To ask what should be being done about the economy and the country generally

[AlertCat]

I’m fairly Keynesian in my economics (I’m not an economist) but there are so many problems in society at the moment that I’m not sure even a massive programme of work like in the 1950s would really help.
There’s another thread where people are expressing unhappiness at the levels of tax they’re being asked to pay and it’s easy to find lots of threads about benefit claimants and immigration.

If we take as given that (a) our birthrate means we need immigration; (b) we have a benefits system that’s both overly punitive and (apparently) overly lenient if you say the right things (I’m not sure I personally believe the second part, but it’s an opinion I see a lot); (c) climate change means more and more people from the global south moving north; (d) the days of good state services, free at the point of use may be over-

what would you do differently to the government? Could we get back to the kind of services provision we had in the post-war consensus era (up until the Thatcher government)? Is that a pipe dream? Is it even desirable?

b) is the preserve of the economically illiterate. It’s been proved time and time again that it’s not implementable and even if it was it would obliterate pension saving and cost the taxpayer more. Firstly, you would make already unaffordable public sector pensions literally unpayable overnight. Secondly, nobody earning over £50k would then pay into a pension, because they’d be likely to be subject to double taxation on withdrawal given the perchant of Governments for discal drag on tax thresholds. Thirdly, you’d therefore have insufficient money raised from the policy to fund the extra giveaway you’re proposing for lower and middle earners who already pay too little tax and would have to fund this extra pension top up for them from existing general taxation, resulting in further cuts to public services. It’s illogical, would undermine the entire purpose of the pension system which is to defer tax on all contributions (note: it is not really tax relief, but deferral) and there’s no way to fund the policy which would cost a fortune. Plus you’d need to let a lot of already retired doctors, teachers etc know that their pensions payments each month are going to be cut by a large percentage immediately.

It doesn’t work like that.

With increased technology comes advances in productivity and therefore the new things should be affordable. They are not in the UK because our productivity has flatlined for two decades, and was woeful even before that. Hence per capita GDP shrinks in real terms and has a lower value. The issue isn’t that technology has advanced, it’s that our economy has been mismanaged so we haven’t reaped the benefits of that which is why living standards in the UK are declining compared to comparator countries and will continue to do so until that is remedied, hence my original suggestions on the thread about how to go about this because the decline will continue until that happens. Productivity increases are the only way out of that and no political party is proposing any of the measures that would set us on the path to achieving them.

Basic economics really needs to be taught at school. I am convinced that one of the reasons the UK is such a mess is because our population is so ignorant about even the basic functioning of the economy that determines their living standards and therefore allows substandard and useless politicians with idiotic policies to be elected over and over and over again.

But agaib you then have self-contradictory policies that defeat each other unless you reform universal credit as well because this currently prevent anybody claiming it from saving so they have no way out of the situation.

I agree re. elderly care and suggested this myself in one of my much earlier posts: state pensions and care costs need to be converted into a system where everyone is saving individually with some Government top up and this therefore avoids demographic time bombs which will only get worse given the declining birth rate. To expect others to fund this for people who have worked throughout life and couldn’t be bothered to save is not reasonable. If those working now weren’t being taxed enormous amounts to pay for this for people who didn’t bother to save for it then they could afford to do so themselves AND there would be sufficient tax receipts to pay for the education, infrastructure and defence etc that we need for national security and productivity increases.

Pretty much all of the UK’s current economic woes are the result of ostrich syndrome and irresponsible behaviour by the generation now retiring/ retired who refused to fix these foreseen and very apparent issues when it was affordable to do so, which has left us all with unaffordable bills to pay for them and no money for what needs doing now. Utter negligence and deliberate impoverishment of our children and grandchildren.

Because you'll never get buy in from the UK electorate otherwise. And arguably its not UK general public who have benefited from the huge growth in inequality, its the (largely western) global elite.

I agree though, I'm just being pragmatic.

An area that could be reformed is Council tax. It's a very regressive tax.

