Benefits are actually subsidies for big business

[Thatsalineallright]

I don't know, I'm not an economist, but I can't help feeling that all the various benefits and top-ups given to people in work are actually just subsidising greedy corporations.

For example an amazon delivery driver working full time. Can't afford to pay for the ordinary costs of living on their low salary. The gov gives various help with energy costs, housing, children etc. So instead of Amazon having to pay their workers a living wage, ordinary tax payers have to fill in the gap.

The delivery driver maybe feels a bit shit about needing the extra help instead of fully supporting themselves, tax payers are angry and complain about so-called benefit scroungers, the government have less money to spend on other areas. And then Jeff Bezos or whoever is happily pocketing billions in profits.

AIBU? What got me thinking was the announcement about energy subsidies for lower income households. I'm of course happy that people won't be freezing this winter, but the system just seems so broken.

What must the housing benefits be in London - I mean it's so unfair on the rest of the country - and though the financial industry in London does fund most of the UK tax income (those rich dudes that everyone wants to tax more) the rate of unemployed people on benefits is slightly higer in London than the rest of the country, look it up if you don't believe me.

YANBU. Sharon Graham (Head of Unite) says excess profits are unpaid wages. You could incentivise through the tax system - companies that make less profit because they are investing more in people/paying a decent wage could pay less tax than those whose workers are in relative poverty. But they won't because governments are made of rich people who want more and more, and our economic model is based on "growth".

That aspect does seem unfair, but London contributes nearly one quarter of the whole economic output of the UK.

True. It is self perpetuating though. Loads of people being subisdised to live in London so there is ample employees, and a fortune spent on trains, tubes and buses (I am always gobsmacked by the ceaseless transport there) which isn't spent on services outside London so companies just have to move there, and on it goes. Meanwhile all those benefits but so much less going to poorer parts of the country.

I’m sick of the news and government benefit bashing. What’s happened to the Billions still missing from the covid bounce back loans?? Why isn’t the government chasing these debts 🤷‍♀️

They are - suspected fraudsters can be pursued until 2032. Why did you think otherwise?

Agreed. I work for a company where everyone is paid above the living wage and we get inflation increases every year. That should be standard.

When the country is 3 TRILLION in debt, and paying over 100 BILLION in interest every single year, a few tens of billion in fraud, even when collected, won't make a jot of difference to the taxpayer. That's not to say it shouldn't be chased and collected, it should, but let's not pretend it makes a difference.

100% agree.

Unfortunately though if the minimum wage is raised then business will just stop hiring.

Wage growth has been really poor in my sector over the last 15 years. The minimum.wage has actually increased far more relative to my salary. Meanwhile the partners keep earning and more and more.

It's is fundamentally wrong that someone working full time on the minimum wage needs a government top up. That says the minimum wage is set to low but god knows how you fix this mess.

What we need to d is create a new normal and see how 'Business' responds

They have responded to a 'cheap labour' normal which resulted in a flood of coffee shops what we need now is an improvement in productivity and matching wages

Oh & we dont need to borrow on Capital Markets its just that the UK Government is stupid enough to do so.

We've needed an improvement in productivity since at least 2008, probably longer @JohnofWessex . I suspect if it was easy, it would have happened. But our short-termist governments, ginormous Brexit & Covid distractions, not to mention the death grip our economic over investment in land has means that none of it will happen anytime soon.

You are not wrong that there should be a mechanism for closing the gap between the top of the organisation and the bottom. However, it's not as simple as it may seem. People sharing profits at the top are relatively few compared to the workers at the bottom so even if we cap their earnings/dividends, there won't be enough money to go round to raise wages for lower paid workers in the company. I guess that's what they mean when they say they can't afford it.

Reminds me of a conversation I had with my mum who was seething that members of government raised their salaries and said she would much rather see pensioners get a raise in their state pension. Makes sense. Except that there are 300-odd MPs and millions of pensioners so we are talking vastly different amounts of money to finance this.

Yes and no - the problem is it’s an across the board thing -make minimum wage higher and then all those on maybe £3 an hour more in jobs that have required personal training costs/degrees etc will all expect more too and up and up - it can be a bit never ending - the idea too that everywhere else pays higher minimums isn’t always the case- very often it’s that their basic costs are less and they pay higher tax but get far more for it ( scandi countries, Germany etc)- no council tax, far more affordable childcare, lower housing costs, far more good social housing - minimum wage and professional salaries? - not much different .

The state, who are increasingly chosen by the rich, also.

Yes, I've been saying this for years. Companies employing people on 0 hour contracts with unpaid travel, holidays or sick days. The only reason people accept these kind of contracts is because of the gov top up and gov subsidised childcare.

Its even worse when you work for the public sector and wages are so low you how to claim uc top up despite working full time ! A couple of years ago the nhs trust I work for had to put a stop to charging band 2 staff for their £25 per month parking permits as it took them below minimum wage and illegal for any deductions to do this .

YANBU it is all so depressing

That or they should not be working at all and the employer finds it far too difficult to keep records.

It’s the irony of someone working for Amazon having to receive UC top
up because they’re wages are too low. Absolutely sickening. Especially when you see Jeff Bezos swanning about on his super yacht. Makes me want to puke.

What if you just don't provide the benefits though?

I understand that there is traction for equalisation of capital gains tax and corporation tax with income tax. This makes sense as there is no reason why the higher rate of income tax should be 40-45% whilst higher rate CGT/CT is only 24/25%. Especially with top up benefits, increase in pensioners, increased care costs etc this is pushing the tax burden on a lower proportion of those reliant on income whilst increasing the inequality gap between even well paid workers who don’t qualify for benefits and those with asset wealth instead of or in addition to earned income from employment.

Yes, I do wonder what would happen if for example all in-work benefits were phased out over a 10 year period. More poverty? Or would companies have to up wages in order to keep staff, since otherwise people might be better off just being unemployed and getting benefits that way.

Like I said I'm not an economist but I'm finding all the replies here really interesting. Lots to think about.

That certainly does make sense. I don't understand why this hasn't been done ages ago. I mean yes I do understand that the people running the country have vested interests in keeping capital gains tax low, but how can they get away with so blatantly favouring already wealthy people?

Factually, yes, that happens. But stopping it doesn't mean companies would pay more- they would raise costs to cover the increase, ergo the person earning enough to buy the goods (the taxpayer) is still paying, just from a different pocket.

I agree, and have been saying this for years. Companies are profiting from the state.