Is the title of the new magnum opus from the DWP:
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53. But we also know that past government policy across a range of areas, from welfare to the legal system, has exacerbated the rising trend in family breakdown:
• The couple penalty in the welfare system: The way that benefits and tax credits are paid in the current welfare system means that many couples are better off living apart than if they choose to live together.
• Treating symptoms not causes...
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We can ignore that second bit, the underlying cause is taxing earned income not the rental value of land or other government monopolies, and focus on the couple penalty, which is a maths thing. What does the DWP suggest..?
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Supporting family formation: the couple penalty
57. Currently, there are different benefit payment rates for couples and single people because the rate set for couples assumes that they will have reduced outgoings because they can share the expense of some living costs.
58. The couple penalty exists in the current welfare system because the way that benefits and tax credits are calculated means that many couples are better off living apart than if they choose to live together.
59. The introduction of Universal Credit will reduce the couple penalty where it is likely to have the greatest impact – among low earning couples. It will do this by providing an enhanced earnings disregard which will, along with the reduced taper, allow couples to keep more of their income in work. Couples will also receive the higher personal allowance available in the current out-of-work benefits within their Universal Credit, to ensure they are not disadvantaged relative to working singles.
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57. Is true, but that is not what makes the big difference. Income Support is £67.50 per week for a single adult over 25 and £105.95 for a couple. So a couple can make themselves £29 better off by splitting up. That'd be easily fixed by making it a flat £60 per adult, in which case a single person is £7.50 per week worse off and a couple is £15 a week better off.
58. Is the big one. What makes the really big difference, and why couples can make themselves significantly better off by splitting up (or by not getting together in the first place), is when one parent is working and the other isn't. If both are working or neither are working, yes, there is an inherent bias against couples, but it is not enormous.
The calculations might be slightly different if and when the Universal Credit comes in (i.e. as soon as the DWP bureaucrats have worked out how to make it as complicated and ineffective as possible, it's their jobs on the line if it were actually simple and worked), but based on the current tax/Tax Credit system (using the TBMT for 2011-12, the last ones available, rather sadly), the maximum which a couple can gain by splitting up is about £200 per week, and that maximum is reached at wages of about £400 (which is below average wage but still equates to a full time job on nearly twice the National Minimum Wage).
Broadly speaking, a single mum, two kids gets her rent paid and £200 cash in hand benefits and about 65p of those benefits are taken away for every £1 net income her partner earns (if she officially has one).
If her partner earns £400 and they keep quiet, they bank £200 extra a week; if they are foolish enough to tell the DWP, or if the DWP find out they are £200 a week worse off. The level of means testing is so savage, that by that stage it hardly makes a difference whether the partner packs in his job, that only loses them £80 a week, and probably enables them to wangle their way out of repaying all the over claimed benefits which tips the balance in favour of not working at all.
59. Nope. The couple penalty arises largely because of the means testing - it is embedded in the whole system and the Universal Credit will do absolutely nothing to fix it. Of course, the same applies to a couple where both are out of work; if one of them finds a job, they lose nearly all their benefits so it's hardly worth bothering - unless the couple officially split up, of course - the only way to escape the poverty trap legally is if both can find a job at the same time. Only with such couples, the effect of the means testing is referred to as the "poverty trap" and not the "couple penalty".
BESS Fires
1 hour ago
7 comments:
"as soon as the DWP bureaucrats have worked out how to make it as complicated and ineffective as possible, it's their jobs on the line if it were actually simple and worked"
I don't think so. Civil servants are trained to make things as complicated and therefore ineffective as possible. It's done to make sure every eventuality is covered and thus no blame can possibly be attached to the architect of the system. Their jobs are not on the line. If there is no work for them in the DWP, then they will be redeployed elsewhere. Alternatively, they will be offered such generous redundancy terms that they'd be mad not to take them. Civil service redundancy can set you up for life.
Civil service redundancy can set you up for life.
How true. Perhaps not strictly "civil service" in the government sense, but up here, the local Council and the local Health Board were recently having a clear-out of staff to reduce their official head-count and "save money". They invited people to apply for "voluntary severance". The queues were out the door, twice round the building and away off down the street, because of the generosity of the terms.
Naturally enough, the longest-serving people (the ticks buried deepest in the beast's skin, who've quaffed most deeply of the taxpayers' largesse and who by long practice contribute least in return for most) fell into two groups:
1. those approaching retirement anyway, with cronies who could engineer payoffs at staggering rates, and
2. those who didn't have the cronies and so were "too expensive" to let go.
So the first lot are now out with pocketfuls of cash; several are putting themselves forward for election in the forthcoming local authority elections for a £20000-a-year sinecure as a Councillor.
The second lot are still busy doing nothing useful and now they feel resentful too, and spend their days in acts of what might be called passive sabotage.
Marvellous!
Naturally enough, it's just a matter of time before the most senior managers reappear on the payroll as "consultants" because the Council needs their "expertise" at several hundred Pounds a day.
Different day, same shit.
It's an interesting thought that in the C18th, the country thrived and supported as many non-contributors to the economy as, probably, it does now, in the form of the landed gentry and sinecure holders. The difference being, I suppose, that in those days the economically inactive lived off land rents and taxes on land and now they live off taxes on the active economy.
B, but flate rate benefits like Child Benefit work a treat, there's practically no fraud or error, admin costs are more or less nothing; the mother tells them her bank details when the baby is born, HMRC (not DWP!) sets up a standing order payment to her, and that's the end of the matter.
FT, yes, stories like that abound and depressingly they are all true.
B, it's the same shit different century. The Faux Lib's claim that government used to be smaller, no it wasn't, because in olden times the government was landowners who lived off rents, the quango class has been greatly enlarged but only at the expense of landowners.
We've had the 'volunatry severance' here too.
I didn't spot any cronyism as such, more just manager A manages to shaft manager B out of their job during the confusion and take over.
Then for some reason manager B gets a very nice settlement. Everyone who wasn't a manager who applied was 'too expensive' to get rid of.
So now manager B isn't offically a manager, but still gets paid twice as much as the rest of us, and gets a 'phased retirement'. I'm not sure what the last one is, but it's supposed to be a very good deal.
We've had the 'volunatry severance' here too.
I didn't spot any cronyism as such, more just manager A manages to shaft manager B out of their job during the confusion and take over.
Then for some reason manager B gets a very nice settlement. Everyone who wasn't a manager who applied was 'too expensive' to get rid of.
So now manager B isn't offically a manager, but still gets paid twice as much as the rest of us, and gets a 'phased retirement'. I'm not sure what the last one is, but it's supposed to be a very good deal.
"B, but flate rate benefits like Child Benefit work a treat,"
That's because CB was not means tested when it was introduced, so there were no eventualities to be covered, no loopholes to look for and close, no way of "gaming the system".
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