Ship of Fools: Working tax credits - good, bad or just irrelevant?

Thread: Working tax credits - good, bad or just irrelevant? Board: Oblivion / Ship of Fools.

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Posted by anteater (# 11435) on :

Before dismissing this subject as excessively UK-centric, I would mention that there's a lot of comment over here, that the US system of earned income credits (I think that's the term), is much better, but it's not well known what the differences are. Maybe a US shipmate can shed some light.

Despite being a Tory voter, who rather disliked Gordon Brown, I have always thought they are not such a bad idea. Dreadfully over complex but that can be reformed, I would think, but basically sensible.

The basic objection is that they subsidize low pay. But whilst this can be abused, I don't see it as wrong per se, if it enables marginal business to start, that may not be able to if they had to pay fully competitive wage rates.

Or if it encourages part-time work.

Are there any on the Ship with expertise on this? To me the important questions are:

1.Is it just as much of a benefit trap as all the rest? I.e. is it more or less impossible to get off it once your on it? Do we have evidence?

2. Is there evidence of widespread profiteering by firms who could pay the full rate for the job, getting the taxpayer to do it and trousering the difference?

[ 11. November 2015, 16:56: Message edited by: anteater ]

Posted by Sioni Sais (# 5713) on :

The complexity of tax credits wasn't helped by giving the job of administering them to the Inland Revenue (now part of HMRC). I suppose that was because they were and are called tax credits but they are nothing of the kind!

The linked news story gives some examples but the underlying basis of the change is that the "income taper" which reduces tax credits according to increased wages is to be increased from 41p/£1 to 48p/£1. I doubt that tax credits are the only benefit that will be progressively withdrawn when income increases, and once you add the cost of travel to work, the right clothes for the job, the loss of housing benefit, council tax benefit and free school meals for the kids, you can easily end up out of pocket. I only have personal experience c 2001 to go on, but that definitely happened to me when I took a job after six months on the dole. It is tapering like that which is the root cause of the "benefits trap".

Posted by Carex (# 9643) on :

The US "Earned Income Credit" (EIC) is a refundable rebate on income tax available to couples (or single parents with children) that earn less than $20,000/year or individuals earning up to $14,000/year. (Approximately.)

It only applies to earned income such as wages, not to unearned like interest or investment income.

As an example, a couple earning $14,000/yr would get a benefit of $459, while at $14,500 it would drop to $420, for a marginal rate or taper of $39/$500. (This is in addition to the additional tax due on the higher amount.)

This has nothing to do with the wages paid by a particular employer: they are still subject to the same minimum wage legislation (which varies in each state).

Posted by Touchstone (# 3560) on :

My personal experience is limited to a period of unemployment followed by part-time/casual work about ten years ago; I found the UK tax credits system to be very bureacratic and inefficient for someone with a fluctuating income, although I gather that if your income is low and fixed they work quite well. I was glad when my income rose to the point where I no longer had anything to do with them (which I guess is kind of the point).

Noo Labour introduced them to complement the minimum wage: they were too scared of being seen as anti-business to set the minimum wage at a realistic level, so they create a system of state top-ups, which also had the effect of creating employment for an army of public-sector bureacrats. If this sounds rather cynical, I do believe they are on balance a Good Thing in an economy whose systemic low productivity makes a true living wage for all a distant pipe dream, although you do hear anecdotes about people using them to subsidise completely unviable hobby-businesses.

Posted by Mere Nick (# 11827) on :

A particular client of mine is married and has two children.

Their EIC was $5,460 and also had a $2,000 child tax credit.

Posted by Carex (# 9643) on :

Hmmm... maybe I looked at the wrong table in the tax form instructions... it isn't exactly obvious at a quick glance.

Posted by no prophet's flag is set so... (# 15560) on :

The tax system in Canada is federal and provincial. You calculate both amounts. There are credits which apply to everyone such that various amounts for self and family members are deductable from taxable income. These credits are not refundable however: if you don't have income over the threshold, you cannot claim the full amounts.

Provincially they "means test" income for various supplements, mostly not actually money but things that you'd pay for otherwise you don't. The problem is that you are forced to identify as poor, and this allows intrusiveness into your life as to why you're a f**k-up. Social workers. The programs include variously low cost medicines, school fees, breakfast for kids at school, subsidized bus passes. It really doesn't do it; have knowledge adults who don't eat some days so their kids can.

