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.

There would need to be a huge rise in the minimum wage or living costs would need to go back down to it being manageable to survive on one full time minimum wage.

As a single parent tax credits have been essential while my children have been growing up. I had my eldest child before tax credits came along and we literally were scrambling about looking for pennies be able to eat. It was the hardest time in my life financially.

I feel very lucky to have been able to raise my children in tax credit times, when the requirement to go back to work was when a child was 5yo and not 1yo. It was actually 12yo for a single parent when my eldest was born.

Tax credits preserved family life. These days both parents are finding they need to go back to work when they have small babies and are exhausted- parents from work and broken nights, the babies and toddlers from long nursery days.

Whether tax credits etc help the country or not is one point but on the ground they helped families significantly.

There's alot that needs sorting.
No one has the perfect answer because one doesn't exist.

Local to me someone has left a job to go else where (they wanted to work from home), they had a full time, permanent contract.
That position has been replaced with 2 0 hour contacts employees.
No sick pay, holiday pay, maternity pay, no guaranteed hours.

I would support a massive raising of both minimum wage and out of work benefits and scrapping tax credits. If your business cannot pay a living wage then it’s not a viable business - or in the case of large companies you prefer to put the revenue into dividends and executive salaries. It means a chunk of tax payers subsidising much wealthier shareholders via a tax redistribution - I cannot see how this is defendable at all.

We need to legislate against wage disparity in large corporations - where the CEOs are raking in millions and the lowest paid are on min wage struggling to heat their homes.

Someone usually comes along to say that if we make it impossible for executives to receive huge wage packets, they'll just go overseas - well, let them, in my view. Mostly this is an emperor's new clothes scenario, and the CEO on 5 million plus incentives isn't any better than the senior manager on a more reasonable 100k.

0 hour contracts definitely need to be banned.

Someone usually comes along to say that if we make it impossible for executives to receive huge wage packets, they'll just go overseas - well, let them, in my view. Mostly this is an emperor's new clothes scenario, and the CEO on 5 million plus incentives isn't any better than the senior manager on a more reasonable 100k.
Completely agree.
The government seem to of the view that to incentivise rich people you give them make them even richer but to incentivise poor people you have to make them even poorer.

The government seem to of the view that to incentivise rich people you give them make them even richer but to incentivise poor people you have to make them even poorer.

Very true.

@Kendodd

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.

This sounds like a mild version of the communist manifesto, so hard to take seriously. We have moved on from the times when people talked about workers and mill owners. The point now is that govt has the power to influence wages by not subsidizing low pay.

That’s also very hard to take seriously @sst1234. It’s naive in the extreme to think employers would improve wages if the government removed the subsidy. The gap between the haves and have nots would widen even further. The only way to improve conditions for the low paid is via legislation.

I was on them for about 6 years. Every single year I’d dread the inevitable brown envelope through the door telling me how much I’d been overpaid and how much would be deducted from next year. This was despite diligently telling them within 24 hours if there was a change in circumstances. It just took them god knows how long to update the system. One year it was over £2k!! I was so glad when I could come off it.

It’s naive in the extreme to think employers would improve wages if the government removed the subsidy.

It would need to be in conjunction with raising minimum wage - then of course they would. You’d also need reasonable out of work benefits.

P&O sacked almost its entire workforce to get out of paying minimum wage. And the government has openly admitted it can do nothing about it. Employment law in this country is pathetic.

@Maverickess

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.

This is a good idea. Move the responsibility back onto the companies. Much less expensive to do that assessing each individual, also.

The other thing that has suppressed wages significantly is companies still needing to fund historical DB pension schemes, where the contributions were nowhere near sufficient to fund what is paid out to pensioners. This leaves less money for current workers to have payrises, even though they'll receive no such pension benefits themselves.

The problem with raising minimum wage significantly however, as someone pointed out earlier, is that there is a tipping point in each sector where low skilled work in particular then becomes uneconomical. Companies will therefore invest in technical solutions and decrease their workforces.

This would be great for productivity BUT unless there is a HUGE adult retraining programme to give low skilled workers the opportunity to upskill for better work in growing sectors, what will happen to those people? And the whole education system for young people also needs ripping down and rebuilding from scratch so that people leave with the right skills.

There are as well unfortunately a significant minority who are capable of low skilled work but for various reasons can't/ won't upskill. When unskilled labour becomes even less needed (inevitable: it's just a case of how quickly this happens, not if) what will happen to those people?

