A Universal Credit

[Xenia]

As I had suggested, so now treads Iain Duncan Smith - merger of benefits and tax credits so you genuinely gain if you take a job. It also helps him with his sexist view women should be home with babies.
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Housing benefit, income support, council tax benefit, working tax credit and child tax credit would be replaced by one single benefit. This could then "taper off" at a uniform rate providing a simple and transparent path back into the workforce for those currently caught in the benefits trap."

It's not quite a universal payment to all adults whether in work or not or whatever their income but it would be a welcome simplification and could help ensure people did work.

I agree that the benefits system needs to not jsut be tweaked but to be swept away and replaced with a 21st century version which reflects today's society and economy.

The welfare state worked on the presumption of the male breadwinner model of households and that the economy would provide lifelong employment for these breadwinners.

A new system needs to take into account diverse household types and the insecure nature of the labour market.

I'm interested in seeing how these changes will work in practice.

There are some people who will always be unemployable/unable to work and as a society we need to decide what we want to do with them as 'get back to work' incentives wont solve this problem and its costs.

This is the end of tax credits and child tax credits and child benifit = the only people that will get benifits will be those that are disabled or pensioners

say goodbye to tax and child benifits - they are shot

Will they really do that though? I think if they do get rid for nearly everyone, they will have no hope of getting in for the next election...

The universal credit is only one of 3 things proposed. We'll have to wait to see but it certainly could do with huge simplification and people should not be penalised if they take on work and that's what it sets out to solve as an issue.

I will wait for further details before judging but i do think benefits from one 'source' would be a far similar system for claimants and would help prevent fraud.

Currently if you are unemployed with kids you need to deal with
the council for ctb/hb
the jobcentre for is/jsa
hmrc for ctc

The idea of one set of forms, assessed once makes far more sense

I like the idea of a new PAYE system, that takes into account weekly fluctuations income .

DH's income can vary hugely from week to week, so be of great benefit to us, rather than worrying every March about whether we have over/underestimated his annual income.

Xenia - this is a god first step. However, like you I would have preferred to see

"... a universal payment to all adults whether in work or not or whatever their income".

The problem I have with the proposal is that it still involves a tapering away that, in effect, is like a higher rate of tax on the low paid.

I think it should also go further and replace the state pension as well.

A universal welfare entitlement that did not have to be claimed, assessed and monitored would allow us to disband the DSS entirely.

Yes, my plan is too radical sadly unless economists could justify it financially and enough people supported it. We could make loads of benefits office workers redundant too andcut back the frontiers of the state a bit more too. It is in fact an incentiven ot to work in a way because you get paid even if you don't.

If it were set at £200 to include all benefits and housing benefit then people woul djust have to find rooms to rent if they chose to live in expensive areas and could not afford a whole flat or even get jobs or move to where jobs are.

There are 60?m people in the ukx £200 which is £12bn a year but would need to exclude children so less. Current benefits spending in 2008 anyway was about £133bn including pensions. So my scheme would reduce the benefits bill to a tenth of what it is

Great. We could then reduce taxes too and indeed have a capped flat tax. £10k single person allowance and then say 20% tax on all income until you have paid say £50k a year and then no more tax.

Am liking this.

We will now get people saying it is impossible to pay rent and buy food on £200pw as they have 10 children and have never worked. Ithink £200 a week is quite generous and housing benefits are ridiculously high. PLenty of countries don't have them

The idea of a universal benefit is attractive to the political right because taken to its logcal conclusion everyone gets it regardless of income.

That means it is not taken away when someone goes out to work. Hence no disincentve to work. It also means taxpayers cannot complain that feckless benefits claimants are getting something they do not deserve because the tax payer and the unemployed person and the carer and the SAHM/SAHD get an equal amount of Govt money regardless.

Child benefit has always has wide political support for this reason - everyone gets it.

£200 a week quite generous

So if we took away your nice fat salary you have and gave you £200 a week to live on and pay all your bills - you'd think it was very generous would you??

what planet are you living on?

The rich are quite happy with HB the way it is because it is paying their buy-to-let mortgages.

If HB is universalised (not paid at different rates in different geographical locations) then there will be a house price crash in london/the se.

Universalising HB would help the working poor onto the property ladder, though because the money could go towards a mortgage and not just be ringfenced for rent as it is now.

Also how would this new system take into account the costs of childcare for the working poor? Free 24/7 childcare for all would be needed to accompany a universal benefit or it just wont work for families esp single parents.

I don't get a salary. I don't get sick pay. I don't get holiday pay. I don't get maternity pay. I only eat what I kill and if I don't hunt we go hungry such is the lot for most of the self employed in the UK.

