Tax credits / USC - Pretty big loss to the economy

Graham_Devon

After repeatedly insisting that the move to Universal Credit will not see people on in work benefits lose money, Iain Duncan Smoth has today stated that admitted that people will lose money.

The DWP states that any losses can be recouped by the worker by working an additional 200 hours a year (4 hours per week) at £7.20 per hour.

So it seems the loss for the average in work tax credit claimant when they move to USC will be £1,500 per year.

So were back to the tax credit cuts all over again. It's only been a month since the U-Turn announcement.

Working 200 hours extra per year is all fine and dandy, but you will only recoup your losses should you A) have an employer willing to pay you 4 hours extra per week and don't have to then shell out for increased child care.

So there we have it - after all of the fuss over tax credits and then the U-Turn, we now know for absolute certain that the same cuts will come with the move to USC.

Apparently this is all due to come in in April. How it will be achieved I really don't know.

http://www.theguardian.com/society/2015/dec/21/universal-credit-benefit-cuts-work-allowance

mayonnaise

Good.


But how is this a pretty big loss to the economy?

Graham_Devon

mayonnaise wrote: »

Good.


But how is this a pretty big loss to the economy?

I wanted to keep the thread here.

However, it's pretty simple to work out and was discussed at length with the tax credits thing. Removing an average of £1,500 from around a million families overnight obviously has knock on effects to the economy....unless you believe they were previously setting light to this cash for giggles.

mwpt

Graham_Devon wrote: »

I wanted to keep the thread here.

However, it's pretty simple to work out and was discussed at length with the tax credits thing. Removing an average of £1,500 from around a million families overnight obviously has knock on effects to the economy....unless you believe they were previously setting light to this cash for giggles.

It's not removing it though surely? That £1500 came from somewhere. It's not just disappearing.

Generali

Of course if, like the vast majority of people on tax credits, you earn more than the minimum wage you will not have to work an extra 200 hours a year.

It's funny how, after Labour brought in a massive subsidy for people working exactly 16 hours a week, huge numbers of jobs for people on 16 hours a week were created.

I suspect that when the Tories change that to a subsidy for people working 20 hours a week (in effect) a lot more jobs will be advertised for 20 hours a week.

Mistermeaner

And extra childcare is available

michaels

I thought UB was 'grandfathered' so you kept what you get if it is more but it doesn't go up...but if your circumstances or especially if you stop and then start again no doubt you lose out.

wotsthat

Graham_Devon wrote: »

I wanted to keep the thread here.

However, it's pretty simple to work out and was discussed at length with the tax credits thing. Removing an average of £1,500 from around a million families overnight obviously has knock on effects to the economy....unless you believe they were previously setting light to this cash for giggles.

AIUI no one gets anything removed but new passengers on the gravy train will get less.

It's not so bad. What you never had you don't miss athough it might get a bit tiresome with the old hands lording it over them.

Graham_Devon

michaels wrote: »

I thought UB was 'grandfathered' so you kept what you get if it is more but it doesn't go up...but if your circumstances or especially if you stop and then start again no doubt you lose out.

You are correct.

But you also state the issue yourself. Circumstances changing will happen very quickly to many workers.

Doing an extra 4 hours a week, for example, would be your circumstances changing.

This has already been raised on a political programme and far from making work pay, it will make people fearful of taking on anything extra or having to make a phone call regarding a small change of circumstances.

Anyone taking on extra seasonal work or overtime for example will need to inform the DWP or whoever is dealing with thier claim of their change of circumstances - and the change kicks in then.

It simply delays things for existing people. Afterall, the reduction target cannot possibly be hit or anything close without current claimants also taking a hit.

As soon as the national living wage increases huge swathes of claimants will see their circumstances changing.

Graham_Devon

mwpt wrote: »

It's not removing it though surely? That £1500 came from somewhere. It's not just disappearing.

It's being removed from the economy in that it can't be spent in the economy.

Another example is if the government simply axed housing benefit. While the money hasn't dissapeared (it's being saved to pay down the national debt), the economy would suffer hugely as thousands simply wouldn't be able to pay their rent.

wotsthat

Graham_Devon wrote: »

You are correct.

But you also state the issue yourself. Circumstances changing will happen very quickly to many workers.

Doing an extra 4 hours a week, for example, would be your circumstances changing.

This has already been raised on a political programme and far from making work pay, it will make people fearful of taking on anything extra or having to make a phone call regarding a small change of circumstances.

Anyone taking on extra seasonal work or overtime for example will need to inform the DWP or whoever is dealing with thier claim of their change of circumstances - and the change kicks in then.

It simply delays things for existing people. Afterall, the reduction target cannot possibly be hit or anything close without current claimants also taking a hit.

As soon as the national living wage increases huge swathes of claimants will see their circumstances changing.

Probably best to implement it straightaway for everyone then.

We don't want people scared to do an extra 4 hours work do we?