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The reason behind this is clear to me, however if you had a cheap housing, you still have less money in the pocket.
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You only have less money in the pocket if the housing and other expenses still cost more than the allowance you were getting for housing and expenses.
Compare manchester prices and London prices, you can do it anywhere, compare Dublin and Galway.
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It also affects your "credit rating" (is this the right word for it?) when you earn less. Same with your pension level.
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An allowance wouldn't affect your credit rating, do you think the banks take into account Luncheon vouchers employees get?
With the pensions it depends on the set up but most will go on wage not allowances(or bonuses), the only real impact it would have is if the BBC is an organisation that pays the allowance as actual salary instead of an allowance.