Let's take this story in The Daily Mail at face value:
A frugal woman who saved more than £22,000 out of her benefits has been left penniless because she did not tell officials about her nest egg.
Pauline Ford, aged 58, lived in a rusty mobile home, never went out, smoked or drank, and only spent the bare minimum she needed to feed herself and her 15-year-old dog. She wanted to build up her savings for her old age but fell foul of the law by failing to declare her assets when she applied for means tested benefits.
There would have been no problem if she had spent all the money but now she has been forced to repay more than she saved and has been left with nothing at all. Ford, of Valley Walk, Plymouth, who is unmarried, had admitted three counts of benefit fraud and was jailed for four months, suspended for two years by Recorder Mr Jeremy Wright at Plymouth Crown Court...
I don't like means-testing for lots of reasons, not least because it is savage taxation of the income and assets of poor people, but what sickens most is the fact that housing 'wealth' is completely ignored. If this woman had used the £22,000 to pay off a mortgage on a house worth considerably more, then she would not have lost a penny in benefits, and if she played her cards right, the DWP might have stepped in to 'help' her pay off the mortgage as well.
Tuesday, 20 December 2011
She should have bought a bigger caravan.
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17 comments:
True, but the benefits system is meant to be a safety net, not the means to build up £22k in savings. That's £22k of other people's cash.
You are right though, if she had speculated in property and bought something she could not afford, sorry I meant scrimped and saved to buy the dream family home, then the State would have given her even more.
R, but there are plenty of people who didn't save up £22k, and they have received other people's cash as well. And, to put it in perspective, £22k is approx. equal to one year's second home allowance for an MP.
If she's managed to save 22K from benefits, well done her. She received her 'entitlement' and through prudence and abstinence made it go further than other claimants. You could equally well ask why do other claimant squander so much?
At the same time it shows how stupid the benefits system is. As it is adminsitered by employed functionaries, whose first concern is their own employment, there is no incentive to properly look at someones circumstances.
Localise it.
I have a suspicion that it is impossible to run a welfare state that isn't saturated with such follies. By all means cite counter-examples, but I've heard plenty of tales of perverse incentives wherever I've lived.
Dearieme: CBI. It's the only one that totally gets rid of all the daft distortions and inefficiencies that means-testing and/or payment-only-in-kind (whether housing benefit or food stamps) inevitably creates.
"You could equally well ask why do other claimant squander so much?"
That's a bit of a harsh way to look at it. I'd infinitely prefer suicide to this woman's lifestyle, and I don't think it's reasonably to expect people - except maybe prisoners - to tolerate it.
L, I don't believe in local welfare rates. If we have free movement of building between different parts of the UK (whether that includes S, NI and W is neither here nor) then the welfare rate in £-s-d has to be the same everywhere in the country.
1. That makes it a lot easier to manage (it's difficult enough checking who is and who is not actually UK resident British citizen) let alone tracking down people's actual addresses (everybody will register as living in a high welfare rate area).
2. it gives people in expensive areas the motivation to either move to a cheaper area and get out of the way or to pull their socks up and find a job. It's the same logic as having LVT.
D, let's stick to this one particular perverse incentive, there are of course loads of others which are just as bad.
JB, agreed and agreed, as usual.
No hat tip for MBK?
AC1
Same as entertainment budgets at work. No point in skimping on the booze because it can't be saved and spent on something else the next year.
If she had relatives it would be different. My grandparents used to give us all of her (Canadian) benefits. She withdrew a regular amount each week, spent half of it and hid the rest under the bed, and every 6 months we would fly over and take the cash. OK, she also had a pension, otherwise the amounts would have been pitiful.