Regardless that I'm earning 30k, I'm paying exactly the same council tax in band B as someone who is on 200k in band B.

But it's a much larger proportion of my income.

For example, the ceiling for tax for the very richest in Denmark (which has some of the best public services in the world) is 48% of income (local and national taxes combined). In the UK it is 60% for higher PAYE earners, falling back again to 45% for the very highest paid (and this excludes local tax i.e. Council tax).

The reason their services are affordable is that their lowest earners pay around 25% tax (on total income, so not the marginal rate above the personal allowance…) and middle earners pay around 33%.

Similar kinds of statistics are available across northern European countries, whose services the UK public covet. Their higher earners generally pay less tax in these countries than they do in the UK (although there are anomalies for the super wealthy here in the UK due to the low CGT rate, hence it previously attracting such people before RR tried to make their global assets subject to UK inheritance tax 🤦🏻‍♀️, but I’m not talking about them here. I’m talking about people who work for a living but are higher earners because they have a lot of qualifications/ experience/ rare skills/ work brutal hours in for their careers in very stressful roles so have high earnings but relatively few assets compared to previous people who achieved similar roles in previous generations, who had a MUCH higher standard of living for the same achievements. These higher earners who earn their income pay tax rates far outstripping their Canadian, US, Australian or European counterparts at the same level of earnings, and receive services not worthy of a developing country in return. Hence the brain drain and mass emigrations of qualified and bright people who we desperately need to turn things around).

What is different in the countries elsewhere in northern Europe and beyond that have decent public services is that lower and middle earners pay far more tax on their incomes. So the people in this bracket in the UK - who make up the majority of the electorate - need to decide whether they are going to pay more (and I don’t mean £50 per month more, I mean raising their tax contribution to 25-35% of their total income i.e. ignoring any “personal allowance”) or whether they want public services to be reduced enormously.

Unfortunately, we have spineless politicians who won’t even state these basic mathematical facts which are inescapable and unchangeable.

Council Tax is stupidly designed. But how do you propose it is reformed, exactly?

Are you going to revalue every house in the country? How, and at what cost?

The logical thing would be to levy local taxes on a per capita basis with exemptions for disabled people etc, but people didn’t like that, did they….?

It’s also the case that social care and education funding need to be paid centrally to avoid the current buck passing and Councils left to fund only local services like leisure centres, planning, libraries, road maintenance etc. Most of these people are incompetent at best and vastly expensive, and replicating work many times over across the country that could be centralised. Their role should be enormously reduced, then Government subsidies to Councils could cease and they should need to fund whatever they want to do from taxes raised locally only. This would reduce staff (and absurd pension) costs, reduce costs due to totally inadequate administration, enable lower local taxes, and force the Government to deal with education and social care properly by putting it back within their remit.

Which is precisely why they absolutely won’t do this.

This is so true.

Plus routing tax revenue into higher educational standards to teach the population to think critically.

I despair at the inability of some to look at politics dispassionately. So many people just nail their colours to a mast. You'd think they were following a football team.

It is no surprise that Trump's base are the hard of thinking. Christ. watch MTG trying to debate and it's painfully embarrassing how stupid she is. Yet all of a sudden she's worth millions whilst Medicare gets cut. Trump takes the piss out of his supporters daily with hi s actions, but they all bend over and say please sir can I have some more.

Whenever I hear Brexiteers saying the were lied to I just want to say, fuck off you absolute lazy sod. There was loads of information pre Brexit about the lies being peddled.

I remember asking someone a few days after why they'd voted and they said without a moment's hesitation 'to stop more pa*is coming here'. Turned out she had no idea of how immigration into the UK worked and when I pointed out that weakening ties with our closest cultural and economic neighbours would mean doing deals further afield with those that wanted the deals sweetened with easier immigration into the UK: actually meaning more of the people she wanted to stop, she was gobsmacked. But why? All of that information was readily available pre the vote.

