Friday, 25 March 2016

The Benefit Trap Revisited

The other day I found out that a man I know, had given up work a couple of decades ago to 'care for his wife'. I was surprised at this information (which came from someone else), as nothing he had ever said, had suggested that he hadn't worked in decades, and as I had seen his wife occasionally, I had thought that he had only recently 'retired' early, and had a pension etc.

In fact I might add that he had even encouraged this belief, by implication when talking about 'grafting hard' when in another city in the past. On top of this was the fact that his wife often visits her family, and they go on a holiday abroad to Spain once every year, so this was something of a surprise on a couple of levels.

1) That he was not working (or recently stopped work), and
2) That he could afford a lifestyle that includes the pub at weekends, and a holiday abroad every year, while on welfare benefits.

Many People Are Called 'Workshy' ....

Firstly let me say right upfront that I am not suggesting that this couple are doing anything wrong or getting anything they are not due under the rules. But this is a subject that I have talked about once before .... the welfare benefit trap. Its also an area of social policy that this government promised to tackle, by capping benefit levels, so that those working would be clearly better off than on welfare benefits.

For Some In The UK, Welfare Benefits Are A Career Choice

However, in view of the recent very public government level row about the new Personal Independence Payments (which are replacing Disabled Living Allowances (DLA)), and out of curiosity I have looked up the levels of benefits that this couple might expect to receive, bearing in mind that the average annual working wage in the UK is often said to be £26,000 pa, which is a net figure of £20,847 pa (ignoring travel expenses, housing etc).

Locally the average salary where he lives, for a semi manual 'grafter', is likely to be much nearer £22,000 (with some overtime). This means a net salary of £1,737 pcm for two people to live on, if only one working (based on the national average wage, not the more likely local wage levels of £18,127 net pa. and £1,511 pcm ). Now I am guessing that a life on welfare benefits will turn out match, or even exceed the national average salary, and certainly exceed the local salary levels that this man could hope for.

So lets look at him. The Invalid Carers Allowance is £62.10 a week (if you care for someone at least 35 hours a week), or £3,229.20 pa or £269.10 pcm. For her, the maximum amounts that a disabled person currently could get (under the DLA scheme) is:

Care component                    Mobility Component  Total        Total pa  Total pcm
Higher rate £82.30 a week    £57.45 a week          £139.75   £7,267    £605.83

And the new replacement maximum rates will be .....

Daily living component  Mobility Component  Total        Total pa  Total pcm
Enhanced £82.30          £57.45 a week           £139.75    £7,267    £605.83

On top of that, they will also get full Housing Benefit (which will maybe replaced by Universal Credit in the future), which covers their full weekly rent/or interest on their mortgage, plus a reduction in their council tax.

So assuming that this couple are on the higher rates (as he's been a full time carer for a decade or more), then:
  • He gets ICA £3,229.20 pa (or £269.10 pcm).
  • She gets £7,267 pa (or £605.83 pcm).
  • They get housing costs of around £9,600 pa £800 pcm (min ... it maybe more. I have assumed a low rent of £200 pw for a local flat).
  • Total £20,096.20 pa NET (or £1674.69 pcm) for the couple.

This is comparable with a couple where one works for the average national salary, who get a net salary of £20,847 pa (which is £1,737 pcm) - however they also have work related expenses such as travel (at least £500 pa, and likely to be a lot more). Now they can possibly apply for Tax Credits (another welfare benefit and also housing benefits if they are renting). I found a housing executive website, which calculated housing benefits of £23.97 pw for the couple (£1,246.44 pa or  £103.87 pcm).

So no matter how I look at the maths, the couple where one works and is on the average wage, is still worse off, than the couple where one gives up work to become a carer (once you take into account travel costs and lifestyle).

Until this fundamental injustice is tackled, the welfare state is failing those who work, and will continue to be a magnet for immigrants and asylum seekers from the third world trying to get into the UK.


  1. You missed something else. When they get to retirement age won't they continue to get those benefits?

    So suddenly they will be thousands better of than the working couple.

    So the system rewards doing nothing for decades over hard work.

    1. You may be right. I don't know what happens to ICA and PIP when recipients reach retirement age. They may even get paid on top of any statutory pensions thus making this a lucrative state paid for pension and better than ordinary people can get ..... which seems even more unfair on those who work. Thanks for the comment.

    2. I heard a very similar story. A couple. She disabled. He the carer. He stopped work about 20 years ago and since then they have had 3 holidays abroad every year.

      My wife and I worked and are both pensioners. We can just afford one foreign holiday a year.

      The system is just plain wrong.

    3. When you hear these stories, you can't help but think its unfair. However its a speculative post in that I only generalise on benefit amounts, but even so, benefit levels that allow for three foreign holidays a year must be wrong. Thanks for the comment.


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