I realize some people wonder about help to others via gov't assistance. Always struck that they ignore the subsidies they receive under other guises. A guaranteed minimum income is probably the only reasonable solution.

[ 11. November 2015, 20:27: Message edited by: no prophet's flag is set so... ]

Posted by Leorning Cniht (# 17564) on :

quote:
Originally posted by Carex:
Hmmm... maybe I looked at the wrong table in the tax form instructions... it isn't exactly obvious at a quick glance.

There's a better table and a pretty calculator on this page

Posted by Leorning Cniht (# 17564) on :

quote:
Originally posted by Leorning Cniht:
]There's a better table and a pretty calculator on this page

(Note the max withdrawal rate of 21%, which compares favourably to the UK version.)

Posted by Leorning Cniht (# 17564) on :

Sorry for the third post in a row, but I did want to point out that the major difference between EITC, Working/Child Tax credit, Universal Credit etc. on the one hand and a "living wage" on the other hand is that the various tax credits all provide most of their benefit to people with children, whereas doing anything to the minimum wage / living wage / whatever will affect those with and without children in the same way.

Posted by Moo (# 107) on :

AIUI, the American EITC was set up to compensate low-wage workers for the money deducted from their paychecks for Social Security.

I think it has been modified since then.

Moo

Posted by Alan Cresswell (# 31) on :

Working Tax Credits are a form of welfare payment established to meet a particular social need. They were intended to supplement the minimum wage because it was not a living wage for families.

In an ideal world, anyone working a full time job (call that 40h a week) should earn enough that they can afford adequate housing, can eat an adequate diet, buy clothing when they need it, have adequate medical care when needed (either through a decent NHS or some form of affordable insurance depending on where you are), and have something for a few "luxuries" (a night out every so often, a TV, a holiday). Let's call that a living wage.

A minimum wage can be set such that for those with minimal expenses this is a living wage - single people, with no commute, and living in an area where housing costs are low. However, that wage will never be a living wage for people with children or who have to commute longer distances. The options are to set the minimum wage at a level that for a lot of people they're living very comfortably or have some form of top up welfare payment for those who need it. When they introduced the minimum wage the Labour government felt that they wouldn't be able to sell a high level to the general public or businesses. So, they went for the welfare top up through what they rather strangely called "tax credits". And, then to identify "those who need the extra" and how much they needed there was a massive beaurocracy created. It's not a perfect system, but it does provide means for parents to re-enter the work place, which is good, and does meet some of the short falls in the minimum wage as set.

Personally, I would prefer to see the focus shift from welfare to wages, ie: an increase in the minimum wage and a reduction in the proportion of jobs at the minimum wage and measures to encourage businesses to hire more staff, and more staff on decent contracts with reliable income. Add in provision of quality free or heavily subsidised child care, and investment in public transport to reduce costs of commuting. This will have benefits all around - it will stimulate the economy generally, provide benefits to working people who are struggling but just above the tax credit thresholds and thos who are unable to work but still have families to care for, by reducing welfare payments you cut the inefficiencies of government beaurocratic means tests and people generally feel better about earning their pay rather than getting handouts.

But, I'm one of those loony lefties who like Corbyn.

Posted by Arethosemyfeet (# 17047) on :

I'd prefer to help families by increasing child benefit and raising taxes at the top and middle to compensate. Much simpler all round. We already do means testing for paying tax, it's idiotic to do a second round for benefits. But then I support a citizen wage for the same reason.

Posted by Sioni Sais (# 5713) on :

Way back when it was introduced I thought the minimum wage was a Bad Thing as it would become the "norm". That has happened. Until c 2010 child tax credits were paid to many households with an annual income of more than £50,000, which is absurd; I suppose it buys a few million votes though.

The only way people can get a decent waage is to get organised and ensure that employers pay them the full value of their labour. I'd prefer co-operative businesses but other businesses have to invest and pay dividends to their predominantly absentee owners but why there should be anything left beyond that is a mystery. That of course takes 100% union membership and unions that can bargain on level terms with employers/owners, which despite propaganda to the contrary was never the case.

I would also take issue with Alan Cresswell's statement that parents returning to work is a good thing. My wife didn't and we feel it benefitted our children no end. I can't speak for everyone, but for government policy (ie, the tax system) and the housing market to force people down that route is unfair and inflationary.

