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benefit means testing for savings
Comments
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I follow the logic - BUT, if people have children and they then lose their home (as they werent allowed to use their redundancy money to pay off the mortgage) - then Society has to pick up the tab, as they turn round and demand that the State houses them in a bed and breakfast or whatever - whilst they wait to be allocated Council housing! Then also - in fairness - childless people shouldnt be discriminated against - they also should have the right to use redundancy money to pay off the mortgage - even though the State doesnt give a darn whether they are housed or no.
You can use capital to make your monthly mortgage payments. What you can't do is make extra payments to deprive yourself of capital in order to be able to claim more in benefits.0 -
ok then this is asumming they know you had the assets which they proberly do anyway but they are only asking what you had in the last 6 months and in this scenario you paid off the morgage before the 6 months starts!!
There is no limit to how far back they can check. If you deprive yourself of assets in order to claim benefit this is fraud.0 -
On the "spend spend" front - I tend to get rather resentful (and I guess I'm far from the only one) that the only way to be sure and certain that I am the one who gets the use of my hard-earned money is to spend it as fast as it comes in. Personally - I would prefer to know that it was "safe" to save it - as it couldnt be taken off me in the event of unemployment/having to claim benefit happening. The trouble is that whilst there is that risk - then I have to spend it all instantly to protect it from being treated as "capital" and losing income as a result!!!!! I dont want to spend/spend/spend - I dont agree with spending money for the sake of it. Personally - I just want to put whatever spare income I have into savings - just in case I ever need it - but, in actual fact, I expect those savings to go to charity when I die (so the point of saving it, as far as I am concerned, is the mental security of knowing its there just in case I myself need it). So - how daft is that that I feel forced to either spend it all NOW or give it away NOW? I could understand - and totally agree - if I were wealthy. However - I am just an ordinary person in the street on a low salary (ie not much more than National Minimum Wage).
You keep repeating the phrase about "if you need it" but surely if you're made redundant, this is when you need it?
It seems very straightforward to me, you save money for a rainy day, the rainy day (redundancy) arrives and there's your savings, ready to provide for your rainy day. If it keeps raining for too long and you deplete your savings then the benefits system cuts in. I really can't see what's wrong with that.
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Oldernotwiser wrote: »You keep repeating the phrase about "if you need it" but surely if you're made redundant, this is when you need it?
It seems very straightforward to me, you save money for a rainy day, the rainy day (redundancy) arrives and there's your savings, ready to provide for your rainy day. If it keeps raining for too long and you deplete your savings then the benefits system cuts in. I really can't see what's wrong with that.
Most people define "income" as the money that is used for bills and everyday living expenses and "savings" as the money set aside for a "rainy day". Therefore savings arent there for the purpose of paying bills/everyday living expenses - that comes from income.
"Savings" are there in case of:
- expensive health care problems coming up - and the NHS not dealing with them adequately (eg an operation is needed and the NHS tells you that you will be put on a waiting list for it - but you cant wait because the need is urgent). I would say the state of the NHS is THE single biggest reason why people need savings - as one can never be sure of what health problems might be round the corner. I have personally witnessed someone very nearly dying because they didnt have the money to pay for a vital operation privately - so had to wait for the NHS to do it - and they postponed it and postponed it and postponed it.....
- maintenance bills on the house (the boiler going, the roof going, etc)(one cant turn round to an old house and go "I know your roof is leaking and needs replacing right NOW - but you'll have to wait as the DWP took the money I had saved for you whilst I was out of work"). It doesnt work like that - you would have no option but to get on and replace that roof instantly. If the roof went whilst you were out of work you could get a grant - but what if it went the week after you got back into work? What if the central heating stopped working? (at any time - even if one was out of work at the time) - no grant available to my knowledge.....
- maintenance bills on the car (if applicable)
- unexpected expenses generally (eg spilling something ineradicable over an expensive item of clothing like your coat - so needing to buy a new one).
I've been unemployed and known the relief of having savings to go to when a large unexpected expense came up. I've been employed and known the worry when the house needed a large amount of money spent on it INSTANTLY (whether I had it or no) - and I had to get into debt to provide that money (as I hadnt got any savings left).0 -
Most people define "income" as the money that is used for bills and everyday living expenses and "savings" as the money set aside for a "rainy day". Therefore savings arent there for the purpose of paying bills/everyday living expenses - that comes from income.
