The fabric of Britain as we know it is being ripped apart. So much is changing, almost behind our backs, we haven't got time to notice what is happening to us. And it is happening fast.

Tuesday, 24 January 2012

Do We Give £26,000 a Year To The Undeserving Poor?

The Undeserving Poor are work-shy scroungers. They get paid more than the average family income to have dozens of kids and live with them in vast sprawling flats in Chelsea smoking fags and watching Sky on their flat screen tellies.

Or are they?

Yesterday it was decided in the House of Lords that the undeserving poor is anyone who recieves more than £26k in benefits. There are certain exclusions but probably not the ones you'd expect.

Nobody with any bit of humanity in their bones wants the deserving poor to be hurt by benefit cuts. They want the elderly and the disabled, and their carers to be protected. They certainly don't want those who do the right thing and get a job - the working poor to be hurt. At the moment anyone can lose their job without warning and it is taking 12mths or more to get another job, so protection for those recently unemployed and working hard to find work again would be sensible as well.

On the face of it, £26k is a lot of money. A single person with no additional responsibilties or circumstances would have to earn around 34k a year to take home 26k. If you earn less than that - as most of us do, the average individual wage is around £22k before tax, and the average family net income (after tax and plus benefits) is also around £26k.

£26k sounds like a huge amount, are there really people who can't survive on £500 a week and why should a family with nobody working get that much for free?

In the end, it's almost always because of how much rent they have to pay. Even not very nice parts of London and the South East have extremely high rents, more than £1000 per month is the norm. Families with low incomes receive Housing Benefit payments to cover their rent, because wages are so low 1 in 8 recipients of housing benefit IS working, which just shows how much of an impact housing prices are having on everybody living in these areas.

After Rent and Council Tax families in expensive areas are not being given any more to live on pw than families living anywhere else in the country.

If you are unemployed you will be paid a fixed sum based on the number of bedrooms you are calculated to need (how many children and adults are living together - children and couples are expected to share) and then, in the future, given a figure that would completely pay the rent for the cheapest 30% of the available market. If you can't find anything that cheap you will have to top up your rent payments yourself out of your other benefits. This situation is extremely common as this 30% figure includes social housing whose rents are deliberately significantly lower than private market rate, these council flats and houses are usually inaccessible to all but those in the most dire circumstances due to the chronic shortage of stock, a situation set to get worse. Also included but unavailable are the thousands of Buy To Let properties whose owners mortgage agreements exclude Housing Benefit claimants.

A London School of Economics blogger shows how quickly just the rental cost for a cheap property in London can spiral a household's finances towards that magiv £500pm figure.

"£392.31 for rent (the allowable rent for Tolworth, typical of a cheaper property)
£39.06 for council tax (Kingston Council, Band E)
£28.18 for gas and electricity (DECC English average + 20% for large family, in 2011 £s
£7.21 for water (OfWAT UK average + 20% for large family)
£6.00 for telephone/broadband - the cheapest BT anytime package

Starting from £500 means that you have £26.23 per week left over for the family, which is 62p per person per day to the nearest penny.

We can argue over these exact figures. Clearly the family could choose to be cold, or to shower infrequently to save money. But against that, private rented housing is typically less well insulated, the family are at home every day, so energy bills may be larger still. I have not included a mobile phone, or any calls to mobile phones, or to 08 numbers not included in the basic package.

In any case, even after rent and council tax, the family has only £1.64 per person per day to live on. No alternative figures will make any difference: this is simply not a living income for a family with four children in private rented accommodation in a cheap part of outer London"

In a Mumsnet discussion, TheHumanCatapult got curious about what happens to normal working families living in such expensive areas, and what would happen if they were to lose their job:

"Out of curiosity, I did a Turn2Us calculation for a 35-year-old couple with a SAHM and five children (all healthy, no childcare) living somewhere like Wandsworth in a mortgaged home. My fictional man earns £35k and pays £150 a month to his pension plan.

They were entitled to just over £11k in benefits. So, although his take-home pay was slightly over £22k, the state tops him up to £34k net. This is bizarre because it shows the government accepts his family needs £34k but seems to think the same family will need £8k less than that if he loses his job or gets injured - £667 a month less? They'll lose their home."

Now that child Benefit has been excluded from the cap they would have their 26k capped benefits topped up to 31k, but this would still leave them £250 per month less to live on.

But! I hear you say He's only just lost his job, surely they won't have to live with the cap straight away?

Well, actually no. Despite Ian Duncan Smith heavily implying that this would be the case 6 months breathing room to give families a chance to find a job wasn't added to the welfare reform bill. The cap will apply straight away.

Surely they can still move house and go somewhere cheaper though?

Yes, they could. But they probably won't.

Moving house will solve the immediate problem (not having enough money to eat) but could lead to a life on benefits, and this is just not something most people want to risk. the vast majority of people in the UK realise that they are better off working, not just for the cash in hand now but for their potential to earn more in the future and don't want to do anything that would risk them becoming long-term unemployed.

