Labour planning to freeze tax thresholds longer

I nodded along to all of that.

This government is awful. The last one was bad and out of ideas. This one just wants to make life even harder for those who work.

That’s a major problem, I agree. But one of the reasons is that incomes in that lower / middle bracket haven’t risen as much over the last 20 / 25 years as you might expect. And I think there are two reasons for that - the in-work benefits culture was originally an attempt to massage the unemployment levels under the Blair government. But what it has actually done is depress salaries / wages for everyone, including those who don’t qualify for those benefits, and created a huge transfer of money from the (originally Labour) government to the private sector.

Then the massive increase in the number of young people going to university, again to keep unemployment levels low in the short term, without investing anything to increase demand for graduates, also depressed graduate salaries for one, if not two, generations.

So we now have the perverse situation where a newly graduated young person from a middle of the road university with a middle of the road type degree earns only 10/20% more than minimum wage, and career progression for them, plus all those who leave school and don’t go on to university, is really really tough. In real terms their income increases at a glacial rate.

In the mean time because no government for 40 years has invested in social housing these working grads are competing with those on benefits for an ever shrinking pool of houses to rent. It’s no wonder rents have skyrocketed…and the stupid thing is that the politics of envy means that the private sector is also disincentivised from filling the gap that government / local authority have created by not investing in social housing / houses to rent. So now neither the private or public sector are investing in properties to rent. Which has exacerbated the problem further. Now, this government has said it wants to supercharge house building. But it hasn’t said how it’s to be funded, and if they expect the private sector to fill the gap then they’ll either need to change the tax system, or create further subsidies, funded no doubt by PFI or off government balance sheet finance at higher than costs.

This nicely highlights the crux of the problem. Those European countries that have public services we aspire to tax those on average incomes higher than we do in this country. So for public sévices to materially improve, everyone earning more than around £30k needs to pay more income tax, more NI and receive less in benefits.

I think people would be happier to do that (I'm on that kind of income, single income household), if everything else didn't cost so damn much. Housing specifically eats up enormous quantities of most people's income, and has a knock on effect on pretty much everything. Add extortionate childcare for so many parents to that. Increasing energy and food bills. It doesn't leave much leftover does it?

The last government's solution to the high energy bills was to throw even more money at people to pay those bills rather than investing in energy saving and insulation, for example. They just all seems to totally lack any imagination, ambition and intelligence.

There has for far long been a focus on the income tax rate instead of the level at which you start paying tax, apart from in the coalition years. Instead of a sales tax (VAT) at around 10%, we now have seen it double by stealth over the years. Whereas what was 33% income tax rate is now 20%.

It may be not the way to go about it, but at least freezing the level at which you pay higher rate tax is a start, though I disagree with not raising personal allowances.

This nicely highlights the crux of the problem. Those European countries that have public services we aspire to tax those on average incomes higher than we do in this country. So for public sévices to materially improve, everyone earning more than around £30k needs to pay more income tax, more NI and receive less in benefits.

But, the last Labour government created an in-work benefits dependency costing tens, approaching hundreds of billions, that’s virtually impossible to easily unwind, and the tories have created a low tax economy because that’s what drives growth. Neither delivers the levels of tax receipts to provide the level of services we want. Overlay on that a dysfunctional NHS operating under a model than no other health service in the world attempts while delivering worse outcomes and you have a recipe for disillusionment. It’s encouraging in some ways that this government says it’s tackling both. Though its attack on benefits is, in my opinion, focussing in the wrong place - the elderly and the disabled are not a popular target!

Putting the strategy of the country in just a small number of hands is autocratic. Look what's happening elsewhere.......

Imagine putting the strategy of the country in the voting public's hands.
Look what happened with Brexit...

This is where people WILL get annoyed. The reality is - lower earners are protected compared to many comparable countries. They have a huge personal allowance and a very low base rate. They pay some of the lowest taxes in the world. Relying on a shrinking minority of “higher earners” (who pay high taxes comparatively) is why we don’t have enough money.

Problem is, Labour were not honest about it. Everyone thought it would be freebie central. Issue is, we have such a small amount of people
contributing more than they take out -there is nowhere to go.

It's an absolute cheek. Lower paid folk squeezed harder than ever. It's awful. Then more benefits doled out for a myriad of reasons a lot of people don't even know about. Sick of this Labour lot already. But I don't like the Tories either. They're finished with one of those two left in the leadership race in charge.

With the minimum wage as at April 2024, someone working 21 hours a week currently earns over the personal allowance and therefore pays income tax.

Assuming the minimum wage rises, the freeze of personal allowance will drag more and more of the LOWEST paid workers into paying tax.

That is the real betrayal of Labour if they follow through with this policy.

Income Tax thresholds used to increase by inflation. If inflation is 2.5% over the next few years, the effect of freezing the current personal allowance at £12570 will be:
2025/26 - extra tax £62
2026/27 - extra tax £126
2027/28 - extra tax £192
2028/29 - extra tax £258
So in the 5th year of this Labour parliament, you will be paying £5/week extra tax due to this freeze.

(This applies to everyone earning from £13000 to approx £46000)

Their mistake was setting out taxes they wouldn't touch. Thus limiting their options. I don't quite know where people expect the money to come from for improvements if not tax rises. But somehow it's always someone else who should pay that tax.

We need a basic quorum of cross-party support for policies. In fact voters should vote for strategic policies first and then have a secondary vote for those appointees who can deliver. This is bringing back democracy to what it was.

@Fescue totally agree

A bit like Blair after major people had enough of tories and major!!..

People had enough of tories again and voted starmer and it's like kids in a fucking sweet shop.

Grabbing this and grabbing that " we have power now"...

I'm a swing voter, I felt we needed change we did but this lot!! How embarrassing.

@cardibach

@Fescue the hypocrisy is breathtaking

Not opposed at all. All those you name and Starmer and Reeves are weak of character, unqualified in what they do and not brave enough to step up to the challenge.

Two wrongs do not make a right. I am not as polarised as you.

The state needs to get smaller. History tells us that Big State is inefficient and reduces opportunity and values. This pair of imbeciles - they really are because they do not know how to lead - will not be around in three years. Mark my words if you will. I hade so much hope, but now I despair.

I was amused that it would be an issue, I mean it’s really not. And yes if you don’t reply I’ll be fine.

In your words However if they'd laid that out explicitly it would have affected their vote.

This was what I was referring to, I don’t think it’s going to go down as well as it is with a few on here

It's sweet that you know what I suggested better than I did. By the way, for clarity, "have a pleasant evening" is a polite way of declining further conversation with you. I'm sure you won't be fussed either way 😉

The problem is, how do you define the most wealthy? A household income of £81,357 puts that household in the top 5%. One person earning that is getting a good wage - but for most people that will be the combined wage. Despite being in the top 5%, people in those households won’t feel rich … and they may have a whacking great mortgage to pay.

You could set it as £180k but that would only catch the top 1% of the population. A slight increase to taxes on 1% of the population won’t raise enough - and a penal increase will encourage at least some of those people to move elsewhere or to change their behaviour (such as paying more into pensions to bring their income below the threshold).

I mean it doesn’t concern me, I’m not fussed either way

If Labour were just hiding tax rises to get votes as you suggest I doubt everyone will think that’s a good thing.