An illustration on benefits

May 23rd, 2010 | by nick |

Posting this might be considered unwise, as it gives a shocking illustration of what’s on offer if you are minded to work the state, rather than yourself. But there is a lot of confusion, so I thought I’d give you an illustration.

There’s a great website called www.entitledto.co.uk which basically calculates what you should be entitled to. You can play around with the website, but let’s imagine a single parent of two children, of opposite sex. There’ll be a few other assumptions in there, but nothing particularly “underhand”.

Allowances:

Entitlement per year per week
Means-tested income entitlements
Tax Credits £5,153.80 £98.84
Income Support £3,412.75 £65.45
Means-tested bill reductions
Council Tax Benefit £1,199.80 £23.01
Housing Benefit £8,342.85 £160.00
Other income entitlements
Child Benefit £1,757.21 £33.70  
Total Entitlements £19,866.41 £381.00 weekly  

Bear in mind that this doesn’t include any maintenance payments, nor does it include school meal vouchers, free dental, prescriptions, etc, etc.

To earn £381 a week take home, you’d need to earn about £26K gross. Which is roughly the average (median) wage in the UK. The average (median) wage in Dorset is £18K, which means take home of about £275 a week – and of course working tends to have associated costs, not least travel to and from work. Of course it’s true that I’m not comparing like with like – and I’m not going to belittle the amount of work involved in raising children!

Let’s imagine that the single “at-home” mother and the single “working” man were to live together. They would receive his income, and still £220 of benefits. So his full time job is worth about £114 a week, minus travel etc. That’s a pretty depressing return on effort – and about half the government’s “minimum wage”.

Thankfully, people are still working, and still seeking work. The wise realise that work has value, both in terms of future prospects and personal self-worth, and so they continue to work even though the marginal returns are pretty dreadful. But something seems dreadfully wrong.

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