[ 12. November 2015, 08:09: Message edited by: Sioni Sais ]

Posted by Enoch (# 14322) on :

Is this an example of there being "nothing new under the sun", a dilemma that has never been resolved, whether it's this one, Housing Benefit being described as public money going straight into the hands of slum landlords, the old Supplementary Benefit and the Speenhamland System?

Posted by BroJames (# 9636) on :

AIUI Working Tax Credit is paid to any low-income worker and help to make up the difference between the statutory minimum wage and an actual living wage.

Child Tax Credit is paid to support families with children recognising that an adult may earn enough for their own support, but struggle to support dependents as well. It is calculated according to the number of children in the household.

Both kinds of tax credit reduce as earned income increases, once above a certain threshold, and the taper is intended to avoid the 'benefit trap' whereby someone is actually worse off working than on benefits. So for every pound of additional earnings, the benefit is reduced by 41p, with the ultimate cut-off (again, AIUI) set at a level where the final loss of benefit is sustainable by the household. The corollary, however, is a very high marginal rate of tax.

The chancellor's proposed changes reduced the income threshold at which both types of tax credit begin to be reduced, and increased the rate of reduction from 41p/£1 to 48p/£1.

He argued that the negative affect of this for those receiving tax credits would be offset by the increased income threshold before tax is paid, by increased free childcare provision, and by increasing the minimum wage by 2020 to a 'National Living Wage'.

Unfortunately, the tax threshold change is only worth about £40 pa, and the free nursery provision only helps those who are actually using nursery provision, and the 'National Living Wage' only helps those on the minimum wage, and is only fully effective by 2020. Thousands of other low-middle earners were set to be seriously adversely affected by the changes.

Working Tax Credit was introduced, AIUI, to bridge the gap between a politically doable minimum wage, and a living wage.

Child Tax Credit was introduced to address child poverty issues.

Child Benefit is something left over from an earlier era. It is paid for all children irrespective of parental income, but where the income of one or other parent exceeds £50,000 pa the Child Benefit becomes taxable.

Posted by Alan Cresswell (# 31) on :

quote:
Originally posted by Sioni Sais:
I would also take issue with Alan Cresswell's statement that parents returning to work is a good thing.

I possibly expressed myself wrong. I meant it was good to provide the means for parents to re-enter work. Not that it is necessarily good for both parents to work (in some cases it will be, in others not). What isn't good is for people to not have that choice - which, of course, works both ways with some parents unable to afford child care etc on what salary they could earn and therefore forced to stay home, and others needing the extra income to pay for everything and so unable to stay at home.

Posted by Sipech (# 16870) on :

I've never liked the idea of in-work tax credits. If, like me, you're on the left, then it is quite plain to see that they are used by companies to subsidise low wages.

However, the solution is not to cut them up front and then hope that employers will increase their salaries to make up for the shortfall. To me, it seems more logical to render tax credits redundant through reform of the minimum wage laws. So we would still end up with the legislation in place for tax credits, but no one would need them, because everyone is paid a sufficient amount to live off.

If any business claims they will run into difficulty or risk going under if they are forced to pay a real living wage, then one must question the business model they are working with.

As someone who generally can't stand George Osborne, I do actually applaud him for proposing to increase the minimum wage. It was a good idea when Labour proposed it, and was still a good idea when he stole it. It's just not gone far enough or soon enough (and the semantic sleight of hand by calling it the national living wage is nothing short of nefarious). He's like a toddler being dragged along and sitting down on the pavement in a strop when he's not all that far from the destination.

Posted by Enoch (# 14322) on :

quote:
Originally posted by BroJames:
... Child Benefit is something left over from an earlier era. It is paid for all children irrespective of parental income, but where the income of one or other parent exceeds £50,000 pa the Child Benefit becomes taxable.

Not quite. It replaced two things, and taxing it in the hands of some people is a typical example of government dishonesty by both major parties over a long time.

Originally there were two different things that were combined. People, usually in those days, the father, got a personal allowance against their tax per child. There was also a smaller payment called Family Allowance, which mothers collected weekly from the Post office.

