Issues with the benefit system

[Bletchleyite]

More commonly they were either completely lacking in the skills required to work- good luck getting work if you can't read and write- or the benefit system meant that they wouldn't get to keep any of the extra money made through work. It was depressing how often a benefit calculation would show someone to be £15/week better off working, but it would cost them £20 to get to work on the bus.

This is one key reason why Universal Basic Income has potential. You give the same base "benefits" to everyone (plus extras like child benefit), then you claw them back through tax once they earn a decent amount, so you don't get that "but I get nothing if I work" - at very low levels of pay you *do* let them keep the benefit *and* the pay.

 

[Tetchytyke]

This is one key reason why Universal Basic Income has potential.

Universal Credit was designed like this, with income tapering off the benefit. It was recommended that the taper rate be 70p (i.e. you keep 70p of any £1 you earn) but Osbourne set it at 50p. It's improved, but still not perfect.

But within that are huge issues. UC is calculated monthly. Fine if your wages are paid monthly. Not fine if your wages are paid weekly or 4-weekly. Someone paid 4-weekly has one month a year with two pay-packets, and the "extra" pay will clean out their UC entitlement the following month. Great.

 

[Bletchleyite]

But within that are huge issues. UC is calculated monthly. Fine if your wages are paid monthly. Not fine if your wages are paid weekly or 4-weekly. Someone paid 4-weekly has one month a year with two pay-packets, and the "extra" pay will clean out their UC entitlement the following month. Great.

Lunar-monthly pay is an utter nuisance in just about every form, because almost every bill comes monthly. The easiest thing to do may simply be to ban it. It's not that common anyway.

Weekly is harder to deal with but doesn't cause as much variance.

 

[Tetchytyke]

Lunar-monthly pay is an utter nuisance in just about every form, because almost every bill comes monthly. The easiest thing to do may simply be to ban it. It's not that common anyway.

4-weekly pay is common in retail. Tesco- a massive employer- pay 4-weekly (or they did when I left welfare advice in 2020).

Most people on UC have an earnings threshold before the taper kicks in. So those paid 4-weekly can end up losing £100s in UC, just because of how they're paid. I know they've tried to fix it, but still.

 

[Bletchleyite]

4-weekly pay is common in retail. Tesco- a massive employer- pay 4-weekly (or they did when I left welfare advice in 2020).

Most people on UC have an earnings threshold before the taper kicks in. So those paid 4-weekly can end up losing £100s in UC, just because of how they're paid.

I think some people do quite like the idea of "double pay" in the expensive month of December, to be fair (even though all it really is is the equivalent of saving 1/11 of your pay from January to November and paying it to yourself in December). If you think about it that way it's quite nice, almost like a Christmas bonus.

It wouldn't be impossible to change the calculation to take this into account in some form, e.g. to calculate UC on the basis of a rolling 12 month monthly average.

 

[The Ham]

We all know there are a proportion of people on benefits simply because they can’t be bothered to work. I can’t see how anyone can make a case to say that cohort deserves 10.1%. Those who physically cannot work is another matter entirely.

There's quite a few people claiming benefits who are working.

For example there's 2.6 million claiming housing benefits, with about 1 million of those being of pension age, leaving about 1.6 million of working age

However the number in work and getting UC is over 1 million (according to the TUC it's 1.3 million - of about 2.6 million). Now I don't know how the system works, whether both claming housing benefits count or if it's just one, however it does highlight that a significant number are in work.

 

[Peter Sarf]

I think some people do quite like the idea of "double pay" in the expensive month of December, to be fair (even though all it really is is the equivalent of saving 1/11 of your pay from January to November and paying it to yourself in December). If you think about it that way it's quite nice, almost like a Christmas bonus.

It wouldn't be impossible to change the calculation to take this into account in some form, e.g. to calculate UC on the basis of a rolling 12 month monthly average.

I am always dragged back down to reality by remembering the people I have dealt with who really cannot budget. They can never save and, like a lot of us, will borrow for things they don't really need (credit cards). This is all made worse by not having much income in the first place. These experiences have taught me that many people are not as intelligent as me (I am not basting). These people are essential as they do the jobs that many intelligent/educated people would not do. They form an important part of our economy.

