The Universal Credit

[Xenia]

Well done Iain Duncan-Smith.

1. Anyone in work will be better off than anyone not.
2. More benefits can be retained despite starting work
3. Housing benefit, income support incapacity benefit of dozens of other payments all scrapped and replaced with one simple universal credit.

This is reported in the Times. No treasury comment.

Very good news.

I do think adults who can should be incentivised to work.

I do worry about ds3 though , if it will always pay for him to work, I presume that emans he at best gets a life of subsistence?

BadgerPaws - I think as ever where the whole thing will fall down is over the cost/value of Housing Benefit. The cost of property and rents in the UK is so high with the property bubble that anyone who gets housing paid for is in a better position than someone who is on low pay and paying for their own accomadation.

My view has always been that everyone should get about £10k given to them tax free and nothing else. No tax credits, no benefits, no tax allowances and 50% flat tax rate after that. That is enough to live in a bedsit on but if you can work you can live in better circumstances. Incidentally, I think parents who pay childcare and go out to work should also be able to offset that against taxable income. That is another barrier/disincentive to work that really needs to be addressed. The Govt woudl lose no tax income if it did that so more people would work and pay for childcarers who themselves would pay tax and NI.

The whole system of tax and benefits needs changing simultaneosly to make sure incentives are aligned.

"I think as ever where the whole thing will fall down is over the cost/value of Housing Benefit."

I agree with you completely there. The high cost of housing is a huge problem in this country.

"That is enough to live in a bedsit on but if you can work you can live in better circumstances. "

So everyone would get enough to rent a bed sit but that would be it. So what about someone who's unemployed for a year? They would presumably loose their home. What about a young parent whose partner walks out on them. Is all they and their children would get be a small bed sit? What about the ill? Just a bed sit again?

And that gets to the heart of what I see as the problem with such a system. How can the benefit be low enough so as to be affordable to give to everyone and offer a real incentive to get out into work and yet at the same time high enough to help support those in society who need that support?

We don't have any Universal Benefits in this country, all require a simple trigger of some kind (age for pensions, sickness for the NHS or children for CB). This proposed Universal Benefit would potentially have more people getting it than pay for it, and I can't see how that's economically viable.

If I as a worker get £10k then I've got to be paying the Government as least £10k in tax just to cover my own costs.

According to the Daily Mail 1:5 Adults of working age are economically inactive.

So I and four others have to pay at at least £12k in tax so that we can all get out £10k and have enough pooled together to give that 1:5 their £10k.

And that doesn't consider the 15% and growing of the population who are pensioners.

BadgerPaws - it is a tricky problem for severely disabled people but for anyone who say is able bodied just going out to work to do any job on minimum wage would bring in enough to say get a 1 bed flat and anyone who had a stable relationship would have say a minimum income of £20k untaxed so that would be quiet enough to have a good basic standard of livng and anything they earned on top would be taxed at 50% but would feed straight through to a better standard of living without fear of losing the standard £10k benefit even if they took a temporary job.

If a single woman with a child was able to offset childcare against her income that would obviously help her while also removing the incentive to have children just to increase her benefits or get her a Council flat as I one heard two teenage girls (one already had a child) discussing quite openly and candidly on the bus.

Severely disabled people. I am honestly not sure about how to deal with that under even the current benefit system. From reading what Riven writes I am sure it does not work at all well but frankly people in the disability category her daughter is in are not a burden on the system. I personally think that people with severe disability who can never work should be provided for their needs under NHS care - not benefits.

i am in favour of anything that would allow somebody to take on a few days work if they can get it without being mired in a nightmare of form filling and ending up worse off.

many out of work tradespeople get the opportunity for one week or three days of work and should be free to take it and have it make them better off.

my DP earns a good salary but my income is really erratic if he lost his job our household income would become erratic and i can imagine benefit claiming being almost impossible as the situation changes week to week.

Whoever is proposing this scheme will have to do plenty of 'what if' scenarios a) to ensure that the majorty of those already in receipt of benefits & tax credits end up no worse off and b) the majority of people taking up paid employment will be better off.

