More UK Benefits Lunacy

Take two identical people. They both earn the same amount of money each year (for the sake of argument let’s say £20,000). They work for 20 years. They both married ten years ago and both have two children, aged 5 and 2. They both pay identical rent for identical houses. They have paid identical tax and identical national insurance for 20 years.

The only difference between them is that person A saved £1,000 a year (so he now has a nice nest-egg of £20,000) whilst person B spends all the money he has and lives from month to month with no savings.

Both are made unemployed. One of them will receive housing benefit, the other won’t.

Guess which one and why.

The Benefits system in this country rewards profligacy and penalises investment and responsibility.

Roll on Universal Credit.

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29 Comments on “More UK Benefits Lunacy

  1. Wrong. Someone with 20K in the bank manifestly does not 'need' benefit at the Taxpayer's Expense. If the goal is to slashing the excesses of the Welfare state, then the middle-classes (for example)receiving money that just makes them (globally speaking) even more wealthy is legitimate fat to cut.

    You could argue, to use your hypothetical example, that person B should have been more conscientious, but I'm not sure you've thought through the implications of your logic. Benefits should be geared towards need. Someone who has spent all their money and has none, irrespective of their past, manifestly does need benefits.If someone who earns 20,000 a year wants to spent it frivolously then they should be allowed to do so, no? Your point above is weirdly statist for a Tory.

    • The simple fact is that the more conservative you are, the more responsible, the more diligent in looking after your family, the more you are penalised by the benefits system. Despite what you say, it is ludicrous that means testing should be based on wealth not income. Such a system attacks wealth creation (which is vital for economic growth) both philiosophically and materially.

      • What are the alternatives? Presumably, in the example above, you don't think that the irresponsible person should be denied housing benefit and forced on the streets? So presumably you think that BOTH people should receive benefit, not just the ONE person in the current system? Widening the amount of people who are entitled to receive benefit hardly seems the most sensible way to go about slashing the amount spent on it.

        Welfare is about compassion, a legitimate moral impulse. You could argue that the NHS 'rewards' the irresponsible by giving (at Taxpayer expense) treatment to alcholics, or overweight people in cardiac wards, but no Tory (one hopes! :-)) would suggest scrapping it.


        The simple fact is that the more conservative you are, the more responsible, the more diligent in looking after your family, the more you are penalised by the benefits system. >>>>

        Historically speaking, wouldn't the conservative view be that the more responsible and dilligent a person is the less likely they are to even NEED the help of the benefits system?

        Hasn't one marker of the aristocracy been inherited wealth? The idea of someone with (say) a million in the bank and a vast house (who doesn't need to work, and so has no current income in the employment sense) being entitled to benefit is self-evidently ludicrous.

        • I guess that the alternative would be to look at income rather than capital and income. So In the example given, B would still get more benefit than A, because A is getting an income from the interest on the £20,000 saved (you could potentially argue that would mean a reduction in savings due to inflation, but I can live with that). Similarly, those with inherited wealth still derive an income from their wealth, and would not get benefits that way.

          the NHS argument seems a little spurious. It's notionally paid for by NI payments, so is an insurance system, rather than a benefits system.

          • There are different kinds of e.g. Jobseeker's Allowance, based on NI contributions, but people are not given varieties of NHS treatment based on how much NI they've paid in. So it's still an apt analogy of a system where need, not past record of responsible behavior, drives decisions.

            • So your argument is that for an operation you can afford to pay for privately from your wealth, the NHS should still pay, but for housing the local council shouldn't? The difference in need being?

              • Free healthcare is, and should be, a right for UK subjects. The 'right' to have the taxpayer pay for housing that you can afford to pay for yourself is , rightly, not.

                  • The NHS is useful as another system where NEED ,not 'reward for ethical living', is accepted as a legitimate basis for spending taxpayer's money.

                    • Why does someone who can afford to pay for their appendicectomy NEED to have the NHS do it for free? Surely the logical implication of your argument is that he should pay for the operation if they have been responsible enough to save over the years? Why is your position so inconsistent?

                • Why? Why should it be a right? Because you say so?

                  Why the inconsistency in your argument? Why do you think healthcare is different to housing? Why do you insist on wealth being assessed for one, but not for the other?

                  • Of course not. Healthcare is something civilised countries should have.In any case, are you really saying that I need to offer an in-depth argument for the NHS – the legitimacy of which no major political party questions – before YOU will offer an argument for why housing benefit should be based on something other than need?

                    • No, I'm simply asking you to justify why you think one benefit (health care) should NOT be assessed on the basis of wealth but another (housing benefit for those on low income) should. Why is fixing one essential (health) to be treated in a different way to another essential (housing)?

