Working And On Benefits

[silver surfer]

Stick your savings in a SIPP or other pension and they don't count as savings for benefits though ( and they'll even add another 20% to it for you).

Obviously you can't then touch it until retirement age.

Correct, but retirement age is 55.

[silver surfer]

Isn't the benefits system just an acknowledgement of the facts:

1. The cost of living has risen beyond the reach of the average salary.

2. Without large helpings of benefits there would be a lot of poverty and a long hard recession/depression.

3. Benefits are needed to subsidize high house prices. Average wage of 20k doesn't get or pay a mortgage. Add in 20k of benefits=40k=no problem.

Average voters feel entitled to an above average life style and below average voters feel entitled to an average life style.

[19 year mortgage 8itch]

The trouble I have is that its like house prices, the day I decide to play the game is the day this mutha turns and the process of reverting to mean begins in earnest.

[Dorkins]

Isn't the benefits system just an acknowledgement of the facts:

1. The cost of living has risen beyond the reach of the average salary.

Yes, but it is bizarre that the best way to access these benefits is to have as many children as possible. Benefits don't seem designed to help poor people on low incomes, they are breeding subsidies accessible to people with plenty of wealth as long as it is in the form of housing equity.

[tomandlu]

I must admit I'm very puzzled as to the motives of the bbc. Have they deliberately picked examples that highlight the excesses of our benefits system, or is this the best they could come up with in terms of eliciting sympathy? If the former, how does this square with the commonly-expressed opinion on this site that the bbc are a bunch of commies or something?

It's very hard to tell from reading it what the intent is - it's defiantly neutral.

[Tonkers]

The trouble I have is that its like house prices, the day I decide to play the game is the day this mutha turns and the process of reverting to mean begins in earnest.

+1

[CrashedOutAndBurned]

Isn't the benefits system just an acknowledgement of the facts:

1. The cost of living has risen beyond the reach of the average salary.

2. Without large helpings of benefits there would be a lot of poverty and a long hard recession/depression.

3. Benefits are needed to subsidize high house prices. Average wage of 20k doesn't get or pay a mortgage. Add in 20k of benefits=40k=no problem.

Yep. Don't get the hate for this guy. He's got a disabled kid and works a full-time proper job. A middle of the road white collar worker could have had the same lifestyle on one income without a big benefits package a generation or two ago. The system's wrong, not this father.

[VeryMeanReversion]

I've just had a look at working/child tax credit tables. I have two kids so in my case:

Income Handout

------- ---------

£20,000 £4,755

£25,000 £2,705

£30,000 £ 655

So the marginal rate is £2000 in benefits lost per £5000 in income gains. (40%)

So with income/NI included, your marginal rate is around 65%.

I'm getting more and more tempted to salary sacrifice even more and more of my salary to get some of this free cash, use the 25% tax-fee amount to clear the mortgage at 55 and retire early.

I always wondered why people on a third of my salary were doing so well.

[opt_out]

"Benefits are a good thing, and if society can afford it, they should be paid."

And therein lies the problem.

[Dorkins]

Wasting almost £6,000 a year on the kiddeee fyddlers organisation (i.e. the church).

It gets better... Presumably the church is a registered charity which is able to claim Gift Aid from the government on its donations. What little income tax Mr Ade pays through his job will end up in the hands of the church anyway.

[tomandlu]

Yep. Don't get the hate for this guy. He's got a disabled kid and works a full-time proper job. A middle of the road white collar worker could have had the same lifestyle on one income without a big benefits package a generation or two ago. The system's wrong, not this father.

Up to a point I'd agree. However, having enough disposable income to give a fairly hefty chunk to the church and make early payments on his mortgage rather crosses the line...

[opt_out]

It's just struck me that if the tax-credit benefits are the same for employed or self-employed, then there will be people out there who get:

20k net earnings after tax

20k benefits

20k cash in hand.

but you won't find them volunteering their story in the newspapers.

this thought may or may not have been influenced by having the plasterer in today.

[ingermany]

Yep. Don't get the hate for this guy. He's got a disabled kid and works a full-time proper job. A middle of the road white collar worker could have had the same lifestyle on one income without a big benefits package a generation or two ago. The system's wrong, not this father.

Absolutely agree. there is no cause whatsoever to vilify those who are just following the rules that have been drafted by the political establishment. In any case, the real"beneficiaries" are owners of land and property. The benefits keep the property values up by ensuring that families on low incomes can service large mortgages. The money is being siphoned from the young, the single, and those in rented accommodation and being fed to those who have property portfolios. The actual claimants are just blameless intermediaries in the process of theft.

[Democorruptcy]

Yes, but it is bizarre that the best way to access these benefits is to have as many children as possible. Benefits don't seem designed to help poor people on low incomes, they are breeding subsidies accessible to people with plenty of wealth as long as it is in the form of housing equity.

Breeding potential future taxpayers is rewarded?

[@contradevian]

Breeding potential future taxpayers is rewarded?

Its the £218 a week for two kids that gets me. Whereas a singleton over 25 gets just £65 a week on JSA, or £55 if under £25, and has to run his whole household (food, energy, clothing, transport etc..) and possibly contribute to rent out of it his LHA rate isn't high enough or it includes services.

Edited February 22, 2012 by "Steed"

[guitarman001]

Are there any single childless guys here who still plan on staying, and why?

[easy2012]

Are there any single childless guys here who still plan on staying, and why?

It is all relative I suppose... childless Spaniard, Greek, Czech, Hungarian are pretty happy here..

[19 year mortgage 8itch]

Its the £218 a week for two kids that gets me. Whereas a singleton over 25 gets just £65 a week on JSA, or £55 if under £25, and has to run his whole household (food, energy, clothing, transport etc..) and possibly contribute to rent out of it his LHA rate isn't high enough or it includes services.

