Eurojohnny left a comment on my earlier post, Universal Credits/Single Unified Taper:
Unfortunately, you have been a bit selective. Looking at your graph for a single person 25+ you don't appear to take any account of WTC! Looking at the source figures, the tables also seem a bit confused on this, though the graphs seem to pick it up?!?
For example your graph shows someone with income around £100pw netting around £60pw and performing better under your system. In fact, as shown in the appropriate DWP graph, such an individual would be better off under the current system provided WTC is added to their income: if they were working 30+ hours (many self-employed here) their income would be £150pw; even a part-time employee receiving the basic element would be slightly better off now.
You need to redraw your graphs taking care to include basic and 30+ hours WTC.
Well, yes and no to that. I'll call that a score-draw...
The various dotted lines in the charts are taken straight from the Tax Benefit Model Tables, which are based on people living in social housing or renting privately (as explained in the original post), and represent the net income after housing costs i.e. wages - PAYE + Tax Credits (basic or 30+ hours) - rent - Council Tax + Housing Benefit + Council Tax Benefit. The bold lines in my graphs are also the figure for net income after housing costs (which are paid for by the Universal Credit and clawed back via PAYE under the Single Unified Taper).
So I am very much comparing like-with-like.
As to Eurojohnny's specific example...
Table 1.1b of the TBMT shows that a single adult who is an owner-occupier (ignoring any mortgage subsidies) and who is earning £195 a week also ends up with a net income before housing costs of £195 a week (PAYE and WTC net off to nothing); but at this level of earnings, Council Tax Benefit is tapered to £nil, so his or her net income would be £181 per week after paying £14 Council Tax (again, ignoring mortgage costs).
Under my suggestions, his UC would be £65 cash, and he gets a K-code of £131 per week*. So at earnings of £195 per week, the PAYE deducted would be £98**, so his net cash income after notional Council Tax (dealt with via UC/SUT) would be £65 UC + £195 gross wages - £98 PAYE = £161.
So this particular adult would be £19 a week worse off, assuming absolutely no change in behaviour, which he can easily make up by working a few extra hours, and if not, it must be worth £19 a week for the peace of mind that no horrible bill for overclaimed WTC will land on the doormat; or the peace of mind that there is no huge form filling nightmare if the number of working hours or wages goes up or down etc.
As my original charts showed, the black line criss-crosses with the three dotted lines, so at very low incomes, some people will be a bit worse off and some will be a bit better off (more or less at random - but the randomness is embedded in the current rules, and not what I suggested); simply picking one example of somebody who would be worse off, assuming absolutely no change in behaviour, is pretty pointless.
* UC = £65 cash + £14 Council Tax 'paid' = £79; £79 ÷ 31% = £255; £255 - weekly personal allowance [= £6,475 ÷ 52] £124 = £131.
** The lower of [50% x £195] and [31% x £195 + £131].
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5 minutes ago
13 comments:
I thought your post was going to be about a EU standard condom...
From the news reading i've been doing today, looks like someone linked Mark's post on Universal Credits / Single Unified Taper on a guardian article about Osborne. There was a reply aimed at whoever posted the link by a Eurojohn.
RR, that was his pseudonym and I'm sticking to it.
Anon, good summary (hence the PS on the original article).
All this debate really does illustrate how completely wrecked the current system is, doesn't it? It takes a load of maths to work out whether this person would be better off with the current system or not. How on earth does anyone expect a typical benefit claimant to work it all out?
The biggest advantage of Mark's proposals is their extreme simplicity. Obviously they aren't going to produce exactly the same outcomes as the current system, otherwise they would be the current system. The bottom line is that they would be fair, and seen to be fair by everyone, and they would be clear and administratively (relatively) simple.
:)
AC, "Obviously they aren't going to produce exactly the same outcomes as the current system, otherwise they would be the current system. "
Tee hee!
To be fair, if I had the time and energy I could do comparative for every single table in the TBMT, but I've never disputed that some people would be a bit worse off (as against the many who would be better off). But people can adjust to small falls in income - some people have to adjust to big falls in income and life goes on.
