In-work benefits reform, the way to incentivise employment

[chem1st]

Unemployment is a large problem in the UK, it is rising. Youth unemployment is at an all time high.

 

The average working week is shrinking, and overtime less common.

 

We have the minimum wage, which is a great thing. But some people earning NMW get less than those on benefits.

 

We have in-work benefits; council tax benefit, housing benefit, working tax credit, child tax credit etc.

 

But they don't often translate into a £ph net increase in income ph worked.

 

What we need in-work benefits to do is have a real £ph net increase in income if we are going to incentivise work.

 

Minimum wage is £5.80.

 

Surely somebody working for that, should realise a net gain of 50% of minimum wage. Say +£2.90ph worked

 

I'll give an example;

 

Unemployed youth.

£~52 JSA

£~63 HB

£~15 CTB

___________________________

£~130 benefit total/total income

Hours worked = 0

Net gain from hours worked/work costs vs benefit/tax system minimum = £0.00ph

 

 

Employed youth, 20 hours NMW

£116 Income

£~24 HB

£~4 CTB

____________________________

£~144 benefit+income total/total income

Hours worked = 20

 

However, you need to minus from that the £0.67 NI they pay, and take into account the travel to work costs, 5 days working 4 hours will require the person to get a bus pass at £17.50.

 

so, ~ £126 benefit + income - NI - Work travel costs/total income

Hours worked = 20

Net gain from hours worked/work costs vs benefit/tax system minimum = A NET LOSS of £0.20ph

 

 

This is not fair, nor does it make work pay. We do not have an abundance of jobs, especially full time jobs, and part time jobs can reduce peoples income (and this is for those on the lowest benefits).

 

Surely a system of in-work benefits is needed, (and we do have them, although they are not always designed to incentivise work, some are like WTC and CTC, but these in-work benefits are not available to the youth, unless they have children, then both CTC and WTC become available).

 

An in work benefit of £2.90 per hour worked, would incentivise work, and hopefully reduce youth unemployment, a form of unemployment that has reached its highest ever levels and continues to grow.

 

It would also encourage people to find higher paid, higher skilled jobs. NMW would equal a net gain of £2.90 ph, NMW+£x would equal a net gain of £2.90+£x ph.

 

The example of the employed youth highlights a lot of problems with our benefit tax system. A person working can;

 

Receive less than he would on benefits

Pay NI (which has associated administrable collection costs, probably greater than the 67p NI)

Still require benefits (which are now costlier to administer)

Pay council tax and receive council tax benefit (whilst paying NI that he then receives back in benefits)

Benefit private companies, which are subsidised by government, for example FIRST.

[espadrille]

Unemployment is a large problem in the UK, it is rising. Youth unemployment is at an all time high.

 

The average working week is shrinking, and overtime less common.

 

We have the minimum wage, which is a great thing. But some people earning NMW get less than those on benefits.

 

We have in-work benefits; council tax benefit, housing benefit, working tax credit, child tax credit etc.

 

But they don't often translate into a £ph net increase in income ph worked.

 

What we need in-work benefits to do is have a real £ph net increase in income if we are going to incentivise work.

 

Minimum wage is £5.80.

 

Surely somebody working for that, should realise a net gain of 50% of minimum wage. Say +£2.90ph worked

 

I'll give an example;

 

Unemployed youth.

£~52 JSA

£~63 HB

£~15 CTB

___________________________

£~130 benefit total/total income

Hours worked = 0

Net gain from hours worked/work costs vs benefit/tax system minimum = £0.00ph

 

 

Employed youth, 20 hours NMW

£116 Income

£~24 HB

£~4 CTB

____________________________

£~144 benefit+income total/total income

Hours worked = 20

 

However, you need to minus from that the £0.67 NI they pay, and take into account the travel to work costs, 5 days working 4 hours will require the person to get a bus pass at £17.50.

 

so, ~ £126 benefit + income - NI - Work travel costs/total income

Hours worked = 20

Net gain from hours worked/work costs vs benefit/tax system minimum = A NET LOSS of £0.20ph

 

 

This is not fair, nor does it make work pay. We do not have an abundance of jobs, especially full time jobs, and part time jobs can reduce peoples income (and this is for those on the lowest benefits).

 

Surely a system of in-work benefits is needed, (and we do have them, although they are not always designed to incentivise work, some are like WTC and CTC, but these in-work benefits are not available to the youth, unless they have children, then both CTC and WTC become available).

 

An in work benefit of £2.90 per hour worked, would incentivise work, and hopefully reduce youth unemployment, a form of unemployment that has reached its highest ever levels and continues to grow.

 

It would also encourage people to find higher paid, higher skilled jobs. NMW would equal a net gain of £2.90 ph, NMW+£x would equal a net gain of £2.90+£x ph.

 

The example of the employed youth highlights a lot of problems with our benefit tax system. A person working can;

 

Receive less than he would on benefits

Pay NI (which has associated administrable collection costs, probably greater than the 67p NI)

Still require benefits (which are now costlier to administer)

Pay council tax and receive council tax benefit (whilst paying NI that he then receives back in benefits)

Benefit private companies, which are subsidised by government, for example FIRST.

