Opinion: Tuition fees – a progressive model for welfare?

Given the proportion of public sector spending it accounts for, in austere times welfare spending has come under the spotlight, with sizeable cuts having already being made.

Looking at who is accessing benefits to ensure those in receipt of them should be is to be welcomed. A blind eye should not, however, be turned to wealthier individuals in receipt of things like winter fuel allowance whilst cuts are made to some of the poorest in our society.

It is right that Liberal Democrats have distanced ourselves from Cameron’s musings that everyone under 25 should not be able to rely on support from society. Radical changes are however needed to how we treat welfare to help ensure a strong welfare system continues to exist and is in a better position to weather future financial storms than it has been on this occasion.

The safety net that the welfare system provides is precious and has to be protected. A move to a ‘tuition fee’ style model for some benefits payments is worth considering. Benefits such as Job Seekers’ Allowance and Housing Benefit up until a certain ‘capped’ value could be considered as a loan. When an individual is back into work and earning above a certain threshold, a small amount is taken – as in the tuition fee model – on a monthly basis to repay up to that capped amount.

Having claimed housing benefit for a short time, I was met with a mixture of ridicule and bemusement when I enquired as to how I could repay the amount I had claimed when I moved into full time employment. Why should this be the case? I had benefited from the system, what is ridiculous about the idea I should make an additional contribution back to it?

The model has to be progressive and always encourage work. The threshold at which repayments would begin would have to be set at a fair level and the rate of repayments adaptable to an individual’s income; those moving into employment have to be better off in real terms.

Alternatively, in less turbulent times a loan element could be used as a ‘top up’ to the basic benefit which people are currently eligible for. For example, for the first 6 months somebody is on benefits they could opt to claim an additional amount on top of their basic benefits in the form of a loan, which would be repaid as described. Any savings could even be used to help fund schemes to help people back into work- for example by expanding the wage subsidy plans.

The driving force behind this model has to be to safeguard the welfare system against excessive cuts; this cannot be a backdoor excuse to strip away the crucial support that is the last resort for so many people. If this model could allow support to not be taken away from those who need it, then it is a progressive, liberal measure and should not be criticised on the grounds that it is asks people to make a contribution back to the system from which they have benefited.

Whilst Labour and the Conservatives compete to see who can be ‘toughest’ on welfare, Liberal Democrats should be radical reformers; changing how welfare is viewed and treated without risking the safety net the system can so often provide.

* Samuel Barratt is a Parliamentary Researcher and is completing a PhD at the University of Leeds. He is writing here in a personal capacity.

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  • local gvt worker 5th Jul '12 - 1:38pm

    i have been on benefits in the past. i pay back the money now. it’s called tax.

    i actually find it terrifying that an advisor to a liberal mp can seriously suggest turning benefits into a loan. it says to me that the author has very little knowledge of how some people live in this country and how hard pressed they are. someone who is long term unemployed who then gets a job will probably be working in a low wage job where every penny counts.

  • Sam Barratt 5th Jul '12 - 1:53pm

    Local Gvt worker- thanks for the comment,

    As I set out in my piece I also claimed benefits for a (admittedly) short time. The essence of my point is using a loan element to either increase the amount an individual can claim in short term, and also a small repayment of SOME of what is claimed.

    There would have to be a ‘cap’ on the amount that could be repaid, a good threshold which would exempt anyone on low wages, and a progressive method/rate of repayment . The new tuition fee system for example means those on £21,000 repay around £15 a month. When cuts are being made to welfare, if this sort of system could protect benefits for those who need them then I think it is something that could be considered, as opposed to withdrawing that support entirely.

    I am certainly NOT advocating a full ‘bill’ for those who do access benefits with crippling, indefinite repayments the minute they are earning a salary; that would as you identify be targeting those who have the least and are incredibly hard pressed.

  • MP's Caseworker 5th Jul '12 - 1:53pm

    @local gvt worker This guy is making a new and unheard of suggestion, most of which you obviously haven’t read.

    You worry that for people who are out of work for a spell will probably get low paid jobs first off, ‘where every penny counts’; that’s precisely why the idea of an income threshold was mooted, just like for tuition fees.

    I agree that this idea won’t solve the problems of the long term unemployed, or even those whose needs expand beyond their income (plenty of which I come across in my job), but it would certainly be a refreshing step forward for that sector of benefit claimaints who genuinely do well out of ‘bouncing back off the safety net’.

