Sunday, 3 October 2021

I misunderstood the first headline

From The Dail Mail, via MSN:

Minister calls petrol crisis a lesson in abandoning fossil fuels

I initially thought that somebody had seen sense and admitted that the petrol crisis is a good lesson in the futility and nigh-impossibility of abandoning fossil fuels, but I was sorely disappointed:

Environment minister Zac Goldsmith has said the ongoing petrol crisis is a 'good lesson' in the need for the dependence on fossil fuels to end.

But hopefully I haven't misunderstood the second headline, hinting that IDS actually cares about welfare recipients::

Ex-Tory leader Sir Iain Duncan Smith launches a last ditch attempt to save £20-a-week Universal Credit uplift as he urges Boris Johnson to keep the extra cash in place over the winter.

Go IDS! If they want to cut the welfare bill, the first priority must be to phase out Housing Benefit for private tenants.


Sobers said...

One way to cut the welfare bill is to up the number of hours you need to be working to qualify for Universal Credit. At the moment 16 hours a week is all you need, or 2 days a week. For many people it makes no sense to work more, because they'll keep very little extra cash by doing so (the withdrawal rate is 63%), so they refuse to work more, because the UC will make up their income to roughly what they'd make if they worked full time anyway. Its perfectly rational - why work an extra day when it will only gain you about £25 extra income? (Based on an 8 hour day @ min wage earning you £71, you lose 63% of that in UC entitlement, so your extra days work actually gets you an extra £26 of income. There may be some tax losses in there too, so it could be even less than £26). Better to have the extra day off to lie in bed if you want.

Given the massive number of job vacancies at the moment now would be the perfect time to up the 16 hours to 24 at least, maybe 30 hours. That would cut UC paid out dramatically. It would probably have to be phased in over say 3-6 months, but in the current employment climate anyone who wants a job can find multiple employers desperate for workers.

Mark Wadsworth said...

S, good maths, completely wrong logic and wrong conclusion.

Cut the number of hours required to nil and forget means testing - just give claimants a PAYE code with no personal allowance (DO code) and no NI threshold.

Tax on earnings and overall effective UC withdrawal rate is now 33.25%, doing that extra day gets you £47 with no form filling and no crap.

Sure, that won't reduce welfare bill, but it will boost PAYE receipts so it pays for itself.

Andrew Carey said...

@Sobers: I think you have forgotten the taper rate of Council Tax Support from your calculations. 20-25% on top of that UC taper rate in many LAs if you are in the opposite of the sweet spot of the income range.
In doing so, accidentally I presume, you show how extraordinarily complicated the system has become.
Anything that simplifies, e.g. an LVT with no allowances or discounts, has to be welcome

Mark Wadsworth said...

AC, ta for painting that out.

The fag packet says overall withdrawal rate is about 80% of earnings up to at least £20,000.