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Anyone Know Where The £12Bn Of Welfare Cuts Will Come From?


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Benefits comes from the workers, it's simply an injustice that benefits should be as profitable. Government is itself responsible for a high cost of living pretty much in its entirety, with its taxes and interventions.

This sort of thing is why I tend to find that the word "social", when used as a prefix, inverts the word after it. Hence "social justice" actually means grotesque injustice.

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I expect them to start nudging this in the not too distant future.

Perfectly reasonable if they do. The equity most people have is untaxed and unearned - it shouldn't be some sort of privileged asset class. I think they do do something similar for aged care already so no doubt it is on the policy radar.

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Perfectly reasonable if they do. The equity most people have is untaxed and unearned - it shouldn't be some sort of privileged asset class. I think they do do something similar for aged care already so no doubt it is on the policy radar.

...but, but, my property is my bank account, my pension....who can help me if they take it away. ;)

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Yes, it doesn't make sense......free money made from just buying a house that has freely increased in value without lifting a finger is protected, but hard working labour, paying taxes and putting a bit away each week is not protected.......every day it gets clearer to see that hard work does not pay... leverage using others money or investing to speculate on property does. :wacko:

That will be why they are about to abolish inheritance tax on "the family home" :) making it different from cash and other investments. The special status of a house is practically enshrined in the constitution.

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When tax credits were introduced, my sister immediately cut her hours from 37 a week to 16 and was no worse off (travel to work costs, childcare). I am convinced that there are thousands like her. I regularly hear people comment that it's "their right" to spend time at home with their children rather than work. I agree that it should be - but not at somebody else's cost. If you can't afford your mortgage when you cut your hours, sell your house.

The problem now is that there is probably very little work available to all these people who are about to have their benefits cut. That will cause real hardship.

Maybe this will also tip the housing market downwards once more - i'm not sure that you can count tax credits when you take up a mortgage, but there's certainly no reason for you not to cut your hours when you've got one.

Ahh, the magic 16 hour wonder. This should be raised. I might fill that "what do you want in the budget" form in with this.

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I classify any sort of benefit paid to in-work claimants as benefit to the "employer"

I'm sorry, but I think you've got that wrong for two reasons:

Firstly, at best this is an untested assumption. The effect of the benefits is to encorage workers to reduce the number of hours they work, reducing the supply of labour, which logically should increase hourly wage rates.

Secondly these employers operate in competetive markets, any advantages they receive from employee benefits should quickly be competed away in the form of reduced selling prices, leaving them no better off and all of the benefits either in the hand of the employees or in the hands of the employer's customers.

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I'm sorry, but I think you've got that wrong for two reasons:

Firstly, at best this is an untested assumption. The effect of the benefits is to encorage workers to reduce the number of hours they work, reducing the supply of labour, which logically should increase hourly wage rates.

Secondly these employers operate in competetive markets, any advantages they receive from employee benefits should quickly be competed away in the form of reduced selling prices, leaving them no better off and all of the benefits either in the hand of the employees or in the hands of the employer's customers.

Up to a point......but in a competitive global free market not that easy to just up prices.....the customers will buy elsewhere, and do.

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I'm sorry, but I think you've got that wrong for two reasons:

Firstly, at best this is an untested assumption. The effect of the benefits is to encorage workers to reduce the number of hours they work, reducing the supply of labour, which logically should increase hourly wage rates.

Secondly these employers operate in competetive markets, any advantages they receive from employee benefits should quickly be competed away in the form of reduced selling prices, leaving them no better off and all of the benefits either in the hand of the employees or in the hands of the employer's customers.

Well - I did say it was probably simplistic.

Your first point I agree with - tax credits as they stand strongly encourage working fewer hours. That's rather a perverse incentive is it not?

Your second point I agree with as well, in that it is likely that the consumer sees a benefit from these employers reduced wage bills - although not all employers will be in markets as competitive as retail. But why should the taxpayer subsidise these costs at all? It surely makes more sense for employers to pay a "real" wage to their employees, and for their products to be priced appropriately on the basis of this. Whichever way you look at it the market is distorted by this intervention, and we can't really know what the outcome would be if they were removed. My rough guess is that if all benefits were removed from workers (HB included), then (in the SE at least), it wouldn't be worth working at all until you hit £30k+.

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Up to a point......but in a competitive global free market not that easy to just up prices.....the customers will buy elsewhere, and do.

However the OP was claiming that benefits reduce wages and end up in the pockets of the employers, which clearly means reducing the prices, not upping them.

One could make a marginal case that if the employers were competing in an international marketplace then lower wages would benefit them, but I'd suggest that the vast majority of low wage employers are in the domestic retail/services sector and thus any changes to the cost structure would affect all competing businesses equally and would be bargained away in the form of lower (or even higher) prices very quickly.

