Britain’s unemployment crisis fueled by benefits anomaly that encourages people to work just two days a week

Britain’s unemployment crisis is fueled by an anomaly in the benefits system that encourages people to work just two days a week, it can be revealed.

The Telegraph understands that the Treasury is deeply concerned that the current system allows claimants to unlock thousands of pounds of extra benefits if they earn as little as £658 a month.

An anomaly in the welfare scheme means someone on Universal Credit could receive a total income of almost £45,000 a year for working the equivalent of two days’ work in a low-paying job.

To bring home the same amount after tax, someone not on benefits would need to earn almost £62,000 a year.

MPs have raised their concerns with Jeremy Hunt, the Chancellor, and it is understood that Treasury officials are considering addressing the issue identified by the Telegraph.

A Cabinet minister said: ‘We are aware of this problem and it is a matter of concern. We are committed to tackling the problem of unemployment and closing this loophole is a top priority.

The Telegraph has also seen posts on online forums where benefit claimants advised each other not to work more than two days a week.

One person wrote, “I normally work 16 hours a week, but I did 32 hours a week for a month… I won’t do that again.”

The number of services on the rise

It comes at a time when there are more than a million vacancies and amid concerns over the number of people claiming unemployment benefits which stands at 5.3 million.

MPs have approached the Chancellor with concerns the anomaly is fueling the number of people who are content to stay on benefits rather than take on more work.

Lee Anderson, the MP for Ashfield, said when he raised the issue the Chancellor ‘listened very carefully to what I had to say and I am confident he will act on this injustice’.

Mr Hunt has already promised to force more people on Universal Credit to meet job coaches, to help them get better jobs – as well as fuel economic growth and help Britain recover from the cost pandemic finance.

According to a survey by the Confederation of British Industry, three-quarters of UK businesses said they had been hit by labor shortages in the 12 months to October.

Claimants have their benefits capped at £13,400 for a single person outside London and £15,410 in the capital. For couples and single parents the figures are £20,000 or £23,000.

The benefit cap affects payments, including Universal Credit, Child Benefit and Housing Benefit.

Some households are exempt from the cap, such as those with caregivers or people with disabilities.

Even when the cap applies, the money for childcare costs is “protected”, which means that those who benefit from it receive a higher overall amount.

Alongside the benefit cap, there is a ‘declining scale’ system, which reduces claimants’ Universal Credit by 55 pence for every pound they earn.

Households with children, or where one of the partners is disabled or sick, can bring home 100% of their income up to £573 a month – or £344 for those receiving housing assistance – before the “reduction” does not come into effect. Anyone doing two days’ work a week could pass this trigger point.

People working more “not much better”

Comments on social media show that both measures appear to be deterring many people from working more than necessary.

One said: “I normally work 16 hours a week, but I did 32 hours a week for a month. But my CPU broke, I was working 32 hours a week, and I wasn’t much better off. No need to kill yourself to be a little better off. I won’t do it again.

“You better stay on UC,” said another. “Are you able to find cash jobs that you don’t report or sell on eBay?”.

To see how much of a deterrent there is to working there, the Telegraph analyzed how much some benefit recipients could earn if they increased their working hours by two to three days a week on the National Living Wage.

It showed that a single mother of two, paying £2,000 a month in London rent, would receive £36,663 a year in tax-free Universal Credit if she worked 16 hours a week at £9.50 a week. hour – which earned him a gross amount. income at £44,567.60.

But if she decided to work three days a week instead of two, as she would lose some of her Universal Credit entitlement, her gross income would only increase by £2,172 a year to £46,348, or an extra £34 per week. Add childcare and transportation costs, and the money she earned from that third day on the job would be wiped out.

The disincentive to work is almost as strong for couples with children. If each parent works one day a week, they can expect to earn a joint income of £46,856, of which nearly £39,000 would be paid from the public purse. But if these parents worked three days a week with each other, their gross income would also only increase by £34 a week.

In these two cases, families’ Universal Credit would be subject to the cap, excluding the contribution they receive for childcare costs, which is “protected”.

This Post Has 2 Comments

  1. Nasreen Ahmed

    This is outragious that those only working 2 days a week are aloud to claim 39,000 from the taxpayer! I am self employed single person, i earn less than tax threshold and i only get £200 p m wtc. On universal credit i could get zero. The government seriously only help lazy scroungers or the very wealthy. It is NOT AT ALL RIGHT

    1. admin

      You are right, this is not right at all. Something has to be done about it by the authority

Leave a Reply