Is the UK beyond repair?

[Brrrrrrrrrrrr]

I’m sure plenty will come along to say I’m BU but for the past few weeks I’ve really started to question where this country and our society is heading and whether or not things are ever going to get better and when that might be.

We have economic chaos driven by high inflation, increasing interest rates and a total lack of urgency by anyone in charge to seemingly do anything about it. We have a government in power that seem to have nothing but contempt for anyone that doesn’t resemble their backers, ministers openly mocking critics on social media and a PM who can not remember if he may or may not have had something to do with benefiting from £5 million of Russian money. What on Earth have we become?

Our Health service is being systematically picked apart and left to decay away much to the detriment of those who rely on it or who cannot afford Private healthcare. We have Medical professionals striking because they are underpaid again to the detriment of those who rely on said services, wait lists are through the roof and the levels of care being received are understandably inadequate.

The education sector is a ticking time bomb because teachers are seeing the demands of their roles increase, funding cuts, the behaviour of the pupils start to become impossible to manage and the prospect of an easier life switching to another career too hard to resist.

Food bank usage is at an all time high, not just by those in charge who don’t know poverty but working professionals who can not afford to feed their families because the cost of living has zapped every last penny from them. The reality on the streets of real life Is so far detached from that seen on social media that it’s like looking at a different planet.

It just feels bleak and I don’t see how things are going to change, I’m often an optimist but this is stretching any semblance of light in the tunnel. Anyone else? Is this the type of world you want your children to live in? Surely they deserve better? How can this be fixed?

One the greatest cons the torys have managed to pull off is convincing people earning £50-£150k that they're the rich we talk about taxing more / being the focus of wealth redistribution policies. They are not.
Agree with this. Many people in this bracket vote in a way that actually harms their interests.

This is the kind of pseudo-analysis used to defend the status quo of a crumbling country with zero productivity growth in 15 years and people now apparently astonished that their living standards are dropping like a stone. Depressing. Of course all countries have their own problems. Nobody was saying they are perfect utopias. What we are saying is that their social structures and systems have been designed with some kind of long-term vision for sustainability and a future that holds some hope of a decent life and appropriate rewards for hard work for their citizens. Of course there are flaws and mistakes and difficulties. But that is not the same a terminal decline and having not a single politician who can accurately and honestly describe the key problems let alone propose and implement policies to address them.

No, the punitive tax rate remains throughout primary school as children still need childcare and tax free childcare discount is also lost. And as I said even without children you are at a 71% tax rate. That's absurd. The Chancellor commissioned independent research before the last budget to tell him why productivity is so low (disturbing that he needed to do so) and this was one of the key findings. It is not a small problem. But did he address it? No. Will Labour? No.

However, it’s these earners who carry everyone else with their tax. Stopping them paying more tax because they stop working - is incredibly harmful to all.

Well, they are the ones who have been hammered for 15 years and taxed into obliteration while those below £50k and the genuinely wealthy pay a fraction of the percentage in effective tax. And Labour have proposed no policies to change this. In fact until a recent U turn Starmer was proposing to lower the rate at which people pay 45% tax to £80k so tax this same group another 5%! When Rachel Reeves was interviewed by Mumsnet not long ago and it was put to her that the bottlenecks that create disincentives and are punitive at £50k and £100k earnings need removing she stated she had no intention of addressing this. So you can forgive people if protestations that they won't be the target yet again don't go far. Where are the manifesto pledges to change it? Despite all the research stating it is lowering overall tax revenue and harming growth?

This.

It is also why Labour seems to have gone quiet on taxing people more by lowering the threshold to 80k. This small ‘lucky’ group are the ones literally carrying the whole country. The fact that it’s a small group is the problem. It’s getting smaller as people won’t work to be worse off.

Taking this bracket even more will just see the decline speed up.

The NHS is a giant spending obligation that is holding the country back. I love the idea of universal healthcare free at point of use but it's simply not sustainable. All other options are just too expensive but we can't do nothing. Maybe we should just delete it and let the free market sort it out.

To fix the UK problems we first need money and lots of it, we cannot borrow, we aren't attractive to invest in and we have an aging workforce... so we will need to start taxing those who have most... a lot more, unearned vs earned income rates are going to have to narrow, as is taxes on wealth to increase.