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I'm sorry, but I think you've got that wrong for two reasons:

Firstly, at best this is an untested assumption. The effect of the benefits is to encorage workers to reduce the number of hours they work, reducing the supply of labour, which logically should increase hourly wage rates.

Secondly these employers operate in competetive markets, any advantages they receive from employee benefits should quickly be competed away in the form of reduced selling prices, leaving them no better off and all of the benefits either in the hand of the employees or in the hands of the employer's customers.

Why do large retailers, such as Tesco. employ so many part timers? Because it suits them...it gives them more flexibility on what hours they can give to whom...Some employees may have, say a 10 hour a week contract. but this can be increased with extra hours (no overtime allowance I might add)...you can't do that with someone working 40 hours, by reducing their hours, esp. with no or little work to do (such as during quiet periods, say during the summer)...and this is talking from experience, as I work for a retailer on a part-time basis...

People who work full time at these sorts of jobs quickly work out how badly they are paid for the work they do (so I don't blame them if they get the same deal for the same wage, but substituted partly with benefits)...You may find part timers are slightly more eager, as they haven't got the drag of the shit job for the full 40 hours, so you may find that productivity may be higher...They leave, for another similar job, which they believe is different, but isn't - but that's all they can get with their experience...

For me, my hours suit me, but I can see how doing 40 hours of shit for bugger all grates...I also hear that employers pay less NI for PT employees than those working FT (unless I'm wrong)...

Edited by Dave Beans
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Your second point I agree with as well, in that it is likely that the consumer sees a benefit from these employers reduced wage bills - although not all employers will be in markets as competitive as retail. But why should the taxpayer subsidise these costs at all? It surely makes more sense for employers to pay a "real" wage to their employees, and for their products to be priced appropriately on the basis of this.

I agree with this, however it is a totally different point to the "tax credits = employer subsidies" argument that gets trotted out on a regular basis, seemingly as a stick to beat crony-capitalist business with.

On the competition side, I'd suggest that the vast bulk of low wage jobs are in competetive industries, employees in non-competetive industries generally have far more bargaining power because any excess wages paid can simply be recovered by higher prices.

Whichever way you look at it the market is distorted by this intervention, and we can't really know what the outcome would be if they were removed. My rough guess is that if all benefits were removed from workers (HB included), then (in the SE at least), it wouldn't be worth working at all until you hit £30k+.

I've got to disagree on this point. You're essentially assuming that all workers live by themselves (or are sole-earners in a family unit) and that it's impossible to support yourself on less than £30k; the reality is that a large proportion of the workforce is female/young or otherwise dependent upon other persons for the major costs of living in which case £500 or £1,000 per month of extra spending money makes a big difference to them.

FWIW I'd suggest that tax credits probably make little actual difference to wage levels; there's a sufficient pool of workers/potential workers who don't qualify for tax credits to absorb the effects of any behavioural changes in those that do, even if this means importing more/fewer workers from the EU.

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....efficient productive well run businesses not hostile to change, that invest in and value their staff, value and care for their customers have little debt and do not pander overtly to shareholders if they have them, do pay their staff well because it costs more in many ways to lose good staff and train new ones....poor companies treat their staff poorly and their customers worse.

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The tax credits lark isn't all to do with helping companies or (maybe) helping employees. The government is very keen on the idea as in a wrecked economy it keeps the unemployment figures down and they are totally obsessed with that for electioneering purposes.

It doesn't matter if it creates massive imbalances in the real economy as long as the unemployment figures are minimised. Likely it's now got to the stage when so many workers are used to only 16 hours a week that many wouldn't be able to countenance or endure a full working week anymore now

Edited by billybong
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The tax credits lark isn't all to do with helping companies or (maybe) helping employees. The government is very keen on the idea as in a wrecked economy it keeps the unemployment figures down and they are totally obsessed with that for electioneering purposes.

It doesn't matter if it creates massive imbalances in the real economy as long as the unemployment figures are minimised. Likely it's now got to the stage when so many workers are used to only 16 hours a week that many wouldn't be able to countenance or endure a full working week anymore now.

Maybe 16 hours full productive work for every working aged person is all the economy requires.....you can't create demand, create stuff, create services if either people don't want it or do want it but can't afford to buy it, or more importantly can't afford to borrow the money to buy it......saturation point, how much debt can one country, business or individual carry?