Because the personal allowance usually went to husbands, but it was wives who were likely to be responsible for children, this was regarded as archaic. So the two were combined as Child Benefit. But those for who remember that far back, Child Benefit is still part of the tax system. We haven't forgotten that. So not making it universal or taxing it for some people comes over as typical politician chicanery, even though it doesn't affect me.

Posted by anteater (# 11435) on :

Sipech:

quote:
If any business claims they will run into difficulty or risk going under if they are forced to pay a real living wage, then one must question the business model they are working with.

I can see your point, but which is better for society as a whole? I find it quite easy to believe that there are businesses, particularly labour intensive ones, where only low wages can be paid.

If it means that X amount of people can now work rather than not (which most prefer) and they are 30% stated supported instead of 100%, who is the loser?

Posted by Penny S (# 14768) on :

quote:
Originally posted by anteater:I find it quite easy to believe that there are businesses, particularly labour intensive ones, where only low wages can be paid.

So why is it that there are businesses such as care, and cleaning, which employ (usually) women on peanuts, but enable their higher echelons to live on much greater pay? Why can they only afford to pay the minimum wage, and even get away with less by not paying for travel time, or uniform laundry, or other drains on time and money?

Back a bit, a well known company, which had extended from laundry to catering, removed the allowance for school cooks to launder their own uniforms, without replacing the service themselves. It also removed the time allowed for cleaning the cookers from the time paid for but still expected the work to be done, which it was, because the women were not going to let them get dirty.

I'm not sure what dividends were paid to shareholders.

[code]

[ 12. November 2015, 18:23: Message edited by: Eutychus ]

Posted by Sipech (# 16870) on :

quote:
Originally posted by anteater:
Sipech:
quote:
If any business claims they will run into difficulty or risk going under if they are forced to pay a real living wage, then one must question the business model they are working with.
I can see your point, but which is better for society as a whole? I find it quite easy to believe that there are businesses, particularly labour intensive ones, where only low wages can be paid.

If it means that X amount of people can now work rather than not (which most prefer) and they are 30% stated supported instead of 100%, who is the loser?

I find that quite a slippery argument. It's the same that the Conservatives used when they were fighting against the introduction of the minimum wage. For example, Peter Bone famously once paid one of his employees 87p per hour and claimed that introducing a minimum wage would be a disaster.

Thankfully, his prophecy of doom proved to be wrong. In susbtance, the argument is little different from that made over the living wage now.

The "pay them a bit less than they need to live on, otherwise they'll be unemployed and have nothing to live on" is an argument that presupposes a false dichotomy. It's meant to look like the
trolley problem of utilitarian ethics, but real world economics is much more fluid than that. There are other possibilities, like paying the executives a bit less than they are already on. If you only see two alternatives, it's not because there only are two alternatives, it's more that one might simply lack vision and imagination.

Posted by Ricardus (# 8757) on :

Also, if people at the bottom are being paid more, that gives them more to spend, which increases the viability of any business that sells to them.

Posted by chris stiles (# 12641) on :

quote:
Originally posted by anteater:
Sipech:
quote:
If any business claims they will run into difficulty or risk going under if they are forced to pay a real living wage, then one must question the business model they are working with.
I can see your point, but which is better for society as a whole? I find it quite easy to believe that there are businesses, particularly labour intensive ones, where only low wages can be paid.

As Sipech points out - this is deeply problematic. Besides, if they can't pay a wage that allows for survival where is the excess value being extracted from that allows them to pay the managers and owners? They are essentially parasitic on society and only surviving because they are able to externalize their costs. I don't see why this is a good thing.

[ 12. November 2015, 21:09: Message edited by: chris stiles ]

Posted by anteater (# 11435) on :

chris styles:

quote:
Besides, if they can't pay a wage that allows for survival where is the excess value being extracted from that allows them to pay the managers and owners? They are essentially parasitic on society and only surviving because they are able to externalize their costs. I don't see why this is a good thing.

I would agree if it can be reasonably shown that the viability is threatened by "the excess value being extracted from that allows them to pay the managers and owners", and that the business would still be viable if it paid a living wage.

But you seem to rule out in principle, the possibility of a reasonable business only being made viable by being able to pay low wages and have them topped up. I can't prove you're wrong, since I can't quote specific examples. But it's not obvious, at least to me.

