======= At 2002-07-16, 11:27:00 Jonathan Bradshaw wrote: =======
>
>The Income Support scale for a single person ...
> in comparison with earnings it is a
>decline in value (from 17.6 in 1948 to 11.9 in 2001). If the scales
>had kept pace with earnings (which they did until the mid 80s - though
>we can argue whether they should) then the current scales would be about
>£70 per week.
Jonathan,
I did quite a lot of work comparing work incomes with benefit incomes over time
when I worked with Patrick Minford. I can't for the minute lay my hands on
that data, but I suspect these figures are relative to gross average
earnings? If so, they are largely irrelevant. The appropriate comparison,
which from memory gives a very different picture, is between benefits (with
and without housing allowances, etc) and net, after tax, earnings. Further,
they should be compared not with average (net) earnings but with the
net earnings of those in the lower decile of the earnings range, since most of
those on benefit move into below-average paid work. There has, of course,
been a sharp divergence between the earnings of this group and the overall
average, especially in recent years and so gives rather different figures to yours.
>
>Is it right for them
[single people]
>to continue to drift away from the living standards
>of working families and other groups of beneficiaries? That as I
>understand it is the question being asked.
I'm not sure who's asking, the BBC? The poverty lobby? In any
event, this has happened against the background of pressure from the
poverty lobby for family benefits to be increased -- they largely ignored
single working-age people. And New Labour wanted to be seen doing something
about (so-called) child poverty. So I think the answer, so far as
government is concerned, is 'yes'.
>When an unemployed single person on income based JSA reaches pensionable
>age their benefit increases (overnight) from £53.95 to £98.15 - the
>current Minimum Income Guarantee. In 1948 the increase would have been
>10p!
As for the MIG, it is pure madness to have it at the current level and to
index it to earnings. A whole swath of lower-paid people will have the
incentive to save for their retirement taken from them. The likely impact
is assessed, to give a plug for another QEB article, in Ashton P., 'Pension
Reform: at what cost?', LRG Quarterly Economic Bulletin, April 1999 pp24-28
(but see the 'correction' to the cost estimate in the following Quarter's
edition).
>Jonathan
>
Paul A
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2002-07-16
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