Benefit claimants overpaid £2.6bn

Great, just great. Apparently the government has managed to give out £2.6bn to the wrong people. But no fear! This rate is down from levels in 1997/98 where over £5bn went missing. Link

£2.6bn is 2.2% of the total money that is given away annually in benefits. So according to my rather bad maths the total money is (2.6*100)/2.2 billion About 118 billion pounds a year.

How is this sustainable? What could be done in the UK if that money were freed up (or more to the point - what couldn't be as that would be fewer things)?

This country needs to simplify the tax and credit system (to help the fraud which claims another couple of billion a year) and drastically reduce this astronomical amount of money that get given away.

Does not one in power equate the demise of the manufacturing sector with the fact that the utterly unskilled in the society are given more money for not working than is an economically viable wage for doing work that fits their "skill profile"? And if this was seen to be the end result of bieng unskilled I'd bet that far fewer people would end up this way.

But with our current wonderful democratic system the incentive is to pander to the masses and to sort this issue out would cost votes! ~:shock: Best ignore it then...

~:smoking:

We could have a very nice education and health system for £118b a year extra. Or demolish and fix all those messed up estates.

And you have pinned the issue with democracy. It'd work so much better if eveyone was honest, hard working, etc.

I suppose you would be able to afford a proper military besides having to rent bases and ships...

Quote:

---

Originally Posted by rory_20_uk

£2.6bn is 2.2% of the total money that is given away annually in benefits. So according to my rather bad maths the total money is (2.6*100)/2.2 billion About 118 billion pounds a year.

---

thats a disgrace.

Quote:

---

This country needs to simplify the tax and credit system (to help the fraud which claims another couple of billion a year) and drastically reduce this astronomical amount of money that get given away.

---

The system needs to be simplified, but i suspect (and im no expert on su hthings) that it is difficult to reorganise the system and create a sustainable and wroking simple system - money and finances tends to be complicated...

:2thumbsup:

Does anyone know whether the 2.6bn is net or gross? It was my impression that one of the problems with the current system is that, in addition to money being paid to the wrong people, people eligible to benefits aren't claiming it due to ignorance, and that the second number is bigger than the first.

Some countries have a tax system that is 0% tax up to a point, then a set rate after that point. Extremely simple.

Ours has different bands, then a multitude of ways you can claim tax credits for all sorts of things. This makes the forms for tax longer year on year, and of course a small army of people to go through them. And as the complexity increases, so does the potential for errors - either unintentional or intentional.

~:smoking:

Gross, it would seem. However:

Quote:

---

Originally Posted by BBC article

The DWP also estimates that £900m was underpaid to claimants who were paid less than they were entitled to

---

And a second however:

Quote:

---

Originally Posted by BBC article

The DWP figures were based on a random sample of benefit claims in that financial year.

---

That seems a bit dodgy.

Quote:

---

Originally Posted by rory_20_uk

Some countries have a tax system that is 0% tax up to a point, then a set rate after that point. Extremely simple.

Ours has different bands, then a multitude of ways you can claim tax credits for all sorts of things. This makes the forms for tax longer year on year, and of course a small army of people to go through them. And as the complexity increases, so does the potential for errors - either unintentional or intentional.

~:smoking:

---

It's odd, you speak to nearly anyone from whatever part of the political process, and having a high 0% tax level, followed by a single higher one seems to have a lot of support. Certainly allowing the poorest to keep most/all of what they earn. Would reduce this ridiculous social bill somewhat.

I think the corruption is less of an issue, rather more the actual amount spent.

Brown's Treasury seem to take complicated tax as a matter of faith. Link

I know it's the Torygraph but it was the only link I could find. The Treasury webside link doesn't work... :inquisitive:

~:smoking:

I think we should all get £15k a year tax free. Then pay a flat rate of 30% on the next £15k, 45-55% on the rest. Also get rid of NI. It's basically the same as tax anyhow.

Quote:

---

Originally Posted by Idaho

I think we should all get £15k a year tax free. Then pay a flat rate of 30% on the next £15k, 45-55% on the rest. Also get rid of NI. It's basically the same as tax anyhow.

---

For our fellow Brit-speak-impaired readers, what is 'NI', please?

National Insurance.

As Idaho says, it goes to the same people for apparently a slightly different reason.

~:smoking:

Quote:

---

Originally Posted by Idaho

I think we should all get £15k a year tax free. Then pay a flat rate of 30% on the next £15k, 45-55% on the rest. Also get rid of NI. It's basically the same as tax anyhow.

---

Intersting. So the federal government/crown/whatever could take over half your salary right off the top? No sales or luxry taxes? You must have only one tax in the UK or you'd have what we did in the 70s, a top marginal tax rate of ~75-80%. Or are you just speaking about taxing the increments and not the whole?

Quote:

---

Originally Posted by Vladimir

Intersting. So the federal government/crown/whatever could take over half your salary right off the top? No sales or luxry taxes? You must have only one tax in the UK or you'd have what we did in the 70s, a top marginal tax rate of ~75-80%. Or are you just speaking about taxing the increments and not the whole?

---

His description was clear enough.

