Universal credit is NOT an incentive to work for the single able-bodied: 63p of every pound earned is clawed back
Focussing on undue delays causing hardship, highlighted on this site, The Times and the FT in 2017 asked ‘is universal credit – to date – a disaster?’
The FT today says “Universal credit is a plum example of how not to reform public services. The theory was broadly sound: the simplicity and real time data of the universal credit would ensure people were always better off in work. The reality, however, has proved calamitous”.
Conservative and Labour politicians, such as Jacob Rees-Mogg, Johnny Mercer, Gordon Brown and Frank Field, are now demanding that the government reconsiders the national rollout.
John Major has warned that UC could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the then Conservative government.
A reader with a postgraduate degree was asked to look at these sections on a government-recommended benefits calculations site:
Work allowance for Universal Credit (Ed: able-bodied & childless need not apply)
If you/and or your partner are in paid work, you might be able to earn a certain amount before your Universal Credit is affected, this is called the work allowance. Your work allowance will depend on whether you are single or part of a couple and whether your Universal Credit includes amounts for housing costs, children and/or limited capability for work. The table below shows the different levels of monthly work allowance.
The Universal Credit earnings taper is a reduction to your Universal Credit based on your earned income. The taper rate sets the amount of benefits a claimant loses for each pound they earn. The earnings taper rate is currently 63%. This means for every pound you earn over your work allowance your Universal Credit will be reduced by 63 pence. To work out the earnings taper that applies to your award:
- Take your total monthly earnings figure after tax, National Insurance and relevant pension contributions have been taken off
- Deduct your monthly work allowance, which is the amount you can earn without your benefit being affected (if you are eligible for one)
- Apply the taper rate by multiplying the remaining earnings by 0.63
This is the amount that will be taken from your Universal Credit maximum amount when calculating your award.
Even the post-graduate reader found these instructions ‘far from simple’ and in no way producing a simpler and more effective system.
Esther McVey, the work and pensions secretary in charge of the scheme, confirmed last week that families will be poorer under UC. She did not deny reports that millions of families could be up to £200 a month worse off when it is fully rolled out.
The chairman of the Commons work and pensions select committee has described the project – running well behind schedule – as a “shambles, leaving a trail of destruction” and in its assessment this year, the National Audit Office doubted whether the system would ever deliver value for money.
The current Universal Credit system is NOT ‘fit for purpose’
Bank branches are closing all over the country, with huge savings in the upkeep of buildings and staff wages. This is due, it is said, to customers undertaking more transactions online. In many cases this is a result of firm persuasion by the banks urging customers towards the more profitable system.
A reader experienced this firm encouragement towards online banking a few days ago when phoning to transfer funds. The impression was given that this was essential, but when pressed the staff member admitted it was not. Indeed she wavered a great deal more when it was pointed out that her job could well be eliminated with the closing down of telephone operations.
America’s Central State Bank warns that – due to the open nature of the Internet – all web-based services are inherently subject to risks such as online theft of access codes/user ID/username, PIN/Password, virus attacks, hacking, unauthorized access and fraudulent transactions.
The National Audit Office records that the volume of online ‘card not present’ fraud increased by 103% between 2011 and 2016
Online banking security rated by Which? At best, a 16% chance of being defrauded
In 2015 online bank fraud was described in the Guardian as the UK’s fastest growing area of crime – doubling from £60m in 2014 to an expected total beyond £130m this year – and the losses to consumers have in some cases been of the life-changing order of £90,000 each.
50 banks were surveyed by Which? and its August 2017 report revealed that all had experienced fraud – the best were 84% free of fraud, the worst only 56%. So even customers using the ‘best’ banks have a 16% chance of being defrauded.
Defrauded customers should accept the blame and not expect automatic refunds
Ross Anderson (right: professor of security engineering at the University of Cambridge’s computer laboratory) has seen the mass take up of online banking, and more recently the explosion in fraudulent activity. Financial fraud cost £2m a day in 2016, with older people disproportionately hit.
According to Anderson and other security experts, banks are shifting liability away from themselves and on to the customer – aided by a Financial Ombudsman Service that they claim rarely challenges the banks following a fraud. Miles Brignall in the Guardian comments: “The bank is on the hook for credit card losses, but not most bank frauds”.