  • Sam Barratt 5th Jul '12 - 1:55pm

    Sorry- those earning £23,000 will repay £15 a month; those earning £21,500 will pay £4 on the new tuition fees model.

  • “The threshold at which repayments would begin would have to be set at a fair level”

    This is where I fear it falls apart. For this not to be an ultra-regressive measure, the repayment threshold would need to be at least at the median income. Now I’m always happy to be proved wrong, but I suspect that this threshold would mean very low levels of loan repayment . The black hole left by non-repayments would have to some from general taxation, and we’re back to where we started, but with the addition of a load of government bureaucracy.

    Nice idea, but I don’t think it works.

  • Sam Barratt 5th Jul '12 - 2:44pm

    Duncan- I accept this is potential issue, this is very much a ‘kite-flying’ idea if you like. My intention would be for the loan repayments to be viewed as additional funding, not replacement to existing taxpayer/NI contributions. This is why I suggest additional monies could be used to allow people to borrow a higher amount in the short term (say they are in between two jobs an decide an extra £20 would be very useful), or limit prospective cuts.

    I will not pretend to have a civil service-esque, fully costed plan…. yet anyway 😉

  • I like the idea more as an alternative safety net for those who have become unemployed from a situation of relatively high earnings. Rather than receive ‘grants’ in the form of JSA, housing benefit etc., they could get a loan that gives them time to find appropriate work in the understanding that the state is fully reimbursed if they find that job. If they get the maths right then current levels of benefit could hopefully be preserved for the most needy and lower level jobs won’t be taken up by overqualified individuals under strong economic pressure to take anything they can find.

    An interesting idea that deserves serious examination.

  • It sounds as though you’re proposing a system of National Insurance,

  • Firstly, just to say that I applaud you for chucking out a fairly radical idea; there isn’t enough of that in politics. However, in this case I flat out disagree.

    Surely as progressives we wish for those who have not fallen on hard times (the rich) to chip in and help those who have (those who are out of work, or struggling to pay their rent). This would, by definition, increase the burden on those who have at some point claimed housing benefit. These people are disproportionately poor. So the measure would be regressive.

    Furthermore, it would essentially act as a (further) tax upon people returning to work. Those returning to work would essentially face higher taxes than those who were lucky enough to already be in work. Moreover, as they became longer and longer term unemployed, the disincentive to return to work would increase (they would have a greater loan to pay back). If we want to create a system that makes work pay, then this is the wrong way to do it.

    Thirdly, tuition fees make some sense because people are choosing to go into education, and education will imply that their lifetime earnings will be higher – it is an investment. People do not (on the whole) choose to become unemployed, and it actually decreases their expected lifetime earnings.

  • … so the tuition fee repayment model isn’t really transferrable (if you want to achieve the same effects)

  • Sam Barratt 5th Jul '12 - 3:19pm


    Thanks for your remarks; on each point

    1- I am all for the rich making a greater contribution; for me this is very much about those who do go back into work and CAN afford it making a contribution that could protect benefits from cuts and/or mean those claiming benefits could opt for a higher payment in shorter term with some of that being repayable.

    2- The key here is that the amount that could be repayable would have to be capped, so the ‘disincentive’ is limited, and the repayments set at the right level – I don’t believe that would necessarily act as a disincentive if this was done in the right way.

    3- Comparison to tuition fees is more on the idea of repayment method rather than principle of WHY the fee exists if that makes sense.

    As said before this should be seen as additional money not ‘instead of’, and could be used as described in article; more generous terms of short term benefits, better support for job creation and help back into work. I genuinely would have been happy to repay what I benefited from over some months if it meant helping those less fortunate now. When other parties are looking at limiting housing benefits, or where cuts can be made I think an alternative to fully removing swathes of support could be found in something akin to what I have described. This is not a “lets punish those on benefits because they are taking all our money” piece; far from it.

  • Sam Barratt 5th Jul '12 - 3:21pm


    Thanks for replying; I did wonder if the Tuition Fees comparrison would prove provocative. I would say I think I have made it clear the idea of this, and I’d argue the way I’ve outlined it, is NOT about punishing anyone but ensuring support continues to be there, and even expanded. I appreciate you see this differently.

  • Thanks for responding. Just to re-respond, if you will:

    1) We disagree here. For me it’s a simple matter of principle that if you are unlucky to get out of work you shouldn’t be then financially punished by the state for it later on (no matter how rich you become).

