A worker on £40k per year is £39 pw better off than his unemployed counterpart.

[orwellian]

I find this astounding.

A nuclear family in one of the outer London boroughs (2 parents, 2 kids) with husband sole breadwinner will have an income of £30,007 (£577 per week) on a £40k wage plus child benefit of £1,750 per year or £33 per week. Council tax is approx £30 pw. A travelcard from zone 4 into town is £43.60 per week.
Pay in full for school meals.
Pay in full for prescriptions.

Weekly total (minus council tax and travelcard) of: £536.

A nuclear family where both parents are unemployed in London would get;

child benefit x 2: £33
child tax credits x 2: £115
2 bedroom LHA allowance (outer London) of: £236 or 3 bed if children are different sexes and over a certain age: £300
income support/jobseekers allowance: £112.55.
No or little council tax to pay.
Free school meals.
Free prescriptions.

Weekly total of: £497 (2 children both same sex) or £560 (if different sexes or one over ten).

So, the household with one earner on £40k per week is at the most £39 a week better off than their unemployed counterpart and the unemployed family is not affected by the benefit cap unless they claim the 3 bedroom rate of LHA.

Work really doesn't pay does it.

We are both only in 20s. I am talking about now. I used to worry like you about living somewhere small, but now I have had another child I have stopped worrying. My two share a bed and dont seem bothered by it. I used to panic because my mum would say how will you cope etc, but thats old school thinking. We are going for a 3rd in here and will put the baby in our bed.

That's great for you Olive but it's just not true for many people. Some (lots) of people wouldn't be able to get the deposit together no matter how small the flat. It's still a huge sum of money.

Long term the benefits option is much worse.

No prospect of improving income. Income reduces once children leave. Continued rental costs for rest of life.

The person with an income can aspire to earn more money, will keep their income regardless of dependants and theoretically can pay off their mortgage (no more payments) and has an asset.

Agree that £40k is very little these days though. That is why it is not massively far above benefits level. It will also seem less because sensible people spend the excess on boring things like insurance, dentistry, pensions etc.(although these things are a squeeze on 40k), and 'essentials' like Christmas, misc. school costs, and swimming lessons.

Having bought in 2006 you have equity and a proven history of paying a mortgage. Can you really, honestly not comprehend that places you in a far better position when asking for a mortgage than someone with no deposit who has rented?

Really?

I don't believe you can't understand that. I'm teetering on saying you are being disingenuous.

Which is lawyer speak for lying.

I havent got equity from 2006 lost about 10k from then we put down 22k though so have about 12k but prices have come down so it all equals out I suppose. I did used to worry about living in a small place and having lots of kids but now I think I had unrealistic expectations based on what my parents have. I am not bothered any more, and even my mum has relaxed about it.

I suppose now with rising population it will always be like this, and most of my friends are having kids in 1/2 bed flats.

My two share a bed and dont seem bothered by it. I used to panic because my mum would say how will you cope etc, but thats old school thinking. We are going for a 3rd in here and will put the baby in our bed.

Councils up and down the country are heaving under the pressure to move families out of cramped flats into accommodation more suitable for families. A key aim of the bedroom cap is to free up family accommodation from those who don't need them (whether it's successful in doing so or not remains to be seen.)

So while I admire your spirit, you may just be lucky that your DC don't seem to be bothered because, as far as I'm aware, not having the option available of a proper bed for each child (there may be a time when they want/need one) would be frowned upon by the authorities, so not sure that's to be advocated for every starter family really, sorry.

I find it amazing that so many people think it is simple to get a promotion or new job to get above the £40k level if you are working. Most jobs earn well below that even at management level.

There are proportionately few jobs earning over £40k. So even if you are in work, get promotion you are still worse off if you cant break over that threshold.

A well paid teacher would get what? Around £38k with extra responsibility? A nurse with years of experience and responsibility would earn about £40k maybe (I really don't know). In Local Government (planners, social workers etc you rarely get above £36k even in senior role unless leading a decent size team.

So how do those of us in ordinary careers get a massive rise. I would love to know as I have been trying for years!!!!!

Most lawyers in private practice don't even earn 40k. I don't.

