Call to end "middle class" benefits

[AtheneNoctua]

news.bbc.co.uk/1/hi/uk_politics/8319646.stm

"It defines middle class as a household where every adult has an annual income of at least £15,000 and every child £5,000. "

if a family of 4 can't get by on 40k a year then something is seriously wrong. 40k per year gives a take home on £29,524pa and £2,460 pm. It may not be fantastic but I think people have forgotten how to live within their means, everybody has to pay rent/mortgage c/tax utilites these are general living costs if the bills are too much then you have to tighten belts and cut costs elsewhere.

emma, there comes a point where there's nothing more to 'tighten'.

And it isn't true that 'everybody' has to pay those things. Some people get them paid for them, which is where the 'disposable income' comes in.

emma1785. I think you will find that people struggle to get by on 40k a year because the property market went crazy and people are paying high mortgages/rents. Please tell me how we can economise further because I'm scratching my head trying to find a solution.

What scares me is the huge waste of money and the red tape that will ensure if these benefits are all means tested. I don't have direct experience with benefits systems but there have been enough threads on here it makes you mind feel like spaghetti.

My biggest fear is that it will done over a year as with CTC's- too many people lose their high paid income through redundancy or illness then find they can't get a peenny for ages as their annual income was 'high', just that it sopped dead in (usually worst affected) early Spring- we were terribly lucky that DH was made redundant in May tbh.

emma I think that's quite naive. It's not unlikely that mortgage/rent/bill costs plus childcare is £2k per month alone, leaving £460 for food, clothing and everything else

I know the property market has not helped a lot of people and current unemployment rates are making things even worse but my argument is that if we want our economy back to the way it was and to avoid similar situation in future then changes have to be made.

People that go out to work should support themselves financially this may mean smaller houses or cheaper cars but that?s just the way it is, like I said earlier, parents that do want to work should be given some incentives but not just given cash handouts to subside living costs. For people who have no other option other than to live of benefits then the govt will have to support them but I do think there should be tougher scrutiny.

My best friend has 2 children both under the age of 5, luckily for her she gets free child care from her mother but they manage to get by on well under 40k pa without any help from govt. They live in private rented housing and pay all their own bills they may not go on exotic holidays or shop at Waitrose but the children want for nothing and they are very happy. They chose not to have any help from the govt because they didn't want to rely on something that could be taken away and they actually wanted to take care of themselves without any help. We do live in the midlands where it is cheaper to live than the south but earnings are also lower here.

OK shalla dd more LOL as it is too wet to go to baby gym (wuss, me)

This is unlikely to happen- it would force rents down hugely (if half your income or thereabouts is from TC's some rents would be unsustainable, likewise the knock on effects on the banking and finance industries).

People'sexpenditure would drop causing a rise in unemployment in the retail and finance led industries dragging us back into recession (if we're out by then).

It's just another think tank really- theya re ten a penny. What I imagine will happen is a middle road; I can quite see TC limits not rising with pay rates, and access to heating payments etc should be capped for people on higher incomes regardless of their pensionable status. It's bizarre the way it is atm, frankly. OTOH maternity benefits and CB should be left well alone, peoples expenditure expands to fir their income, and it doesn't take much of a knock to push people over the financial cliff; one can pull in on the waitrose shop and suchlike, but there is a point a great many poeple are at now anyway where the next thing that goes is their mortgage / loan / CB payments. At that point society as a whole suffers immensely from the fallout.

It won't affect me massively- we're well inside those limits (though not planning on staying here!), but the reason we cope OK is becuase we have no credit cards or the like to pay off, those peoplewith them often have an income of two or three times ours and far less that is disposable.

I see where you are coming from emma. I suppose it depends on each individuals perception. DD and I live on under £12k per year and could reduce it further if I had to, so I think that £20k for the 2 of us, in our situation seems a lot. For those used to having a "high income" may have a bigger house, become accustomed to a higher standard of living than me (I dont feel poor, or feel I have a low standard of living) Maybe if it was a 2 adult household, or my daughter was older and making more demands financially, then it would be very different for me.

Your friend has free child care and lives in a cheaper area. That is why they are managing. If we lived in the midlands and had free childcare we would be managing just nicely too.

But Emma the fact they get free childcare is everything isn't it? What's two times childcare full time (sorry don't know their ages)- here in Wales with our CM it would be about £1.2K.

The differential there is surely the key? But it will be an option for fewer people if this report were followed, as more grandaprents etc would be forced to look for work also. My aprents did all my childcare, but my sisters do not ahev that luxury as my Mum isn't well enough and dad can't afford to retire at 65.

Why dopeople think scrutiny is low for benefits? We've been waiting on HB since May (a refund to pay rent borrowed from parents, we don't actually qualify now - I presume anyway- as DH has a cobbled together income again), and they still write asking for proof weekly. And as for the DLA we receive - blimey, that's a hellish nightmare to apply for!.

I do think people put a lot of store by media exposure of fraudster types but TBH I don't know how people manage all that theft, as I can't see how to do it (not that I want to you uinderstand, just couldn' figure how). The only one I can see is easyish is JSA and working cash in hand.

I'm probably being completely naieve here (never owned a house, so not quite sure how it works) but the complaint that people who rent get housing benefit seems odd to me.