You may choose to use this definition of what your savings are intended to cover but neither I nor the benefits system accepts it, fortunately. Considering that you're allowed to have £6,000 savings without it affecting benefits, that would cover quite a number of new coats, car repairs etc. If you had to be penniless before getting benefits then I might agree with youbut that's not the case.0 -
Oldernotwiser wrote: »You may choose to use this definition of what your savings are intended to cover but neither I nor the benefits system accepts it, fortunately. Considering that you're allowed to have £6,000 savings without it affecting benefits, that would cover quite a number of new coats, car repairs etc. If you had to be penniless before getting benefits then I might agree with youbut that's not the case.
I think you're entirely correct on the letter of the law but I also think that your clear belief that this is a fair and reasonable system deserves to be challenged.
Firstly, there are lots of reasons people might save, including to use as deposit for a house, in anticipation of starting a family, to pay for a childs private tuition, etc. I doubt many people save in order to be less of a burden on the tax payer should they find themselves out of work.
Secondly, the real issue here is that a fair system of means assessment would be either
a) based on income with no regard to capital or assets of any type except in terms of any income they might generate
b) based on income and capital including all equity in property (even the primary residence) and all possessions (cars, yachts, tvs) and most importantly offset by any debt
In the case of (a) there is really no need for a deprivation of capital clause at all.
In the case of (b) a deprivation of capital clause is needed but in the same way that someone is not entitled to purchase a possession (car, yacht, tv) from savings anyone already owning an equivalent possession should be required to sell it (or borrow against it) before they are entitled to claim.
The proper treatment of debt is also important. Clearly there is a difference between someone who has £16k in savings but owes £50k and someone who has £15k in savings and no debts. Otherwise, why don't we just make job seekers allowance a loan that has to be repaid and on which interest is charged?
Just in case the above is not self-evident I put forward a couple of examples:
John Smith
Is made redundant from a highly paid job.
Owns a £1m property mortgage-free and it is his primary residence.
Owns a £100k car which was purchased as part of his normal extravagant lifestyle.
Has no savings.
Is (at least according to the letter of the law) entitled to job seekers allowance.
Jane Fairfax
Is made redundant from a poorly paid job.
Owns a £100k property but has a £150k mortgage.
Has no car.
Has £20k which she has chosen to keep in savings because she has a tracker mortgage at 1% interest.
Is not entitled to job seekers allowance and paying down her mortgage would be regarded as deprivation of capital despite the fact she is in negative equity.
Fred Jones
Is made redundant from a moderately paid job.
Owns no property.
Has no car.
Owes £15k in student loans.
Has £17k in savings.
Is also not entitled to job seekers allowance and is not entitled to pay off his student loans either (despite the fact that if he had done so gradually during his employment then that would have been allowed). He is also not entitled to buy a car (although again if he happened to have bought one as part of his normal lifestyle then that would have been allowed).
Mark Wallace
Is made redundant from a moderately paid job.
Owns no property.
Has no car.
Has no debts.
Has £17k in savings.
Was not able to take long periods away from his job and decides to take the opportunity to travel the world. Even this poor sucker is technically guilty of deprivation of capital if he attempts to claim job seekers allowance when he returns with no money. You have to wonder what exactly he IS supposed to live on under those circumstances? Presumably you think he should just be thrown in jail though I'm not sure thats actually going to save the tax payer any money.
So, we have a system where it always pays to borrow as much as possible and never have any savings. The result of this is an economy based on debt which, when you think about it, isn't really an economy at all - its just a mass of people living beyond their means. This leads to the banks issuing loans amounting to 5 times the actual amount of currency that exists and finally, lo and behold, a crash of monumental proportions. And just in case some of the savers still haven't got the idea yet, they can watch their savings evaporate as the government prints all the money needed to pay the banks back the money they invented (through issuing debt).
The tax and benefits systems are NOT designed to be fair. They are the result of a succession of individual policies each designed to win votes or party funding from individuals or sections of the population.
Seriously, there are going to be riots in the streets before this recession is over if certain attitudes don't change.0 -
greatbritishdepression wrote: »I think you're entirely correct on the letter of the law but I also think that your clear belief that this is a fair and reasonable system deserves to be challenged.
Firstly, there are lots of reasons people might save, including to use as deposit for a house, in anticipation of starting a family, to pay for a childs private tuition, etc. I doubt many people save in order to be less of a burden on the tax payer should they find themselves out of work.