5 kids, one of them disabled?

[@contradevian]

5 kids, one of them disabled?

oops my bad. Thought it seemed generous!

[Dorkins]

Breeding potential future taxpayers is rewarded?

As if any government thinks that far ahead...

If you want to assign the government a motive, I think vote-buying will suffice.

Edited February 22, 2012 by Dorkins

[winkie]

As if any government thinks that far ahead...

If you want to assign the government a motive, I think vote-buying will suffice.

...not when the kids grow up to find they will not be able to afford to buy or rent a property, and the parents finding the benefits cease but the kids are still living with them.

[Debbie568]

Absolutely agree. there is no cause whatsoever to vilify those who are just following the rules that have been drafted by the political establishment. In any case, the real"beneficiaries" are owners of land and property. The benefits keep the property values up by ensuring that families on low incomes can service large mortgages. The money is being siphoned from the young, the single, and those in rented accommodation and being fed to those who have property portfolios. The actual claimants are just blameless intermediaries in the process of theft.

Are claimants entirely blameless though? What about people who deliberately restrict their economic activities in order to protect their benefits? We're breeding children like mad for sure, but children who don't have much ambition, who don't have much get up and go, let alone entrepreneurial spirit, because they realise it doesn't matter, provided they have children, how much or little they earn - if a bit low, no worries, other taxpayers will mandatorily make up the difference.

Tony Blair used to parrot on about how essential it was to support the self employed via the minimum income guarantee, because if just one in a thousand of those fledgling businesses becomes an employer of five people, all the subsidies via the minimum income guarantee will be well worth it. The current government have made it very clear that the £26k benefits cap does not apply to people claiming working tax credit and in particular to the self employed. But they don't understand the reality of being self employed and having a family. There are massive financial incentives to not work too hard in Britain if you have children.

Here's the deal;

If you earn £50k a year, and refuse to have children, then I want my take. I get £14,389 in NI contributions and tax and you get the other £35,610. For that you have to work 50-60 hours a week and throw in ten hours or so of commuting time on top. And no, you don't get housing benefit, council tax benefit, child benefit, working tax credit, child tax credit, help with your childcare costs, free dental, a health card (for free prescriptions in England), free school meals (for the working poor, Scotland), EMA for your older children (Scotland also) etc, etc, etc.

If, on the other hand, you agree to work 30 hours a week, have a couple of children, be self employed and only earn a net income of £7,000 a year then you get to keep all of it AND I'll throw in another £23,600 as a sweetener, tax free. (HB £700 a month LHA, three bedroom house in our area, WTC/CTC £10,400 a year, Child benefit £1,600 a year, council tax benefit £1,500 a year (average rate for a house in our area), EMA if any of your children are over 16 and in school £30 a week for 41 weeks, £400 or so free dental, £100 a year or so free prescription glasses + a few other things I probably haven't thought of, like childcare subsidies)

So far, you are well up on the hours but well behind the £50k a year person? Yes, but what if I told you that your £7k net profit is AFTER claiming 40p a mile for your business mileage (usually well and truly enough to cover the private mileage too), the cost of your mobile phone, your home office, some portion of your broadband, replacement/upgrade of your computer, whatever knowledge maintenance seminars you feel like attending to keep your knowledge current, borrowing costs that you "need" to incur in order to upgrade whatever you need to upgrade for your business, your car perhaps, or your boat if you are starting up a charter fishing business - best to lease those, actually, then you can deduct the costs if full.....

AND if you will just go ahead and have another child, I will seriously sweeten the deal. I'll give you another £3,500 or so tax free a year, possibly (dependant on ages and sexes of the tribe) give you funding for a four bedroom, rather than a three bedroom house, and you can earn a bit more profit after tax.

With deals like this, I still don't think people should deliberately restrict their working hours and incomes - their potential - just to get such deals. But I can understand why they would.

The prevailing view pushed by the media is that Britain will never end up like Greece. But surely there must come a point where, if we spend beyond our means to the tune of £8 billion a month, we end up either unable to pay our debts or with a currency so depleted in value we end up like Zimbabwe? Greeks are currently pounding the doors of foreign embassies trying to escape Greece with their wealth intact, before it is either kicked out of the Euro or the Euro tanks to reflect the banana republic Greece has become. Is the UK really so different?

[Debbie568]

...not when the kids grow up to find they will not be able to afford to buy or rent a property, and the parents finding the benefits cease but the kids are still living with them.

Does anything really change in that situation? If the kids are working they will pay board. if they are not they will get their JSA income based and presumably make a contribution from that to the running costs of the family. I thought unemployed children living at home count as eligible adults for housing benefit?

[OnionTerror]

Does anything really change in that situation? If the kids are working they will pay board. if they are not they will get their JSA income based and presumably make a contribution from that to the running costs of the family. I thought unemployed children living at home count as eligible adults for housing benefit?

Nope. If they are living with a relative/parents, they aren't eligible for HB...

Edited February 23, 2012 by Dave Beans

[Debbie568]

Nope. If they are living with a relative/parents, they aren't eligible for HB...

It's not the children who can claim. The parents' HB is in part based on whether anyone is living with you who could contribute to the rent, and I think unemployed children are deemed unable to contribute to the rent if they are on JSA. This from the DWP:

"No deduction should be made from your rent rebate or allowance if the non-dependant (i.e. grown up son or daughter) is under 25 and on Income Support or income based JSA."

This would presumably be the case if they leave school and become unemployed. (source: http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/rr2-a-guide-to-housing-benefit/what-you-can-claim-for/non-dependants/)