I used to use the same argument when industries are being closed down due to not being economic, in that I always felt the costs of closure should include the cost of benefits to those put out of work, since there was no reasonable hope of large scale redeployment. It's a similar argument, namely that state subsidy of businesses can make sense.

Posted by Sioni Sais (# 5713) on :

The notion of state subsidy of businesses so that people can be paid a decent wage would also suggest that the same business has to pay a reasonable return on investment for the owners. The problem is that those who own the business usually decide how to split the proceeds between the workers and the owners.

If the state then sets rules about how the proceeds are split I'm sure the business community would accuse it of interfering, so wouldn't it be better to avoid the problem entirely, and take the work that businesses can't do profitably, while paying a decent wage, into the public sector?

Posted by chris stiles (# 12641) on :

quote:
Originally posted by anteater:

But you seem to rule out in principle, the possibility of a reasonable business only being made viable by being able to pay low wages and have them topped up. I can't prove you're wrong, since I can't quote specific examples. But it's not obvious, at least to me.

What does 'being made viable' in this sense even mean? Presumably it is either expressed in terms of either return on invested capital, or the actual investment is quite low and the return is a function of the various salaries those in the business who are not on a minimum wage are paid.

Consider a firm of two people, one person who gets paid less than the minimum wage to perform a function, and a second person who manages them and gets paid more than the minimum. Now clearly the business could only be run this way if their customers are willing to pay for the product of the business at a rate which bears out this level of compensation. The worked paid under the minimum having his wage then topped up by the state.

In principle I don't see any difference between this situation and one where a business owner demands that the state supply them with free workers so that they can be guaranteed a certain standard of living.

Posted by anteater (# 11435) on :

quote:
What does 'being made viable' in this sense even mean?

Well, of the top of my head: a business is viable if it produces useful outputs (goods or services) which people are prepared to buy, provides work which people accept without coercion and remains solvent.

quote:
In principle I don't see any difference between this situation and one where a business owner demands that the state supply them with free workers so that they can be guaranteed a certain standard of living.

Up to a point I agree, since the higher the proportion of wages that are provided through state payments, the more businesses end up in the category.

So, you control that by capping the maximum top-up. But this may be a case where a "thin end of the wage" argument is used to rubbish a reasonable idea. Who knows?

When it first came out I was not that impressed. But as a MOTR Tory, I am of the view that if a Labour government brings in a measure which is not what you would have done, it is still good to try and make it work. What George O. proposed was hugely politically inept and painful to MOTR Tories. And it is my view that the Tax Credit system whilst not being my preferred option, can be made to work, and since it's here, and popular with many, that's the best way forward.

[ 13. November 2015, 13:06: Message edited by: anteater ]

Posted by Leorning Cniht (# 17564) on :

quote:
Originally posted by Sioni Sais:
so wouldn't it be better to avoid the problem entirely, and take the work that businesses can't do profitably, while paying a decent wage, into the public sector?

Why? If people don't want to pay enough for the work to allow a decent wage for the workers, perhaps they don't actually want the work do be done? It doesn't magically become cheaper to get work done if the public sector is doing the work.

Posted by ThunderBunk (# 15579) on :

quote:
Originally posted by Leorning Cniht:

quote:
Originally posted by Sioni Sais:
so wouldn't it be better to avoid the problem entirely, and take the work that businesses can't do profitably, while paying a decent wage, into the public sector?
Why? If people don't want to pay enough for the work to allow a decent wage for the workers, perhaps they don't actually want the work do be done? It doesn't magically become cheaper to get work done if the public sector is doing the work.

True, but it removes the profit imperative, and signals that the work is something that society needs to happen and is committed to, removing the consumerist veto from life. To pander to consumerism and the profit imperative would simply increase the cost and quite possibly reduce the quality.

I believe the consumerist veto to be one of the most significant blocks to abundant living.

Posted by Enoch (# 14322) on :

Speaking from experience, the public sector doesn't actually do business very well, just as business doesn't get, and can't be trusted, to run government and other public functions.

Posted by Ricardus (# 8757) on :

quote:
Originally posted by Leorning Cniht:

quote:
Originally posted by Sioni Sais:
so wouldn't it be better to avoid the problem entirely, and take the work that businesses can't do profitably, while paying a decent wage, into the public sector?
Why? If people don't want to pay enough for the work to allow a decent wage for the workers, perhaps they don't actually want the work do be done? It doesn't magically become cheaper to get work done if the public sector is doing the work.

