Benefit capping

SimonAH

What do you think? Is it valid to say that if you're dependent on the state you shouldn't be living in a large house in Westminster or South Kensington?

Effectively it will force families to move out into less expensive areas of the country - but TBH I feel that this is valid (as long as some form of grace period is granted)

cjcp

Cap benefits? Absolutely.

jds_1981

Reading the guardian comments I can see there are two sides to this discussion
1) Those people who think the government should pay whatever it takes to allow some people to live where they can't afford, in some attempts at mixing up populations
2) Those people who think the government should make sure all people have accommodation provided for them if they are unable to do so for themselves, but believe there should be limits to the largesse, thus requiring them to live in more 'affordable' locations.

With the third point of
- should people be made to move out of 'their' houses when they can't afford to live there?

(guardian commentors then rapidly head downhill with ethnic cleansing and tories/rich like the poor to get poorer arguments.)

Clever Pun

Is there any details of the actual proposal?

TheStone

£26k is about £38k before tax.

I've got no idea why the cap is even set that high? What must low/average earners think?

I know it's not many people and won't make a jot of difference to the deficit, but I don't understand why it's ok for working people to have to make compromises, move where work or affordable housing is, but that's not acceptable for those out of work.

Some of the sums being paid in housing benefit are astonishing. They're more a benefit to the property owner than the tenant. This is not how tax revenues should be used.

We should ensure everyone has somewhere adequate to live, a reasonable living standard and a good education.

asprilla

Clever Pun wrote:

Is there any details of the actual proposal?

Fairy sure the full thing has been published since its now going to the Lords.

jds_1981

TheStone wrote:

£26k is about £38k before tax.
I know it's not many people and won't make a jot of difference to the deficit, but I don't understand why it's ok for working people to have to make compromises, move where work or affordable housing is, but that's not acceptable for those out of work.

I don't believe it is just for people out of work. Many people who work also get various benefits. This is just limiting the total that people can get in general...

clarkey cat

I'm a bit of a pinko myself but I definitely think that benefits should be capped. Although the amounts that are currently being paid out above £26k I think are quite rare and the legislative and administrative process will probably cost more than the benefits themselves.

sketchley

If you are talking about housing benefit cap it's a good thing. First it's not taking money from the poor or disadvantaged but from the Landlords who rent the property. The buy to let market combined with the amount of rent you can get from from housing benefit tenants in London distorts both house prices and rent. Capping it should force rents down and then house prices. It's a good move that'll benefit all but the landlords renting the properties. I doubt anyone will have to move. Think of it from the landlords perspective you have to take a cut in rent for housing benefit tenant, or rent privately (who's going to pay more than the cap privately) or sell and you are not going to get a good price for the property as the new buyer won't get the high rent either.

Also consider the cap is £400 per week for a four bedroom house that's £1733 a month. You could get repayment mortgage of £300k for that. There are 30 pages of sub £300k 4 bedroom houses in London on rightmove for sale right now in London. Also to get £300k mortgage would require joint income of £120k pa plus a deposit. That's way above average.

notsoblue

Both the coalition and the opposition have made very good points around this issue that aren't mutually exclusive. Its a real shame that party politics are getting in the way of actually coming to a solution that is fair for both those who legitimately need access to benefits, and those who don't but contribute via taxes.

What the tories are saying in essence is actually quite sound. i.e. That your income from benefits should not be higher than that of the national average. I don't think anyone actually disagrees with that. And anyone on the left that *is* disagreeing with that is just playing some party political game imo.

The issue though as I see it is the detail of the changes and that the coalition admit to not having done any kind of poverty impact modelling. There will be people who have to undergo a pretty drastic change in circumstance as a result. But then I suppose its fair to be of the opinion that you forfeit a degree of control over your life if you are dependant to that degree on the state.

DonDaddyD

I think the current proposal is to cap the total amount of benefits to £26,000 reference.

I think there are those that while see this as nescessary want to make child benefit exempt.

Me? I think there should be a cap on benefits. I think the suggestions around child benefit needs some working out...

asprilla

Sketchley wrote:

Also consider the cap is £400 per week for a four bedroom house that's £1733 a month. You could get repayment mortgage of £300k for that.

Maybe 6 years ago. However, with interest rates as they currently are a £300k mortgage is more likely to be around £1300 a month.

notsoblue

Sketchley wrote:

If you are talking about housing benefit cap it's a good thing. First it's not taking money from the poor or disadvantaged but from the Landlords who rent the property. The buy to let market combined with the amount of rent you can get from from housing benefit tenants in London distorts both house prices and rent. Capping it should force rents down and then house prices. It's a good move that'll benefit all but the landlords renting the properties. I doubt anyone will have to move. Think of it from the landlords perspective you have to take a cut in rent for housing benefit tenant, or rent privately (who's going to pay more than the cap privately) or sell and you are not going to get a good price for the property as the new buyer won't get the high rent either.