    2) A cap would indeed improve things (although not entirely remove the disincentive, just curb it)

    More generally, I agree that welfare cuts are often very bad (particularly, say, scrapping HB for U25s). But this isn’t the right way to finance welfare – we should be starting by means testing universal benefits (WFA and so on). I think even raising taxes across the board would be preferable to this – at least the burden would be shared between the lucky and the unlucky (and disproportionately held by the lucky).

  • Sam Barratt 5th Jul '12 - 3:41pm

    Browne- I agree means testing is a logical first step and something I hope happens sooner rather than later for some of them.

    I have to say I am not ideologically attached to the idea of making people repay benefits just for the sake of it. I just do feel it could be a good way of limiting cuts and even expanding the system; its something I’d want to look at more. The important elements in this idea (which I know is controversial) are 1) what level a cap would be set at 2) when and how much repayments are. If this was done incorrectly you could have a bad situation.

    To give an idea of what I am driving at, if someone could borrow and £20 extra benefits per week and £30 a week was added towards the repayable amount, which was repaid at a progressive rate you could have a system that doesn’t leave those who fall on hard times living just above the breadline (not as close), or mean that cuts to disability allowances are mitigated. Of course a general rise in taxation could also help finance that, and I appreciate the argument you make.

    I am actually quite glad you identify I am trying to put forward a reasonably radical idea, which you have responded to constructively and not just tried to shoot down with abuse- something I did fear when suggesting this!

  • I think the societal problem here is that as you earn, you already lose benefits at a rate of about 65p per pound earned. Probably more as the cuts to welfare for non-pensioners hit local authorities hard. On top of this, you are suggesting that what many people would assume was ‘general taxation’ for this purpose is not available to them – hence political and legitimacy problems.

    And I dear Duncan’s comment is fatal – the scheme will not in fact reduce the burden if the threshold were set high enough to be considered ‘fair.’

  • Another problem is with what you would have created. It’s all well and good saying that your system would be on top of existing benefits, but at some point in a democracy you leave power, and it then becomes all too easy for another government with a different ideology to move all in-work benefits to the loan system you set up, thus ultimately leaving the welfare system in a far worse state than you started with.

    It’s generally not a good idea in government to create a weapon that would be misused in the wrong hands.

  • Joseph Donnelly 5th Jul '12 - 4:37pm

    I love the idea in theory but have to say instinctively it seems to me to have the problems some others have layed out; simply that very few of those on benefits will actually end up earning high enough salaries post-benefits (if they ever leave them) to pay anything like a significant proportion of the costs.

    But I do like the idea that benefits are a safety net yes…but one you should pay back if you bounce back well. It introduces responsibility and reciprocation into the relationship between welfare reciever and government.

  • These benefits have already been paid for through national insurance. It is quite absurd to make people pay twice.

    It is clear from this that £9k tuition fees was the start of a slippery slope. What do you want to pay for through this model next? How about sick pay? Maternity pay? Why not the NHS? People could take out loans to pay for their operations. Parents could be forced to take out loans to pay for schools. Perhaps army personnel could take out loans to pay for their kit – they are the ones that benefit most directly from having bullet proof jackets? But I bet the last thing they will think of is to make MPs take out loans to pay for their expenses!

    Or how about this idea – we could pay for it all out of general taxation so that those most able to pay contribute the most! Now there is a truly radical and progressive idea!

  • I’m progressive and so’s my wife.

    Keep throwing the word progressive around and it can be used for anything! The only problem is that tuition fees are actually regressive by strict definition – rich people pay less as a proportion of their income.

  • Simon Wilson 6th Jul '12 - 8:27am

    Just because we may say that something is “fair” or “progressive” does not make it so.
    Am suprised that an article about welfare benefits can be written which does not meantion National Insurance.
    Breaking the tuition fee pledge was not only bad economics but very bad politics which we cost our party dear

  • The SMF or CPS have proposed this model for childcare. Worth a guest post?

  • If I reach a pensionable age without ever claiming benefits then can I have a lump sum for paying in without taking out.

    As per your post if take out you pay back; well I’ve paid in and not taking a penny out so fairs fair.

  • James Sandbach 6th Jul '12 - 11:25am

    The whole basis of the social security system IS contributory (reference the Beveridge Report) though the principle has been abbrogated over the years by a whole series of poorly thought through reforms which have made it all more complex – not least the Welfare Reform Act, which the Government passed this year.