I think we should all get £15k a year tax free. Then pay a flat rate of 30% on the next £15k, 45-55% on the rest. Also get rid of NI. It's basically the same as tax anyhow.

For someone earning 35K, 0-15K band is taxed at 0%. 15-30K band is taxed at 30%. 30-35K band is taxed at (let's say) 50%.

15K*0=0
15k*.30=4.5K
5k*.50=2.5K

So someone earning 35K will be paying 7K in taxes (20% overall).

For someone earning 60K, 0-15K is taxed at 0%. 15-30K is taxed at 30%. 30-60K is taxed at 50%.

15K*0=0
15K*.30=4.5K
30K*.50=15K

So someone earning 60K will be paying 19.5K in taxes (32.5% overall).

Clear enough for you but this is the internet and clarification is good. I thought part of the point of this thread was for a simplified tax code, not one based on increments. Does anyone know the current marginal tax rate in the UK?

Edit: Interesting.

Ok - even simpler. The first £20k is tax free and there after there is a flat rate of 40%.

NI is National Insurance. It used to be a fixed amount that people paid into to get a state pension and for unemployment benefit. It runs at about 5% but it all goes into the same pot as tax these days and only complicates things.

Also regarding N.I. someone of my generation who has paid it for over 30 years will probably get a reduced pension when retirement comes. This leads to a sense of being ripped-off. :furious3:

I tend to agree that the whole tax policy in the UK is a bit of a dogs dick.

Take the vehicle excise duty. No, please take it. :yes: This should be scrapped and an extra duty put on fuel to pay for the road infrastructure. This should be ringed fenced. The more you drive on the roads, therefore adding to wear and tear, the more you pay. This would help with the 'green' issues we have at the moment and not having to spend billions on satellite technology, which, given the track record of this government, can only be a good thing.

Quote:

---

Originally Posted by Idaho

Ok - even simpler. The first £20k is tax free and there after there is a flat rate of 40%.

NI is National Insurance. It used to be a fixed amount that people paid into to get a state pension and for unemployment benefit. It runs at about 5% but it all goes into the same pot as tax these days and only complicates things.

---

In other words, it goes into the general fund and is spent on whatever they desire. Kinda sounds like the same tricks they play with our Social Security system. The Federal budget deficit doesn't look so bad when they use the billions in our retirement fund as a counter balance, even though that money is supposedly only for pensioners. "Just keep your eye on the pea under the cup, and around,around we go....so, which cup is it....oops, you lose again sir...care to have another go?"

I disagree that the money from roads should only be spent on roads.Other forms of transport should also be eligible for this money, as the idea should be to try to make other forms of travel more attractive.

~:smoking:

Quote:

---

Originally Posted by rory_20_uk

I disagree that the money from roads should only be spent on roads.Other forms of transport should also be eligible for this money, as the idea should be to try to make other forms of travel more attractive.

~:smoking:

---

the district line could do with it --> had to wait 40 mins extra the other day because some idiot decided to kill himself at rush hour :wall:

:2thumbsup:

Quote:

---

Originally Posted by Idaho

I think we should all get £15k a year tax free. Then pay a flat rate of 30% on the next £15k, 45-55% on the rest. Also get rid of NI. It's basically the same as tax anyhow.

---

I'm thankful that doesn't exist.

I misread it as 'get rid of Northern Ireland, as it's basically a tax too'.

Hehe.

Quote:

---

Originally Posted by Idaho

Ok - even simpler. The first £20k is tax free and there after there is a flat rate of 40%.

NI is National Insurance. It used to be a fixed amount that people paid into to get a state pension and for unemployment benefit. It runs at about 5% but it all goes into the same pot as tax these days and only complicates things.

---

There's a lot to be said for something like this but I can go one better: negative income tax below a certain level.

The idea is you run the tax and benefit systems together, in theory reducing running costs and the opportunities for fraud. You can also vastly simplify benefits, replacing a whole load of complicated different benefits with, in effect, a national guaranteed income. To that I would add a loading for disability and a loading for being a pensioner and that's about it.

The numbers need to be set up so that you don't create a benefit trap but that is easy enough.

For the sake of argument: nat guaranteed income= £5200

[nat guaranteed income] -[your income /2] = your negative income tax.

You get an uplift of 20% on your negative income tax if you are registered disabled, or over 65.

Hey presto, so simple a claimant could understand it.

Quote:

---

Hey presto, so simple a claimant could understand it.

---

But you wouldn't need the civil servants then. Their unions would call for strikes and so on.

*cough*

That is an absolutely great idea! I'd certainly vote for a party proposing it. Has this actually been tried anywhere?

EA for treasurer!

Quote:

---

Originally Posted by Big King Sanctaphrax

That is an absolutely great idea! I'd certainly vote for a party proposing it. Has this actually been tried anywhere?

EA for treasurer!

---

I ought to but I am afraid do not know if it has been tried, but as an idea in various forms its got a long pedigree and literature (and some surprising proponents, Milton Friedman for example)

There is an interesting article here http://www.citizensincome.org/findings/abatkinson.html (and the whole site is well worth a browse)