You've entirely missed the point. You need the economy to generate more wealth to sustainably raise living standards and fund public services. You have to put a sustainable model in place to do this, a critical part of this is a tax regime that encourages productivity growth rather than crushing it as we have now. The tax regime is within Government control unlike many other economic factors therefore any serious Government would make the changes I'd suggested immediately. Neither our Government nor the opposition have any intention to do so. And yes those changes did include taxing capital gains at a higher level if you read my posts however, it is pure fantasy to think that alone would be sufficient and demonstrate total economic illiteracy.

the EU isn't going to want another Switzerland trying to have its cake and eat it, esp in regard to FOM - a SM pre requisite - we would need to start negotiations to rejoin the EU and thats not going to happen, with a significant minority still supporting Brexit.

I didn't suggest a Swiss model. We need to rejoin the SM and CU. Yes, with FOM which is hugely beneficial to is. The significant minority of people so unbelievably stupid they still support Brexit need to be told to fuck off. Or, implement an optional Brexit tax for all Brexit supporters which will need to make up the £50bn loss in tax revenue per year (compounding so will keep increasing). It can be split between all those who sign up to register their support for continuing with this. They said they want to be poorer so can put their money where there mouth is and pay the cost themselves. If they don't wish to, then their opinions are just hot air and should be ignored.

i also doubt playing around with tax thresholds/rates, either your ideas or Starmers Nom Dom stuff is going to solve much either, in a 2 trillion economy, a few billions just isn't enough.

What I have suggested is nothing like irrelevancies like non doms. 🙄

Again, though, other systems are available. Plenty of other countries have health systems with far superior patient outcomes, timely treatment and for a not dissimilar percentage of GDP. As someone mentioned upthread it's not just Germans and Danish people I know who go home when they need healthcare, so do the few remaining friends I have here who originated from central and eastern European countries that are far poorer than ours in terms of GDP per capita.

With healthcare, education, pensions, tax models, infrastructure investment, etc we do not need to reinvent the wheel. What works has been proven for decades across many other countries. We can look at the internationally published data and take the best parts of their models and copy them. It isn't rocket science.

That worked so well for water and railways.....

This.

It is also why Labour seems to have gone quiet on taxing people more by lowering the threshold to 80k. This small ‘lucky’ group are the ones literally carrying the whole country. The fact that it’s a small group is the problem. It’s getting smaller as people won’t work to be worse off.

Taking this bracket even more will just see the decline speed up.

@Saywhatevernow yes indeed. If they did do that, I would cut my hours. Why would I spend even less time with my children to be taxed even more? It's just not worth it. As the Chancellor was told in the independent research done at his behest: tens of thousands of people around these thresholds cutting hours or turning down promotions.

It's bad enough for two parent families that hit these thresholds but a single parent with two young children has to earn over £150k to get to the same net pay after tax, benefits and childcare that a couple with two children has if they earn £25k each, because of these tax threshold distortions. Whilst doing everything on their own and usually having a much higher childcare cost as a result! And people wonder why people don't bother. Where is the incentive? To have to take all the stress and time away from children that a job earning £150k entails, just to take home the same as a couple with less than average earnings and two people to juggle work and caring/ household responsibilities between.

Can it just be boiled down to join the SM / CU and be tax competitive?

No party is offering that

So much of it is gubbins and headlines

I get the changing landscape with mass displacement on the horizon but in terms of purely economic this seems to be the best way to go

Taking the shift into mind I’d happily hear reasoned argument from both sides

It’s so perverse, people don’t think it’s happening. Then you explain in actual real terms. The one where you are worse off by tens of thousands at 101k is where cognitive dissonance really kicks in. World’s smallest violin etc, they should pay more tax. How? Over 100% in some cases already. The reality hasn’t dawned for many - that it is this small tax payer base paying for everyone else. Not “the rich.” Penalising them so heavily they don’t bother is leading to the decline we have now. The chancellor has been told this.

It is a case of biting the hand that feeds. If I were reliant on state help - I’d be worried that the people who may the most tax are becoming less productive. That’s a huge issue. People can’t see past the higher earner label though. Actually, Labour don’t intend on fixing this con. For example, the pension break to get more consultants back to work - they will reverse it. That benefits absolutely no one.

Yes, that's the crux of it. Remove the disincentives in the tax system to support productivity growth and remove the pointless and expensive trade barriers stifling growth and reinforcing inflation by lowering the value of GDP.

