Families hit by benefits changes

The-Joker

This £480 week cap will have profound consequences on the London market. I suspect the reason it keeps getting postponed is out of fear of the riots.

LydiaJ

drc wrote: »

I agree with you about the scum part, there is no need for silly language like that but on your second point about those in work receiving benefits, I think this is actually one of the issues a lot of people have with the benefits system.

The welfare state should not be subsidising employers who pay their employees low wages. Also, the cost in supplementary benefits for someone who is either working very few hours or not getting paid enough normally cancels out any tax or NI they pay in as what they get in return from the benefits system is normally much more.

For example, the whole tax credits fiasco currently encourages people to work a minimum of 16 hours (no more of they won't get the benefit of tax credits) which are topped up by generous working tax credits (and housing benefit and possibly some council tax benefit), so not only do they not have to work a full week but they are rewarded for not doing so by getting working tax credits. Why not just raise the level at which tax/NI is paid (so that low paid workers get to keep more of their income) and get rid of tax credits altogether and make the employer pay the difference. Why the hell should the taxpayer be subsidising companies like Tesco's and Asda?

I agree that the state should not be subsidising businesses to pay less than a living wage. However, I'm not sure that raising the level at which tax/NI is paid would be sufficient to achieve your aims. That's because if you are out of work, the benefits you receive depend on your circumstances - the safety net provides more for those who need more, and less for those who need less. But low-paid jobs (rightly) just pay according to the job, without regard to the person's circumstances. That's why it's so easy for situations to arise in which somebody is better off not working, and it still would even if tax/NI didn't have to be paid until a higher level. There's also the consideration of the high costs of childcare, which can make work uneconomical unless it's paid well above the NMW or some help is provided.

The idea of WTC (including its childcare element) is to make it so that working makes you better off than not working, even if the work that you find is part-time and/or low-paid, and/or you have steep childcare expenses. It's a good idea, but the detail isn't working properly.

I have a friend (single parent) who's looking for work. She found a job that was 14 hours/week, and thought about maybe taking that job and continuing to look for other part-time work to do as well. But she couldn't, because the 14 hour job wouldn't pay as much as her out-of-work benefits, and it would incur childcare expenses, and she'd be seriously out of pocket for some unknown length of time until she found a second job. So she's hanging on for a job with 16+ hours/week.

In an ideal system, working full-time would make you better off than working part-time, working part-time would make you better off than not working at all, and those who are unemployed and looking for work (or those who are unable to work because of their circumstances) wouldn't be destitute. The devil's in the detail, though.