The UK has borrowed too much money, has a massive debt - £105 billion goes on paying our debt interest

[cakeorwine]

A good visual guide from the Guardian

https://www.theguardian.com/uk-news/ng-interactive/2025/mar/24/visual-analysis-how-the-markets-boxed-in-rachel-reeves

But basically, the UK has had to rely on borrowing money as it spends more than it brings in.

It has borrowed money at low interest rates - but these rates have increased.

£105 billion on servicing debt interest. When you are borrowing a lot of money, even a small change in the interest level will massively increase the actual amount of money we need to pay on interest

Some context from the OBR on the budget

https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/

Income: £1149 billlion
Spending: £1276 billion
Of which £104 billion is on interest payments
Deficit: £127 billion

We need either more income, less spending and reduced interest payments.

Why would anyone put their money into buying a house just to be taxed for it? That would just hugely increase people looking for council housing that then has the added benefit of not being taxed as well as lower cost, and privately renting so they are eligible for housing element of UC and better off.
We are worse off month to month with a mortgage than when we rented with UC, if owning a house was then taxed extra lots of people would just decide to avoid that by taking state support and renting.

This is what happens when you have 9 million people of working age not working and 6 million of then claiming out of work benefits.

It’s also what happens when you have a bloated public sector, a useless civil service and even more incompetent politicians who have no experience of how to actually make money, only how to spend other people’s money.

Just to finish off what’s left of the economy, Rachel from accounts comes along and trashed it by killing businesses through tax hikes and Red Miliband starts spending borrowed money like confetti on the net 0 scam which is designed to funnel money to cronies or corrupt government officials and politicians.

Get people working. Part timers to work more hours, unemployed and disabled to work (if they can), discourage early retirement, etc.

Short term pain for long term gain. You may be "worse off" on a short term cash flow basis with a mortgage, but at least you're paying towards owning your home, as your mortgage capital loan will be falling, and you'll almost certainly benefit from house price inflation over the long term.

That's currently the case, but adding a tax to penalise home ownership would reduce the benefits of owning a home, as well as in turn likely reducing house prices as there would be more demand for rentals and more people selling to avoid being taxed and to free up their money.

I’m really confused. What tax are you talking about? The one I suggested that replaces stamp duty and council tax? 0.5-0.7% of the value of the property in which you live, no matter whether you own or rent it. Just like council tax, but value based on where you can afford to live. It would also have the benefit of reducing house prices / rental slightly.

No one would voluntarily agree to pay more tax. That's why we need politicians with balls to actually impose it. Go right back centuries and people bricked up some of their windows to reduce "window tax".

Trouble is for 2 or 3 decades, politicians have actually encouraged "tax avoidance", i.e. tax breaks for this, that and the other, ISAs, tax relief on pension contributions, tax breaks for film partnerships, new savings tax allowances, £1k tax free interest, £5k personal savings allowance, etc etc. It's given the impression that they're encouraging people to reduce the tax they pay!

Then you add in complexities like Brown fouling up small business taxation and "encouraging" window cleaners etc to incorporate limited companies to save tax - just sends out the wrong signals to people.

Like increased IHT thresholds, the relatively new residence nil rate band, etc - just giving the green light to people that they don't need to pay IHT when the threshold for a married couple hits a million!

There's been absolutely nothing from any politician over recent decades that paying tax is a good thing. It's all been about reducing taxes, increasing allowances/exemptions, etc. When entire generations have heard nothing else, it's no surprise they think tax is bad and will take actions (legal and illegal) to avoid it.

Let's be clear - that graph isn't 'debt repayments', it's just the debt interest payments, not including any repayment of the capital. Typical Guardian lack of understanding here...

IHT is 40% and therefore the massively wealthy are incentivised to do all they can to avoid it. It’s massive. The thinking is that more would be taken as a tax and a higher proportion from the wealthy if the rate was dropped to 5 or 10%. Far fewer people would bother making a big effort to avoid it then. Currently the people mainly being caught by IHT is the wealthy but not loaded. People that cannot afford to pass their assets on before death as they need their assets to live off.

We need to stop focussing on the national debt as a bad thing. It is used to beat up governments when it is part of a much bigger picture.