Create the conditions for growth then you will have growth and then you have some money to invest in education, healthcare, infrastructure, energy and food and water security etc.

And interest rates will go down because inflation can also go down and international markets will no longer be charging a huge risk premium (or as many call it: the "moron premium") for investing in a country with an 8% trade deficit and no realistic plan for how to stabilise itself.

@SolarPoweredHuman Your posts are really informative, thanks.

Thank you, I hope it does help and some people listen because things could be improved but no politician seems to have any intention of doing these things that will actually make a difference. They won't unless voters on doorsteps and in their "focus groups" keeping telling them that this is what they need to do.

I mean, what foreign investment do they think they will be getting annually to plug this 8% (!!) trade deficit, just to keep the country afloat? Who would want to transfer their money into GDP knowing its value is being inflated away at 9-10% per year? And believe that with our failing infrastructure, skills shortages and Brexit-induced trade barriers they need to make a 10% profit on it just to maintain the value they invested, with no profit?

It's not hard to see why our Government can't now borrow from international markets without paying the "moron premium".

GBP, not GDP! 🤣

Also all of the focus with these interest rate rises (which will have minimal impact on reducing inflation) has been on how they will affect mortgages. That is a disaster in itself and will likely cause a recession. Expect huge back-pedalling before long, sometime next year perhaps, but it'll be too late and a recession will have been instigated. Meanwhile though... nobody seems to be talking about the impact these rate rises are going to have on the large number of highly leveraged companies post-Covid who will be unable to refinance and will go bust. Further erosion of tax revenues and many findings themselves unemployed. Or for larger companies, they will relocate where they can trade freely and not have their capital value eroded at 10% per year (accelerating the post-Brexit trend of exits).

So, no reason any company from outside the UK would want to invest here, and we will shortly be destroying many of the UK-based smaller companies that survived the pandemic.

Genius.

So we engineer an entire tax system around the small minority of people who earn £100+ and have children below school age. I wonder how many of those there are? And what proportion of the tax paying population they represent. Obviously plenty of people bother otherwise we’d have nobody earning those salaries.

In Thatcher’s day the basic rate of income tax was 33% with 9% national insurance on top so everyone was paying 42% as a minimum.

https://commonslibrary.parliament.uk/research-briefings/cbp-8513/

The stats are interesting. The high earners do indeed contribute most of the income tax.

Doesn't that also tell us that too many people are far too low paid? And that a very small number hold astounding wealth.

@Blossomtoes what?

No. We engineer a tax system that increases productivity and tax revenues so that there is money for services, without making taxes punitive. This involves everyone contributing fairly, services being universal so that they maintain public support, and crucially removing distortions that are illogical and have been proved to be harming productivity.

This is not "just a few people". Independent research stated that these artificial cliff edges are leading to our most productive workers cutting their hours or declining career progression (which would lead to yet more productivity and tax). This is a big problem for everybody. And, as pointed out, the marginal rates are punitive at around 91% all through primary school if you have two children. Even if you have none, 71%: still punitive. Why would anybody bother? The answer is they don't, mostly. The data is clear. Yours is exactly the sort of ideological viewpoint that damages the country, thinking such people are "rich". When in fact penalising these people this heavily makes everyone poorer. I've seen your posts before, going on and on about irrelevancies that are a drop in the ocean like MP expenses.

How predictable that out of everything I said you focused on that one aspect of it, this endless animosity towards the people who are the ones who've been paying for what's left of UK public services. No engagement whatsoever of course with the numerous other changes to the tax system that I suggested, just the false assertion that I said "we should design a whole tax system" around this one issue because I said this issue should be sorted out, amongst the many others I also described. There's no reasoning with the economically illiterate. 🙄

The stats are interesting. The high earners do indeed contribute most of the income tax. Doesn't that also tell us that too many people are far too low paid? And that a very small number hold astounding wealth.

Yes, it does. So what do you propose to do about it? What does Labour propose? What do the Conservatives propose?

Nothing.

The only answer is to raise productivity, that is the only way to get sustainable increases in living standards.

This is like bashing my head on a wall.

You have to actually make the country worth investing in, and make it worth people working because there is a realistic prospect of decent rewards for it! Hence the need for all of these changes to the tax regime and to rejoin the SM and CU.

There really isn’t. You are wasting your breath.