Now I see benefits are set at about £335 per month but a state pension is nearly £800 per month. Now one excuse is to encourage people back into work - and I do see people who just will not work and have a nasty attitude to work. BUT I see one case of a 65 year old who was let go by her employer due to Long Covid. The job centre are just going through the motions as retirement age looms. But she has less than half the money coming in than a pensioner expects. We are just keeping her going until pensionable age. I see people turning to dubious credit to get by.

It is a two edged sword. Providing support for people who are out of work but without giving so much that there is no incentive to work. Sadly there are a lot of people unable to work who fall through into poverty. I think there are a number who claim benefits and earn a little extra doing cash in hand doing casual work, to a lesser degree selling drugs or other crime.

 

[Tetchytyke]

I am always dragged back down to reality by remembering the people I have dealt with who really cannot budget. They can never save and, like a lot of us, will borrow for things they don't really need (credit cards).

This is far more true of the middle classes, in my experience: Audi on tick, holidays on tick, sofas on tick.

For people on benefit incomes the truth is that borrowing- usually catalogues, not credit cards- pays for the kids clothes and maybe something at Christmas. The problem is that it is impossible to repay borrowing from benefit incomes, so the debt just gets bigger and bigger. A Debt Relief Order will give some respite, but not in the longer term.

It's also worth pointing out that social housing comes unfurnished. And by unfurnished I mean social housing doesn't even come with a carpet.

A depressingly big part of my job was making grant applications to Greggs to buy a family s new cooker or fridge. Sometimes the answer was yes but increasingly the answer was no due to over-subscription.

 

[Bletchleyite]

Now I see benefits are set at about £335 per month but a state pension is nearly £800 per month.

Given that in most of the UK you can't even rent a single room for £335 a month, let alone eat, is that not with housing benefit on top, which would account for the difference?

 

[GS250]

Aren't we all going to be on benefits in the future? This being the assumption that there aren't going to be that many jobs available due to AI etc.

 

[Bletchleyite]

Aren't we all going to be on benefits in the future? This being the assumption that there aren't going to be that many jobs available due to AI etc.

What makes you think that? People thought computers would kill off all jobs, but they've formed a multi billion dollar business of their own.

 

[The Ham]

Aren't we all going to be on benefits in the future? This being the assumption that there aren't going to be that many jobs available due to AI etc.

Not as big an issue as you may think, as the number of people not working due to having retired is growing (very rapidly) and whilst the population is growing the number under 16 isn't keeping up with that rate of growth by quite some margin.

As such there's more need for service providers to older people (which may include meals out, shopping, etc. as well as care services) but with a working age population that if it wasn't for net migration would be shrinking.

There's been fears for loss of jobs due to technology since at least the Luddites and it's rarely reduced the numbers needing to be in work (often due to a shift in what is being done).

For example, Excel got rid of accountancy clerks, however because it was so easy to do it meant that there's now just as many accountants to audit the data. As such technology created higher paid roles than people were in before.

The issue may come that the step up into qualified role become too high without a specialist degree or other training.

 

[ainsworth74]

Given that in most of the UK you can't even rent a single room for £335 a month, let alone eat, is that not with housing benefit on top, which would account for the difference?

That's the rate for a single person over 25 on Universal Credit with no housing costs element included in the award. Most working age people cannot claim Housing Benefit anymore (unless they're already on it) and will receive support through Universal Credit instead.

Though even then that support is not all milk and honey. Private rents are capped at the 30th percentile of the local areas rental market so 70% of private properties will be outside of your budget immediately and usually those on the lower end are, you know, rubbish. Though at the moment they've been held at and will continue next year to be held at the same rates as 2020/21 so are probably now even lower than the 30th percentile. It's a bit better in social housing as that can meet the full rental charge but there Bedroom Tax applies reducing your eligible rent by 14% for one bedroom or 25% if you've got two or more than the law says are required.

 

[Broucek]

This is tricky. We have a HUGE percentage of the working age population not working. Some of those are too sick, others have caring responsibilities, some may have strong community ties in places where there are not that many opportunities and others are perhaps genuinely not employable on anything other than a subsidised basis.