This particular case encapsulates, as pointed out by Lola, a contradictory ahem plank, of the present system - the amount the system provides is supposedly a carefully calculated minimum required to live on, and that calculation assumes little or no "personal capital" of any sort - which infers that recipients will and do of course receive the basic minumum and and have to spend every penny they get (and then get roundly slagged off for doing so in many places and not least by the Ministers in charge of the department which presumes that as the amounts given are the bare minimum recipients will have to spend it all) so, it follows, if a recipient is somehow managing to not spend it all, they don't need it, and if they are squirrelling any away for a really rainy day - say a hurricane day - well then they must declare how much they have squirreled away and have the bare minimum further reduced to force them to spend what they have squirreled away. There are no prizes whatsoever for being more than careful and more than prudent when you are a benefit recipient. Which means of course that "help" from well meaning family and friends usuallly results in a benefits reduction of some sort. There was as I recall a paper doing the rounds of Whitehall written by a prominent "think-wonk" (a Lord no less, if memory serves) which suggested that "people in difficulty" should be encouraged by a publicity campaign to look to family and friends first; and for family and friends to step in and help to a much greater degree, as part and parcel of reducing the "welfare bill" ....
This is why "christmas clubs" exist. I never understood why people stuck their money with companies like Farepak that sold overpriced goods instead of sticking the money in a bank account. Then someone explained - because it's inaccessible, it doesn't count against benefits.
Also, everyone should know that PPI revenue counts against benefits. You pay to protect your car loan and the DSS will take that off your benefits. The only winners with PPI are the banks as they make a whopping commission on the policy sold and then have their loan guaranteed.
AC1, why? I read it in yesterday's Mail the same as everybody else. The fact he emailed me the link after the event is neither here nor.
JB, yup, a lot like that.
Anon 17.02 good anecdotal.
Anon 17.17 I wouldn't put it past them, they say one thing but bullshit talks and money walks and our welfare claimant class is far too savvy to fall for it.
JT, aha, the whole Farepak thing now makes sense. To be honest, had the lady in question paid into a pension fund, then that doesn't count against benefits either. But instead of the DWP taking it off her, the pensions companies would have taken it off her in fees and commissions, or just malinvested it. A bit like Farepak...
MW - some of claimant class is probably indeed, too savvy, but my experience suggests that it is the "not quite so savvy" who end up reaping the punishments that the Great and Good design, ostensibly for the "too savvy" but actually designed to be pretty broad brush, because "it is the numbers that count" - especially when it comes to press releases - so if in fact more of the genuinely needy, not all savvy and pretty much lost and looking for the help they had been lead to believe was their due cases get hammered and cast aside, well who gives a toss, so long as we can point to a falling roll of benefit claimants?
Oh and glad you liked my contribution in a comment on a Dick P posting today - of course it makes much more sense to use that approach - the police have come to regard everyone as criminal who just haven't been caught and convicted yet, so why shouldn't the D of H adopt a stance of assuming we are all, in one way or another, doing things we didn't ought to, and must be stopped. Not for our benefit, although that will be the professed reason, but because, well, they just don't like the idea that we have minds of our own, don't fall down and worship at the feet of "professional mkedical opinion" (right or proven wrong, or just lies, and often peddled by people who really don't deserve to be thought of a medics but rather as meddlers) and some of us have proved resistant to "the messages" ..
Have jolly Yule everyone .. 'cos if the D of H and the vast swathe of banstarbators it funds on "our behalf" get their way, there won't be many more !
"there won't be many more !"
Yup, the Puritans are taking charge again. Welcome to the new Commonwealth.
"but what sickens most is the fact that housing 'wealth' is completely ignored."
Nor does it include council house wealth. Which in some cases £20 k less than it would cost others to pay rent is a lot.
Of course if you have secured tenancy
then you need a lot less money in savings. You don't have to pay if something breaks (like owner occupiers) or have money in case you need to move like private tenants.
Anon 23.26, good point re the "not at all savvy". But going by the Benefit Fraud blog, they do catch and prosecute a large number of "quite deliberately taking the piss" people as well.
Anon 21.58, good point re housing. Which is why I would prefer to exclude cash from asset means testing entirely and include housing 'wealth' instead. There would be no need to include housing if people were paying full rent or paying full tax, and by and large, it is owner occupiers who pay the least, but those days are a long way off.
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