                    • There are needs and Needs and the State (I'm sure you'd agree) can't afford to act like Santa Clause with a credit card, giving everything for everyone. The right to privacy is one reason why people shouldn't have to give details of how many zeros they have on their bank balance before receiving medical treatment; conversely, it is legitimate to restrict housing benefit to those who NEED it. Talk of the "right to healthcare" makes sense and is at least potentially fiscally justifiable, and also as an elaboration of central human rights. But talk of the "right to have the taxpayer pay your rent even if you have 20G in the bank" not seem self-evidently ludicrous to you?

                      And that's aside from the fact that, even if someone thought that, in a perfect world, millionaires SHOULD pay for their own operation, they would rightly be wary (human nature being what it is) of the implications of introducing even the smallest element of privatisation. The NHS, or anything else, hardly has to be perfectable to be justifiable.

                    • Why should a benefit claimant not have a right to privacy but someone needing an operation does? Why the inconsistency? Why shouldn't someone with £20k in the bank pay for their operation? They don't NEED to have it for free.

                      Your position is logically inconsistent.

          • That's exactly the point. Wealth creates its own income and that should be taken into account. But wealth is not income, and benefits are designed to support the latter, not the former.

            • They are designed to meet central needs such as food and heating bills. Someone who has 'wealth' to meet those needs does not, by definition, NEED such benefits.

                • I disagree with your premise that the benefits system should be judged in such terms. Do soup kitchens 'reward' the irresponsible? Does medical treatment 'reward' the unhealthy? Does giving to charity 'reward' people and states who make poor free-will decisions? Etc

                  If you can articulate a (economic or otherwise ) case as to why the benefit system shouldn't be based on need then I'd love to hear it.

            • >>>>>>>>>>>>Why should a benefit claimant not have a right to privacy but someone needing an operation does? Why the inconsistency? Why shouldn’t someone with £20k in the bank pay for their operation? They don’t NEED to have it for free.

              Your position is logically inconsistent.

              No, it's not. We were talking about housing benefit (which has been supplanted by LHA anyway). A benefit for people to pay for housing. Currently it does so on the basis of need. You, again not stating whether Person B should receive it, think that 'not penalising good behaviour' is more important. Why?

              As stated above (but apparently ignored) I cited the NHS as an example of something that is accepted by all parties and that priorities need. This is more important than my own, personal views on the NHS.

              You ignored my point about the state not being able to pay for anything. The NHS is justifiable if you think that free healthcare should be a right for all British subjects, which I do.

              And of course, logically speaking, my being wrong about the NHS would not in any way make you right about Housing Benefit. "Lots of rich people get free operations so they should get free housing money too!" isn't much of an argument.

  2. (No 'reply' bit on your comment below)

    You would have a point if I was arguing that the NHS and benefit systems are or should be perfectly analogous. I'm not. Your post pointed out that the current housing benefit system rewards poor behaviour. I pointed out that it was based on need. I cited the NHS as a good example of another organisation based on need whose existence usually goes unchallenged and is accepted as a legitimate and moral use of state funds. You might be right that the benefits system rewards poor behavior, but you have offered no argument as to why reward for good behavior, not need, SHOULD be the basis for the benefits system.

    As for inconsistency : you've still not stated whether Person B should receive housing benefit or not. If 'yes' then you're effectively bemoaning the wastage of the benefits system whilst arguing that MORE people should receive housing benefit, which seems pretty inconsistent to me.

    • I'm not arguing that good behaviour should be rewarded, rather that it should not be penalised. Different point entirely.

      As to your final point, it is not a waste of the benefit system to support those who are actively seeking work. It is a waste to support those who aren't seeking work but could. Once again, a different point entirely.

      • What happens when 'not penalising good behaviour' and 'need' are in conflict? Which value takes precedence? And why? You've still not said if Person B should receive benefit, let alone offer an argument as to why need SHOULDN'T be the basis for receipt of benefits.

        And of course Job Centre or ATOS medical staff aren't mindreaders – the very existence of a system that gives money to people who claim to be seeking work means that you will support some who do so falsely.

  3. Peter, if your savings of £20,000 is blocking your benefit, you can always invest it with me (thus clearing your account to a nil balance) on the hope that at a later date you will receive it back with interest. More likely it will have disappeared in my get rich quick scheme (which means ME!!) You will have lost the £20,000 but gained the benefit and a life-long friend!! :-)) Do they also count investments? If not, you could invest it with me and get it back at a future date with minimal interest (whatever the bank rate is)

    • They count everything, but the threshold IIRC is £16G, so Peter would only have to invest £5K in your scheme ;-)!