The Independent reported that RBS’s chief executive Ross McEwan caused a storm when he claimed that it is not banks’ responsibility if customers are defrauded in such circumstances. The bank boss – who as part of his role also runs the NatWest brand, which has 24 million retail customers – said he didn’t think the bank had “a duty of care” to victims. They should accept the blame and not expect automatic refunds, he argued. 5,000 of his customers who were defrauded of £25m during nine months in 2015 – and anyone else who has suffered such losses – should consider taking class action.
Anderson, one of Britain’s foremost experts on cybersecurity, says he has never banked online – and has no plans to do so. He believes that system has become so weighted in favour of the banks that the customers now carry all the risk.
Miles Brignall in the Guardian asks: “If a man who has chronicled the rise of online banking won’t use it, what hope is there for the rest of us?”
Today the National Audit Office – the public spending watchdog – recommends that the government reconsider whether more nuclear plants are needed and reproves ministers for failing to consider alternative ways of the costs of the Hinkley nuclear power plant, which could have halved the overall cost to households.
The NAO found that the case for building Hinkley Point had weakened while the government negotiated the final deal, partly because alternative low-carbon sources of power, such as wind and solar, became cheaper.
The plant is under construction in Somerset and is due to open in 2025, supplying 7% of Britain’s electricity. However, the NAO report recommends that the government produce a “plan B” to fill the gap in power generation if the project is delayed or cancelled. It notes that projects using the same reactor design in France, Finland and China “have been beset by delays and cost overruns”.
Note senior politicians or members of their families lobbying for the nuclear industry
- Three former Labour Energy Ministers (John Hutton, Helen Liddell, Brian Wilson)
- Gordon Brown’s brother worked as head lobbyist for EDF
- Jack Cunningham chaired Transatlantic Nuclear Energy Forum
- Labour Minister Yvette Cooper’s dad was chair of nuclear lobbyists The Nuclear Industry Association.
- Ed Davey, Lib Dem energy minister’s brother worked for a nuclear lobbyist. When failed to be re-elected went to work for the same nuclear lobbying firm as his brother.
- Lord Clement Jones who was Nick Clegg’s General Election Party Treasurer was a nuclear industry lobbyist.
- Tory Peer Lady Maitland is board member of nuclear lobbyist Sovereign Strategy.
- • Bernard Ingham, Thatcher’s press spokesperson, has been nuclear lobbyist for over 25 years.
- Tory Peer Lord Jenkin was a paid consultant to nuclear industry.
- Tory MEP Giles Chichester is president of nuclear lobbyists EEF
Comment from a Times reader who has long held significant reservations about Corbyn and McDonnell, ”Putting aside their sixth form foreign policy, I’m just about willing to give Labour a shot. If we’re going to have somebody (botching) the public finances I’d rather they did it out of well-meaning innumeracy – with some good ideas like a National Education Service & renationalised railways . . . “
Other nuclear industry lobbyists including politicians, journalists, academics and lobbyists are listed here: http://powerbase.info/index.php/Category:Individuals_linked_to_the_push_for_nuclear
Margaret Hodge, who chaired the Commons’ public accounts committee in the last parliament, attacked an unaccountable Whitehall “freemasonry” while speaking at Policy Exchange in February, alleging that the PAC has been threatened with break-up if it did not moderate its treatment of civil servants.
Mrs. Hodge’s tenure has been marked by penetrating criticism of civil service management of big projects [a search on this site will find several instances] – also shining a light on big companies, such as Google, whose tax affairs her committee exposed.
A researcher at the Institute for Government think-tank was said to have passed on comments from senior civil servants, one accusing the PAC and the National Audit Office of being “modelled on the red guards”. Another asked: “Should the PAC be broken up?”
In the past, Total Politics has commented: “Aircraft carriers, IT projects, border checks – the slippery Sir Humphreys are forever hiding behind their department’s ministers to avoid proper accountability for the sometimes very expensive decisions they make”.
The FT reported Margaret Hodge’s statement that the sad truth was – in a battle between Whitehall and politicians – civil servants were most likely to win because whereas we are here today and gone tomorrow, they are there for the long term.