Thankyou for replying Mark, but I don't think that is my point - which is that individuals (single 25+ no children, though I suspect this will also be reflected for childless couples) on low incomes will be worse off - and making the poorest worse off, any worse off cos god knows they're poor enough at the moment, is a non-starter and at these levels there is little opportunity for "behaviour changes".
Anyone receiving full Working Tax Credit (which is up to about £6.5k pa at the moment I believe) will get just under £40 pw working 16+ hours or £50 pw working 30+ hours (such as the significant number who have used WTC to come off JSA and go into self-employment) and despite what your graph appears to show will be worse off under your system. I specifically mentioned someone on £100pw who could have a net income of £150pw currently, which does not seem to be reflected in your graph (there is a graph in the paper which reflects this, though curiously none of the table figures seem to).
As I understood it, you were attempting to assess your proposals re non-housing income and housing costs separately (you yourself express a preference for tackling the housing issue differently) and I accept that you might manage to reverse this income drop with what you do on Housing Allowance for the £100pw earner. For the very lowest incomes currently in receipt of full Housing Allowance, or for those who are owner occupiers, no such remedy is available and it strikes me these people on the lowest possible incomes but trying to work will be unacceptably worse off but you do not reflect this.
EJ,
1. The TBMT are all for social tenants (or 'private tenants') and that I based my charts on like-for-like after housing costs. My charts are clearly labelled showing which tables I got the figures from. I trust that as you interested in welfare reform you are familiar with how the tables are put together?
2. You don't need to tell me, or anybody else, who would be better or worse off, because it is a simple matter at reading and understanding what I suggested and then looking at the charts.
3. My charts show exactly what they are intended to show, and it is pointless for you to claim that they show something else. Some people are better off, some are worse off (see Adam's comment above).
4. Feel free to bandy around phrases like 'unacceptably worse off' if you so wish, but let us first agree on the maths and logic of all this.
5. You keep mentioning 'someone on £100pw who could have a net income of £150pw' but without anything to back this up. I have the TBMT in front of me and:
- a single childless adult without WTC (table 1.1a) on £100 pw gross would have net income before housing costs of £146 and after housing costs of £74. Under my suggestion he would get £115 after housing costs.
So he'd be considerably better off!
- the chart for a single adult with 30+ WTC (Table 1.1b) starts at gross income of £171.90 (so it is a mystery where you get your £100 figure from) and this person has income before housing costs of £188 and after housing costs of £116. Under my suggestions he would get £151 per week after housing costs.
So he'd also be considerably better off!
EJ,
Somebody working 30 hours a week at minimum wage gets £174. Somebody earning only £100, even at minimum wage, cannot be working more than 17 hours. Therefore they get the lower WTC of £37 per week.
AC, exactly, thanks, so we can add that £37 to what the person in Table 1.1a would be getting after housing costs = £111 (minus a bit because the amount of HB and CTB withdrawn goes up if your WTC go up!) and compare that with the £115 the person would get under my suggestions.
Yup, he'd still be (slightly) better off.
What I don't understand is why a single, CHILDLESS individual on £100 / week keeps cropping up. Who, other than someone with a disability works 17 hours a week when they have no parental responsibilities? If we mean students here they would only be doing so to supplement student loans and would have enough money. There doesn't seem to be any circumstances other than lazyness which would create this scenario of a £100/wk single, childless individual. Minimum Wage is £5.80 rising to £5.93 on 1st of October, I would expect the majority of single, childless individuals to be on £200 or more per week EASILY, even burger flipping pulls in that.
Now if you wanna go ahead and claim that the diabled would be worse off because there would be no specific tax credits top up anymore for those on DLA, you could increase the base rates of DLA but then taper it off in the same manner by using K-Codes, It seems to me viewing the charts that the only people who would be made worse off are precisely those in a situation to more easily increase their employment income, those who would be significantly better off are those who cannot do so as easily. Single mothers for example.
