The Sun this week declared war on what they refer to as Britain's Benefits culture. 

http://www.thesun.co.uk/sol/homepage/features/3091717/The-Sun-declares-war-on-Britains-benefits-culture.html

The story featured a young couple with two children that believe their benefits would be 'cut' if they work. This is a common pre-conception about the benefits system along with the idea that people are always 'worse off' when they start work and come off benefits such as Income Support or Job Seekers Allowance.

At IncomeMAX we believe that one possible solution to the problem with benefits and worklessness is to ensure that people can access expert advice and support, so that they can make the correct choices in relation to work, benefits and income. I appreciate this might not be the answer for people that really do not want to work! But many people do want to come off benefits and into work, so quite often its not knowing where you stand that is the issue.

To explain this in more detail, I have worked out a couple of scenarios for the young couple that were featured, to show that they could be better off working. In an interview with BBC Radio Kent, the couple said that when it comes to work, they do not have a choice, but I believe they do have a choice - its just that they don't realise they do!

I have worked out two scenarios, based on a couple with two children, one of whom is aged under 1. Figures are approximate and for guidance only as I have included a full year of the Child Tax Credit baby edition, when there might only be a part year entitlement to that particular element. Also, I do not know if there are any disabilities in the family, so if either of the couple or any of the children receive Disability Living Allowance this would alter the calculation.

Scenario 1: Dad takes on a job for 16 hours per week, min wage £4.92 per hour

 

Current Income before working;

Jobseekers Allowance £102.75 per week

Child Benefit £33.70 per week

Child Tax Credit £109.42 per week

Total = £245.87 per week

Plus they receive Maximum Housing Benefit and Maximum Council Tax Benefit

New income once working 16 hours per week;

Wages £73.80 per week

Child Benefit £33.70

Working Tax Credit and Child Tax Credit £182.69

Total = £290.19

Plus they will still receive Maximum Housing Benefit and Maximum Council Tax Benefit

BETTER OFF BY £44.32 per week

Scenario 2: Dad takes on a job for 35 hours hours per week, min wage £4.92 per hour 

Current income before working;

Jobseekers Allowance £102.75 per week

Child Benefit £33.70 per week

Child Tax Credit £109.42 per week

Total = £245.87 per week

Plus they receive Maximum Housing Benefit and Maximum Council Tax Benefit

New income once working 35 hours per week;

Wages £155.82 after tax and NI per week

Child Benefit £33.70

Working Tax Credit and Child Tax Credit £197.88 (they will get full WTC and CTC for the first year as previous years taxable income is £0 - this will change in year 2 though and they should seek advice at that point)

Total = £387.40

They will still receive some housing Housing Benefit and Council Tax Benefit but they will need to pay £52.52 per week towards their rent and £16.16 per week towards their Council Tax

BETTER OFF BY £73.17 per week after rent and council tax is paid

Summary

The difficulty is that 'better off' is a subjective term. Feeling ‘better off’ is clearly not just about having additional income, especially if this extra income has to go towards fares, lunches, uniform etc. This is also the conclusion that the Centre for Social Justice came to in their recent report 'Dynamic Benefits'.

The Government is going to reform the system to make the withdrawal rates of benefits less harsh which is a step in the right direction. This will try to ensure that people see more money through the work that they do.

BUT you can see already that for many, it simply isn't the case that you will be 'worse off' financially. Instead, in many cases you will be slightly better off, or about the same if you come off benefits such as JSA and IS and into full time work (which meets the conditions for Tax Credits). 

So the question might soon become... how do you change the culture? How do you incentivise people to want to work, to want to contribute to society by working? It is clearly not just about being better off financially as you can see from my examples above.

The Government must therefore find a way of instilling work, or the preparation for work as a cornerstone of our culture and the expected 'norm' for people of a working age. This must then be reflected in the welfare system rules.