Saturday, 18 July 2009

The Benefits Trap: First Hand Experience

A guest post by Hektor Reborn

When you lose your job or you get sick, the State steps in to look after you. That's a good thing, right? Well, it is until you get hooked on it. Like painkillers, it helps to begin with but you can become increasingly dependent on them and find that you can't get off them. Having read The Welfare State We're in, which details how the benefit culture may have contributed to a breakdown in British society, I know that the trap is now sprung and I am on the verge of becoming stuck.

I am not sick, but I did lose my job in November. I got a reasonably generous redundancy package that was not enough to live on but with savings it was too large to qualify for benefits. That was fine. I would rather make my own way in the world than rely on the State's handouts. All well and good, but life goes on. I had a flat that I had to pay rent on. Food to eat. People to see and some fun to have. Not having a job but having some money has the upsides of being a student and having a job: both Time and Money at the same time.

I wasn't being stupid though. I had enough money coming in from doing odd jobs to keep afloat and I wanted to save most of the money to offset various debts (student loan, etc). However, with interest rates crashing down this seemed less and less viable. What is the point in having a full ISA if you get £8 a month?! Additionally, oddjobs dried up, so my bank balance began to creep down to the point where my savings no longer close to offseting my debts. At this point I decided to empty my savings and pay off as much of my debt as possible.

The reason for this is simple. If you have any savings then you get less dole money. But this doesn't take debts into account. If I wanted to get my Jobseeker's Allowance (JSA) then that is what I had to do. It was painful getting rid of everything that I had saved up and leaving myself with no financial cushion or room for manœuvre if something went wrong but it had to be done. So I called up the Department of Work and Pensions (0800 055 6688) and spent 45 minutes telling them all the tedious details that they need. They seemed more concerned with finding out which disability I might have had than actually processing my claim. It was almost as if they wanted to register me as disabled so that I didn't count as unemployed.

I went to the JobCentre Plus in Hammersmith the next day for an interview only to find that they had put me down for contributions based rather than both contribution and income based JSA. The difference essentially being that if you haven't paid enough NI then you can't get contributions based and income based is limited to about £64 per week, the level that the State thinks is the minimum you can live on. Sky dishes on council blocks anyone? That's another story....

As this was my first job since university and having been working in Zug, Switzerland my NI contributions were not enough and additionally I had to fill in a form explaining why I hadn't been working in the UK (more money, less taxes & better services just about sums it up). Obviously I was seen as Patriotic enough and passed that test. I even managed to make it through the interview with an incredibly patronising fat woman. She didn't seem interested in what I had done or was good at, but wanted to tell me exactly what I should be doing (reading the Guardian twice a week) and she didn't ask for a copy of my CV. Why would she? She probably knows exactly what kind of job is right for me just by looking at me.

So, I got my money each week, but not before agreeing to certain conditions, the Jobseeker's Agreement. This sets out that I will be looking and available for employment, make suitable efforts to find work, etc. I record everything I do in a little book but must make sure I complete three jobseeking steps per week. An example of this would be to phone the local baker to see if he has any work. So not exactly strenuous. I filled up the book and went onto another sheet of paper in my first two weeks and from listening to the other people, it is clear that you don't actually have to do anything for them to give you the ok. Indeed you could make it all up.

There are two conditions that are important. One is that you can't work for more than 16 hours in a week and the other is that you earn money you will get your benefit + and extra £5 - the amount you earnt. So if you earn £20 in the week you will get £64+£5-£20=£69. There is a small incentive to work if you are going to get less than your benefit amount, but not much. And if you are going to earn just more than £69 in a week, then you are going to have to do a lot of work for it when you could do nothing and get your money anyway. Also, you can't do more than 16 hours unpaid work. The reason: you won't have enough time to conduct your job search properly. Seriously, that is taking the piss. Weekends? Evenings? They can't actually want anybody to be looking for work.

And now, the best part. Hammersmith & Fulham is my council. They have an eight year waiting list for council housing, but those on JSA can claim housing benefits. I would be eligible for around £150 per week renting a private flat and £15 per week council tax benefit. All of this is income dependent so if you are earning money you get less benefit. So let's add this up. £64 JSA + £150 Housing Benefit + £15 Council Tax Benefit = £229 per week. Let's call it £230 for simplicity. That works out at £11,960 per year. Not a bad wage (starting salary as a squaddie is around £15,000) for doing 5 minutes work per week.

So, how much would you have to earn to take home £11,960 after paying council tax at £15 per week? About £15,675 by my calculations. The State has decided that there is an income that people need to survive but they still tax you if you earn that much. How does that make sense?

So you have a choice when offered a job worth around £15,500 or less: take it, work hard, earn your own money or do nothing and get the same amount of money. What if you are offered a job for £16,000? You would be better off by £6.63 per week, not £9.61, due to tax. That's not a lot of money for a lot more work. £17,000 makes you £19.90 better off per week instead of £28.85 because of tax.