Very good point, and its at the crux of the reason why this will disproportionally affect the South East.

sketchley

Re a cap on total benefits. Isn't there a cap already? i.e. The total amount you are legally allowed to claim.

TheStone

jds_1981 wrote:

I don't believe it is just for people out of work. Many people who work also get various benefits. This is just limiting the total that people can get in general...

But I find that quite strange too.

If someone's in full time work, they should be able to support a family. We're using the tax system to subsidise corporates so they can pay less wages and sell stuff cheaper. It doesn't make any sense.

drays

TheStone wrote:

£26k is about £38k before tax.

Must be nice to get paid more than I do at the taxpayers expense without even working.

The welfare state provides a safety net, and absolutely should be there to stop people dropping off the bottom of the system. But it shouldn't pay more than the equivalent of a basic salary surely?

jds_1981

notsoblue wrote:

What the tories are saying in essence is actually quite sound. i.e. That your income from benefits should not be higher than that of the national average. I don't think anyone actually disagrees with that. And anyone on the left that *is* disagreeing with that is just playing some party political game imo.

Shocked that NSB & I both seem to be on the same side of an argument..

I am even more shocked to find out that I was essentially homeless for much of my chilhood

http://www.guardian.co.uk/politics/real ... ap-poverty

Duncan Smith also dismissed this saying that the definition of homelessness used in government and by the authorities was families living in inadequate accommodation with children forced to share bedrooms rather than actually being on the street.

notsoblue

TheStone wrote:

jds_1981 wrote:

I don't believe it is just for people out of work. Many people who work also get various benefits. This is just limiting the total that people can get in general...

But I find that quite strange too.

If someone's in full time work, they should be able to support a family. We're using the tax system to subsidise corporates so they can pay less wages and sell stuff cheaper. It doesn't make any sense.

+1

drays

notsoblue wrote:

this will disproportionally affect the South East.

Oh well. Share the wealth and all that!

jds_1981

TheStone wrote:

But I find that quite strange too.

If someone's in full time work, they should be able to support a family. We're using the tax system to subsidise corporates so they can pay less wages and sell stuff cheaper. It doesn't make any sense.

Child benefits currently aren't means tested, so there's a 'subsidy' straight off.
Also, what do you mean by 'support a family'? One or two kids, or fourteen as in the old days?

It also doesn't make sense that the government is taxing people making little money & then giving it straight back as benefits

DonDaddyD

It should be noted

That benefits don't just cover housing and children. I suspect there are a whole range of benefits (that working/non working people) get which is being capped/cut to achieve this reduction to £26,000.

I think housing is the most obvious, pleasing and is being widely discussed.

But what about other benefits.

Child benefit for example - A single parent family with the Dad on say £44,000 would lose the right to child benefit being in the higher tax bracket. But a family with two parents on £38,000 would be entitled to it. Isn't fair.

I presume there are other proposals like this that are equally unfair.

sketchley

Asprilla wrote:

Sketchley wrote:

Also consider the cap is £400 per week for a four bedroom house that's £1733 a month. You could get repayment mortgage of £300k for that.

Maybe 6 years ago. However, with interest rates as they currently are a £300k mortgage is more likely to be around £1300 a month.

I used a Repayment Mortgage at 5% over 25 years. http://www.bbc.co.uk/homes/property/mor ... ator.shtml

In fact an interest only mortgage at 5% is less than £1250 leaving a pretty good profit of £483 per month or £5856 a year for a private landlord. Assuming a £30k deposit is all that's required that's an annual return of 19.5%. Of course you would need to build in agents fees and maintenance etc but it's still a good return. Plus if the house prices goes up.

My point being a £400 per week cap is still very high.

asprilla

DonDaddyD wrote:

It should be noted

That benefits don't just cover housing and children. I suspect there are a whole range of benefits (that working/non working people) get which is being capped/cut to achieve this reduction to £26,000.

I think housing is the most obvious, pleasing and is being widely discussed.

But what about other benefits.

Child benefit for example - A single parent family with the Dad on say £44,000 would lose the right to child benefit being in the higher tax bracket. But a family with two parents on £38,000 would be entitled to it. Isn't fair.

I presume there are other proposals like this that are equally unfair.