Secondly, the real issue here is that a fair system of means assessment would be either
a) based on income with no regard to capital or assets of any type except in terms of any income they might generate
b) based on income and capital including all equity in property (even the primary residence) and all possessions (cars, yachts, tvs) and most importantly offset by any debt
In the case of (a) there is really no need for a deprivation of capital clause at all.
In the case of (b) a deprivation of capital clause is needed but in the same way that someone is not entitled to purchase a possession (car, yacht, tv) from savings anyone already owning an equivalent possession should be required to sell it (or borrow against it) before they are entitled to claim.
The proper treatment of debt is also important. Clearly there is a difference between someone who has £16k in savings but owes £50k and someone who has £15k in savings and no debts. Otherwise, why don't we just make job seekers allowance a loan that has to be repaid and on which interest is charged?
Just in case the above is not self-evident I put forward a couple of examples:
John Smith
Is made redundant from a highly paid job.
Owns a £1m property mortgage-free and it is his primary residence.
Owns a £100k car which was purchased as part of his normal extravagant lifestyle.
Has no savings.
Is (at least according to the letter of the law) entitled to job seekers allowance.
Jane Fairfax
Is made redundant from a poorly paid job.
Owns a £100k property but has a £150k mortgage.
Has no car.
Has £20k which she has chosen to keep in savings because she has a tracker mortgage at 1% interest.
Is not entitled to job seekers allowance and paying down her mortgage would be regarded as deprivation of capital despite the fact she is in negative equity.
Fred Jones
Is made redundant from a moderately paid job.
Owns no property.
Has no car.
Owes £15k in student loans.
Has £17k in savings.
Is also not entitled to job seekers allowance and is not entitled to pay off his student loans either (despite the fact that if he had done so gradually during his employment then that would have been allowed). He is also not entitled to buy a car (although again if he happened to have bought one as part of his normal lifestyle then that would have been allowed).
Mark Wallace
Is made redundant from a moderately paid job.
Owns no property.
Has no car.
Has no debts.
Has £17k in savings.
Was not able to take long periods away from his job and decides to take the opportunity to travel the world. Even this poor sucker is technically guilty of deprivation of capital if he attempts to claim job seekers allowance when he returns with no money. You have to wonder what exactly he IS supposed to live on under those circumstances? Presumably you think he should just be thrown in jail though I'm not sure thats actually going to save the tax payer any money.
So, we have a system where it always pays to borrow as much as possible and never have any savings. The result of this is an economy based on debt which, when you think about it, isn't really an economy at all - its just a mass of people living beyond their means. This leads to the banks issuing loans amounting to 5 times the actual amount of currency that exists and finally, lo and behold, a crash of monumental proportions. And just in case some of the savers still haven't got the idea yet, they can watch their savings evaporate as the government prints all the money needed to pay the banks back the money they invented (through issuing debt).
The tax and benefits systems are NOT designed to be fair. They are the result of a succession of individual policies each designed to win votes or party funding from individuals or sections of the population.
Seriously, there are going to be riots in the streets before this recession is over if certain attitudes don't change.
Well, I'm glad you got that off your chest!
I do understand what you're saying but really, what either you or I think doesn't come into the equation. What strikes me about two of your examples is the current strange situation where someone can have both substantial debts and substantial savings. This is quite a recent phenomenon, and can never have been anticipated by the benefits system.
As sites like this one have encouraged things like borrowing on 0% credit cards to put into savings accounts, perhaps this advice should be held up to scrutiny? There's likely to be quite a few people in this situation where the effect on possible benefit eleigibility was never explained when this strategy was suggested.
On a simpler level, I have to say that savings are savings. You're surely not suggesting that someone with substantial savings should be able to claim means tested benefits just because those savings are earmarked for private education or a lavish wedding? If you really want to bankrupt this country, you could hardly devise a more effective strategy!0 -
Oldernotwiser wrote: »What strikes me about two of your examples is the current strange situation where someone can have both substantial debts and substantial savings. This is quite a recent phenomenon, and can never have been anticipated by the benefits system.
Debts are only half the problem. The other half is that hugely valuable assets can be excluded if there was no deliberate deprivation of capital.Oldernotwiser wrote: »On a simpler level, I have to say that savings are savings. You're surely not suggesting that someone with substantial savings should be able to claim means tested benefits just because those savings are earmarked for private education or a lavish wedding? If you really want to bankrupt this country, you could hardly devise a more effective strategy!