      I think a number of people could argue that the threshold is, if anything, too generous. £15 large in the bank and you still get housing benefit at taxpayer's expense?

  4. Ryan,

    I see your point about taxpayers funding housing for those with money in the bank but I wouldnt have a problem with it at all – if the benefit system was anything like what it was set up for – short term help for those in need. Why should a honest working man – who has been paying tax for all those years – not get help he has paid towards when he actually needs it.

  5. Paul,

    If you want a return to the old days of benefit geared solely for short-term, limited help then expanding the amount of people who qualify for housing benefit is a strange way to go about it. The right-wing President Nixon once said something along the lines of he opposes any form of public pension system as it rewards loafing. You could certainly argue that any variety of benefit 'encourages' bad behaviour, but nobody is suggesting scrapping the whole thing. As to your last point, somebody with 20K in bank plainly does not 'need' taxpayer's money to cover their rent.

    I should say that Peter's original post referred to a hypothetical Person A and Person B and I responded to it in that spirit – my apologies if it seemed insensitive to what one hopes and trusts is a very temporary downturn in Peter's own fortunes. But I'd reiterate that it's not necessarily a failing of the benefits system that it's not geared towards (relatively or actually) wealthy, successful middle-class professional types!

  6. I agree with Pete here.

    It seems that Pete is saying that the housing benefits system is unintentionally creating a perverse incentive for people to live profligate lives by penalizing those who have accumulated wealth through savings (or presumably inheritance etc).

    Ryan you seem to be saying that if that wealth exists there is no need for them to receive support for the taxpayer, as they have no need for it. Pointing out that the NHS has the same perverse incentives and we're not extending the same criticism to that… But that that is the entire point, Pete is saying that Housing and Health are two things that the government should guarantee citizens regardless of their wealth.

    All that besides; Ryan, you are yet to show why the government must provide universally for health but not for housing. To use the language of rights, which I try to avoid, why is it that you think there is a universal right to healthcare free at the point of access (NHS) but not a universal right to have a roof over the head of you and your family? I will admit they are different ball games, but you are yet to make an argument. Seems I am with Pete on this one which is unusual for me (Pete knowing my politics)….

    One argument that no-one has considered – that the reduction of universal benefit availability in the case of need, (on a non-means tested basis but with proof of need), leads to divisions within society and the creation of an identity grounded in imposed inferiority amongst the demographic on non-universal (means-tested) benefits especially within geographically concentrated areas.

    If you propose that those with wealth but no income should not receive benefits then you need to be prepared to accept a clear and damaging division in society. Perhaps the 'fat' or 'waste' of universal benefits is the price to pay for societal cohesiveness.

    Pete, on a personal note, here at Lee Abbey i've not managed to keep up with your situation but from the little i've gleamed in online passings it sounds tough at the moment, know that you are in my prayers. Hope to catch up soon! Jonathan

  7. Hello Jonathan.

    My thanks if you've accurately conveyed Peter's opinion that the irresponsible person in his hypothetical should still get benefit! You'll note that the above thread is curiously prone to misdirection; I'll happily elaborate on my views on the NHS, but it's a bit odd that I'm expected to do this whilst those who agree with Peter (or the man himself) don't even bother to say whether more or less people would get benefit in their presumably fairer system, let alone offer an argument on why need shouldn't be the basis for the benefits system!

    As said above, my position is only inconsistent if I thought Government can and should pay for everything, which I don't! (and you'd think that, 20 years after the Berlin Wall came down, that a lack of faith in the Government-as-Santa-Clause model can or at least should be taken for granted). You could argue that all forms of tax involve some inequalities – the rich pay taxes that go towards education and libraries, yet pay for boarding schools and never step foot in the latter etc. A system based on need may well be the "least bad" one , but it's still the fairest and most economically sensible one available.

    As for the NHS: wouldn't most people prefer a life where they have no need of its services? Conversely, you don't need to be particularly right-wing to think that people work to earn money to meet key needs such as housing; on top of which there is the fact that – irrespective of theoretically principles – the welfare state is manifestly bloated and crippling. So suggesting that it should not be expanded to encompass those who can afford their own housing is commonsensical irrespective of the (supposed) ultimate logic of one's ideology.

    Social cohension: surely a right-wing sociological case could be made that the breakdown of the distinguish between the "deserving" and "underserving" poor – so that genuine jobseeker's are conflated with those who choose a lifestyle of living on benefits – is a large cause of the problem? Expanding the benefits system to include those who, due to large savings, aren't even 'poor' hardly seems like the best solution. And similarly the right, especially given recent events, could certainly argue that destigmatising being in receipt of benefits may not always be a good thing.

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