The killer fact in this article is as follows:
However, some claimants have high expectations of what they might earn should they return to work. Of the minority who said they would like a job, about a third of men and one in six women said they would need at least £300 a week after tax to make it worthwhile coming off benefits and going in to work. That would mean a job paying around £20,000 a year.
There's a sore misunderstanding on the part of the BBC. These people do not have "high expectations", what the claimants are referring to is the fact that the welfare payments they receive are so generous and the withdrawal rate is so high, that mathematically they would indeed need to earn a gross salary of £20,000 to be significantly better off.
You can check this for yourself using DWP's Tax Benefit Model Tables. Long term IB is about £20 per week more than Income Support, so a single person over 25 on IB living in council housing has net out-of-work income of around £80 after housing costs (Table 2.1a). Assuming travel and work-related costs of £20 per week, to achieve the same level of net income when in work, they would need a gross income of £190 (Table 1.1a).
Does this make work worthwhile? Nope. Could this be fixed at the stroke of a pen? Yes - just reduce the generosity of out-of-work benefits a bit and reduce the marginal withdrawal rate a lot, and Bob's your uncle!
What have we wrought in the UK?
3 hours ago
7 comments:
Can anyone explain why invalidity benefit is higher than unemployment benefit?
Oh, sorry, it's so that NuLab get better-looking stats.
Silly of me. I do apologise.
Anon, while it is true that the number of IB claimants has increased from 740,000 to 2,600,000 since 1979, the bulk of that increase was between 1979 and 1997, i.e. under the Tories. The number on IB in 1997 was just under 2,400,000. Nulabour, Blulabour, it all part of the same LibLabConsensus.
Where is the politician with the guts to say, "Vote for me and I'll cut your benefits today to give you employment and self respect tomorrow."
It would require a lot of courage for the unemployed to support this policy, and I'm not sure we still have a majority that will vote this way. If a majority exists, it's certainly getting smaller as time goes by.
Perhaps immigration will help restore a work ethic. We hear a lot in parts of the media about foreigners coming here to live off the state, but in my opinion a higher proportion of immigrants wish to work than that of the indigenous population. This is not to say I think immigrants are inherently better workers, just that it takes time to be corrupted by the welfare state. The indigenous, of whatever ancestry, born here and raised by nanny are at a big disadvantage today.
Cutting benefits is the smaller part of the equation, much more important is reducing the marginal tax/benefit withdrawal rate.
The fact is that the difference between work and benefits has to be quite large to justify working. I love lying on my sofa. It takes a fair incentive to get me off it.
Agreed. That's why reducing the marginal withdrawal rate is so important - to make the income gap between working and not working as big as possible.
That's a good question: "Can anyone explain why invalidity benefit is higher than unemployment benefit?"
Putting aside the politics, it seems rather Victorian in its deserving/undeserving poor premise. Do people who cannot work because they are sick deserve more than people who cannot work because they are unemployable for some other reason? There might be additional costs due to their disability but that's a separate issue.
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