The State seemingly doesn't want people at the job centre to get jobs (or it would be making them do a lot more), and even if they are offered a job, unless they are offered a good wage (average in the UK is about £25,000) there is little incentive to take it.

If I decide to move into a flat on housing benefit, I will have a large incentive not to take a job unless it comes with a good. So, no bar jobs, no part time waiter work, etc. It just doesn't pay. The same goes for the other 2.38 million people.


Anonymous said...

I was on sickness benefit for a while. They cut it when they found out I was trying (entirely in on my own) to pass some accountancy exams. Now I just spend my time drinking pikey cider, smoking skunk and playing computer games.

AP said...

The Irish government have just realised that a family with three kids in Dublin on Benefits has a cash income equivalent to pre tax 54,000 euros a year. This excludes all the other non cash benefits such as medical cards etc. A close examination of the figures here will reveal the same story.

There is fuck all incentive to get up off your arse unless you are sure you are going to succeed big time.

Everyone should get a basic income from the state of say £100 a week with no means testing, available to residents here for more than five years but no pensions or any other benefits available at all. a simple 25% tax on all income. Then if someone wants to sit around on the state basic they can, and the rest of us get to enjoy 75% of everything over and above that as a reward for contributing to society.

Anonymous said...

The whole system needs pulling apart and starting again. Last week I had an appointment with a South African couple. Been here 9 years,paid tax, 2 kids,in rented accomadation. She's turned into an ox-like munter,he's buggered off with a younger slimmer prettier model.(can't really blame him,she looks like john Prescott in a frock)
To cut a long story short,you,I and the rest of the mugs,are now paying her rent,and will,I expect,continue to do so whilst the kids remain in education.

Anonymous said...

It's the private landlords that seem to get rich on the tax money.

Rab C. Nesbitt said...

Indeed it is Anon 14.32
I blogged on the subject some time ago

Anonymous said...

Off topic, but have you seen this :

The link pretty much says it all....riot squad dispatched to a 15 person BBQ, at 4pm.

No parties for you...

Rab C. Nesbitt said...

There is also the other side to the benefits trap. It's the lifestyle choice for millions -

Anonymous said...

Bring back the wage stop.

Rab C. Nesbitt said...

And finally, even those in work are encouraged not to do any more than is strictly necessary -

Wesley Groves said...

The savings thing only comes in if you have thousands in the bank. Say nothing. The "little book" you had to fill in? They just want to see a few applications per week. Don't be too arrogant. Don't be too submissive. As for carrot & stick it depends on where you live. Poor areas with few vacancies = the DSS tacitly gives up. Signing on is a game, you pretend to look for (non existent) jobs, they pretend to pay you.

caesars wife said...

a good article with some accurate insights , one statistic that caught my eye was that 1 million people have been on benefits since 1997 with no work . So clearly govment help in getting them into work , kind of missed that group ! Also makes you think just how fake gordons promise of training for jobs that arnt their is , they havent been there since 97 .

There is the more subtle labour strategy of tax payers cash funding building projects that fail , I dont mind the odd piece of art , but some projects have cost millions only to find not enough public money to keep them viable .

While ever we keep importing low cost goods for the sake of inflation labours prie that has to be paid is debt to fund the job losses and ergo taxation of the productive parts of the economy.This was golden rule labour had claimed they had learnt the Thatcherite lesson on .

Yet here we are in 2009 , 6 banks failed and in state control, borrowing at 20 million a week , 2.3 million unemployed , afuture that will be paid for by taxation yet again of the productive economy , all thanks to the liberal elites and the champagne socialists.

That is lie that gordon keeps pedaling , how is he going to pay for the debts that are paying for his benefit clientel state. he doesnt want to explain how it will all come right , as it doesnt , it just regiments any spare cash people earn into either a lower take home or more expensive bills.

But back to changing the work ethic , some people need part time work to fit in with there life , but by enlarge any couple will need at least one person to have a good job , a full time job with some security .
This is exactly why he should have put money away in the good times , to support private business when production fell , but instead he has to borrow to keep the poor , poor and the public sector rich , no 10% wage cut across the board in the public sector , sending private business to the wall is price worth paying in labour wonk anomincs.

the sad truth is many are losing or have lost there jobs , but many more will struggle , due to bank charges making ends meet , paying the bills and insurance costs and not having any cushion or savings when , cash is needed for , a new carpet, fridge , sofa etc .

i worked out a family car say about 2 litre (2nd hand) wil cost about £700 per year before you put fuel in it and travell anywhere , put in £15 worth of fuel a week and its £30/week just to run a secondhand car , which may need replacing or futher expense , enrgy bills are about £30 a week , council tax roughly same , so thats nearly £100 a week gone before you feed and clothe your family .