    What is proposed here in this post looks comptetely unworkable – who will administer these suggested benefit top-up loans?? A Company or Agency (and what happend when they cock-up, which they will)? Who will actually recoup them (send in bailiffs?? or benefit officers? ) – how will the recoupment system be tapered? Will it use the HMRC or DWP assessment of income? Will interest be charged on the “loan”? Does anyone recall the outcry over HMRC cap-handed attempts at recovering overpaid tax credits (Tories and David Laws leading the charge of Gov swapping tax credits for food credits)? Is it really a good idea for the state to make people worse off by clawing back benefits already paid? How will benefit loans incentivise finding work if as soon as you’re employed you have to start paying benefits back? Surely this would be more likely to breed a culture of resentment rather than reciprocity! Can you point to a single piece of serious research, feasibility study, scoping study, modelling, inquiry, select committee report, pilot project etc to back up the workability of this proposal?? Just because the principle vaguely works (well sort of works, but not really and the Student Loans Company have to write of £millions) you can’t just postulate it’s suitability for the benefits system on a hunch and your personal experience of wanting to philanthropically re-imburse your HB. So as well as rewriting the whole post-war social contract, why not just go the whole hog and just give a large wasteful public sector contract to Wonga to deliver it all, as it’s what they do anyway?!

    With all due respect to the author, when I read pieces like this from a Parly researcher I really do wonder what’s happened to our Party, whether we are fit for Government, and whether I can remain within it. I don’t object at all to bold and radical thinking on welfare reform and yes it is important to build in reciprocity – but it must be grounded in some basis of reality, not ideological flights of fancy.

  • Sam Barratt 6th Jul '12 - 11:35am

    Thank you all for comments. I probably won’t reply too much more as I think I have set out my stand as it were and will start repeating myself.

    To answer George, and others’ concerns- I am of course aware of National Insurance. I left out discussing a number of things at all, or more widely, to fit a 500 word limit (which I still exceeded). I am not “completely ignorant ” of this; the idea I am advancing just didn’t rely on or require wider discussion of it in a reasonably short article. If I do a follow up thesis I will be sure to mention it….. 😉

    First, and foremost, as we all know taxes and NI are NOT covering public expenditure; that is the point and challenge we are currently facing. I agree raising tax receipts from those who can shoulder the burden, and means testing more benefits are good steps to mitigate cuts. National Insurance contributions raised £97.7bn in 2010-2011 according to the OBR; welfare and pensions expenditure was £231.6bn according to Ukpublicspending so the argument that it is all paid for in NI is not really the case.

    Put it this way a cleaner on minimum wage paid taxes which subsidised my Housing Benefit; having gone into a full time job that pays a reasonable salary- more than NMW- I don’t see why my making a personal contribution to what I benefited from is unreasonable.

    I have argued that in doing so, smaller cuts could be required or wider support provided; I have not argued for cutting or shrinking state support- it would be supplementary finance.

    I have set out three elements that are vital in what I am outlining; there has to be a cap on the amount that could be repayable; there has to be a fair threshold that doesn’t penalise lower earners for going into work and the payments have to make work always pay and be manageable.

    It could be that this is not achievable; it could be not practical or economically worthwhile; hence the ”?” in the title and the numerous qualifying phrases I have used- but it is something I do thing could be looked at and considered.

    It is worth considering that in real terms expenditure on income related benefits has increased by over 580% since 1978-9- not something I oppose. The welfare system has rightly changed, and does more than when it was established; I think it is important that we give thought to how the system can evolve to suit what we want and need it to do, rather than unquestioningly accepting the model as it stands.

    If someone on job seekers allowance could under this model increase their payments from £56.25 (amount a single person under 25 receives) to say £76.25 for a short time with some of it being repayable when they are back in work and earning a good wage I can see how this could be preferable for some people; when people fall on hard times giving added flexibility and relief is something I feel is important.

    Tim- Its the SMF I believe, I read it a couple of weeks ago, its an interesting read.

    Thanks again for all comments- genuinely found them interesting to read.

  • David Allen 6th Jul '12 - 1:57pm

    “I am of course aware of National Insurance. I left out discussing a number of things at all, or more widely, to fit a 500 word limit (which I still exceeded).”

    Perhaps if LDV allowed the OP just a few more words to explain a complex idea properly, there would be a lot less wasted words in the Comments as people struggle to interpret the idea.

  • Sam Barratt 6th Jul '12 - 2:23pm

    Simon- I do not suggest it being run by private companies I have seen that in some comments I think, but I agree entirely; this wouldn’t be something I would want to see run on a ‘for profit’ basis and it would have to have ministerial accountability.