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Why do large retailers, such as Tesco. employ so many part timers? Because it suits them...it gives them more flexibility on what hours they can give to whom...Some employees may have, say a 10 hour a week contract. but this can be increased with extra hours (no overtime allowance I might add)...you can't do that with someone working 40 hours, by reducing their hours, esp. with no or little work to do (such as during quiet periods, say during the summer)...and this is talking from experience, as I work for a retailer on a part-time basis...

People who work full time at these sorts of jobs quickly work out how badly they are paid for the work they do (so I don't blame them if they get the same deal for the same wage, but substituted partly with benefits)...You may find part timers are slightly more eager, as they haven't got the drag of the shit job for the full 40 hours, so you may find that productivity may be higher...They leave, for another similar job, which they believe is different, but isn't - but that's all they can get with their experience...

For me, my hours suit me, but I can see how doing 40 hours of shit for bugger all grates.

I'm sure that's quite right, but I don't see what it's got to do with tax credits.

.I also hear that employers pay less NI for PT employees than those working FT (unless I'm wrong)...

Yep, makes sense.

Employers pay NIC at 13.8% on any earning above the primary threshold of £153 p/w. Logically, 2 people working 20 hours per week at £7.50 per hour will earn £150 each and give rise to zero NIC liability; one person working 40 hours per week will earn £300 and cause the employer to pay £20 NIC.

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Maybe 16 hours full productive work for every working aged person is all the economy requires.....you can't create demand, create stuff, create services if either people don't want it or do want it but can't afford to buy it, or more importantly can't afford to borrow the money to buy it......saturation point, how much debt can one country, business or individual carry?

Maybe all that the economy requires under the current circumstances of 16 hours, tax credits and massive debt etc etc for as long as they can get away with it but the way it's structured doesn't help or facilitate the economy to develop, change or transform. That plus the ever increasing disinclination in a lot of the workforce to work beyond 16 hours, actually quite a disinclination to doing even that. It's potentially building up massive problems for the future and the real standard of living is deteriorating.

That's not a criticism of the 16 hour people but it's the outcome and the way it's developing.

Edited by billybong
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I'm sure that's quite right, but I don't see what it's got to do with tax credits.

Yep, makes sense.

Employers pay NIC at 13.8% on any earning above the primary threshold of £153 p/w. Logically, 2 people working 20 hours per week at £7.50 per hour will earn £150 each and give rise to zero NIC liability; one person working 40 hours per week will earn £300 and cause the employer to pay £20 NIC.

There are quite a number of people technically working under 16 hours (as I said they may have a 10 hour contract), and thus can't claim tax credits...however their hours could range from say 10 hours to 25 or 30 hours a week..They could claim them, if the system was more flexible (which UC was supposed to do, but it wont ever work)...but dont.

Not everyone who are doing the lower range of hours are claiming tax credits...They are most likely to be single, and I have no idea how they live on their wage, but they do...I know a few people who live like this...

If you have 20k part timers, where employers can save twenty quid a week on each....That's a lot of money saved, which ends up as dividends for shareholders..

Edited by Dave Beans
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How many jobs are there where people are 100% productive all of the time......many jobs they may only be productive two thirds of the time or less.....meaning they are being paid to be there not doing anything particualy useful......they could be at home being far more productive..... Herein lies the problem.

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How many jobs are there where people are 100% productive all of the time......many jobs they may only be productive two thirds of the time or less.....meaning they are being paid to be there not doing anything particualy useful......they could be at home being far more productive..... Herein lies the problem.

I almost thought that you work alongside me. But in reality I work maybe 1/3 of the week at best. ?
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They could be doing more productive stuff at home and not claiming tax credits but a lot are just used to being at the workplace for 16 hours and tax credits and that's it.

Make work pay means just that.....tax credits or unemployment credits different name same pot.

Working means working to pay the bills, rent/debts.....the cost of living full time costs more than working 16 hours minimum wage.

Edited by winkie
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Make work pay means just that.....tax credits or unemployment credits different name same pot.

Working means working to pay the bills, rent/debts.....the cost of living full time costs more than 16 hours minimum wage.

Indeed. The point is that with a large amount of the workforce ever more disinclined to work even the 16 hours suggests problems in restructuring to a more full time economy if it's needed to compete globally. Living standards for most are already deteriorating. Unless robotics does it all then it's a life of leisure for everyone - an unlikely outcome but who knows.

Edited by billybong
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Indeed. The point is that with a large amount of the workforce ever more disinclined to work even the 16 hours suggests problems in restructuring to a more full time economy if it's needed to compete globally. Living standards for most are already deteriorating. Unless robotics does it all then it's a life of leisure for everyone - an unlikely outcome but who knows.

How do you know people could work more hours but don't want to because they are not better off? I know someone on 15 hours a week who doesn't want any more hours I guess that tax credits are partly responsible.

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