There's an article on the BBC yesterday about strongly brexit Thurrock residents being embittered post Brexit. One woman wanted to know where all the money saved from leaving the EU had gone! She had obviously just read a bloody bus poster and nothing before or since.

Our education system needs a massive overhaul. An ill educated population, easily swayed by social media is a dangerous thing indeed.

And doing this - simply taking social care and education out of Council’s remit - would be vastly cheaper than the “re-organisations” at a cost of tens of billions of pounds that Rayner is proposing, which won’t solve any of the issues anyway and will (given the transitions will be managed by disgruntled Council staff who were incompetent to begin with before they were made angry) be a disaster.

I agree entirely.

With rights come responsibilities and people seem to have forgotten this. There should be a test before voting or becoming eligible for jury service to ensure the person is capable of weighing up evidence rationally and objectively. The idea of having your guilt or innocence judged by 12 random adults in the UK is, frankly, terrifying.

Lazy Brexiters, absolutely. Always someone else’s fault. Behaving like school children expecting to be spoon fed information. All of the information was publicly available prior to the vote, all of the possible scenarios (minus minor details) were set out and modelled and it was perfectly clear that all possible Brexits would be extremely detrimental to the UK. Yet you get these morons saying they were “misled”, like a woman quoted in an article in The Times today because she believed slogans on a bus instead of bothering to read any of the freely available evidence to inform her decision, or at least have the sense not to vote at all on something if she wasn’t capable of comprehending the implications. One wonders what rock from under which these people crawl out, or how they manage to function in their lives with this level of self-infantilisation. Then they moan they’re poorer now, when at the time they said they were quite happy with that… clearly they meant they wanted everyone else to be poorer and, remarkably, seem surprised that they are poorer themselves and expect sympathy for this.

I had one idiot tell me the day after the vote that they thought it was a vote on whether to join the Euro!!

I completely agree re. education and that was one of the main things I emphasised in my first post on the thread about how to break the productivity doom spiral that we are in.

I’m afraid that any prospect of sympathy for poorer areas of the UK faded with the spite of deliberately making everyone poorer with Brexit. Predictably, there’s now far less money available to subsidise them as much as before (none of the heavily Leave voting areas were making a net contribution to the UK economy anyway, and are now even more of a drain). They destroyed any sense of national solidarity by impoverishing everyone out of spite, and redistribution has gone as far as it can already without raising productivity because the wealthy can and will leave (and are doing so) and higher income earners already pay the highest taxes for their income level in the world.

The only possible way to raise living standards will be through increased productivity, not by trying to grab a disproportionate share of an ever-shrinking cake.

I mean, if the Government is in favour of devolution, it’s only so long before the South East of England realises that it’d be one of the wealthiest countries in the world if it cut loose from the rest of the UK and declared itself an independent nation. It’d also be over 80% in favour of rejoining the customs union and single market. Living standards would rise off the charts once it wasn’t being drained to fund everyone else.

People should be careful of biting the hand that feeds them.

As much as I don't want this to be true I think it is.

I see Princess Catherine talking about the importance of ' what connects us' and I think fucking hell you are really out of touch.

The difficulty is - how do you get people to be productive? I have no problem with it but there's an attitude that - well if the conservatives got away with being rich and living off interest why should I work. Not helped by the rise of the social media influencer. A decline in jobs. The rise of AI. It's an impossible task.

And arguably its a sick idea in a way - the route out of poverty is work harder when the cards are now even more impossibly stacked against you in terms of getting a mortgage on a minimum wage job. Not everyone makes it out of that.

There used to be this idea in politics that we were helping give people a lift up- is there really no money left to do this anymore?

Every era of welfare cuts and austerity has meant more riots and social unrest. The whole country will be fucked and there'll be no one left to blame. Obviously that's a grim picture and I think focusing on industries that we do well is where it will make a difference.

But we need to bring humanitarian values back and not treat the general population as if they can't understand.

@GreenFressia as I said near the start of the thread, this is how you get people to be more productive.

If any Government actually raised productivity, living standards would rise. More money would be available for public services and people would have more money left to live on in real-terms than they do now, across the board.