  • At present I pay a great deal of tax and NI and begrudge not a penny. I have paid more as I earn more and that is how it should be. It would appear wrong to me that having willingly paid these throughout a working life where I have been blessed to be healthy and in work if I ever needed some support myself I would then somehow owe the state for this.

    I hope never to need benefits, but if I do I know I can draw them with the sure knowledge that I have already contributed a great deal in the other direction. If more is required general taxation is the way. Repayment for any welfare should be about abaili

  • Sorry iPad moment…

    This should have ended…

    Ability to pay not the need to use.

  • patricia roche 6th Jul '12 - 3:41pm

    This sounds like a good idea. We could also start charging to see the Doctor, using hospitals, accessing child support, going to college and university, oops, forgot, this is either being proposed or has already happened. Well done everyone.

  • @Sam Barratt
    “Put it this way a cleaner on minimum wage paid taxes which subsidised my Housing Benefit”

    Cleaner’s on the minimum wage do not subsidise anybody’s housing benefit. Why would anyone repeat such an obvious Tory lie?

    Those on low incomes receive more in the value of public services than they pay for in taxes. That cleaner is not subsidising anybody, let alone anyone on housing benefit. It is wealthy taxpayers, that pay more in tax than they receive in public services, that subsidise housing benefit and they don’t like doing so, so they persuade gullible poor people that their taxes are paying for other people, when nothing could be further from the truth. Divide and conquer the poor – it’s been the Tories’ strategy since the poor were allowed to vote.

  • The tuition fees system is hardly a model to follow! It forces many middle income folk to pay 9% extra tax on much of their income to pay for their education for much of their working lives; it lets low income folk off the hook completely, and it allows the rich to pay less by paying quickly. The quicker it is revisited, the better.

    All that is needed for the tax and benefit system to work is for the Govt which thinks a 50% marginal tax rate is a disincentive to work for people on £150k+ to realise that this also applies (with knobs on) to the marginal tax+loss-of-benefit rate applied to the poor!

  • No Terry, its 9% of income above £21k pa, which rises in line with average earnings.

    If you earn the median wage of £26k pa you pay back just 9% of £5K which is £450 pa, or £8.65 pw.

  • @ColinW
    “No Terry, its 9% of income above £21k pa, which rises in line with average earnings.

    If you earn the median wage of £26k pa you pay back just 9% of £5K which is £450 pa, or £8.65 pw.”

    26k pa is the starting salary of the average graduate – it is certainly not the median. Besides, looking at weekly payments is farcical (see MSE’s absurd take on tuition fees). It is the gross cost of tuition fees that matters to people and which effects peoople’s lifetime prospects. It is graduates on middle incomes that get hit the hardest by tuition fees as Terry points out.

  • “It is the gross cost of tuition fees that matters to people and which effects peoople’s lifetime prospects”

    Er, how?
    As credit scoring for mortgages & loans does not include the tuition fee/maintenance loan debt at all – just the monthly repayment. & the repayment level is entirely dependent on income.
    It’s a graduate tax. Progressive & fair.

  • @ColinW
    “Er, how?”

    This isn’t difficult to understand. If someone has a debt of £27k (plus interest) that they pay back over 30 years then that is £27k (plus interest) LESS they have to pay for a house over that time period.

    “It’s a graduate tax. Progressive & fair.”

    If you repeat a lie a thousand time it does not become the truth. Tuition are not progressive – you have stated an opinion, whereas I have stated a fact. For a £27k loan, someone on a £100k salary will pay back a much smaller proportion of their income over 30 years than someone that earns £30k . Tuition fees are regressive according to the strict definition. This marks tuition fees as being very different to a graduate tax, which would be at least proportional if applied as a flat tax or progressive if thresholds and increasing percentages of income are applied. Tuition fees are also completely unlike a graduate tax, as a graduate tax is based solely income (the ability to pay ), whereas the aggregate amount paid with fees is a function of the amount borrowed.

    I look forward to your next explanation of how black is white.

  • Old Codger Chris 7th Jul '12 - 5:04pm

    As several people have mentioned NI it should be remembered that – as made clear in some previous Lib Dem Voice pieces – NI is a tax, not an insurance. Less progressive than Income Tax it enables governments to proudly cut Income Tax while quietly raising NI. The most iniquitous feature is the Jobs Tax aka Employers Contirubution.

