The latest analysis from finance expert, RIFT, has shown that with Rishi Sunak planning to crack down on those improperly claiming Jobseeker’s Allowance, an increase in those transferring to full-time employment could bring an additional tax boost of £68.9m across Britain.
Jobseeker’s Allowance is a working age benefit for those working less than 16 hours per week and who are actively seeking work, although the income-based scheme is being phased out in favour of Universal Credit.
Those aged 24 and under can claim up to £71.70 a week, climbing to £90.50 for those 25 and over and the latest figures show that 87,631 Brits claim JSA, although this figure has dropped by -1.6% year on year.
Those in London (16.6%), the West Midlands (12.1%) and South East (11.6%) are most reliant on JSA, accounting for the largest proportion of claimants in Britain, although the South West has seen the largest annual increase in JSA claimants – up 22.7% annually.
However, previous figures from the National Audit Office found that a quarter of JSA claimants had been caught abusing the system and, more recently, the prime minister announced a raft of reforms to the welfare system, one of which being the removal of JSA after 12 months for those who don’t accept job offers.
The analysis by RIFT shows that should more JSA claimants be pushed into taking employment, it could bring a sizable boost to the tax contributions made to the British economy.
Based on the current minimum wage of £11.44 per hour for those over 21, and based on the average working week of 40 hours per week, those making the move from JSA to employment would earn a gross average income of £23,795.
From this, they would make an annual tax contribution of £3,143 – £2,245 in income tax and £898 in National Insurance.
If just 25% of the current 87,631 JSA claimants were to make this tax contribution on an annual basis, it would boost the British economy to the tune of £68.9m – £11.4m of which would come from JSA claimants in London alone.
Bradley Post, MD of RIFT, said, “Britain’s benefit system plays a vital role in supporting those most in need and JSA makes a valuable contribution in this respect.
However, as in all areas of life, there are unfortunately those who game the system for their own individual gain and it’s these people who the prime minister has pledged to crack down on should the Conservatives win the next general election.
Should just a quarter of JSA claimants be encouraged into employment, it would bring a sizable boost to the British economy at a time when it is arguably well needed.
Although we must appreciate that for many, this transition is easier said than done when you take their wider financial situation into account and the fact that they may be worse off in employment compared to the cumulative level of benefits they receive.”