If you own your house, surely you don't get housing benefit because you are not actually paying anything that isn't recoverable. If you can't afford your repayments, you can remortgage. If you can't afford rent, you have to leave with nothing. Your rent payments don't build up equity, unlike your mortgage payments.

Or have I got that completely wrong?

p.s. well aware that some peoples houses are negative equity (you put in more than you will get out) but you would still get something out if you sold. There is no way your house is worth less than nothing, otherwise I you can pay me to take it ;)

Let's be realistic about childcare costs. For full time working parents (or parent if sing parent family) school age and below will cost you about £2000 (yes two thousand) per month. More if your job isn't 5 days a week 9:00-5:00 with no travel.

So, £40k is very quickly reduced to £16k. I can't really get excited about the price of clothes or transportation required to go to work next to this figure.

agree with bobbing - the fact that your friend has free chilcare makes a massive difference. My childcare bill is £12.5k per year, equivalent to say £20k gross of my salary - so knocking £20k of your friends' £40k income makes quite a difference, doesn't it!

Exactly - crikey, if we had free childcare and lived in a cheaper area then we'd be OK too. As it is, we pay a fortune in childcare, have to run 2 cars because we both work in places where there is no public transport, have a huge mortgage simply to get a basic house and have to feed and clothe 3 kids. I had 2 part time jobs, but the funding for one was cut - which means that with the additional childcare since having an unexpected 3rd we're now nearly £700 a month down. Child benefit of £180 is a massive help to us - that pays 2 weeks of food.

If we ate out, had foreign holidays (or holidays beyond a week in a caravan), bought lots non-essentials, then fair enough. Our essentials - mortgage, council tax, utilities, food, petrol, basci clothes and shoes and childcare come to more than £2K a month.

gracie "If you can't afford your repayments, you can remortgage."

YES, that is very naive. Don't you read the papers?

Gracie you have got it very wrong.

You would remortgage if you wanted a lump sum to pay toward renovations for example but obviously your monthly repayments would go up so you wouldn't do that if you couldn't afford the existing repayments. The other reason for remortgaging would be to go with a lender who is offering a better deal. There aren't many good deals around at the moment and lenders are having to be stricter with borrowers.

If you are in negative equity you can't sell because you will be in debt with your mortgage company. For example if you have a £200k mortgage and your property is worth only £170k if you sell how are you going to pay the bank that additional 30k?

emma1785 , if a family of 4 can't get by on 40k a year then something is seriously wrong. Well they often can't, and something seriously is wrong. So, a family of 2 (not one) take home £2,460. £1,000 goes on mortgage and bills (this is on a fairly modest ex-council house btw). One child is at school so minimal childcare required for them (other than during hoildays), other child is under 2 - nursery fees come in at about £800 pm. That leaves £660 a month to feed and cloth four people. It sounds doable and probably is - until the washing machine breaks for example and assuming that neither adult has to drive or use public transport to get to work or to the shops.
Of course if houseprices hadn't gone quite so insane things would be way easier. In effect ax credits, child benefit etc are subsidising those that made a mint out of property, much in the same way as benefits used to subsidise poorly-paying, cash-in-hand employers.

I used to work part time out of the home, until ds2 was born. Once I had paid transport and childcare costs for me, ds1 and dd, I took home about £10 a week. In order to cover the costs of the childcare, I had to teach from 8:30-6:00 with one 30min break for a cup of tea and a sandwich. I kept doing it, because I felt I 'should' be working. After ds2 was born it was impossible to keep working.

I now work from home, and my kids just have to 'manage' - they have to look after themselves for 2-3 hours 2 days a week, and a shorter time on othe days. They are cared for, but it is not the quality time that they could be getting. Without the income I generate from this, we would not manage. If I had to pay childcare, then it would entirely cancel out the income.

As I said, I clearly know nothing about it. I guess I'd assumed you'd paid off that 30k already.
The system was designed that way though because most people were making a mint off buying an selling houses. It was always a gamble. I just don't think it's very fair when people resnet those who get housig benefit, considering that it in no way covers their rent which is completely unrecoverable. At least if you can ride out the mortgage Repayments you own a house at the end of it (hopefully)

See,even minimal after school childare for a family with two kids is almost £250, that's a significant cost in itself, no? And again, that's at local bargain basement rates. Fewpalces are as cheap as S E Wales (after school club £6 per evening).

This would push a lot of people into the unmanageable work bracket. A lot of women in fact. Which is no doubt part of this; when jobs are scarce get those pesky women out of the jobs amrket (OK probably not but have noticed a few overtones of that lately).

I'm a carer so working FT isn't an option for me, but i've been looking around for a PT job (with less than minimal success and that's as an experienced mature grad) and it's only the TC's etc that would make it possible. OK I am limited to inco,me structure based on the need to be here at 9 and at 3, but I think its fair to say most people will be the lower level of the pay scale anyway,and if we took away the ability for those people to afford work then what- all our childcare, TA's, HCA's vanish? Great option

It seems as if the Govt really needs to redefine a middle income, and start taking into account disposable income before it hammers families who are just getting by and no more, rather than looking simply at the gross salary. If they did away with our £180, they need to then think about other ways of ensuring that I'm not forced out of work and onto benefits in order to maintain the same income.

gracie - I don't see where you getting this notion of 'recoverable' from. Clearly rent is not recoverable. However selling home which you live in is not exactly recovering costs unless you move into a caravan or something - you still need somewhere to live!