Monday, January 23, 2012

Fun With Numbers

Proposed benefit cap (defeated in the House of Lords): £26000 per year.

Typical working year including holidays: 48 weeks.

Typical full time working week: 37.5 hours.

£26000 / 48 / 37.5 = £14.44

So getting benefits of £26000 a year is the equivalent of earning £14.44 an hour after tax.

I can see why the noble Lords and Bishops feel this is plunging hardworking families into debt.

* I'm haven't worked it out myself but apparently for £26000 after tax income you'd need to be earning £34000, which works out an hourly rate of  £18.89!


James Higham said...

There's a lot of trouble coming up actually. Perhaps not the country to be in after it hits the fan.

PJH said...

Closer to £35,000 which equates to £26,162.36 net, or £19.44 gross/hr.

£34,761 gets you closest to £26,000.

Ross said...

PJH- Thanks, seems even more absurd.

Matthew said...

I'm a little bit sceptical it will impose any medium-term hardship, but it does partly reflect how disastrous the UK housing market is that families on median income need govt support.

I'm coming around to the view so many of our problems could be solved by a LVT, or as that is politically a non-starter, just an enormous relaxation of our insane planning laws.

Anonymous said...

It is only the same as £35k p.a. if
a) you have no travel costs
b) you don't have to buy special clothes to work.

Is there anyone for who the above is true?

PJH said...

"It is only the same as £35k p.a. if"

Tenuous. There are both 'pros and cons' for both working/not working, which can be offset against each other.

For example, those who work (from an office) don't have to pay for the electricity while they miss Jeremy Kyle, or for the alcohol they won't be drinking while not watching it.

Anyway, to address your (you appear to think rhetorical) assumption:

"a) you have no travel costs
b) you don't have to buy special clothes to work.

Is there anyone for who the above is true?

I walk to work, and I need no special uniform I need to wear while at work.

Indeed, I could work from home if I needed/wanted to.

As could a lot of people I imagine, since some people - who work where I do - are actually home-office based (except for the occasions that such homeworkers are requested to attend the office, and I understand most, if not all, transport costs are expensed.)

Ross said...

Matthew- The inflated housing market affects a lot of other issues imho- transport, benefits, education, the wider economy.

Mark Wadsworth said...

As Matthew hints, the largest part of the mythical "families on £50,000 a year benefits" is of course the Housing Benefit element, i.e. welfare for private landlords. The family never sees a penny of that (although they do get somewhere nice/expensive to live).

Ross said...

Mark- it still amounts to a big subsidy to the families who receive it though, surely?

Matthew said...

It must to some extent, but (I don't know of any figures), I've read that claimants tend to pay higher prices than market rents due to a smaller potential number of landlords.

It's also worth remembering that housing benefit, child tax credits and child benefit are paid to people in work.