Debts destroy business as well as low order books , thank gordon for his bankers , mirage of credit boom , he is after all the greatest chancellor we ever had,or the greatest liar !

Ivor Bigot said...

Whilst the truly bone-idle will always make easy targets, I have long suspected that there is a vast swathe of benefit dependents for whom it simply makes financial sense to not work. It's easy to get all high & mighty when you're safely above the "threshold", but when the money is just lying there in the street, so to speak, principles can quickly become eroded.

Assuming you're vaguely fit for work, then the welfare system should be there to stop you starving and/or freezing to death, and nothing more.

Mark Wadsworth said...

Good post, I agree with AP, if we are to have a welfare system, then let it be universal and flat rate (whether £50 a week or £100 a week is another debate) for everybody with a flat rate of tax on all income, no means-testing, nothing.

And sod housing benefit for private tenants while we're at it, either build or free up more council housing.

Londonistan said...

I have a flat which i wanted to rent out. If i rented it at current market prices i would get about £200 a week for it. If i rented it to people on housing benefits i would get £300 a week.

Type in LHA in google and then put in your post code. The amounts paid (especially in London) are a scandal. This governmnet has created a culture where working is not an option.

By the way i rented it to a Somalian family through the council at £330 a week. They get free health care, free housing, free schooling etc. They don't speak English and don't give a fuck.No wonder the world is flooding to this country.

sixtypoundsaweekcleaner said...

I identify with all of this.

No wonder we are in such a mess.

banned said...

Nice post Hektor Reborn, not much news ( though the detail is good ).
The Govt. have long preferred you to be 'disabled' because that way they do not need to go to the expense of pretending to re-train you. They hope that you will die off but you will not, you will mate and breed a new generation of idle persons who will not ask the questions that you do, just " Where's me Free Money ".

Rogerborg said...

So, solutions?

We could say "No workee, no money". Get them out in high-vis vests picking up litter 16 hours a week, same as we should be doing with community service lags.

I say this not because I think they'll clean up the country, but because the unexpected exposure to clean air may cull some of them.

Anonymous said...

AP is completely right. Such a system would be incredibly efficient too, as there would be no need for any of the form filling crap, no need to allocate tax codes, no need to hassle people because they are on benefits. You could dismiss a whole army of bureaucrats complete with their unfunded pensions.

Its that kind of blue skys thinking that would be siezed upon - by East European governments.

The purpose of our welfare system is to create dependency. That army of bureaucrats and their clients are not likely to vote for any change that will end their status. Great idea, but alas unlikely to ever happen here.

Its a total collapse we really need. So we can start again.

Sugar Tits said...

The welfare state was put in place to stymie creativity. THEY love an infantile populace sucking at their tit.

Anonymous said...

The purpose of the welfare state is to keep poor people in poverty.

The really sad thing is that the Socialists do understand this fact on some level. When talking about their fashionable African aid projects, they tend to make remarks such as "Give a man a fish, and he will eat for a day. Teach a man to fish, and he will never go hungry." And yet they are unwilling to make the logical leap between this trite saying and poverty closer to home.

Old Holborn said...

No socialist has EVER taught a man to fish.

electro-kevin said...

Excess of welfare is the key to Britain's social problems.

I understand why welfare dependants are unable to take time 'off' from benefits to work seasonally on farms or on resorts. The arrangements become far too complex to even begin to contemplate. Hence it is easier to import casual labour.

How ridiculous !

caesars wife said...

nice to see you back electro kevin

i think you have a viable solution

Anonymous said...

they pretend to pay you." If only if only but they really pay them.
They seem to forget welfare was set up for the needy not the greedy but now some slag with 3 or 4 kids can't afford to go to work as the benefits are so high.As for the blokes who sired the kids, well its fuck and go leave you with it love let the taxpayer pick up the tab, bye now.

mikey said...

I have spent the past 4 years working in CG special effects, post production for the film industry. Previously I had worked without break for 28 years.There is however only ever something like 6 months work a year in post production and so I now sign on at Jobcentre Plus in Walthamstow whenever I am out of work. The staff there are wonderful. They are however very aware of how the welfare state is spinning out of control. A while ago a very senior employee there asked me, while casting a hand around the room, "what is wrong with this picture?" the answer, it transpired, was that I was at that moment as far as she was aware the only person in the room who had ever worked in Britain and paid taxes. Everyone else had just shipped up and was taking advantage. I am reasonably certain that most everyone working there I have met and chatted to has always voted Labour and yet they all seem to feel that the British tax payer simply cannot pay for a world begging service. The most senior lady there said to me that in her opinion the entire rotten edifice will cave within a year...two at max

libertarian dole sponge (down on his luck) said...

"I record everything I do in a little book but must make sure I complete three jobseeking steps per week ..."