£200 per adult is £400 for families with two adults living there. There are plenty of cultures where those who cannot afford it have to live with extended family There are advantages to that and may be essential for many of the poor. You could have 2 grandparents and 2 adults and may be an adultchild and that's £1000 a week on my £200 a week basic for food and rent and clothes.

I could live on £200 a week. My student children have lived on very little. It's just people have an over inflated idea of what are essentials. I only drink tap water,not even tea.

If you have £200 a week per adult including rent and food and you need childcare to work well you only work if you can make that pay. I don't see why it has to come with universal free childcare. We spent more than a whole of our salary on childcare at one point but took the longer view - clothes fro Oxfam, second hand children's toys and not buy most baby eqipment because in the next 40 years that sacrifice would pay off.

Anyway I doubt IDS will be radical enough to propose a universal payment but certainly child benefit being one such has worked very well. Most of the rich don't have buy to lets so I doubt they would be too bothered about losing HB and anyone with sense never rents to those on benefits anyway. I wouldn;t worry about that side of it.

Interesting discussion - just marking my spot.

£200pw would give every adult £10,000 pa tax free - which is the rate that the Lib Dems wanted to raise the tax allowance to, wasnt it?

foreverastudent is right though, it would = a massive price crash in housing.

Yes and it wil be going up to £7500. So you'd be taxed at my 20% rate on your income over £10k a year at 20%. Say you earned £10k you'd have your £10k from the state and then you'd keep 80% of your next £10k. You would get no tax credits or other benefits and probably not child benefit either and no housing benefit.

And most couples with children share things so that's £20k a year tax free. It would help IDS in his plan too to help housewives and househubands who want to stay home as the family would have an automatic £20k a year whch is about the average wage. So easier to stay home with children (not that I particularly want to encourage that).

I hadn't realised how much benefits cost us and how much less - onetenth my £200 a week would cost us. We can't afford the benefits we currently pay. The new capping of housing benefit will help.

you could pay rent, pay your council tax, buy food, pay all your other bills (gas, electric, water, insurance etc), and support your children on £200 a week

Those that have no extended family? Those for who childcare is limited/expensive (more than they earn - ok if you have 2 incomes in the house to "lose" one to childcare - but if it's a sole income..........)

"and anyone with sense never rents to those on benefits anyway."

you know I'm pretty damn good at my budgetting - but £200 a week for me and 3 children, with a £495 a month rent and that's extremely cheap compared to many parts of the country. I've known people pay twice that just to rent a single room in a house!

Very few people support a family alone so we're talking about £400 a week for most and I'm sure IDS would say if he were on this thread it can be better for children to have 2 parents around and possibly even live with grandparents too. No one had an entitlement to any money from the state and if it's necessary to live with extended family or a husband in order to make ends meet then so be it.
Anyway it's fairly academic as I doubt IDS will even be allowed his third option of the universal credit so I'm not hopeful so no one taking lots of money from taxpayers on this thread will need to worry too much about losing all that cash the state pays them every week which well exceeds £200 a week

tocatta - my ideal solution would deal with your situation. It would be that every adult regardless of income is entitled to a tax free £10k national income and every child a tax free £5k national income (i.e a true universal benefit).

A family of 2 adults and 2 children would have £30k per annum tax free.

After that universal benefit, no benefits and no tax allowances of any kind would be allowed. Everyone after that pays 50% tax rate on every penny earned. Tax would be levied on all capital gains including on houses at that 50% rate too.

It would do a lot to simplify the tax system and make it socially just. The gap between rich and poor would shrink.

mmm not liking that. I hink 20% is a fairer % for all tax not 50%. Don't want to pay people more because they have more babies either
I could be attempting to scrap capital and inheritance taxes entirely once the frontiers of the state had been reduced further so no CGT on anything ideally
Happy to ensure purity of the tax system though by abolition of distorting tax allowances for individuals.

Gaps between rich and poor aren't a problem. If people think they are they should spend more time in church thinking about what a sin envy is.

if it's necessary to live with extended family or a husband WTF???? So you'd rather people stayed in violent or abusive relationships??

2007 estimates said there were 1.9 million lone parents - that's hardly a small figure you're talking about. nearly 1/4 families of working age parents are single parent families.

Extended family - damn it's so long any of my extended family either lived near to me or were alive I can hardly remember what they are

ahhh now I could quite comfortably live on £25k a year tax free (if I could earn it - unlikely I'll ever earn that much when the highest paid roles in my future (hopefully) career only just tip over into the 20's.........mind I could live on that very comfortably with 3 DC as well.