Mark, thanks for your reply again. First, I have to own up to an error (which you thankfully ignore) when I'm talking about those on the lowest incomes of £3.3k which is not relevant to this discussion (a warning there, about posting late at night when having TWO related but separate discussions - my points about people on this level are only relevant to another discussion, so apologies on that one).
Second, to reply to another poster first. Low earners are not all so because of being "lazy" so can we dispense with such right-wing nonsense for starters! Secondly, many people ARE on incomes below £6,500 and working either 16+ or even 30+ hours a week. In the former case because of being part-time (our jobs economy now depends on vast numbers of people on low-paid part-time work, not because of choice but because that is all they can get!). In the latter case, large and increasing numbers have found a way off JSA through self-employment - for which there is no "minimum wage." I think this is a good thing to be encouraged and expanded. It is made possible because WTC guarantees a minimum £50pw (and elsewhere, support for housing costs) from the early years where they make no profit at all, through the times of low profit (my £100pw or so people) before hopefully finally making it into the sunny uplands of no longer needing state support.
As I indicated in my previous post, I think there is a misunderstanding here emanating from whether we are debating a replacement for non-housing benefits OR one encompassing housing benefits too. As I conceded in my previous post, if you look to the latter then of course the shortfalls occuring by looking simply at replacing the non-housing part can be made up for (and more) by a more generous approach to housing costs. If I am right about this, can I suggest that the 2 elements need to be studied separately (whilst, of course acknowledging the combined effect) since otherwise the sheer number of variables (in the housing comparisons) makes the number of scenarios difficult for comparisons.
If I am right about this, my point would (I think) stand but only for owner-occupiers around the £100pw level and in receipt of WTC - which of course drastically reduces the number of people affected.
Having highlighted what I think to be the cause of the confusion, perhaps I can further justify my initial concern by drawing your attention to the contrast between your own graph and that in the DWP paper after table 1.1d - which seems to illustrate my point and shows the £100pw individual receiving just under £150pw after WTC.
Can I add (with excuses for the length of my posts) that I think I am unusual in that though left-leaning I am actually a long-standing supporter of a move to Universal Benefits (or 'Citizens Basic Income,' etc). BUT am all too aware that what distinguishes my support from those on the nutty-right is the level of payments, with myself constantly concerned to ensure that NO low-income individuals are any worse off than at present and preferably better-off.
EJ, ta for coming back!
1. Of course you don't agree with what I suggested, so there is no point arguing the toss, which is why you should go to DWP website and download their 21st Century Welfare consultation thingy and reply to them yourself!
2. The questions are quite narrowly framed and what I suggested here is in direct response to that, rather than what I would do if I were in charge. Send me a copy of what you submit.
3. Why do you mention this "£50 weekly minimum income", under what I suggested there is a "£65 weekly minimum income", what's not to like?
4. I chucked in Housing Benefit because there is no reason to treat this any differently to other (cash) benefits, and that was a question in the DWP thing.
5. Yup the table to 1.1d shows £150, but that's before housing costs (and clearly labelled as such). Far more important is the fact that whether that adult earns £0 a week or £200 a week, his net income hardly increases.
6. I also support CBI but I have no strong opinion on what the CBI "should be". Seeing as IS/JSA/E&SA are £65 a week, that seemed like a good place to start. I'd happily cull DTI, DFID, Trident, Afgh war, EU contributions and so on and use the £40 billion annual saving to bump up the £65/£52 a week to £80 for all adults, but again, that is completely beyond the remit of what DWP were asking for.
Its not really "right-wing nonsense" to consider SINGLE, CHILDLESS, ABLE-BODIED individuals lazy if they do not work. Even in so called "less affluent areas" there are jobs available, in Sheffield which has high unemployment I could walk into a job tomorrow were the need to arise.
The part-time issue is something seperate entirely, part-time workers are more expensive to employ due to the employers national insurance which should be scrapped, in the UKIP taxation policy such a change is proposed. Mark is one of the writers of this policy by the way and there's a lot in there which should appeal to a self confessed left-leaning individual if that individual can read between the lines a bit...
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