteen years in the meantime. They achieved a landslide victory and had a huge majority. They could have done what they wanted in terms of addressing wealth inequality and no one would have been able to stop them. What they did was put in place a mechanism to subsidise low paying employers and create a rentier economy with guaranteed income for landlords. That's a Labour government.

It's a Labour government from the 90s.

Thinking has moved on from then (thankfully!) Furlough for example, would not have been considered by the Tories 30 years ago. Politics evolve especially during crisis events and I'd argue the cost of living currently is definitely a crisis.

@BookkeeperBobby

For those blaming Thatcher, obvs she was a horror but she left office 32 years ago. That's pretty much two generations and we had a labour government in power for thirteen years in the meantime. They achieved a landslide victory and had a huge majority. They could have done what they wanted in terms of addressing wealth inequality and no one would have been able to stop them. What they did was put in place a mechanism to subsidise low paying employers and create a rentier economy with guaranteed income for landlords. That's a Labour government.

Yes she left office 32 years ago after comprehensively destroying the fabric of this country. The damage she did was irreparable. It’s only with hindsight that I can see the extent of the devastation she left behind. Living through it, you were too close to see how appalling her legacy would be.

The Blair government for all its faults did the best it could. Money was poured into the NHS, Surestart, tax cuts for the poorest paid, minimum wage.

Of course there were things it should have done - abolishing right to buy and starting a massive social housing programme would have been great. The thing they had to bear in mind is that one term isn’t long enough for real achievement and they needed to get re-elected.

No government is perfect but, having been an adult under both Conservative and Labour governments, my perception is that Labour governments make society more equal and support the people at the bottom. Tory governments do a reverse Robin Hood.

They were introduced to try and close a gap and reduce poverty. Along with a reforming government and the NMW TC were a start.
Then the Conservatives came in. IDS introduced UC and the idea of closing the gap was lost. Businesses were able to use TC to avoid paying a decent wage. The gap increased. Unions were hobbled. Employment law was scalped.
And here we are.

I think people conning the system has got to be a major issue and one that doesn’t seem to be spoken about. I’m all for people being on benefits for a valid reason or for the short term to prop them/their families up. That’s not who I’m getting at in the slightest but I know of someone who for the last 20 years has claimed disability benefits, drives around in a virtually brand new car and has absolutely no disability whatsoever. Not only is he claiming this money fraudulently, in addition to this he is wasting massive amounts of time at the local GP. Him (and his wife - his ‘carer’) are there multiple times every single week. They get blood tests, scans and all sorts just as a day out! It must be near impossible for the GP to tell these people to ‘beat it’ but I’m guessing he goes so that he has fake evidence of his disability from pretending to have a sore back only when it suits. I try not to let this person (almost a relative) bother me but the other day I tried to get my baby a doctors appointment and there was no one available. This went on for 2 days until I was able to speak to someone and we ended up sent straight to the hospital due to how sick he was. Meanwhile, that pair would have been in there moaning about a pain in their ankle or something, it infuriates me 🤦🏼‍♀️ They have no concept of the fact that everyone else has spent the last 20 years working! I don’t even know how you’d police this but surely people like this can’t just do as they please and con the system for an entire lifetime while we pay for it

Every thread like this is the same. If companies pay more then costs go up and it's a vicious circle as you don't gain from the higher wage.
The idea behind tax credits was to stop the increase in costs so people actually benefit. The problems started when they started to fiddle with it. Now nobody can work out the ridiculous calculations, people are underpaid or overpaid their credits and no longer better off working. It's farcical.
The original tax credits helped many people.

If it were not fit the tax credits, my son and I would have been living under a bridge 3 months after my husband and I split.

I can assure you that I would be dead and my son a fully independent adult before anything is done to make salaries fair. So waiting 3 months for tax credits to kick or waiting 3 generations for adequate salaries was a no brainer

My salary was not screwed up because tax credits existed, the tax credits had not been in place for long enough for that to happen. They came in to solve the issue for thousands of people who were already underpaid.

@sarah13xx

I think people conning the system has got to be a major issue and one that doesn’t seem to be spoken about. I’m all for people being on benefits for a valid reason or for the short term to prop them/their families up. That’s not who I’m getting at in the slightest but I know of someone who for the last 20 years has claimed disability benefits, drives around in a virtually brand new car and has absolutely no disability whatsoever. Not only is he claiming this money fraudulently, in addition to this he is wasting massive amounts of time at the local GP. Him (and his wife - his ‘carer’) are there multiple times every single week. They get blood tests, scans and all sorts just as a day out! It must be near impossible for the GP to tell these people to ‘beat it’ but I’m guessing he goes so that he has fake evidence of his disability from pretending to have a sore back only when it suits. I try not to let this person (almost a relative) bother me but the other day I tried to get my baby a doctors appointment and there was no one available. This went on for 2 days until I was able to speak to someone and we ended up sent straight to the hospital due to how sick he was. Meanwhile, that pair would have been in there moaning about a pain in their ankle or something, it infuriates me 🤦🏼‍♀️ They have no concept of the fact that everyone else has spent the last 20 years working! I don’t even know how you’d police this but surely people like this can’t just do as they please and con the system for an entire lifetime while we pay for it

Even the DWP admit the number of fraud cases on disability benefits is tiny (think it was around 0.5% for fraud and error last time I read something).

Under claiming is actually a bigger thing, but that hasn’t stopped the anecdata of someone knowing one person being used to decimate the benefits and make the system brutally difficult for people to navigate.

@mumda

Pre tax credits overtime existed. Which means doorstep loans could be avoided by asking for overtime.

No one does overtime now. Certainly not for time and a half.

More part time working means more companies avoid national insurance payments too. And effectively tax credits subsidise companies allowing bigger profits.

People definitely do overtime where I work. Those are blokes who don't get tax credits.

Most people getting top up benefits are single parents who can't work overtime due to childcare issues. Where is my 8yo supposed to go while I do overtime, tell me? I work 28 hours which is as many as I can until he's old enough to get himself to and from school and be home alone for a couple of hours.

Inter generational wealth- while rightly belonging within the family, many people who for whatever reason do not have the privileged have to work so much to earn a fraction of the wealthy. Nothing to do with class either.