I think the elephant in the room is that one of the worst offenders is the social care sector, which is clearly an activity that ought to exist.

[ 13. November 2015, 21:56: Message edited by: Ricardus ]

Posted by anteater (# 11435) on :

Thunderbunk:

quote:
True, but it removes the profit imperative,

I've never believed that public ownership removes the profit element. They are still owned by people who want money to do all sorts of things. The Government has all sorts of schemes for getting money into their coffers. Why do you think that business profits are not one of them?

Posted by chris stiles (# 12641) on :

quote:
Originally posted by anteater:

quote:
What does 'being made viable' in this sense even mean?
Well, of the top of my head: a business is viable if it produces useful outputs (goods or services) which people are prepared to buy, provides work which people accept without coercion and remains solvent.

Those last two conditions do not exist, whilst you might debate the second condition, the third is patently untrue of any business which relies on the state to top up wages which would otherwise be un-sustainably low. They are the equivalent to the 'garbage disposal business' which tips the rubbish they collect into people's back gardens rather than paying for a landfill - in each case the cost is borne by the rest of us. [And again, presumably the owner will not be on minimum wage]

There's also a fairly cogent argument to be made that continuing subsidy of low wages has the perverse effect of encouraging the wrong sorts of business models; see the whinging from business owners you get on any radio program that discusses raising the minimum wage.

quote:

So, you control that by capping the maximum top-up. But this may be a case where a "thin end of the wage" argument is used to rubbish a reasonable idea. Who knows?

So remove the need for people to work in order to claim 'tax credits' and see how many people continue to want these jobs.

Posted by Late Quartet (# 1207) on :

I'm no expert, but I experience at first hand the oddness of the 'effective marginal tax rate': it's 73% at the moment at the current stalled proposals would push that up to 80%.

The only plus point that seems to produce is that if you can reduce your income, you reap all sorts of advantages for little cost. I take unpaid parental leave, but because the marginal rate is 73% anyway, losing 100 GBP of gross income costs me 27 GBP.

It's even stranger when it comes to charitable giving, though, where you get back just over half of what you give away: that, can, perhaps, lead to a set of ethically ambiguous questions one might want to ask about what giving is and what receiving is too!

Posted by Doc Tor (# 9748) on :

Remember, the Laffer Curve only counts if you're rich.

Posted by Sioni Sais (# 5713) on :

Whether they they are good or bad, Osborne has just announced that the cuts are off.

Posted by L'organist (# 17338) on :

Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.

But I fully expect the comrades to spin this as a U-turn, notwithstanding their implacable opposition to any welfare cuts.

Politicians of all persuasions need to learn that the public doesn't necessarily regard flexibility as weakness - rather that some of us have more respect for a politician who can admit he's made (or was about to make) a mistake and adjust things accordingly.

Posted by Albertus (# 13356) on :

It occurred to me this morning that if Gideon really wanted to show flexibility- which I agree is a good quality in politicians- he could have said, after the May election, 'Look, folks, that £12bn in cuts we promised was set high so that we could negotiate it down if we had to go into coalition again. Now that we've got a majority, I'm not going to force it through, but so nobody accuses me of slipping out of a promise, we'll have an unwhipped vote in the Commons on the single question of wthere we should stick with the £12bn figure. if the Hosue says stick with £12bn, we'll do it: if it says not, we'll go away and look for something lower'.
Of course, that underestimates the extent to which he is, I strongly suspect, ideologically committed to cutting government spending as an end in itself.

Posted by chris stiles (# 12641) on :

quote:
Originally posted by L'organist:
Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.

:roll:

Or that his tactic is; preannounce cuts over and above what you believe to be realistic. If you are challenged you can present it as a victory for democracy and evidence that you listen, if you aren't challenged you get a nice little bonus.

That this tactic has been followed multiple times isn't really in dispute.

quote:

But I fully expect the comrades to spin this as a U-turn, notwithstanding their implacable opposition to any welfare cuts.

It could well be both. It's also possible to be against welfare cuts in principle, whilst believing that tax credits are a particularly poorly implemented form of welfare.

Posted by BroJames (# 9636) on :

quote:
Originally posted by L'organist:
Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.

