Do working tax credits and child tax credits make sense?
With the hot topic of married tax allowances being the politicians pet project this week, does the system work?
Over the last couple of years, we have reported a couple of weird and wonderful stories about personal finance when linked to the benefits system, and the way that lenders assess an individuals personal circumstances. We had a lender saying they wouldn’t lend to somebody who was self employed, but would lend to those on benefits!
Now call me old fashioned, but a hardworking self employed person should be higher up the pecking order when being able to repay a loan? well over the last couple of years this doesn’t appear to be the case and a large number of those on benefits have been deemed a safer financial bet.
Trumpo is aware of many many instances, when people want to get back into work, that they would find themselves out of pocket by £100’s a week if they went back. Now these people are not the types of scroungers portrayed by the Gallaghers in “Shameless” – these are genuine hard working people, who would loose so many benefits that are needed to keep them afloat;
Trumpo example;
Family of 6 living in a 3 bed semi with a mortgage with Bradford and Bingley of £225,000 – House Value £200,000 (Negative Equity)
Let’s call them Mr & Mrs Porky Pig;
Mrs Pig stays at home looking after Pinky and Perky (the twins age 2) and Bob 6 and Lisa 10 – No point in Mrs Pig working because it would cost too much.
Mr Pig lost his job at the Farm and has been unemployed for six months; these would be Mr & Mrs Pig’s benefits (approx);
Mortgage interest income support towards the mortgage £500
Council tax benefit £165
Child tax credits £160
Child benefit £210
Jobseekers allowance (Mr & Mrs Pig) £411
Total: £1,446 Per month.
Mr Pig’s take home pay in his previous job £1350 Per month.
Now Mr Pig wants to work, and he wants to provide a better life for his family and prove to his kids that “Work Pays” – however when you look at the numbers, Mr & Mrs Pig would be better off staying on benefits and doing a part time job (cash in hand). Is this Mr & Mrs Pigs fault? he can get a low paid job in farming, but the family would be considerably worse off, but Pinky and Perky need nappies etc.. so no chance, why would they.
How many hundreds of thousands of our unemployed families live like Mr & Mrs Porky Pig ?
I am not blaming Mr & Mrs Pig, because they have a family to provide for and will do whatever it takes to put food on the table, however I feel that the system should provide Mr Pig with additional support so that his family is not worse off if he returns to work. Maybe even top up his salary to his benefit level if needed, this would be so much less a liability to the tax payer.
If you took every person who is elligible to work, and stated that to receive support/tax credits that they would have to work, and they would be know worse off, how low do you think our unemployment would be and just as important how much of a reduction would the tax payer benefits liability be?
Maybe we should introduce a “Porky Pig” financial benefits test? maybe not a good name if we have to ask politicians to set it up for us – trough trough…
A tough job ahead for anybody who is brave enough to tackle the current benefits system.
Kind regards
Your Trumpo.
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January 18th, 2010 at 3:55 pm
Finally some common sense, I saw something on tv last week getting people off the dole And clearing the snow, much the same thought process and productive.
January 18th, 2010 at 4:13 pm
It is hard to blame people not working in example like yours. The benefit system is a fraud.
By the way, the child benefit amount is not totally right in your example, also Mr Pig would still get child benefit in additional to his previous employment income making him marginally better off working, but might not be the case when taking travelling to work expenses into account!!
January 18th, 2010 at 4:50 pm
in this day & age child benifit should be scrapped altogether,
if not scrapped then it should apply only to the first child, Looking after any other children that arrive later should be the responsability of the parents only.
Most large Family’s (not all) end up as a financial drain on an already fragile system, so smaller family units would be more economical & benificial for the children & the country as a whole.
China has it correct to limit a family to one child.
so if money is tight and your budget can’t stretch to another child, don’t have anymore, so if mr pig was unemployed he would only receive benefits of £1076.00 plus child benifit for 1 child making it more desirable to work for a living.
January 18th, 2010 at 5:39 pm
Crikey johnyerman, you could become the new spin doctor for “Red Gordon”
January 18th, 2010 at 7:10 pm
A two pronged process of limiting child benefit and restricting benfits to everyone would be a good way forward to cut the burden on the State (or is it Taxpayers?).
Why on earth should we support large families? We need to encourage quality families not quantity. My view is that large families are quite often the scrougers.
Another step could be to discourage teenage/single Mum families from all the handouts they receive.
I would encourage you to read Simon Heffer’s views on this sort of problem. He has his head screwed on right!!
January 22nd, 2010 at 1:41 pm
My daughters boyfriend (18) dropped out of college at Christmas and has since been provided with a one bedroom flat and jobseekers allowance at the State’s expense. My daughter has now also dropped out of college (six months from the end of a two year course)and joined him in the flat. She has been told that as long as she is not employed this will be perfectly OK. Who is responsible for this crazy syatem?