As 26,000 civil servants in the Home Office had not been able to keep up with an era where services were delivered by “a plethora of autonomous health trusts and academy schools” and private providers were delivering public services through “a range of fragmented contracts”, Ms Hodge suggested the principle that had worked when there were 28 civil servants in the Home Office was no longer sustainable.
As noted on this site under the ‘reward for failure’ category, Ms Hodge stressed that those responsible for “dreadfully poor implementation” were rarely held to account for their failures and all too often showed up again “in another lucrative job paid for by the taxpayer”.
Next post: an insider’s view from a civil servant
The MoD’s Defence Equipment and Support organisation (DE & S formerly DESO), employs 16,000 full-time staff and more than 3,400 contractors to handle the three armed services’ £14bn annual spending on new equipment and on maintenance. It oversees Britain’s £163bn 10-year defence budget and most of the government’s largest expenditure projects.
But today, the Times and the FT confidently predict that defence secretary Michael Fallon, speaking at an Institute of Directors dinner in Durham, will reveal many shortcomings, including fraudulent charges that arms companies have levied on the taxpayer for:
- croquet lessons,
- horseracing trips,
- speeding tickets
- and magicians.
And today, the National Audit Office has released a report saying that during attempts by the DE & S to privatise the running of procurement, which were abandoned in December 2013 after a collapse of the bidding process, MoD civil servants had ‘squandered’ £33m on consultancy fees and preparatory work.
Mr Fallon’s proposal:
A Whitehall defence watchdog will be set up, with the power to fine defence companies up to £1m if it discovers abuse of the contracting process. The defence secretary will tell the audience that the MoD will demand “100% transparency”.
FT: “Mr Fallon’s remarks are likely to be greeted coolly by a defence industry that has so far been broadly critical of government reform efforts”.
And sadly, the ‘fat cat’ mentality survives unscathed . . . The FT reported (14.4.14) that the MoD had asked the Treasury for permission to give top staff in the new watchdog inflation-busting pay rises or bonuses when they leave.
Government payment strategies boosting the working capital of corporates but jeopardising the future of SMEs
PCU: As some members of the public have suggested, if the business case for HS2 is so compelling, let business fund its construction and the whole operation.
On August 22nd the following message cited the findings of the government’s Public Accounts Committee investigation into HS1 (below)
It would appear from the experiences of several other countries that HS2, if it is built, will add to the ongoing subsidy required for railways in the UK. High Speed Two (HS2) if built will involve the expenditure of £33bn for its construction (London to Manchester and Leeds) plus several more billion for the trains. Is this sensible for a country as indebted as the UK? There are alternatives to HS2.
World Bank: copious and continuing budget support for the debt
What has been overlooked is that high speed rail involves a subsidy to keep its trains running once the lines have been built. In July 2010 a World Bank report cautioned that governments planning high-speed rail systems: “. . .should also contemplate the near-certainty of copious and continuing budget support for the debt”.
The National Audit Office estimated that the total cost to taxpayers of supporting High Speed 1 (in Kent) could be £10.2 billion over a 60 year period. HS2 is considerably longer than HS1 and will cost several times more to build.
Does it make sense for the Government to commit to not only an initial outlay in the order of £40 bn but an ongoing subsidy to run it? The subsidy could amount to £2 bn per year based on the experience of some European countries.
The Optimised Alternative
51M, a group of 18 councils which are opposed to HS2, advocates significantly cheaper alternatives which can be made available much sooner on a progressive basis. These measures would consist of lengthening existing trains to 12 carriages, changing one first class carriage per train to standard class and relieving a handful of track pinch points. This solution is known as the Optimised Alternative and more details may be found on their website: http://www.51m.co.uk/.
- MPs warn government to learn lessons from HS1 – http://www.itv.com/news/central/2012-07-06/mps-warn-government-to-learn-lessons-from-hs1/
- HS1 Channel link leaves £4.8bn (taxpayer) debt, says MPs – http://www.bbc.co.uk/news/uk-18733308
- The PAC report helpfully opens with its summary, conclusions and recommendations and is followed by the record of the oral and written evidence, including a written submission by Mr Bodman. http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/464/464.pdf