It's just a pity that the only thing he would listen to was a defeat in the House of Lords.

A bit of more thoughtful listening before then would have saved a good deal of parliamentary time, and avoided the impression of someone who rushes into a policy proposal either without thinking it through, or without caring about its negative impact on low income working families.

Posted by Arethosemyfeet (# 17047) on :

quote:
Originally posted by L'organist:
Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.

But I fully expect the comrades to spin this as a U-turn, notwithstanding their implacable opposition to any welfare cuts.

Politicians of all persuasions need to learn that the public doesn't necessarily regard flexibility as weakness - rather that some of us have more respect for a politician who can admit he's made (or was about to make) a mistake and adjust things accordingly.

I prefer politicians who get things right the first time.

Posted by Doc Tor (# 9748) on :

quote:
Originally posted by L'organist:
Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.

The case had already been made against the cuts long before he decided to make the cuts.

The fury of the public wasn't enough to make him change his mind. It was only his own MPs who could see their own slender majorities circling the plug who forced his hand.

A man who deliberately targets poor people, only to not deliberately target poor people because he realises he and his mates would be out on their ear shortly afterwards is certainly a big something, but he deserves absolutely zero credit for back-tracking at this late stage.

Make no mistake: if he thought he could have got away with it, he'd have gone through with it.

Posted by alienfromzog (# 5327) on :

quote:
Originally posted by Doc Tor:

quote:
Originally posted by L'organist:
Which would seem to show that he listens and, if the case is made for not doing something, he's big enough to back-track.
The case had already been made against the cuts long before he decided to make the cuts.

The fury of the public wasn't enough to make him change his mind. It was only his own MPs who could see their own slender majorities circling the plug who forced his hand.

A man who deliberately targets poor people, only to not deliberately target poor people because he realises he and his mates would be out on their ear shortly afterwards is certainly a big something, but he deserves absolutely zero credit for back-tracking at this late stage.

Make no mistake: if he thought he could have got away with it, he'd have gone through with it.

Posted by Wild Organist (# 12631) on :

Brief UK Social Security Benefits history lesson.

Family Income Supplement (FIS) was replaced by Family Credit (FC) and these in-work benefits were administered by the Dept of Social Security (now DWP). When Working Tax Credits were to replace FC in the 90s the Revenue (now HMRC) bid to administer it as it guaranteed more jobs for them. However, HMRC were not used to paying money out (I think it hurt!), and the initial administrative staff level was insufficient and the admin guidance somewhat inadequate. Over the years, WTC has developed and now works a lot better.

This is all to be scrapped as Universal Credit (UC) is introduced. UC will replace income-related benefits like Income Support (now Lone Parents and carers), Jobseeker's Allowance (JSA) and Employment Support Allowance (ESA) ("sickness benefit") (both only the income-realted parts) and Housing Benefit/Council Tax Benefit (HB/CTB). I understand that the WTC cuts have been transferred to UC which, since this presently only universally affects the single unemployed at the present, is less of a hot potato. Only some areas pay UC to couples or those with children whilst the system is stress-tested to ensure it works before it is introduced country-wide. However, it will also affect HB/CTB, I hear.

The new principal which UC uses is the much more gradual taper of earnings against UC and, unlike JSA versus WTC, where the abrupt changeover is made when someone works 16 hours/wk or more/less and which can result in a significant interruption to support whilst the new benefit/credit is assessed. I welcome UC as the loss of JSA/ESA/IS can be a disincentive to take on more work. However, reducing the UC taper so that it is less favourable to the claimant is not good. If I am wrong, I would love to hear.

UC is administered by Social Security (DWP), so all the HMRC WTC staff will transfer back to DWP and go on mark-time til their salary level is caught up by the DWP pay levels, which are significantly lower. This will also save the Govt money. UC will also (it is claimed) need fewer staff to administer as self-reporting becomes the norm: claimants report their own wage changes and changes of circumstances online and the computer calculates things on a 4-weekly basis and adjusts the UC much faster. It is thought that current links between HMRC and DWP computers will be enough to discourage misreporting and deliberate fraud.

Sorry if I was a bore. And sorry for the alphabet soup. But the fiasco of WTC's introduction all at once has been avoided, at the expense of a much slower roll-out. At least no-one has felt compelled to superglue his hand to a DWP caller-office desk so as to get some money.

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