WTC and CTC thresholds are already scheduled for change as per the last budget. That level, I would suggest, is the benchmark against which calculations for future schemes will be done.

Why would we want to make sure people are no worse off? We want it to be rather painful and nasty to rely on state benefits so there is an incentive to do more. I don't mean workhouses and soup kitchens but some unpleasantness so that people do make a bit more effort to create work or find jobs.

I am really confused now..what is the difference between working tax credits tapering out the more you earn and this new scheme?

i had thought that working tax credits got paid when you work over 16 hous per week and therefroe providing an incentive to work

or am I confused as to this new scheme is working out better for working people?

not being funny just confused

I know that the Daily Mail would have us believe that everyone in receipt of benefits is living the life of Riley but for the majority, it is a hand-to-mouth existence. Brown should have lost his job over the 10% tax rate cock-up. A universal benefit that left the poorest in society even worse off would make the reaction to that look like a walk in the park.

@ivykaty... I think what they are trying to avoid is the multiple add-ons problem. Once you hit the qualification threshold you get X + Y + Z + + +.... It tapers up to the threshold but if your income is a few hundred over the threshold you get nothing whatsoever. And the difference is actually quite stark.

So the threshold with tax credits is around £20k, then you still get some money on your own or as a couple but agian it tapers off and will also take into account how many chidlren you get.

Am I being really cycnical if I say it's a new scheme and will cost millions to implenemt and be very similar to the tax credits and before them working family tax benifits and before that there was another scheme when the tory party where in power

Xenia - here's a thought - do you really want carers, people with disabilities and long term illnesses, people that are genuinely looking for a job but unable to find something with which things such as child care will work with to be worse off?

There definitely needs to be something to cover the situation i mentioned above.

Where (for example) a single parent would get no help with childcare costs etc if they worked 16hrs a week - but would lose all their IS. There are quite a few 12/13/14/15hr a week jobs round here that fit in with standard childcare hours ("out of hours" care round here is extremely scarce), lone parents can't take those otherwise they would be substantially worse off. As the have to work 16hrs a week to qualify for WTC.

Yet on 16hrs a week on minimum wage they still don't earn enough (if my maths is correct) to pay any Tax or NI so what's so different about them working 16hrs a week being economically active and getting help with childcare costs, to them working 15hrs a week and being economically active - but getting no help.

I agree with BeenBeta. Surely, the only way if could be cheaper to adminster than the current benefits would be if the same amount was given to every adult in the UK - no tapering, no means testing, no elegibility criteria.

My understanding is that that was IDS's original plan.

its ok to say a benefit that would mean people would be better off in work is an improvement, but the crux is how much better off would people be?

if someone is say £10 a week better off in benefits thats not a lot of incentive for some people to go to the trouble of going out to work

sorry, I meant £10 a week better off working

Ma, why can't those who want those 15 hour a week jobs find a friend with children and each have the other's children whilst they work 15 hours a week assumgin they cannot find an out of work boyfriend to do so for them? Or live with their sister and they each share the care? In many societies where the state does not provide families and friends do.

that £10 a week would be cancelled out by loss of free school meals/prescriptions/travel costs anyhow

jesus, xenia, get real......

neverneverland, where we all have willing, eager friends who'll have our kids or a great sister in the same position as us......
if only

well I'd love to find a friend that could have my children early morning/late afternoon/during teh day.

Sadly none of my friends can do so because of their own working hours.

I have no sister to live with - and I have NO intentions of finding a boyfriend just to look after my children

You are making vast assumption about today's British socieity that are VERY far removed from scoeities where living together in large family groups is common. Countries where that is common families tend not to be spread far and wide across the entire country. Here in the UK people are spread much further.

And you are of course assuming that if they lived with their "sister" and shared childcare that they would both find work with opposite shifts.

I kjow from experience when still with exH that finding working to fit around each other is even harder than just finding a job

Well if plenty of couples find split shifts where they are on low incomes (as they do - my taxi driver with nurse wife theo ther day) I don't see why friends can't and also if it were starvation or tolerate a friend and share housing and childcare given as a nation we can no longer afford the benefits we have had, then people might indeed have just to make do and horror of horrors support family members.