As far as I know there ar e a great number of exceptions and including Child Benefit as an exception is going to be the principle challenge in the Lords.

DonDaddyD

Here we go:

http://www.dwp.gov.uk/policy/welfare-re ... bill-2011/
http://www.bbc.co.uk/news/uk-politics-16591457

It's more than just housing and child benefits. Also includes DLA, ESA and others

TheStone

jds_1981 wrote:

Child benefits currently aren't means tested, so there's a 'subsidy' straight off.
Also, what do you mean by 'support a family'? One or two kids, or fourteen as in the old days?

It also doesn't make sense that the government is taxing people making little money & then giving it straight back as benefits

Totally agree. I'd scrap child benefit and increase benefits by the same amount to those out of work. (upto the cap)

If it was up to me, anyone making less than £15k wouldn't pay any income tax.
Anyone making more than £30k would be nowhere near the benefit system.

There are gonna be some exceptions (8+ kids etc) and very difficult to have a solution for this. Part of me knows you have to look after those kids and part of me thinks you need some kind of personal responsibility.

DonDaddyD

Asprilla wrote:

DonDaddyD wrote:

It should be noted

That benefits don't just cover housing and children. I suspect there are a whole range of benefits (that working/non working people) get which is being capped/cut to achieve this reduction to £26,000.

I think housing is the most obvious, pleasing and is being widely discussed.

But what about other benefits.

Child benefit for example - A single parent family with the Dad on say £44,000 would lose the right to child benefit being in the higher tax bracket. But a family with two parents on £38,000 would be entitled to it. Isn't fair.

I presume there are other proposals like this that are equally unfair.

As far as I know there ar e a great number of exceptions and including Child Benefit as an exception is going to be the principle challenge in the Lords.

Yes, I read that to and it should be. In it's present format the proposed changes to Child benefit is too open to criticism.

DonDaddyD

TheStone wrote:

jds_1981 wrote:

Child benefits currently aren't means tested, so there's a 'subsidy' straight off.
Also, what do you mean by 'support a family'? One or two kids, or fourteen as in the old days?

It also doesn't make sense that the government is taxing people making little money & then giving it straight back as benefits

Totally agree. I'd scrap child benefit and increase benefits by the same amount to those out of work. (upto the cap)

If it was up to me, anyone making less than £15k wouldn't pay any income tax.
Anyone making more than £30k would be nowhere near the benefit system.

There are gonna be some exceptions (8+ kids etc) and very difficult to have a solution for this. Part of me knows you have to look after those kids and part of me thinks you need some kind of personal responsibility.

Yes but then you incentivise having excess children. A noted problem with the current system.

Personally the only benefit I get is child benefit, I earn over £30K. I need that. It covers nappies and formula.

Wallace1492

We pay out far too much on benefits. Plus there is a very poor record of it going to the right people.
There is a huge underclass of people drinking, smoking and injecting there way through Government handouts.

asprilla

DonDaddyD wrote:

TheStone wrote:

jds_1981 wrote:

Child benefits currently aren't means tested, so there's a 'subsidy' straight off.
Also, what do you mean by 'support a family'? One or two kids, or fourteen as in the old days?

It also doesn't make sense that the government is taxing people making little money & then giving it straight back as benefits

Totally agree. I'd scrap child benefit and increase benefits by the same amount to those out of work. (upto the cap)

If it was up to me, anyone making less than £15k wouldn't pay any income tax.
Anyone making more than £30k would be nowhere near the benefit system.

There are gonna be some exceptions (8+ kids etc) and very difficult to have a solution for this. Part of me knows you have to look after those kids and part of me thinks you need some kind of personal responsibility.

Yes but then you incentivise having excess children. A noted problem with the current system.

Personally the only benefit I get is child benefit, I earn over £30K. I need that. It covers nappies and formula.

The CB we get for the Mighty Pickle goes straight into her child trust fund.

I think I'm part of the problem.

Wallace1492

DonDaddyD wrote:

Personally the only benefit I get is child benefit, I earn over £30K. I need that. It covers nappies and formula.

[devil's advocate] I would say thay you appreciate that rather than need it. If you did not get it, then the little 'un would still get nappies and formula, you would do without something instead. In your case the benefit is being used exactly as intended, to ease the financial burden of having a child.

There are too many that take the benefit as extra booze money.

Plenty don't need it. Maybe introduce a sliding scale....

TheStone

DonDaddyD wrote:

Personally the only benefit I get is child benefit, I earn over £30K. I need that. It covers nappies and formula.

Or they could scrap the child benefit and take a few percent off the tax rate for lower earners?
(I bet it costs a load to administer anyway!)