Where it’s due – understanding government credit schemes

Gary Vaux takes a tongue in cheek look at the burgeoning credit system. You must decide which of the below are genuine payments

The phrase “credit crunch” seems to have entered the English language in the past 12 months as a form of universal shorthand for “the economic recession caused principally by greedy bankers’ irresponsible lending practices”. However, the UK government has made its own contribution to the explosion of credit – pension credit, working tax credit, child tax credit, return to work credit, in to work credit, a better-off in work credit… and a few more besides. So this is a short seasonal guide to the credit that is out there.

Pension credit
Paid to people aged 60 to top-up their other retirement income. Only 75% of pensioners who are entitled actually claim it – research shows that some of the missing 25% are put off by the name, because credit is seen by the older generation as something that you don’t apply for and have to pay back.

This is obviously another success for the Red-Braces brigade who dreamt up the name Pension Credit, no doubt after consulting focus groups.

Child Tax Credit
This was called the Family Credit, then Working Families Tax Credit, and in 2003 became Child Tax Credit, so it is no doubt due for a name-change soon. It slightly confuses claimants because it’s neither linked to tax nor a credit. At least the “child” bit is accurate.

Working Tax Credit
This started life as the Disability Working Allowance, then became Disabled Persons Tax Credit, before changing to WTC in 2003 and being extended to all lower-paid workers, not just those who were disabled or parents. It also includes the child care costs credit.

Return to Work Credit
Introduced in April 2008, this is paid to disabled people who start work, but only for their first year of employment and it’s on top of any WTC they are due.

InTo Work Credit
Still awake? This is also fairly new and is paid to lone parents who go into employment for the first year only.

Better-off in Work Credit
Also known as the “Admission of total failure credit”, this pilot payment is being tried out in order to ensure that no-one is left less than £25 a week better-off if they take a job, even after claiming any or all of the above credits.

However, the DWP has had to admit that it doesn’t take into account things like loss of free school meals or prescriptions if a person takes a job so it should really be called the “Better off in work but not by as much as you might think credit”.

The Credit Credit
A new benefit that has very few strings attached to it and is paid almost on demand. Paid mainly to banks who lost our money (yours, mine, our employers’, our pension schemes’) and totals about £50bn so far.

The Credit Crunch Credit
This is a special award to any journalist who can work the words “credit crunch” into any article about any subject, irrespective of accuracy, truth or relevance.

The winner so far is the genius who turned a routine (and sadly typical) story about delays in payment of funeral grants by the DWP into the headline “Credit crunch leaves the dead unburied”.

Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question e-mail natalie.valios@rbi.co.uk