I agree with you. A new set of incompetent sailors in the same sinking ship doesn’t change anything. They are still intent on the same uncompetitive and economy-shrinking course.
Jeremy Hunt increased taxes to the highest level in our peacetime history. And, last time taxes were this high, the thresholds were set sufficiently high that ordinary working class voters paid almost no income tax. The freezing of income tax thresholds relative to inflation has dragged people in moderately paid professions like classroom teaching into the higher tax bracket. On top of a gross salary that is subject to 20% basic rate of income tax, the government receives employer NI of 13.8% plus employee NI of 8%, giving a basic rate taxpayer a marginal tax rate of 41.8%, which is high. Increasing employer NI will make employing people more expensive and suppress wages.
Furthermore, Jeremy Hunt increased corporation tax to 24%. This is amongst the highest in Europe. Higher than Sweden and Denmark (known as high tax economies) and double Ireland’s. Combined with the above, this makes doing business here inordinately expensive. The largest contributor to our economy is the financial services industry, which is highly mobile, so we risk eviscerating our tax base if we are not competitive.
Meanwhile, we have created one of the most expensive welfare states in the world. 20% of adolescents receive DLA. 18% of working age adults receive PIP. For every successful recipient of PIP, 1.5 people have claimed and failed. In effect, half the working age population have deemed it worthwhile applying to receive DLA. So, on the one hand we have the highest life expectancy, best access to healthcare and greatest range of employment opportunities and technological aids in our history, making it easier than ever before to find suitable employment. On the other hand, perceived disability is at a record high, with half the population of Britain thinking they are so disabled that their neighbours should pay them a monetary allowance through the tax system. PIP alone cost the taxpayer £20 billion a year. DLA costs a similar amount. This is projected to rise to a combined £58 billion in the next three to four years.
54% of households are net beneficiaries of the state, meaning they receive more in benefits than they pay in tax. The average taxpayer earns c.£36,000 a year and pays c.£4,600 income tax, so it takes all of the income tax of almost 9 million average taxpayers to cover just the PIP and DLA elements of the welfare bill. Then there are all the many benefits that are paid to ordinary families, some of which are called tax credits, despite having no relationship to tax paid. these have enabled multinational corporations to suppress wages at the low end and pay their executive excessively.
The total cost of the welfare state is in excess of £240 billion or £6,500 per taxpayer (significantly more than the average taxpayer pays). It’s totally unsustainable, but successive governments have found it easier to increase taxes than do the painful job of cutting unnecessary civil service jobs and welfare benefits to sustainable levels. We are now so far past the sweet spot on the Lather curve that more tax rises will probably reduce total tax revenue, so the government are in a Catch 22 mess of their own making.