Increasing productivity is the only solution, that isn’t just people fighting over cake crumbs that get smaller year on year, not only lowering living standards but also increasing social division as you try to carve up an ever-smaller cake (or just the crumbs left). Squabbling over the division of the crumbs is a distraction from the real issue which is why are people expected to live on crumbs?

Those in what used to be our comparator countries aren’t doing so: their real-terms living standards HAVE increased over the last two decades. Their citizens HAVE NOT become increasingly poorer to the extent in the UK; comparatively their real-terms GDP per capita is racing away from ours. Yes, there’s been a pandemic and Trump and Ukraine and immigration pressures etc which have caused a variety of extent of impact on all of our comparator countries depending on their vulnerability and preparedness, but generally they’ve had to deal with similar issues to us, or worse. We have then had self-inflicted Brexit on top of that (and no preparedness). Nothing has been learned. But, their GDP per capita has risen in all cases away from ours. Ours has stagnated.

The reason? Productivity.

Until we have a Government that does something about this living standards in the UK will continue to decline in perpetuity.

There are solutions. I’ve set out some ideas in the post I’ve just quoted. What the electorate should be asking themselves is why none of the politicians are proposing them.

Ultimately if you give people a prospect of hope for a better life through hard work the majority (not all, of course, but the majority) will make an effort and do work hard because they can see a benefit to it for themselves and their families. This applies at all levels of earnings. If, instead, you create a system that destroys all hope for the future then of course at all levels of earnings people will do the minimum they can and not bother. This is human nature.

If you have marginal tax rates of 75% for people on universal credit if they work more hours so they’ll get to keep £3 per hour from their work, or marginal tax rates of 90% for people claiming child benefit who are higher rate tax payers, or marginal tax rates of over 100% for people who earn £100k but have young children in childcare (i.e. earn more and be poorer), of course they will cut their hours/ emigrate. It’s not rocket science and that’s why no other country does things this way.

Therefore, the first step is to reform the universal credit and tax systems so that the disincentives to work are removed i.e. vastly lower the universal credit taper rate so that the effective tax rate for further work is much lower, and get rid of the cliff edges by abolishing the means testing of childcare, child benefit and abolishing the withdrawal of the personal allowance. It is well-documented in numerous independent economic studies that this would increase productivity and tax revenues within a matter of months, despite it lowering headline rates of tax.

Then, you have something to build from. Combined with the other sensible measures I set out to start reforming the NHS and pensions and invest in education and infrastructure the situation is recoverable but ONLY if the first steps start to be taken soon and the country isn’t so idiotic that it votes for Reform which will, obviously, do the opposite of all of these things: make the country even poorer, increase the focus on cultural and social division and politics based on spite rather than evidence, trash the economy further with nationalistic policies, etc…

One would hope people would learn from mistakes, but history suggests otherwise.

@GreenFressia this also bears repeating, I think.

What I am proposing, to be clear, isn’t about “work harder”. That’s not what productivity is.

Increased productivity means focusing the work that we do as a nation on high value activities per hour. To do this, we need to move away from low value service industries.

There is no way 1950s style manufacturing in the UK is coming back. That is simply not going to happen. The communities that lost those jobs need to take some responsibility for having done nothing themselves for trying to generate anything new to take its place since the ‘80s. 50 years, to take some initiative and start businesses, lobby Parliament and their MP for investment with start-up business plans…

Then they’ve screwed everyone over with Brexit out of spite, so people have little sympathy as I said, because they’re on a sinking lifeboat and trying to save themselves so not overly concerned with the plight of strangers hundreds of miles of way in the way that - ironically - before Brexit many were. Such an act of spite has consequences, and people are very angry still, despite all of the people who did that saying “it’s history, forget it now”, that isn’t going to happen anytime soon. That action cemented a complete lack of empathy and division in society that will make things very hard to fix. I think, to be honest, it’s understandable that people who’ve been propping up other for years and years financially are a bit fed up of their whinging now about their living standards declining given they deliberately voted for something to try to inflict the same on the very people paying their bills and funding the public services they use.

