The Benefits System

lazer

The benefits system is a mess.

To correct it, firstly correct the earnings disregard - it pointless, who wants to work for £5 a week - unless you can source over 12 hours work a week there is absolutely no point, this doesn't encourage all the window cleaning, car washing etc.

Instead, reduce benefits by 1/16th for every hour worked or for every £6.08 earned (NMW for hour) (as 16 hours is the qualifying cut off for JSA)

Secondly, stop the tax credit nonense - shared tax allowances instead, and increased personal allowances - why should we be taxed as individuals and given benefits as couples.

Thirdly, Increase contributions based JSA, people that have paid in deserve more out than people that haven't. I see no harm in paying out say 70% of your previous wage for say 6-12months, and reduce income based JSA to abolutely basic subsisdence (£50 a week), this gives you time to cut your cloth accordingly and gives a massive incentive to look for work during the contributions peiod.

Contributions benefits, should be paid regardless of when the contributions have been earned as long as they have not been prevously used.
The current farce is that someone who has worked for 20 years full time, then moved to part time hours (under the Lower earnings limit) for 5 years, then loses the part time job, they will not be entitled to any contributions benefits, and if they have a working partner will not get any benefits.

Fourth: Revise VAT rates, correct the list of so-called essentials so it includes everything essentail, then increase the rate to at least 22.5%, that way its a choice, if you want to buy the non essentials, you pay for them, but it won't harm the poorest in society as essentials are not taxed!

Fifth: An additional duty on fat foods - crisps, sweets, chocolates, ice creams, fizzy drinks etc. Only around 2-3%, so as not to effect the industry too much.

Sixth: Change the policys on freebies if on benefits, increase benefits by x% (research correctly) and then make everyone pay for eye tests, prescriptions, school meals,travel etc.

These are just some of my suggestions to increase the fairness in the system.

I believe we should continue to provide support for those who need it, but we also need to ensure that it not easy for people on benefits, so that it cannot become a lifestyle choice.
Those genuinely disabled, (and by that I don't mean a slight back pain, mild depression, stress or whatever other illnesses seem to prevent people from working) should be given the average wage in the country plus 10%, as they do not have the potential to earn and should be supported!

ILW

Can we not bring back the idea of the deserving and undeserving poor, and base benifit levels on it.

Jaikagen

The issue isnt how much money people will or wont get on benefits. The issue is the lack of work ethic effecting areas of the population. I was on benefits for a period of time, and each and everytime i went to cash my giro, the feeling of shame and embarrassment was over whelming and i worked my socks off to get out of that situation. Free housing? No thanks, id rather pay my mortgage and live in my lovely house that is mine to do as i wish with. Free money, no thanks, id rather earn my money of an evening after spending all day caring for my children whilst my partner is at work, showing my children in order to get the nice things they want, holidays, christmas presents, the current "in" trainers, you have to earn it. I highly doubt the vast majority of people would be "better off" on benefits if you throw in standard of life and happiness into the mix.

Unfortunately though, the benefit culture has a way of infecting generation after generation through a family. My parents gave me my work ethic, same for my partner, and with every breath in me i will instil that into my children. How you can combat that and target the children of parents happy to waste their life on benefits - i have no idea.

Flight2quality

Cleaver wrote: »

I was watching channel 4 news last night and they had some comparisons between benefits in certain european countries. Maybe someone can correct me on the actual countries but I remember the figures.

In Denmark unemployment benefit is 90% of the average wage. In Holland (I think) it was 65% and in Germany it's 75%. In the UK it's £65 maximum a week, which I make to be around 14% of the average wage. I know all of these systems will have complex systems around kids and houses and other benefits, but I was quite surprised at how low our's was.

What about over the water? In Ireland you can live like a king on unemployment, almost as much as in Greece.

Loads of long term unemployed living in nice houses with very good quality of life from benefits.

Pennywise

I think the only way we're going to get anywhere is for a radically overhaul and simplification of both tax and benefits. It will be painful at first but should be regarded as a long term plan over a couple of generations to change behaviour.

I'd suggest that every adult be allocated a fixed amount on which to live, say £15k or so, and out of that, they have to pay everything themselves - no free prescriptions or dental work, no housing allowances, no childcare allowances, no tax credits. This would apply from aged 18 to death. They'd simply get £1,250 paid into their bank account every month and have to manage with that.

Then they'd have the option of getting a job (any job) to supplement their income, which would be taxed at say 50% (no NIC), so they'd always get to keep half of their extra earnings. No tapering away of the £15k basic living allowance.