 

Seems a reasonable thing to do to me. There has to be some sort of incentive to coach the long term u/e off benefits.

We realise each day just how the system does not support people who actually work. This has affected my family in ways I cant describe at the moment so I do feel that we need to make it more of an incentive for people to get out of bed on a cold dark winters morning instead of turning over, going back to sleep and thinking that the state will pick up the tab.

[terryh]

and where are you going to find all these jobs ask maggie to bring back the mines and steelworks

[Tatman]

and where are you going to find all these jobs ask maggie to bring back the mines and steelworks

 

Thats the spirit

[Berberis]

and where are you going to find all these jobs ask maggie to bring back the mines and steelworks

 

Why not bring back the cotton mills while you're at it?

[Guest]

This subject gets discussed over & over again.

I fully agree that both Benefits and the NMW need overhauling but no real progress can be made without a massive job creation program together with good apprenticeship schemes.

 

We are a country with a disgraceful & crumbling road network.

We have water shortages every time we have 3 or 4 weeks without rain whilst we lose a third of all our water through leaking pipes (Prescott said that was going to be fixed but it never happened - as soon as we have another downpour, the leaking pipes are forgotten again).

There is a national shortage of social housing, both council & private - why, when council homes are sold off, is the money not used for building more.

The railways are a shadow of their former selves and we have been closing lines & stations since the 60's.

 

We may be up to the neck in debt now but when the good times were there, no investment was made by any of our governments so we need massive investment.

This would soon pay for itself by the reduced benefits bill and increased levels of income from all the extra workers.

If full employment was created, then staying idle on JSA etc. could be ended.

The problems cannot be sorted without some action of this sort.

[espadrille]

This subject gets discussed over & over again.

I fully agree that both Benefits and the NMW need overhauling but no real progress can be made without a massive job creation program together with good apprenticeship schemes.

 

We are a country with a disgraceful & crumbling road network.

We have water shortages every time we have 3 or 4 weeks without rain whilst we lose a third of all our water through leaking pipes (Prescott said that was going to be fixed but it never happened - as soon as we have another downpour, the leaking pipes are forgotten again).

There is a national shortage of social housing, both council & private - why, when council homes are sold off, is the money not used for building more.

The railways are a shadow of their former selves and we have been closing lines & stations since the 60's.

 

We may be up to the neck in debt now but when the good times were there, no investment was made by any of our governments so we need massive investment.

This would soon pay for itself by the reduced benefits bill and increased levels of income from all the extra workers.

If full employment was created, then staying idle on JSA etc. could be ended.

The problems cannot be sorted without some action of this sort.

 

Usually because it is used for something that isnt needed, or it is used to pay off some debt.

Of course we need massive investment but massive investment requires massive pots of money and we aint gonna have that some time soon.

I would like to have a brand new settee in my house and it would be great for the economy and the workers in the factory making that settee if I had the money to pay for it, but, as I dont, I have to wait until I get that money and then I shall eventually get that lovely new settee that I am longing for.

[terryh]

ok itsnot maggies fault that the cotton mills closed down some other tory twit

[Gormenghast]

This subject gets discussed over & over again.

I fully agree that both Benefits and the NMW need overhauling but no real progress can be made without a massive job creation program together with good apprenticeship schemes.

 

We are a country with a disgraceful & crumbling road network.

We have water shortages every time we have 3 or 4 weeks without rain whilst we lose a third of all our water through leaking pipes (Prescott said that was going to be fixed but it never happened - as soon as we have another downpour, the leaking pipes are forgotten again).

There is a national shortage of social housing, both council & private - why, when council homes are sold off, is the money not used for building more.

The railways are a shadow of their former selves and we have been closing lines & stations since the 60's.

 

We may be up to the neck in debt now but when the good times were there, no investment was made by any of our governments so we need massive investment.

This would soon pay for itself by the reduced benefits bill and increased levels of income from all the extra workers.

If full employment was created, then staying idle on JSA etc. could be ended.

The problems cannot be sorted without some action of this sort.

 

It was tried in Germany in the 1930s wasn't it?

[taxman]

This subject gets discussed over & over again.

I fully agree that both Benefits and the NMW need overhauling but no real progress can be made without a massive job creation program together with good apprenticeship schemes.

 

We are a country with a disgraceful & crumbling road network.

We have water shortages every time we have 3 or 4 weeks without rain whilst we lose a third of all our water through leaking pipes (Prescott said that was going to be fixed but it never happened - as soon as we have another downpour, the leaking pipes are forgotten again).

There is a national shortage of social housing, both council & private - why, when council homes are sold off, is the money not used for building more.

The railways are a shadow of their former selves and we have been closing lines & stations since the 60's.

 

We may be up to the neck in debt now but when the good times were there, no investment was made by any of our governments so we need massive investment.

This would soon pay for itself by the reduced benefits bill and increased levels of income from all the extra workers.

If full employment was created, then staying idle on JSA etc. could be ended.

The problems cannot be sorted without some action of this sort.

 

I thought councils were strictly prohibited by the original legislation from using the money from council house sales to build more houses.