I like Pratchetts boot theory of economics to explain it;

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

Think of the NHS, Education etc as a pair of boots. The reason it is costing us so much is because it is inefficient, outdated, run down. Schools and hospitals are costing us too much to run because they are worn out. People are doing a bad job because they are worn out. We don’t replace things or improve things, we have spent decades just patching things up. A local council will spend more money over the years, patching and re-surfacing roads than they would just properly fixing things so they will last longer. They do this because of a lack of capital.

The extra money you spend plastering over the cracks, is way more than the interest you spend on borrowing money to fix things properly. Borrowing to invest in the nation properly will save us money in the future. But we never get to that because if a government does that, they are hammered for it. So, we just keep seeing borrowing going up and up with no plan of how we are going fix the problems.

If the government doesn’t borrow money, they will have to raise taxes or cut services. What do you want the government to do?

If I thought that paying more tax would make a meaningful difference and it was going to be spent on securing the future economy for my daughter, I’d agree to it.

No one accuses pensioners of plotting anything.

As a cohort though I would say they are slow to recognise intergenerational inequality (this is probably understandable) and be supportive of measures to balance it such as increased inheritance taxation.

Ultimately though it will not be them who decides what is necessary to rebalance the system, in the same way it wasn't them who decided to unbalance it in the first place.

Debt interest a problem - as is the fact that our future ability to afford our spending looks worse. We keep piling on taxes, reducing incentives to work and I can’t see where the mystical growth to solve all this is supposed to come from. This situation is only going to get worse, we’ve had retail job losses, we’ve got university and civil service job losses coming…where are the new jobs coming from?

Rachel from accounts

@Annajones101 please stop with the misogynistic belittling of women in politics. It isn’t clever and shows what kind of person you are.

In my experience, people using this term wouldn’t have a clue how to do the role Reeves does.

And ultimately it will not be them who pays the price for that inequality. They could start their recognition of it by not piling on about how terrible young people are and how they could afford a house if they just stopped buying coffee and worked hard.

Seriously? It pays practically nothing. In 2022 it paid no corporation tax at all. The law needs to be changed so that companies like Amazon pay proper amounts of tax. Not 3 per cent of its profits, but more like 20 per cent.

Buying from Amazon is basically the UK population destroying its own economy.

I agree that tax needs to shift towards unearned income from assets to reflect the growing inequality that now exists. We will reach a point where cutting disability or increasing income taxes or NI will achieve very little as the majority of the income is in the hands of the super rich. Trickle-down economics is a myth. You can't cut your cloth to suit your means when someone else owns the scissors and is quickly taking the cloth off you!

Labour could have immediately reversed the NI reduction decision if they thought it was in best interest of NHS but didn't before the election promised they wouldn't.

A tax on work is in direct competition with the need for growth. OBR latest to downgrade to around 1%

That’s stalling pretty much and you need to get out of it to resolve issues. Taxing work was the opposite to what growth requires.

Communism in action.

I agree @EasternStandard increasing the cost of workers was absolutely what did not need to happen, an incentive for all employers to look at cutting staff.

The bigger question is why after near endless amounts of people telling them they need to increase taxes on unearned income/wealth taxes they just simply don't get on with it and do it.

Maybe it is because of their election promises. But if that is the case we have effectively voted in a second Tory government.

Some people have to be careful what they wish for.

Thing with increasing inheritance tax which yes elderly people are against is it isn't actually the elderly people who ultimately pay the price it's the younger generation who would be inheriting that wealth. Intergenerational unbalance can't be tackled by increasing inheritance tax, that will only increase the difference. Wages are too low, house prices are too high. Investment into the country is too low to provide the growth needed to sustain the economy. I know my own company is cutting costs, staff who leave aren't being replaced, overtime is no longer available, this is having a knock on effect on morale. That's a direct result of the increase in NIC

But inheritances only benefit those younger people with parents with assets/savings. Not sure why some people can get effectively a tax free windfall if their parents/relatives have assets, yet others continue to struggle if their parents/relatives don't have anything to pass on. It's just perpetuating the "us and them". We really shouldn't have the situation where people have to wait for their relatives to die before they can buy a house, or are destined to a life of renting if they have no parents/relatives to inherit from.