In this context, more of a “tax the rich” rhetoric when these people have already been taxed into oblivion to fund people who are not pulling their weight economically, is one kick in the teeth too many and there will be little sympathy at all.

The only way past the “every man for himself” mentality and these social divisions will be if there is a gradual rise in living standards for everyone, so some hope for the future is restored. Trying to take from one group to give more to the demands of another will just entrench social division further. The only exception to this is the retirees who as a cohort have absolutely screwed this country over and are responsible for the current state of affairs economically. They should be forced to cough up, and I don’t mean via inheritance tax (because that would be very easy for them as it doesn’t affect them at all, only their descendants, and would be too late anyway); I mean they need to pay far more now. They need to pay NI, their pension uprating needs to be cut, and a proper analysis of what was paid in for public sector pensions vs what is being extracted needs to be done and the amounts paid out per month reduced in line with this to a sensible level. They also should be told that if you have over X amount of assets you have a choice between either paying a levy of X% of your pension income for the additional healthcare cost that older people cost to the NHS, or you can fund your healthcare privately. The same for social care.

This will free up current tax revenues to be spend on education (half class sizes in primary and secondary, set up schools for different skills and needs - the precise opposite of what the education secretary is doing, abolish student loans but send a much smaller proportion of students to university, reinstate adult education and retraining for free, invest in apprenticeships with genuine links to business and career routes especially in skills shortage areas where currently everyone is leaving the UK. The real-terms salaries for most skilled jobs in Dubai, Australia, Singapore, the US, Canada, even in Italy/ Germany/ France (after tax and including purchasing power/ living standard) are much, much higher. If the UK doesn’t do something about this soon then a brain drain that would normally cement a 30 year recovery period will instead, this time, likely prove fatal.

Infrastructure investment must happen. We need flood defences, we need to invest much more in our research into fusion, we need to invest in hydro power, we need to upgrade the grid, we need to build nuclear plants, and we need to give up absolutist crazy targets about net zero which are a nonsense anyway because we’re just offshoring the real carbon impact out of our national figures. We need reservoirs and a proper water distribution system across the country: it’s insanity that we could even have a water shortage in one of the rainiest countries in the world! We need to invest in food security. In the coming decades we must ensure we have sufficient power, food and water for our population. People will regret it if we do not, but yet none of them list these things in their priorities in polling. Are people really this stupid and short-sighted?

Sadly, given the voting for Brexit and then more recently for Reform I think we have to conclude that they are. It does not bode well.

Ultimately people need to stop being so short-sighted and understand that you’ll never be the richest person on Earth but if you’re born in the UK you’re very, very far from the poorest, either. Provide some hope for people of a decent standard of living by fixing the economy through tax reform and a proper industrial strategy, invest in the required infrastructure repairs and primarily in education and then improvements will happen, quite fast.

If, instead, the piranhas are allowed to continue to feed off the younger generations and not required to fix their own mess, and continue to consume 70% of tax revenue, then of course productivity and also, therefore, living standards in the UK will continue on a downwards spiral because there is NO way to fix it without taxing the piranhas more on their ill-gotten gains and to invest the tax revenue we have left into things that will actually drive a productivity increase.

High value activity (i.e. higher productivity) requires education. A UK budget of £1.27trn of public spending in 2024/25 and only £94bn of it spend on education? And over £600bn (almost 50%!) of it spent on healthcare, social care, benefits, housing for the elderly plus the debt interest they ran up during the longest boom in history over the longest period of peace in Europe in history (not even paying back any of the money they extracted, just paying the interest payment on it…). It is not sustainable. This is why the country is a mess.

£1.27trn i.e. £1,270 million of public spending per year and only £12bn is spent on housing (0.9%). £94bn on education (including university, apprenticeships, adult education, primary, secondary, college educations… everything, total just 7.4% of public spending!).