However the total number of people on out of work benefits is now FIVE MILLION. https://www.spectator.co.uk/article/yes-five-million-are-on-out-of-work-benefits-heres-the-proof/

Given the size of this number it is clear that some of those people are simply choosing not to work... Meanwhile, we have a HUGE staffing crisis across every sector of the UK economy with a similar pattern in many other European markets (without wishing to distract from the main point, Brexit hasn't helped but that's not the main cause).

In this context, it's madness that the benefits system does too little to get people into work. However, any attempts to fix this problem will almost certainly end up harming the most vulnerable. I'm glad I'm not responsible for public policy in this area.

By the way, UBI has conceptual attractions, but would almost certainly push inflation even higher and our public finances are knackered. Hence, its implementation in the near future would be tricky to say the least...

 

[ainsworth74]

However the total number of people on out of work benefits is now FIVE MILLION. https://www.spectator.co.uk/article/yes-five-million-are-on-out-of-work-benefits-heres-the-proof/

Given the size of this number it is clear that some of those people are simply choosing not to work... Meanwhile, we have a HUGE staffing crisis across every sector of the UK economy with a similar pattern in many other European markets (without wishing to distract from the main point, Brexit hasn't helped but that's not the main cause).

Er that's a very simplistic picture.

Taking Universal Credit, as the DWP produce nice stats for it, as of October 2022 there were 5.8m people on Universal Credit (which I assume is what the Spectator are using for their figure). Of which 2.2m were working (either with no work search requirements or a requirement to seek more work), 1.8m have no work search requirement at all (disabled, carers, parent to a child under 1), 0.4m preparing or planning for work (parent to a child aged 1 or 2, limited capability for work right now, etc) and 1.4m who are searching for work (these would have been Jobseekers Allowance claimants in old money). So of the 5.8m UC claimants 4m are either in work or cannot work.

The Daily Mail and the tabloids like to paint a picture of all benefit claimants being lazy scroungers that need to get off their backside and get a job or some fecund lower class girl just pumping out kids at regular intervals. But the majority of claimants are either in work or cannot work.

Plus of the 1.4m odd who are actually actively seeking work, looking at the ONS stats for the labour force from July to September 2022, well over half will likely be in work within six months, another chunk will be back to work within twelve months and only around perhaps a third of the total are actually going to be unemployed for more than a year.

We don't have a huge crisis of unemployed lazy scroungers sat on their fat arses as much as the Spectator and other right wing media outlets like to claim. We do have a crisis of ill health and people who should be working but can't due to the poor health the nation. We do have a crisis of transient underpaid work which struggles to attract applicants. We do have a crisis of people not being able to afford to heat and eat.

 

[Bletchleyite]

We do have a crisis of transient underpaid work which struggles to attract applicants.

Certainly, and that work often has unnecessarily poor conditions, too.

We also have a crisis of employers being unwilling to train people up and thinking they deserve trained employees growing on trees!

 

[ainsworth74]

Certainly, and that work often has unnecessarily poor conditions, too.

We also have a crisis of employers being unwilling to train people up and thinking they deserve trained employees growing on trees!

Agreed! Wholeheartedly!

 

[Broucek]

Plus of the 1.4m odd who are actually actively seeking work, looking at the ONS stats for the labour force from July to September 2022, well over half will likely be in work within six months, another chunk will be back to work within twelve months and only around perhaps a third of the total are actually going to be unemployed for more than a year.

We don't have a huge crisis of unemployed lazy scroungers sat on their fat arses as much as the Spectator and other right wing media outlets like to claim. We do have a crisis of ill health and people who should be working but can't due to the poor health the nation. We do have a crisis of transient underpaid work which struggles to attract applicants. We do have a crisis of people not being able to afford to heat and eat.

The Speccie figures are indeed simplistic but we do have more people claiming and a labour shortage

But thanks for the knee-jerk, comfort-zone, partisan party politics response. (Sarcasm)

 

[ainsworth74]

The Speccie figures are indeed simplistic but we do have more people claiming and a labour shortage

Yes and of the 5.8m that claim Universal Credit 2.2m are already in work and 1.8m cannot work. So that's 4m right off the bat who are either already in work or cannot work so cannot really help address the labour shortage in any meaningful way (though some of the 2.2m are probably part time so might be able to pick up more hours). Of the 1.8m left around 0.4m of them are taking steps to prepare for work and the remaining 1.4m are actively seeking work. But as said, most of those will be in work within 6 six months. This is actually healthy. You want short term churn in employment figures, that's typically a healthy sign in an economy!