To be clear to anyone who isn't familiar with the terminology, a "jobseeking step" is only something like reading the jobs section of a newspaper or doing a single search on jobsite etc. You only have to make (i.e. claim to have made) one (nominal) job application per week in this area. I presume it's the same kind of deal elsewhere.

In addition, the requirement to fill out a jobseeker diary has been dropped in the last month or two. When I asked about this, they admitted that they never checked the contents of jobseeker diaries anyway - I think that dropping the requirement is just a signal that they're prepared to be expecially 'loose' on the terms and conditions of JSA.


Interesting. I heard something very similar from someone who was working in the immigration services of a nearby foreign country (processing applications and new arrivals) ... "There is no future in this country" were her exact words.

Dick the Prick said...

It's Keynsian shite. Proper chaves have a higher marginal propensity to consume beer and fags so it all goes back to the exchequer - hmm.

hermit said...

Anon 18 July 20:32

Agree with you completely, AP nails the solution.
It's an idea I've had a long time to mull over. I think I first read it in Richard Neville's 'Playpower'. When was that, 1969?
But your last sentence is perhaps most telling: 'Its a total collapse we really need. So we can start again.'
It's coming.
The government are like a gambler in the casino, who has just lost 999 thou. Rather than go home and spend his last grand on a few groceries, he insists his luck will change and stays til the bitter end.

Anonymous said...

Don't forget that most of our 'overseas' visitors claim benefits n two or three (or more) identities. Sometimes even in the same area job centre.
So it's not a bad job for them to sign on 3 times a fortnight and receive 3 lots of cash.
Nice work if you can get it !!

JPT said...

The BNP (calm down) have a policy of NO benefits to single parents and of making people actually work four days a week for their unemployment benefit.
But of course fuck all that because they're 'racist'.

Anonymous said...

Working four days for £55 a week is nothing more than slavery. Plus it would fuck up the private sector - why should people hire a company to do a job, even on minimum wage, when 5 doleys paid for by the taxpayer would do it for the same price? That's a retarded policy. That said, there's nothing wrong with one day a week - it works out as minimum wage so people are earning their money instead of sponging it, and the genuine employed aren't made to feel like scumbags just because they've just lost their job. And they genuine unemployed (as opposed to the scum) still have time to go for interviews etc.

The tax system is key to this. Make anything below 12 grand or so tax free. Rich and poor benefit, but the poor proportionately moreso. Back in the mid 90s I was making £3 an hour - and I still paid tax and NI. When you're only making £120 a week and you're still paying 20 quid a week in tax I was very much tempted to just go on the dole. I'd have lost £50 a week but I wouldn't have had to chore for 40 hours a week and get up at 5 in the morning, either.

They also need to introduce a sliding scale so if you manage to get something part-time you don't automatically lose all your benefits. Earning an extra £50 then having them take £45 off your dole is just ridiculous. Where's the incentive to get work and experience? Ditto with the hours. Unpaid internships are an option for some now, but they refuse to pay up in that situation (but are happy to pay if you promise to watch Trisha and wank all day). There also needs to be a time limit. Maybe up to 2 years then off. I was forced on the dole in the last recession - hard, and no jobs. But even in those circumstances I got SOMETHING within a year, even though it was minimum wage. We can't have people sucking off our teat saying "But I was a Senior Manager. I must be a Senior Manager again." Fine. You've got 2 whole years to do it. After that, if you still haven't found something then stop sponging and get a bar job or something. Same for lifelong doleys. No excuses after 24 months. Hell, that is a LONG time after all!

We also need to stop paying child benefit beyond the first child. One can be an accident and the child shouldn't be punished for the stupidity of the mother. But two or more is a job, one that I don't want to pay for. And it needs to be means-tested. I know people who are on £200,000 a year each and they still get child benefit, paid for by me. Fuckers.

Oh, and no more benefits to non-UK nationals. Not working? Then starve or fuck off. Harsh? Funnily enough, when I was working abroad and lost my job that's exactly what I did - starved, then as I was starving, fucked off. I certainly didn't expect them to pay for me, even though I'd been paying into their tax system for 2 years. Why should they?

Then again, none of this will work as thanks to Brown we have no money to change the tax system.

So we're fucked.

Anonymous said...

Yeah, I’ve long thought this: that there should be INcentives rather than DISincentives for people to work. I’d be appalled if the welfare state disappeared; a safety net is good, and if a small percentage of that money is people scrounging and not working, I don’t care too much.

However, to address the “The system is designed to keep us down, man!” comments: Don’t be so bloody thick. You ascribe to conspiracy what can be explained by short-sightedness and bureaucracy.

I’d guess that the political necessity to prevent people exploiting the welfare state (or worse, the appearance of exploitability!) is regarded as more important than making the system actually work.

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