So if someone got themselves a job earning £10k per year, they'd get another £5k on top of their £15k allowance. If someone made provision for their pension and got an occupational pension of £10k per year, they'd get another £5k on top of their £15k allowance.

The more people earned themselves, they'd always keep half of it. That's a pretty good incentive to better yourself, but if you couldn't or didn't want to, then the £15k basic allowance was something you had to live with.

If you limited annual increases to say 90% the rate of inflation, the £15k would fall slowly in real terms over many years, giving people plenty of time to adapt to change and make more provision for themselves.

People may wince at the idea of giving everyone £15k but think of the savings in admin and fraud of the existing tax and benefit system. £15k is surely a level that gives food, shelter and warmth, without a luxury standard of living, but more importantly it doesn't give any incentives for reckless behaviour, i.e. if you have more children, then you get a job or you live on the same income.

ILW

How would you fund £15k PA for everyone?

MacMickster

Pennywise wrote: »

People may wince at the idea of giving everyone £15k but think of the savings in admin and fraud of the existing tax and benefit system. £15k is surely a level that gives food, shelter and warmth, without a luxury standard of living, but more importantly it doesn't give any incentives for reckless behaviour, i.e. if you have more children, then you get a job or you live on the same income.

Whilst I admire the principle I doubt that the maths stack up.

45 million adults receiving £15K is £675 billion, before taking into account any other government spending on health, education, roads etc. The total UK tax take in 2009/10 was around £520 billion which was 37% of GDP.

I also know many married couples who would regard £2,500 per month nett joint income as more than enough to live on, so why work? Would anyone want to do a full-time minimum wage job for effectively £3 per hour?

pqrdef

Graham_Devon wrote: »

None of that can be achieved, not without completely reseting.

Resetting will be thrust on us whether we like it or not, because we can't carry on pretending to be a richer country than we are. We want to live like Americans, but even America isn't America any more.

Our politicians are no good at managing expectations, but they're going to get managed anyway. The trick would be to do it without a Greek-style crisis.

Pennywise

MacMickster wrote: »

Whilst I admire the principle I doubt that the maths stack up.

45 million adults receiving £15K is £675 billion, before taking into account any other government spending on health, education, roads etc. The total UK tax take in 2009/10 was around £520 billion which was 37% of GDP.

I also know many married couples who would regard £2,500 per month nett joint income as more than enough to live on, so why work? Would anyone want to do a full-time minimum wage job for effectively £3 per hour?

OK, we need to find £675bn. We already pay £239bn in welfare and pensions, so that leaves £436bn to find.

Govt receives £229bn in tax and NIC. For 50 million adults, that works out at an average rate of 27%. But that's on the amount over the personal allowance, so if the personal allowance is scrapped and the rate increased to 50%, your £229bn increases to £600bn, an increase of £371bn. The increase from 20% to 50% across the board together with the PA scrapping makes a massive difference to tax revenue.

So, the actual shortfall reduces dramatically to just £65bn - still a huge figure, granted. But you'd have saved a few billion in scrapping the admin costs AND more importantly, drastically reduced the scope for benefit fraud and tax evasion which may well bridge the gap. Even if it didn't, there's still the massive benefit for the future in terms of having tackled today's problems that will bear fruit in the future.

As for why someone would work for just 50% - at the moment, we expect people to work for far less than that - if they're paying taxes and losing benefits as their income rises - is it 73% cost of earning more if you're on working tax credits? So this idea is an improvement for all the low earning poor sods who are claiming working tax credits!

No, I don't like the idea of £15k for everyone nor a tax rate of 50% for everyone - but I'm working on what we're stuck with today in terms of an out of control benefits system, tax and benefit fraud, etc and I'm thinking of ways to keep it as ridiculously simple as possible. I don't think you can get simpler than a single "benefit" payment to everyone (no exemptions, no special cases) along with a single tax rate on everyone's other income (no exemptions, no special cases). I think my idea is one way of moving forward onto something more simple and sustainable and fair, without causing undue hardship to the people who rely on state help the most, and without causing undue cost to the workers etc. You also have to remember that I want the benefit to be increased at less than the rate of inflation so that it declines in real terms over the decades so as to be a further disincentive to rely on it for ever.

kabayiri

MacMickster wrote: »

Whilst I admire the principle I doubt that the maths stack up.
...

I like the innovation behind PW thinking too, but my concern is just how to implement such a scheme.

The current planned changes to the system are already giving the DWP and HMRC headaches. Anything much grander could turn into yet another IT fiasco.

That's not to say that we couldn't introduce a completely different system for those people who live in say London. The capital city has a completely different economic pattern to many other parts of the UK. It really makes sense to have a benefit system in London which ensures that as many inhabitants there as possible are working.