But thanks for the knee-jerk, comfort-zone, partisan party politics response. (Sarcasm)

I get fed up of the right wing, and it is usually right wing, distortion of the reality of the benefits system to suit a party political point. So you'll have to forgive me as someone who works with people caught up in it every day for getting fed up of those distortions.

 

[Tetchytyke]

The Speccie figures are indeed simplistic but we do have more people claiming and a labour shortage

A significant proportion of UC claimants are in paid employment. As @ainsworth74 points out, 2.2m people on UC are in full time (no additional work requirement) or part time work.

It's worth noting that UC numbers are "rising" because people are being migrated from other benefits. People in work claiming UC will, previously, have received Working Tax Credit and/or Child Tax Credit, which have been abolished to new claimants.

The bigger question is, of course, why someone working full time cannot afford to live without a government top-up. That indicates to me that we don't have a labour shortage, we have a shortage of employers prepared to pay a decent wage.

 

[RailWonderer]

Certainly, and that work often has unnecessarily poor conditions, too.

We also have a crisis of employers being unwilling to train people up and thinking they deserve trained employees growing on trees!

Totally agree. They expect a finished product all in one and in fact I have seen employers search for months and months and choose not to employ anyone after an extensive search. They would rather be understaffed long term then train somebody even to a basic level they require.

 

[Tetchytyke]

Given that in most of the UK you can't even rent a single room for £335 a month, let alone eat, is that not with housing benefit on top, which would account for the difference?

Just to add to @ainsworth74 explanation, the housing element of UC is based on bedrooms. For social housing the "bedroom tax" cuts the benefit if you are deemed to have too many bedrooms. It's worth noting that children are expected to share bedrooms, so a typical family of 4 would often be treated as over-occupying a 3-bed flat.

For private housing, the rate is the 30th centile for the category you're entitled to. For a single person aged 34, that would be the "shared accommodation" rate, i.e. a room in a shared house. So 70% of *shared houses* would be outside your budget.

Still, scroungers eh.

 

[GusB]

There's also the issue that the jobs available may not be near where people live and it's not quite so simple for people to up-sticks and leave.

• Is there similar housing in the new area to where someone lives now? If it has taken years on the housing waiting list before someone was allocated their current house, and they've spent consider time and money turning it into a home, it's a daunting prospect having to move when there's no guarantee that living standards will be any better.
• Someone may be looking after elderly relatives nearby, or may themselves be in receipt of emotional support from a network of family and friends that suddenly disappears when they move home and go to a place where they may not know anyone at all.

If there was better availablity of affordable housing where these unfilled vacancies are, then perhaps there might be more interest.

The problem with trying to get people off benefits is that there's far too much stick and a tiny bit of carrot. The DWP will say that they help people into work; they don't. A visit to my local job centre today, compared with ten years ago, will illustrate that they no longer have the numbers to provide any meaningful help. The move to "everything online" can be daunting for someone who is not confident with technology. They've even removed the touch-screen terminals that allowed people to browse local jobs and print the detail. It's not as if they needed the space within the building - it's more likely that they cost money to maintain - but it removed a relatively easy way for people to find and apply for jobs.

 

[Broucek]

One can only hope that companies and policymakers will become more imaginative. There is some evidence of the former but I don't really see the latter. Fixing the housing market will help

 

[DelayRepay]

The move to "everything online" can be daunting for someone who is not confident with technology. They've even removed the touch-screen terminals that allowed people to browse local jobs and print the detail. It's not as if they needed the space within the building - it's more likely that they cost money to maintain - but it removed a relatively easy way for people to find and apply for jobs.

This is a real problem. In the 'olden days' the local paper would have a day for job adverts, and there would be dozens to choose from. Now it's all online and, as you say, that can be daunting for someone who's not confident. Younger people will probably be ok, but there will be older people, perhaps made redundant after many years in the same job, who don't really 'get' computers, even if they manage to find a library that's still open to use one at.

