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Tax credits and universal credit
LydiaJ
Posts: 8,083 Forumite
I've been thinking recently about the phasing out of child and working tax credits, and the introduction of universal credit.
It started because I was looking ahead and trying to find out what's likely to happen to me. My situation (widowed with kids at school) isn't hugely common, and it's been quite hard to find the information I was looking for, so in the process of searching I've learnt quite a lot about UC and how it's going to work. Two things have struck me.
Firstly, once the lengthy transfer process has completed, and the people on transitional relief have eventually got off it, I think there will be a lot of the sort of people who currently qualify for WTC/CTC who won't qualify for any UC at all. People with more than 16k in capital, for example (capital including cash, shares and property that you don't live in yourself), or people at the top end of the income distribution of CTC claimants.
Secondly, I think the ethos and "feeling" of UC will be quite different from CTC/WTC. The current CTC feels rather like child benefit - if you have kids then you can get it even if you're really quite well off, and it's administered by HMRC not the DWP. This means that many people perceive claiming it as somehow not putting them into some kind of "benefit class", and still manage to look down on those who claim housing benefit and JSA and other out of work benefits. UC, however, is going to feel nothing at all like CTC, and a lot more like all those other benefits - the means testing is going to be much more like the current means testing for HB, JSA etc, and people who've only ever claimed CTC and CB are going to find that intrusive and uncomfortable. Some of them, I think, may even get outraged that they are being treated like "benefit scum".
So I thought it might prove an interesting topic for this board, to consider what the likely effects will be on (a) the economy, (b) house prices, and (c) anything else.
[Please note that the hateful phrase "benefit scum" is in quotes because I do not lump all benefit claimants into one category and consider them deserving of contempt. But other people do, and I am interested in how those people may respond to finding themselves part of the same system as those they despise.]
It started because I was looking ahead and trying to find out what's likely to happen to me. My situation (widowed with kids at school) isn't hugely common, and it's been quite hard to find the information I was looking for, so in the process of searching I've learnt quite a lot about UC and how it's going to work. Two things have struck me.
Firstly, once the lengthy transfer process has completed, and the people on transitional relief have eventually got off it, I think there will be a lot of the sort of people who currently qualify for WTC/CTC who won't qualify for any UC at all. People with more than 16k in capital, for example (capital including cash, shares and property that you don't live in yourself), or people at the top end of the income distribution of CTC claimants.
Secondly, I think the ethos and "feeling" of UC will be quite different from CTC/WTC. The current CTC feels rather like child benefit - if you have kids then you can get it even if you're really quite well off, and it's administered by HMRC not the DWP. This means that many people perceive claiming it as somehow not putting them into some kind of "benefit class", and still manage to look down on those who claim housing benefit and JSA and other out of work benefits. UC, however, is going to feel nothing at all like CTC, and a lot more like all those other benefits - the means testing is going to be much more like the current means testing for HB, JSA etc, and people who've only ever claimed CTC and CB are going to find that intrusive and uncomfortable. Some of them, I think, may even get outraged that they are being treated like "benefit scum".
So I thought it might prove an interesting topic for this board, to consider what the likely effects will be on (a) the economy, (b) house prices, and (c) anything else.
[Please note that the hateful phrase "benefit scum" is in quotes because I do not lump all benefit claimants into one category and consider them deserving of contempt. But other people do, and I am interested in how those people may respond to finding themselves part of the same system as those they despise.]
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Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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Comments
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I think the capital rules for the WTC/CTC are the biggie because they will directly hit families saving for a deposit whilst not impacting those who already own with equity in their properties.
If this doesn't hit the sort of strivers that I thought the Conservatives were supposed to favour then I don;t know what does.
In general there is a suggestion that saving for a rainy day is something sensible to do, however if you are in an employment situation where periods of unemployment are not unusual then this makes it even more definite that you are best of never having more than 6k of savings....I think....0 -
[Please note that the hateful phrase "benefit scum" is in quotes because I do not lump all benefit claimants into one category and consider them deserving of contempt. But other people do, and I am interested in how those people may respond to finding themselves part of the same system as those they despise.]
An interesting point indeed. I have encountered many people who used that term a few years ago, a few are now job hunting and no longer make such comments.
I had not realised that UC would have this impact but frankly it does not surprise me since those formulating the policy think in those terms and it fits in nicely with their "divide and rule" attitudes. I would never defend the minority who make a life on benefits supplemented by the cash in hand economy a way of life. But we must never forget these people are a minority and the norm as some would have us believe.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
[Please note that the hateful phrase "benefit scum" is in quotes because I do not lump all benefit claimants into one category and consider them deserving of contempt. But other people do, and I am interested in how those people may respond to finding themselves part of the same system as those they despise.]