My mum retired from nursing five years ago, as a senior sister with departmental responsibility and acting as a clinical lead, after 30 years of service.

She earned 32k. Full time.

This is why in most households, both partners work. Most of us now depend on two incomes to live.

dialforpizza - Thats because people on benefits get council houses and they are big. Most working families I know are in 1/2 bed flats.

There appears to be some huge presumptions on all sides coming out on this thread - not in a bad way but actually in a really beneficial discussion way.

Firstly it is assumed that those in work have prospects to increase their incomes over time to quite a great extent so are therefore better off than those on benefits and not in work. That does not appear to be quite the case nowadays with the job shortages and low wages - most senior roles pay quite low.

Secondly - it is assumed that those in work will be in a better position when the kids leave home than those on benefits as they will lose a large chunk of their benefit money. However, with the job market as it is there is very little job security and people in their late 40s and 50s and 60s find it harder to get employment. Although in truth this assumption is probably true, it is certainly less certain than in the past. Many 40 - 60-70 year olds may find themselves on benefits having worked for years but lost their job.

Thirdly - there is an assumption by the public in general that benefits are too high. Yet many workers on the same level of income struggle badly to pay their way so therefore by default the benefit claimant on the same income would struggle too. Thus showing that benefits are not too high.

And I feel proud to have been part of a very good, open discussion that hasnt slagged off workers or people on benefits. It has been a good kind thread so far in general.

What Chubfuddler said.

I must admit most working families know on low to middle incomes in the private rental sector are in smaller properties than equivalent families in social housing. Having said that, this holds true for working families in social housing, so I don't think it's a low income vs benefits thing. I'd also note that some of my friends / acquaintances in council housing are living in absolute shithole areas, with loads of crime, no amenities and shitty public transport. Load of room in the shitty, randomly decorated flat with the junkie neighbours

I think oliveoctagon is on another planet.

Surely, you would need to put down at least a 10% deposit of £40k on a £200k flat? That means a mortgage of £160k (four times salary). Are there any mortgage companies still offering those sort of multiples?

I borrowed 4.25 times my salary and had a 95% mortgage when I bought my one bedroom flat in 2002. When I sold it in 2008, despite several pay rises, I would have had to put down a bigger deposit and borrowed 5 times my salary. I got on the property ladder just in time. It makes me shudder when I think about it.

Seriously? People still believe this shit? People on benefits are not the people causing problems here. Do the maths!

I for one am about to move from one place to another, rented and in the last three years, rent has gone up by 50%, yes 50% and the last time I checked, my wages haven't gone up by that much.

We did all the calculations including maybe moving somewhere where we could buy to get to our work in London but with the extra childcare costs on top and the train fares, it actually worked out the same amount of money.

We effectively feel like our hands are tied.

And it's also just a lie to believe that you can just not work and get the council list to live the life of Riley. The council house waiting list here is very, very long and if you can get HB, most landlords here won't touch you with a bargepole.

This is such an interesting thread, because it is such a complex issue and benefits scum vs everyone should get lots of money doesn't answer the issues.

olive I agree with others that you're on another planet. Bringing up a family of three in a two-bed flat is not commendable. It's overcrowding, with the attendant health issues and reduced academic achievement that go with it.

£40k is a high salary, and there really aren't that many jobs outside of London and the South East that pay that, even for experienced graduates.

This thing about people on benefits being well off, well I have some sympathy for the view. But only that I work myself ragged as a single parent, and many families can work part-time or have a SAHP because their lives are subsidised by tax credits etc.

But the kicker is that this is changing. As Universal Credit rolls out, people will not get these benefits - rightly or wrongly. Many people have been on these benefit 'packages' for years, and don't get reassessed. That will change with UC.

As an example, an exBF of mine works part-time, and gets several hundred pounds of housing and council tax benefit a month because his income is so low. There is no compulsion on him to earn more, which he could quite easily do as he's single with no dependants. Under UC, he will have to show he is looking for work on a fortnightly basis or lose some of his benefits. And I agree with that.

frogwatcher, the comparison is also based on two people claiming benefits, but only one person working. In reality I think people who attempt to support a 'nuclear' family on one income of £40K are in the minority.