  • David Morton 8th Jul '12 - 3:58am

    The proposal is for “some” benefits “such as” JSA and HB” to be partially repaid. It might be the generally very poor quality of the piece or it may be deliberate, however you don’t say why only “some” or then why JSA and HB have been selected as the chosen ones?

    Given your broad philosophical thrust why shouldn’t parents repay Child Benefit once children reach 18? After all having kids is arguably more of a personal choice than being unemployed. Or perhaps new adults should be billed for their own CB ?

    Why not ESA? most people get better at some point. Or what about disability benefits for conditions that are not permanent ? By not clarifying this point you lay your self open to the charge, I’m sure unfounded, that your engaging in crypto Victorian moralizing about the deserving and undeserving poor. If some benefits have to be repaid and some don’t then the obvious question is why?

    I’m also curious why you couch the idea in liberal terms then reach straight for coercion and the state. To take your own example you were perfectly free to repay the common weal by donating the amount you received in HB to a homeless ( or any other ) charity when you were back in work. However you want to invent a compulsory charge you you don’t give a name payable to the state**. To do this presumably you feel the situation passes Mills harm test for the exercise of state power. However you only vaguely mention the deficit, which frankly is just as much caused by Trident, Foreign Aid or Parliamentary assistants salaries as benefits.

    ** I believe the technical term is “Tax”. You’re proposing a Poverty, or Bad Luck tax. People on relatively modest incomes who have returned to work and thus contributing again will face higher marginal income tax rates than others because….

  • David Morton 8th Jul '12 - 5:50am

    Do graduates who have been out of work pay this “unemployment tax” if they find a job ? On top of their Tuition fee repayments creating very high marginal tax rates ? or after the tuition fees have been paid back perhaps meaning repayments last a life time? or does incurring Tuition Fees mean you don’t pay this having “done your bit”. With all the appalling tabloid friendly anomalies that that will throw up?

    Speaking of which three quick questions.

    1. Will the 20k Army personal who will lose there jobs between now and 2020 have to pay back their benefits if they can’t find work ? and if not why not ?

    2. Would claimants fleeing domestic violence have to pay back their HB? and if not why not?

    3. Is this just cash benefits or benefits in kind ? will people have to make repayments on their kids free school meals? or their free prescriptions? These things have a literal cash price and the state already holds the infomation on who gets what and how much so it would be easy to do. and if not why not ?

  • David Morton 8th Jul '12 - 6:18am

    In paragraph 4 you say people will begin repayments when “back into work”. However HB, which you cite as a benefit to be effected, is an *in work* benefit as well as an unemployment one. The majority of new HB claims are from people in work. At best this this is a misleading opposition of workers and claimants validating the current Tory narrative. At worst it suggests one of or a combination of 3 things. (a) you don’t know HB is an in work benefit (b) you do know but think readers of a national political website won’t know. (c) the article is badly drafted to the point of serious inaccuracy.

    However to concentrate on the policy lets be clear. For people in low income jobs claiming HB the vast majority will either (a) stay there, hit your cap then never pay it back while still claiming. (b) earn more but in your repayment safety zone and never pay it back (c) move into better paid work but then get clobbered with your marginal tax rate because they were unfortunate enough to be in low paid work for months years. How on earth are these marginal tax rates for low income HB claimants going to fit in with the narrative re raising the basic rate threshold?

  • David Morton 8th Jul '12 - 7:02am

    You say there will be a cap on repayments. I appreciate a 500 word limit but there is a vast difference between a 1% cap or a 99% cap on repayments of what you’ve claimed. Which is it? even roughly? I assume it’s a percentage cap though perhaps shouldn’t. If it’s a total cash cap ( and again £500, £5000, £50000 ?) then you are introducing a (retrospective!) tax on family size are couples and bigger families will get bigger benefits even if only a sole earner eventually finds work ?

    Regional caps? Rent and thus HB varies enormously according to location. If HB has to be repaid aren’t you actually introducing a higher tax rate for those living in expensive areas ( a kind of inverse mansion tax) who either can’t or won’t move ?

    and what about unemployment? clearly if you live in an area with 25% unemployment you are likely to be on benefits for longer than in an area with 5% unemployment. Ergo you’ll run up more debt. There is a case for enhanced Labour mobility but is taxing labour imobility your intention or have you just not thought about it ?

    Then there’s demographics… While doubtless it’s not your intention certain demographic groups have higher instances of unemployment than others. Are you comfortable with, for example, certain ethnic groups building higher debt levels and marginal tax rates than others ? Young people? Black men ? certain disabilities? older people ?

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