@Futuroute

We need to legislate against wage disparity in large corporations - where the CEOs are raking in millions and the lowest paid are on min wage struggling to heat their homes.

Someone usually comes along to say that if we make it impossible for executives to receive huge wage packets, they'll just go overseas - well, let them, in my view. Mostly this is an emperor's new clothes scenario, and the CEO on 5 million plus incentives isn't any better than the senior manager on a more reasonable 100k.

^ I definitely agree - all that shit about wealthy people will leave - if they are that scummy they don't really like it here they are welcome to fuck off somewhere else.

My Mum was a single parent in the early 90s before min wage and the only benefit she got was £20 a week child benefit. She worked all hours as a hairdresser to get by but we were exceptionally poor because, no tax credits/UC to top her wage up and no min wage anyway so she earned fuck all. She relied heavily on tips but she told me we lived in a house with no flooring or heating for a while and sometimes she’d only feed me, not herself. I don’t remember much about that time because I was a toddler but do have some memories of walking miles and miles to her work (I had to go to work with her), she couldn’t afford a bus or car.

What is the alternative? . Without in work benefits some people would stave. I don't think you are being realistic if you think employers would pay higher wages if there were no in work benefits . Why would they? They will continue to pay low wages as they did before in work benefits weee available.
Without the minimum wage (introduced by a Labour government) they would pay even lower wages
You could say the minimum wage should greatly increase to compensate for no in work benefits . But then many businesses would close and more people would need to claim out of work benefits.

Yanbu. Also I found tc v stressful and though I'm worse I'm glad I'm no longer entitled. I was overpaid every year and had to repay

@daimbarsatemydogsbone

The whole tax and benefits system needs massive simplification but HMRC will never agree as their jobs would be at risk

HMRC don’t need to agree. Bizarre comment. They administer the tax system, they don’t devise it. That’s the government.

I still get the old style tax credits. Been on them since 2014. Never had any problems with overpayment.

I've checked out UC and I'd be worse off on it so I won't switch until I'm forced to. By which point DS should be at secondary school and I'll be able to work more hours and be less reliant on them.

I'm in your position wax. Tax credits are godsend. Not as much as much of a godsend as having a longer school day or a proper, functioning wraparound care system would be, but while lone parents with primary school children are forced to drop everything halfway through the afternoon to do the school run, it suits me fine and dandy.

I'm on more than the minimum wage and working full time.
According to some of the opinions on here, I shouldn't need to claim benefits as I'm on more than minimum wage but with the cost of living and the cost of nursery fees, I have to. UC enables me to work.

It's a safety net that working people pay in to. If it went away, a lot of us would be up shits creek without a paddle

[quote ClaudiusTheGod]@daimbarsatemydogsbone

The whole tax and benefits system needs massive simplification but HMRC will never agree as their jobs would be at risk

HMRC don’t need to agree. Bizarre comment. They administer the tax system, they don’t devise it. That’s the government.[/quote]
No it isn't - do you really think Rishi and his mates know how tax works?

HMRC and to a lesser extent the treasury run everything. When a politician wants to make changes they ask HMRC and HMRC come up with proposals.

If you'd seen how HMRC ran RTI, IR35 and various other things it would be obvious to you that they are the ones really in charge and they continue to make taxes ever more complicated on purpose.

The other thing that has suppressed wages significantly is companies still needing to fund historical DB pension schemes, where the contributions were nowhere near sufficient to fund what is paid out to pensioners. This leaves less money for current workers to have payrises, even though they'll receive no such pension benefits themselves.

what happens when younger workers retire or will they not because the pensions are so crap

At the end of the day, we have had over 40 years of neoliberalism which has led us to this point.

Businesses can run by under cutting their staff (by paying them less), because they have more power than individual employees.

Tax credits are but a symptom of that.

The system needs tipping upside down, turning inside out and starting again. Anything now is just tinkering.

Politicians in America had the right idea of calling for a global effort to tackle obscene wealth but funnily enough many other politicians just don’t want to because they benefit!

In the short term, we need more reform in terms of the way in which wealth is taxed as opposed to a penny here and there on income tax. There’s a great chart somewhere which shows how the rich have moved their money into wealth and tax systems haven’t bothered to catch up = the rest of us are fucked.