 

[GS250]

There's also the issue that the jobs available may not be near where people live and it's not quite so simple for people to up-sticks and leave.

• Is there similar housing in the new area to where someone lives now? If it has taken years on the housing waiting list before someone was allocated their current house, and they've spent consider time and money turning it into a home, it's a daunting prospect having to move when there's no guarantee that living standards will be any better.
• Someone may be looking after elderly relatives nearby, or may themselves be in receipt of emotional support from a network of family and friends that suddenly disappears when they move home and go to a place where they may not know anyone at all.

If there was better availablity of affordable housing where these unfilled vacancies are, then perhaps there might be more interest.

The problem with trying to get people off benefits is that there's far too much stick and a tiny bit of carrot. The DWP will say that they help people into work; they don't. A visit to my local job centre today, compared with ten years ago, will illustrate that they no longer have the numbers to provide any meaningful help. The move to "everything online" can be daunting for someone who is not confident with technology. They've even removed the touch-screen terminals that allowed people to browse local jobs and print the detail. It's not as if they needed the space within the building - it's more likely that they cost money to maintain - but it removed a relatively easy way for people to find and apply for jobs.

Gus an acute problem on Skye is housing for quite often key workers or those working on projects. They literally cannot fill jobs of all description because potential candidates cannot actually live there

 

[Peter Sarf]

This is far more true of the middle classes, in my experience: Audi on tick, holidays on tick, sofas on tick.

For people on benefit incomes the truth is that borrowing- usually catalogues, not credit cards- pays for the kids clothes and maybe something at Christmas. The problem is that it is impossible to repay borrowing from benefit incomes, so the debt just gets bigger and bigger. A Debt Relief Order will give some respite, but not in the longer term.

It's also worth pointing out that social housing comes unfurnished. And by unfurnished I mean social housing doesn't even come with a carpet.

A depressingly big part of my job was making grant applications to Greggs to buy a family s new cooker or fridge. Sometimes the answer was yes but increasingly the answer was no due to over-subscription.

A good description. Basically many people cannot really manage money but those on the lowest income have to manage it more (quite often it is impossible). A good example were the door step lenders where someone could quite easily end up with a mushrooming debt due to the high interest rate.

Given that in most of the UK you can't even rent a single room for £335 a month, let alone eat, is that not with housing benefit on top, which would account for the difference?

One I know of gets housing benefit of just under £350 per month. So less then £700 per month in total, so less then the state pension. They believe they will still get housing benefit once they are in receipt of state pension.

What makes you think that? People thought computers would kill off all jobs, but they've formed a multi billion dollar business of their own.

True. The number of times I (as a programmer) got told computers were stealing peoples jobs. Seems to actually create jobs.

Not as big an issue as you may think, as the number of people not working due to having retired is growing (very rapidly) and whilst the population is growing the number under 16 isn't keeping up with that rate of growth by quite some margin.

As such there's more need for service providers to older people (which may include meals out, shopping, etc. as well as care services) but with a working age population that if it wasn't for net migration would be shrinking.

There's been fears for loss of jobs due to technology since at least the Luddites and it's rarely reduced the numbers needing to be in work (often due to a shift in what is being done).

For example, Excel got rid of accountancy clerks, however because it was so easy to do it meant that there's now just as many accountants to audit the data. As such technology created higher paid roles than people were in before.

The issue may come that the step up into qualified role become too high without a specialist degree or other training.

Proof of the shortage of working age people is that the pension age has increased.

Certainly, and that work often has unnecessarily poor conditions, too.

We also have a crisis of employers being unwilling to train people up and thinking they deserve trained employees growing on trees!

I have experienced loss of job opportunity due to lack of training and in IT it was rare to get training. Companies seemed to prefer poaching staff from other companies. It is that attitude to training that has led to the obscenely large reliance on rest Day Working, so short sighted.

A significant proportion of UC claimants are in paid employment. As @ainsworth74 points out, 2.2m people on UC are in full time (no additional work requirement) or part time work.

It's worth noting that UC numbers are "rising" because people are being migrated from other benefits. People in work claiming UC will, previously, have received Working Tax Credit and/or Child Tax Credit, which have been abolished to new claimants.