However hard it might be to improve your position on £40K it is possible. It is not at all possible if you remain on benefits. (Although I agree with your general point that life is very hard for many families despite the so called economic upturn).

olive, working families live in council houses and receive housing benefit. Social housing is designed to provide housing for people on low incomes, not people who don't work. Obviously some people living in council houses are unemployed, but I know plenty of people with full time jobs living in council houses. Remember when all those people bought their own council houses back in the 80's? (or maybe you heard about it in a history lesson). They weren't doing that on their housing benefit. Where that kind of family is supposed to live now is another question. You can't get a council house if it doesn't exist.

Merrymouse - In reality I think people who attempt to support a 'nuclear' family on one income of £40K are in the minority.

You may be right. But in reality the main worker probably gets more like a gross salary of £29k and the other part time worker around £10k. Therefore it is still under £40k. I think salaries for one person of £40k are so rare outside of London that even with two workers this whole comparison still works.

I am currently a Carer for my DS but when employed was on about £40k. Tbh I think £160 a month is a huge sum to be better off by.....I know I really felt the pinch when I left work and began claiming benefits.....and I get extra as DS gets DLA.

Work DOES pay, not just financially but in many other ways too....adult conversation, the satisfaction of having done a days work and having achieved something...all leave you feeling in the land of the living.

I really miss the to and fro of work which is why I opted to do some voluntary work while DS is in school. It is only one afternoon a week but I help another person during that time and liaise with other people.

Work even voluntarily DOES pay.

Really? This kind of attitude actually boils my piss. People 'get' council houses by being on the waiting list and being in housing need. Being unemployed alone just does not cut it, I'm afraid. You need to be overcrowded (where your wait will perhaps be cut to maybe 5 years) or homeless (where you will be housed in a B&B for Christ knows how long before a property comes up) or living in dangerously unsuitable accommodation (and don't think that a bit of a damp problem or a leaking roof will cut it because it won't) before you get within even sniffing distance of a council property. They are not just handed out like sweeties along with your P45.

Council houses are allocated on need. But the lack of social housing is a real issue. We know from Decent Homes Standard research that the worst housing tends to be in the private rented sector, and that privately rented housing tends to be more expensive than social housing.

This has a negative impact on both those employed and unemployed who rent.

Ok last 3months been on 3diffrent incomes

41k gross-hubby earning=£2600 a month

rent priate 3kids, married.

unemployed 3weeks=worked out at £2100 a month.

new job half salary 21 k basic plus commison god knows how this will work on tax credits.

we were struggling before unemployed as cost of living and some debts due to car repairs.

on 21k entitled to £400 month rent and £150 a week tax credits.

so on 21k monthly income we £200 better off being on low pad job.
£300 worse off than being on 41k on paper.

But that does not take into account other costs not included in those figures is

free school ,meal for eldest £40 a month
prescription was £15 other day

need dentist but cant afford it right now as £49 plus need opticians not had eye test n years and old reading glasses are broke.

worry about rising energy bills

we cant afford to buy, cant save and cant get socal housng.

Want to move but cant afford moving costs 1months rent upfront 1000 dep[osit, rise in rent, agents fees, moving van.

Feel pretty trapped at 41k no benefits, 0 and benefits and new salary 21k.

lots people at food banks work.

we still havent had tax credits or housing paid and been month half since he lost his job.Hes not received 1st salary from new job its truly crap.

inflation rising energy, petrol and food costs plus high housing costs make things so hard.

I'm shocked that people think it's acceptable that an unemployed person can be receiving more money than the average wage, which is much less than £40k.

People working have to pay rent or a mortgage. It's funny how people conveniently forget this. All the time we hear that a large percentage of a person's benefit goes to the landlord. The same happens to someone working. Housing has to be paid for.

Journey I think the thresholds 32k for tax credits thees days

so anyone on average wage 20-30k would still come some housing and tax credits to top up their wage. so reckon sometimes evens out as 40k net think is approx 34 net.

Its the tax credits that mean employers can pay low wages as state tops up, same with hb although rents have been allowed to get too high which actually costs the state more.