My friend’s brother is something of a wastrel. He was sacked from his first proper job for stealing and for several years afterwards bounced around benefits and low-level jobs. Over the last 5 years he has, laudably, clawed his way back into proper employment, got married and fathered 3 kids.
Today he goes out to work every day to earn £22k a year to support his family. It’s a cockle-warming tale of someone who has finally knuckled down, joined the labour market and got on with his life.
Only two weeks ago, he went to his boss and asked for a £9000 pay cut. Voluntarily.
Nine. Thousand. Pound. Pay. Cut.
But why?
Here’s the rub: today, once he has paid for his bills, clothing, shopping, transport and all the rest, he is left with around £50 a month ‘free money’ to spend on nights out and fun. After some research, he’s discovered that if he earns considerably less than he does now, the council will step in to pay his rent and his council tax, and the state will make further arrangements to cover his utility bills and provide extra benefits. The net result? He’ll have £400 a month ‘free money’ to spend.
So for once and for all, will those people who are cropping up on TV to tell us that “making work pay” is just a cover story for “Tory attacks on the poor” please just shut the fuck up?
Fixing the benefits system isn’t just about saving money and helping to pay off the stupid amount of money we owe. It’s also about creating a world where people would prefer to work than not, and where your taxes are going to help people in genuine need and distress.
There’s always gonna be loop holes and ways around the system but that does nark me off a bit. My partner recently (finally) escaped HMRC where day upon day she was paid to sit around and read her books and magazines because they didn’t have any work to do. The public sector cut backs are well over due. Hopefully they’ll tighten up the benefits system a bit as well.
Ok it’s an anecdote.
My mate Tim is a programmer. A highly paid contractor (as indeed I am). Some years ago he and a dozen others where hired by customs and excise to write some software to steal more of our money. But HM Customs had no desks or computers for them. So they where asked if they’d mind sitting in the canteen for a day or two. My mate left after !three months! as he couldn’t take it any more. As far as he knows the rest of them might still be sitting in the canteen.
I literally don’t believe this.
Not you personally – but I’ve spent a fair amount of time over the last few years looking into marginal tax rates for people coming off benefits, and while the marginal rate can get to *insane, stupid levels that need changing* (ie approaching 100%), there’s no situation ever where I’ve encountered anyone who’d be better off on a gbp13k job than a gbp22k job.
I’m pretty sure your mate’s brother is shitting him. Or possibly dodging child maintenance payments (or “nicking money from the taxpayer that we’re paying for the upkeep of his kids because his ex doesn’t have an income and he’s classed as too poor to chip in”) by being paid partly cash-in-hand & undeclared..
I would strongly recommend to your mate that he gets his calculations checked by somebody professional who has a clue before going through with this move. His current plan appears to be on the advice of ‘a bloke in the pub’ via the Daily Mail.
I worked for 15 years in welfare benefits advice and I can tell you categorically that the number of situations where you deliberately reduce your wages and end up better off is tiny, the amounts marginal and mostly due to increased costs attached to getting to work, transport and the like.
The thing about ‘in work’ benefits is that they decrease at a taper with increased income, so at a low income you might be entitled to quite a lot of housing benefit, tax credits etc but at a higher income, although the amount of benefits is reduced, total income is higher.
The problem is that it’s often not higher by very much and the combined rates at which the in work benefits reduce results in shocking effective tax rates as your wage increases. For some eg where the opportunities on offer include interesting rewarding work the small increase in income may seem worthwhile but it’s easy to understand somebody not finding the move to dingy factory work for a small increase in cash being very motivating.
But there are no benefits that pay for your utilities except annual grants for old people and grants for some groups for insulation and stuff. The gas bill has to be paid out of whatever you get from the pay packet and any benefits and tax credits you get on top.
And you certainly don’t end up better off by taking a £9k drop in your wage believe me.
Quite possible he’s fiddling something – he has got a shady past. Obviously it’s second-hand information I’ve got here, but it does chime with stories of insane marginal tax rates we’re all kind of familiar with and I know he knows his way around the benefits system quite handily. I do want to find out some more about what he’s doing – I’ll be really disappointed if it turns out I’m on the wrong end of a Daily Mail style Massively Misinformed story
Sorry your comment got stuck in moderation – I got spammed to death by some dirtbag with a blogspot account so… Computer Said No
I have no idea how thoroughly he’s checked this all out – but he’s apparently asked for it officially at work so he’s quite far down the line with it. Like I said above, I have no wish to spread Daily Mail-esque myths – this is just what I’ve been told. There are dependent children and an unemployed mum in the story too – so this isn’t just about him.
At a guess, he’s angling after going part-time, getting housing benefit, child benefit, child tax credit, unemployment benefit, working tax credit, childcare vouchers (? not sure how old his kids are) income support and council tax benefit. I don’t know if it makes any difference if he moves out to live somewhere else or (as someone suggested above) is going to do something over and above all that with cash-in-hand jobs.
Its entirely possible in my view. Though it could be that he’s due some benefits even when earning £22K, so what he should be comparing is £22K + benefits vs £13K + benefits. I’d hazard a guess that there wouldn’t be much in that, so why not work just over half the hours and get the same (or slightly less) money? Insanity.
And I have personal experience of this benefit system effect – my cousin & her husband run their own small business, mowing lawns & doing general garden work. They have 2 kids, and make very sure not to earn too much money as they would lose loads of benefits if they did. So they take on only a limited number of clients and let the taxpayer take the strain. Nice work if you can get it…………….