The bigger question is, of course, why someone working full time cannot afford to live without a government top-up. That indicates to me that we don't have a labour shortage, we have a shortage of employers prepared to pay a decent wage.

True. Someone I know who lost her job due to long Covid would be finding it hard to make ends meet right now if she was still in her job. That person has not had the heating on this Autumn and intends to keep it off all winter. Currently her abode is at 14 deg C just after midday today. She copes by staying in bed as much as possible and avoiding eating. We took her out today to IKEA as it is warmer there.

This is a real problem. In the 'olden days' the local paper would have a day for job adverts, and there would be dozens to choose from. Now it's all online and, as you say, that can be daunting for someone who's not confident. Younger people will probably be ok, but there will be older people, perhaps made redundant after many years in the same job, who don't really 'get' computers, even if they manage to find a library that's still open to use one at.

True. As a techie I still find the progress unpleasant. I encounter people who do not have the internet and are not computer literate. Many of them I fear are vulnerable to fraud if they did dip their toe in the water. Some are illiterate. These are the people that can stomach the low paid menial tasks that the "all you have to do is go online" brigade would never do themselves.

 

[Dai Corner]

The bigger question is, of course, why someone working full time cannot afford to live without a government top-up. That indicates to me that we don't have a labour shortage, we have a shortage of employers prepared to pay a decent wage.

Isn't the idea that a full time minimum wage job should be enough for, say, a young adult living with parents or a childless couple but those who are deemed to need more or cannot work full time such as parents of young children get their income topped up through the benefits system?

 

[david1212]

....Now I see benefits are set at about £335 per month but a state pension is nearly £800 per month.....

If only there were two catagories and no fuzzy boundary
- pensioners and those who can not work due to illness / disability
- those who are between jobs
plus full-time work paid enough for the full cost of living including housing.

For the former even if the home is owned outright £9,500 a year is not a lot without any additional cost of illness / disability.
For the latter the provision just to cover short term essentials e.g. food, utilities not e.g. clothing, household items be that kettle, laptop etc. Housing is tricky as a mortgage could have a payment holiday but for renting the provider reasonably would not give say 3 months credit to be repaid over 24 months starting 9 months from the date employment recommenced.

I am always dragged back down to reality by remembering the people I have dealt with who really cannot budget. They can never save and, like a lot of us, will borrow for things they don't really need (credit cards). This is all made worse by not having much income in the first place. These experiences have taught me that many people are not as intelligent as me (I am not basting). These people are essential as they do the jobs that many intelligent/educated people would not do. They form an important part of our economy.
....

Budgeting is one issue, social pressure is another and attitude a third. Back in time credit has a stigma so was only a last resort for absolute essentials. Everything else was saved for.

Isn't the idea that a full time minimum wage job should be enough for, say, a young adult living with parents or a childless couple but those who are deemed to need more or cannot work full time such as parents of young children get their income topped up through the benefits system?

For 40 hour a week minimum wage over age 22 is almost £20,000 a year gross so ( correct me if wrong ) after income tax, NI and workplace pension deductions around £16,500 a year take-home. At age 18 just over £14,000 gross with around £1000 of deductions. Hence it ought to meet your first two criteria.

...We also have a crisis of employers being unwilling to train people up and thinking they deserve trained employees growing on trees!

Across the board how many employers have secure long term prospects so can justify the costs of training ? Consider rail infrastructure where the average worker age is increasing but a significant proportion is contracted. A contractor will be reluctant to invest in training without long term certainty of requiring the worker. For a dedicated thread but if the majority was in-house by Network Rail and they were providing the training with overall a high proportion staying then long term stability.

 

[Bletchleyite]

Across the board how many employers have secure long term prospects so can justify the costs of training ? Consider rail infrastructure where the average worker age is increasing but a significant proportion is contracted. A contractor will be reluctant to invest in training without long term certainty of requiring the worker. For a dedicated thread but if the majority was in-house by Network Rail and they were providing the training with overall a high proportion staying then long term stability.

The very fact that it's contracted is part of that problem, of course. If Network Rail did it directly you'd have an obvious apprentice-to-manager career path, as you say.