'Triple crunch' will see lower middle class £720 a year worse off

PasturesNew

In my town, as a single person, living in a 1-bed grotty flat .... JSA + LHA + Council Tax = the same as earning £12k, without the hassle or cost of actually working.

Where my mate lives, the LHA alone is equivalent of earning £30k.

Linton

amcluesent wrote: »

Millions of lower middle-class families will face a "personal recession" next year that will leave them worse off by an average of £720 thanks to government cuts, rising inflation and stagnating pay, a landmark report says.
.....

In Squeezed Britain, researchers find that families will see their wages fall in real terms on average by almost 4% over the next year as "major cuts overlap with a fragile jobs market". Gavin Kelly, chief executive of Resolution Foundation, said that millions "who already sit on the edge of downturn face a triple crunch".

.....
FACT - Just the start of the pauperisation of Britain as wealth flows East for good and England faces up to grim, grey, grinding decades of austerity, want, hunger, cold and "making do".

Really this is very silly. Assuming the report is correct we are talking about wages dropping to what they were 2-3 years ago. I may be wrong but I dont think I saw many starving in the gutters then.

Jowo_2

PasturesNew wrote: »

In my town, as a single person, living in a 1-bed grotty flat .... JSA + LHA + Council Tax = the same as earning £12k, without the hassle or cost of actually working.
.

Similar for those in social housing too - someone on a thread was lambasted for saying a lady was raking it in on benefits in a council flat and was roundly condemned.

So I did the maths and even in low cost social housing, a person with a full time NMW job is potentially £35 per week better off than not working, but only if they don't have any travel expenses. If they do, the extra £1 per hour (ooh, steady on, don't spend it all at once) that they receive from working rather than sofa surfing is eroded. If their fares are more than £35 per week, then they are worse off than being on JSA.

http://forums.moneysavingexpert.com/showpost.php?p=38786972&postcount=29

RenovationMan

PasturesNew wrote: »

In my town, as a single person, living in a 1-bed grotty flat .... JSA + LHA + Council Tax = the same as earning £12k, without the hassle or cost of actually working.

Where my mate lives, the LHA alone is equivalent of earning £30k.

The solution therefore seems to be to move near your mate.

ukcarper

PasturesNew wrote: »

In my town, as a single person, living in a 1-bed grotty flat .... JSA + LHA + Council Tax = the same as earning £12k, without the hassle or cost of actually working.

Where my mate lives, the LHA alone is equivalent of earning £30k.

But lets face it they have £65 to pay for everything other than housing.

I worked out that a person living in a I bed flat in Plymouth and earning minimum wage would have about £115 a week after housing cost.

Jowo_2

ukcarper wrote: »

..
I worked out that a person living in a I bed flat in Plymouth and earning minimum wage would have about £115 a week after housing cost.

Are you sure? Have you checked using local market rents, the LHA direct website, a PAYE calculator and the Turn2us online benefit calculator?

Because I worked through a couple of the above to identify how much a single person on JSA in social housing in Birmingham would be better off working on the NMW for 35 hours and found they weren't much better off. Though their rent was only £87 per week, they had to pay around £75 per week towards it. That, and their loss of council tax (which I estimated at £100) per month, pretty much wiped out most of their disposable income.

So they may have earned three times the sum that they had with JSA but then the withdrawal of Council Tax allowance and most of their LHA wiped out most of the gain.

Jowo_2

ukcarper wrote: »

But lets face it they have £65 to pay for everything other than housing.

I worked out that a person living in a I bed flat in Plymouth and earning minimum wage would have about £115 a week after housing cost.

Yes, you're right, my findings are broadly similar so I don't understand why my calculation is so much lower for someone in social housing who got much less tax credit.

They are about twice as better off than being on the dole, the equivalent of earning £2 per hour because of the impact of the loss of council tax, JSA and LHA. I know that's the wrong way to look at it but that's how some claimants think (- why do I have to work for 35 hours, lose my free time and only get a little more than staying at home?)

, I ran the scenario you proposed through the various calculators and I’ve rounded up the sums to the nearest whole pound.
The weekly LHA rate for a 1 bedroom self contained property in Plymouth is £98. A person working 35 hours per week on NMW will net around £180, plus it is topped up with working tax credits of £56. Therefore, their net income is £236 pw so that’s more than 3.5 times greater than JSA.
However, they then have to pay their council tax in full (£19 per week for a single person in a Band C property in that area) and receive £4 LHA towards their rent, so then pay the balance of £94 per week.
Net income is £236 per week and the council tax and rent bills are £113 per week, leaving £123 per week, just shy of twice the rate of JSA. Of course, they may have travel expenses that erode it.

ukcarper

Jowo wrote: »

Yes, you're right, my findings are broadly similar so I don't understand why my calculation is so much lower for someone in social housing who got much less tax credit.

They are about twice as better off than being on the dole, the equivalent of earning £2 per hour because of the impact of the loss of council tax, JSA and LHA. I know that's the wrong way to look at it but that's how some claimants think (- why do I have to work for 35 hours, lose my free time and only get a little more than staying at home?)

, I ran the scenario you proposed through the various calculators and I’ve rounded up the sums to the nearest whole pound.
The weekly LHA rate for a 1 bedroom self contained property in Plymouth is £98. A person working 35 hours per week on NMW will net around £180, plus it is topped up with working tax credits of £56. Therefore, their net income is £236 pw so that’s more than 3.5 times greater than JSA.
However, they then have to pay their council tax in full (£19 per week for a single person in a Band C property in that area) and receive £4 LHA towards their rent, so then pay the balance of £94 per week.
Net income is £236 per week and the council tax and rent bills are £113 per week, leaving £123 per week, just shy of twice the rate of JSA. Of course, they may have travel expenses that erode it.

I did again and come up with £113 but I used a single person 40 hours a week with council tax of £17 a month LHA was £19.

Still £50 not much for 40 hours work.