It’s shocking. It has to change if there is to be a future for the UK.

Low volume manufacturing that can be done by anyone, anywhere in the world is not going to be an option again, until such time as living standards in our country have been lowered to the global average.

Presumably even the poorest in our country don’t wish for this, because then there’ll be no NHS, no state pension, no social housing, no benefits, no free education.

Low value manufacturing is not going to come back here, no matter how nasty people are to the EU or other “foreigners” etc.

So, we have to redirect a LARGE amount of money currently given to the old at infrastructure, business and education to focus on high productivity activities that will earn more per hour. We need to create a good business environment so that start-ups and small and medium enterprises can be established and thrive and a tax system whereby the UK a worthy location to consider when someone decides to make the the risky decision to set up a business, and know that they will actually be allowed to keep some of the money they make if it is successful. And we need proper infrastructure so that we have transport that isn’t embarrassing, water that isn’t cut off regularly in one of the rainiest countries in the world, fibre broadband everywhere, and a national grid that is sustainable and can cope with increased demand and doesn’t have artificially inflated energy prices which are the highest in the developed world (for businesses, who have no price cap), which obviously stops productivity from rising because it makes many businesses unviable.

Sorry, obviously I mean £1.27trn is 1270 billion, not million.

Got to go deal with kids now. Anyway, shouting into the void is pointless, as we’ve seen. People will do what they will, and continue as they are, until they cannot. Then probably be furious and say “if only someone has warned them” or, like the woman in The Times today who I referenced earlier, like a child say that they were “misled” because they believed the politicians and couldn’t possibly - as an adult - be expected to think for themselves or read anything about a topic before forming their opinion. My six year old is smarter than this.😏

So my guess is it’ll all just carry on as it is until it can’t, then all hell will break loose.

Now, where’s my towel? Time to vacate, I think. 🐬

InPraiseOfIdleness
none of the heavily Leave voting areas were making a net contribution to the UK economy anyway

If you are looking at regions that's not correct - East of England voted 56.5% leave, East Midlands 58.8% leave;

2020
In 19 of the past 20 years London and South East have been in surplus. East of England had a surplus in 13 of the 20 years, while East Midlands and South West had surpluses in two years. All other countries and regions had a deficit in all 20 years.

https://commonslibrary.parliament.uk/research-briefings/cbp-8027/

Referendum vote;
https://www.bbc.co.uk/news/uk-politics-36616028

I think one thing that is different here than other western countries was the power of the newspaper headlines -also having a two party system. The ‘dementia tax’ etc made it impossible for politicians to argue their corner.
the papers have lost their power, largely, but unfortunately we now have X etc with a large US input. Causing anger and division.
But I guess we have also had weak politicians.
Labour at last are attempting to sort the mess - Stricter PIP guidelines, and stopping the winter fuel payment but certainly the outcry over the WFP has been unbelievable imv, shows how hard it is to sort things in this country. I remember it coming in -it was a bribe by Gordon Brown to get votes at an election and I thought it was blatant bribery.

Panterusblackish
Turned out she had no idea of how immigration into the UK worked and when I pointed out that weakening ties with our closest cultural and economic neighbours...

I was surprised to read a few months ago that one million people who applied to the EU Settlement Scheme were not born in the EU;

The surprising diversity of the EU national population in the UK (people who had acquired EU passports and moved to the UK, plus their non-EU partners and dependants etc.)

Continent of birth:
Africa - 245,770
Americas - 182,066
Asia - 392,128 ...
...
https://ukandeu.ac.uk/diversity-eu-national-population-uk/

Exactly. 13 out of 20 years scraping into surplus is barely breaking even. 2 out of 20 means you’re a huge net drain. And all of the other regions are a drain every single year in 20 years. Like I said, the electorate outside the South East might want to stop being so obnoxious to the people providing all of the money to pay for all of their services because if those in the South East eventually realise that this is the case every single year and has been for decades, as your post sets out, they may at some point decide they’ve had enough of subsidising everyone else and their own living standards falling as a result.