Only the extreme loony right would lump all benefits claimants into a category called something like "benefits scum". 99.9% of the time such descriptions surely refer only to those who cynically choose a life on welfare rather than working for a living.
If as well as saving money, universal credit also changes the welfare entitlement and dependency culture and mindset in the UK then it will have been doubly successful.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
An interesting point indeed. I have encountered many people who used that term a few years ago, a few are now job hunting and no longer make such comments.
I had not realised that UC would have this impact but frankly it does not surprise me since those formulating the policy think in those terms and it fits in nicely with their "divide and rule" attitudes. I would never defend the minority who make a life on benefits supplemented by the cash in hand economy a way of life. But we must never forget these people are a minority and the norm as some would have us believe.
The current system means that just with tax, NI and WTC/CTC it is easy to suffer a marginal tax rate of 75% on incomes of 20k and without savings that can be pushed up past 100% with council tax benefit, free school meals, free prescriptions etc before the cost of getting to work, work clothes etc is factored in so something needs to change.I think....0 -
I think the reforms are a good idea but it was pointed out to me that the cuts will have a huge impact on business and community as well as individuals.
I don't live in the city anymore but did until recently and there is a high level of benefit claimants in the area. The cuts will mean that there will be quite a few £million less going into the local economy as people won't have the money to spend.
so even those who don't think they will be directly affected, particularly those in service industries that rely on local clients (e.g. a hairdresser working full time may become unemployed because her customers don't visit as often or greggs bakery may close with multiple redundancies as people can't afford to shop there).
Overall I am supportive of moving away from benefits as being a lifestyle choice but the ripple effect on the rest of community may well overshadow any immediate benefits of implementing the reforms.If you always do what you have always done, you will always get what you always got!0 -
I won't qualify for UC - I tried a calculator, which showed me a bigger income than I earn... but it was confusing and based on nothing more than my income/rent ... and it said I'd be better off working by [more than I earn] - maybe that means I would qualify with my current income.
However.... obviously when I add in a modicum of online muneh ..... it zaps that out of the water.... then there's them "savin's for an owse" I've got somewhere.
So, I currently claim £0 benefits; I will continue to claim £0 benefits. No change there then.0 -
I think the reforms are a good idea but it was pointed out to me that the cuts will have a huge impact on business and community as well as individuals.
I don't live in the city anymore but did until recently and there is a high level of benefit claimants in the area. The cuts will mean that there will be quite a few £million less going into the local economy as people won't have the money to spend.
so even those who don't think they will be directly affected, particularly those in service industries that rely on local clients (e.g. a hairdresser working full time may become unemployed because her customers don't visit as often or greggs bakery may close with multiple redundancies as people can't afford to shop there).
Overall I am supportive of moving away from benefits as being a lifestyle choice but the ripple effect on the rest of community may well overshadow any immediate benefits of implementing the reforms.
It depends on whether the tax saved finds its way back into the economy, and if so how. Sure there will be pain, but we can't go on like we have been with ever-increasing welfare and a start has to be made somewhere.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »It depends on whether the tax saved finds its way back into the economy, and if so how. Sure there will be pain, but we can't go on like we have been with ever-increasing welfare and a start has to be made somewhere.
I totally agree with you. In my line of work I see everyday people living on benefits out of choice, people who have never worked, families with up to 10 children with no income aside from benefits and houses filled with giant tv's and multiple games consoles. It really irks me that most of these cases are down to people claiming they can't work as a result of the impact of their current or previous substance misuse.
I had one person shouting at me one day that it wasn't fair that she only has £150 per week to live off when her friend gets more. If I had £150 per week spare after paying my mortgage and council tax I would be overjoyed and I have a well paid job.
It has to change but my fear (based on what I see every day at work) is that many of the people who have made a career out of exploiting the benefits system are virtually unemployable. Realistically where would you get a job that allows you to keep 10 children when you are single and have no prior employment or education?If you always do what you have always done, you will always get what you always got!0 -
I doubt it will save much money.
It will be found to be full of holes and loopholes.
it will create lots of unforeseen consequences.
The IT will let it down both operationally and from a fraud perspective and will be costly to maintain.
It will be reworked and called something else 5 years down the road.
It won't reduce the tax bill of the average Jo(e).
The "benefit scum" will still get their dosh."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Nice to see an interesting thread here for a change.
I think the changes on the economy will be predictable - it will depress consumer spending further as middle class families lose CTC. However this is inevitable as government spending simply must be reined in to manageable levels.
It really doesn't make sense for folks to be taxed and then given their money back as benefits.0
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