At the moment when most people become redundant and jobs are scarce they will look for jobs in a wide area, and if they have to move to wherever they get offered a job. Moving BEFORE you have been offered a job is extremely risky, what if in the cheaper places the reason the rent is cheap is because there are no jobs? Even in reasonably affluent areas like mine 4 pages of job ads in the local paper have become half a page, most either highly specified or potentially dodgy work from home adverts.

According to nomis there are 1.4 million people claiming unemployment benefits, at last count there were 269,089 unfilled job vacancies at the job centre, leaving more than a million people without a chance of finding a job at all.

And that figure doesn't include the several million more people looking to return to work but not claiming benefits, or those already working part time but looking for more hours or a full-time job.

Job seekers would be wise to do whatever they can to make them as attractive as possible to employers, and staying local to high employment areas is a good idea. It's not just that you won't have to delay starting at your new job while you move house (and potentially children's schools etc) but also that jobs are often claimed before they are even advertised, through getting to know local employers, letting them know your skills and that you are available now.

Equally what if you move from area A to area B because it's cheaper, then get a job in area C - moving twice (or more if you are unfortunate enough to be employed by several struggling businesses in a row) in quick succession is extremely expensive, disruptive and potentially impossible if you don't have savings or a kind friend or relative who can loan you money to move house.

To many, getting into debt may seem like a better option than risking moving somewhere new and becoming the long-term unemployed.

Finally - some people really can't move. Just 2 examples:

If you're caring for an elderly relative who lives nearby and couldn't afford to pay for someone to replace you would you want to leave them behind?

Some single parents are subject to court orders that state which school their children can attend, break it and go to jail. Effectively this limits the parents to living in fairly small areas.

Okay, it will be tough for some people, but at least vulnerable people are being protected.


Remeber that list of the deserving poor? You may be interested to learn who hasn't won exemptions to the benefits cap:

Kinship carers: those who foster family members, they save the government huge sums of money by keeping vulnerable children out of care and recieve very little in return - may well be forced to move away from support networks and the Social Services departments supporting the arrangements. Without this help many kinship relationships are at risk of breaking down under both financial and emotional strain. Not protected

Carers for the disabled and elderly: for the princely sum of £55pw, carers save the tax payer thousands of pounds per week by providing the specialist care their relatives need in their own homes 24hrs a day 365 days a year. Not protected

Disabled people who recieve ESA but not DLA: ESA means too disabled too work, DLA is an in and out of work benefit, paid to those with both care and mobility needs at different levels depending on severity. DLA is protected, but those few people in the (admittedly fairly unusual) position of recieving ESA but not DLA not protected

Potentially all disabled people: You see, DLA is excluded, but over the next few years DLA is being replaces with PIP and it hasn't been decided if PIP will be made exempt or not. Disability is expensive - not all treatments and equipment is provided by the NHS, even wheelchairs have to be saved up for and paid for out of personal finances. Adaptions sometimes have to be made to homes, transport is more expensive for those unable to drive or use public transport, this has not been recognised in the plans. Not protected

The working poor: Anyone who recieves Working Tax Credit is exempt from the cap - those already netting £26k in take home pay will still recieve any additional benefits they are entitled to. However, in order to qualify for working tax credit and be considered working you MUST work a minimum number of hours. Currently that figure is 16. It is moving up to 24. That means anyone working part time, at say 20 hours a week is suddenly going to be treated as though they are unemployed even though they ARE working. There are a lot of reasons why someone might only work part time: caring commitments, prohibitive childcare costs, minor disabilities or having your hours cut by an employer in economic trouble. Not protected

Those who have just lost their job but have worked all their lives: could you live on 62p a day? Not protected

What Can I Do?

These agreements have already been passed in the House of Lords, however one amendment was made - that Child Benefit be excluded from the cap. It's not much, but it's an attempt to save tens if not hundreds of thousands of children being pushed into poverty and 20,00 families from becoming homeless

Please Write to your MP and tell them why you support the exclusion of Child Benefit in the cap and if you are unhappy with the Cap in general.

At the moment the government believes that the public supports them, if you don't, let them know!

Don't forget you can tweet many MPs. hashtags #frothers #wrb

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  1. I need to add that while those on Working Tax Credit are currently exempt from the cap IF they are working over 24 hours a week, this will only be until April 2013 when Universal Credit starts. Once Universal Credit starts, ANYONE claiming ANY help with living costs - whether that is help with rent, help with childcare, or help to cover other costs through Universal Credit, WILL be subject to the benefits cap. Because there will no longer be a distinction between in-work benefits (Tax Credits) and out-of work benefits (Income Support, Jobseekers Allowance and Employment Support Allowance). They will be classed as the same 'Universal Credit' that will be subject to the cap.

  2. This is a great article. Thanks.

  3. Really good to see this spelt out so clearly.


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