My point is that "savings" is a ridiculous thing to be using for a means assessment. It should be either income or net wealth. You are probably right that it should be net wealth rather than income.
I think the country's bankruptcy is already pretty much assured.
As you say, there is nothing much we can do about it but I can certainly see situations where I would have every sympathy with the "benefit cheat" despite being a tax payer with a "safe" job myself.
I've said my piece now.0 -
greatbritishdepression
You make some valid points there. Certainly the whole system needs rejigging. Under the present system - as far as I can see - someone could be sitting in a £1 million home and yet be eligible for benefit on the one hand - whilst someone in a very modest home could have some savings they have been accummulating for a very necessary purpose (in case of large health care bills as I previously stated - I believe a heart bypass is in the region of £10,000 for instance - and, yes, it IS necessary to pay for this privately - otherwise the NHS might have killed you with the wait before it gets done otherwise). Another instance would be if your house roof needed swopping and you were saving for that for instance - think that could easily be £5,000 of savings that were NOT available for the DWP to make one use to live on.
A thing that has been striking me recently is on studying people I have come across who have just suffered a redundancy as the result of the current economic crisis - and that is that it seems to have pretty much universally come as a complete surprise and shock to them. When I look at them - I can see exactly why - as I've been in their position myself. When you know that you're a reasonable employee with reasonable qualifications for the type of job you do and reasonably presentable and (though you never vocalise it out to yourself in those words) that you are middle-class - then it honestly never strikes you for one second that you could end up unemployed. I can vouch - from personal experience - that you just honestly regard something like unemployment as something that would never in a million years come anywhere "near your doorstep". You never ever think of it like that - but you are just conscious that it never happens to people like you. There is just an automatic set of assumptions that everyone is born with - and if you're in that position those assumptions include: Of course I will own my own house/Of course I will never be unemployed
until you are and the world turns upside down and your first thought is ".....huh! How? This is obviously a mistake" and then it occurs to you what automatic assumptions you have been making about life and the degree of "protection" you took it as read that you would have from things like this. Hence - my point being - that many people will have been accummulating a bit of savings....without the slightest idea that unemployment could happen to someone like themselves.....or they may not have bothered GETTING those savings, knowing that they would be at risk.
Now I've been through the mill more than once of having found the inexplicable HAS happened and I HAVE been made redundant......I made very sure that once I'd been able to buy a house finally that I have never had a penny of savings since (mind you - when you buy an old dump that isnt hard to do - as the house keeps on and on and on needing to have money spent on it). Then of course you are at risk of ending up in debt - even though you arent profligate with money by anyone's definition. Reason: because you have spent every single penny the second you had it (in order to protect it and make sure that YOU were the one who had use of YOUR money) and then the house needs something doing urgently and you dont have any money for it - so you get into debt and cross your fingers that you can pay it back without unemployment hitting you again before you have.
As for it being a modern phenomenon to have debts on the one hand and savings on the other hand...I would have thought people have always done that. The example quoted of someone having a certain amount of savings and a certain amount of student loan didnt include them having any debt. A student loan isnt debt in most peoples books - its a student loan. Only debt is counted as debt in most peoples books. Student loans arent a debt - they are something that you have been lumbered with against your will and better judgement - because student grants dont exist any longer.0 -
As for it being a modern phenomenon to have debts on the one hand and savings on the other hand...I would have thought people have always done that. The example quoted of someone having a certain amount of savings and a certain amount of student loan didnt include them having any debt. A student loan isnt debt in most peoples books - its a student loan. Only debt is counted as debt in most peoples books. Student loans arent a debt - they are something that you have been lumbered with against your will and better judgement - because student grants dont exist any longer.
I think you're missing the point I was making. If you visited the Students Board you would see that quite a number of people take out a Student Loan without actually needing it and invest it to get a higher rate of interest. This really doesn't come under the heading of "they are something that you have been lumbered with against your will and better judgement ". In fact Martin, and others, have recommended people to do this. However, if you do this and are unemployed when you finish university you won't get means tested benefits as you have savings.
I have to reiterate that having savings as well as loans is a comparatively recent phenomenon which have occurred because of low interest Student Loans and 0% credit cards. In normal times, interest rates would always be higher for borrowing rather than saving so this situation wouldn't occur. I can think of no time in the past when people would have borrowed money to put it into savings; it would have been considered absolute madness!0
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