To wonder how the UK will look in 3 years time?

[Labradorlover987]

I was inspired to write this after reading the UC post that was just reported - the govt’s welfare bill has passed but was watered down so unlikely to make any real savings.

I earn 40k, have a school age child and just feel like I am living hand to mouth 😩 I 100% think there should be a welfare systems that supports people on low incomes but I wonder how the current system will be sustained in the long run?

Just wondered what other people thought.

I actually wouldn’t mind paying more in taxes if we could be guaranteed more in services etc - for example my council tax just went up and the services seem even worse this year than usual.

Yes it’s very frustrating especially when the government is trying to achieve net zero.

it doesn’t help itself with the immigration policies and the constant house building

If the cafe owner has a team of part-time staff who work enough hours to earn more than £5k pa per capita, then that is a massive tax hike on the business. Given that the previous start point was £9k, RR slashed the starting gun down on the businesses by 50%. Please do tell me how that is not going to affect the cafe offering work?

No.

Employing one NMW FT employee before Apr 25 - £18235 wage plus £1260 NI (assuming 50 weeks, 35h /week)

Employing one NMW FT employee from Apr 25 - £21400 wage plus £2460 NI

Total difference £4365.

It's huge for small businesses, esp if you have several employees.
Then you add business rates changes and it's bloody obvious how Labour are killing SMEs, retail, hospitality and labour market with them

Yes as for pp Labour didn’t think it through

Yes that’s the calculation above. It is actually £615 I think, I checked it on kpmgs budget update report. I just rounded it up to £1k to include an amount for the 1.2% increase etc

Those taxes are still very low comparatively though with much higher salaries for those in good jobs. Not advocating for ME though, I lived there and it wasn't my favourite place. Even now, with the offer of high pay and no tax I wouldnt move back, but there are people who seem to love it.

The tax burden has remained relatively stable over recent decades, compared to the much larger rises in the cost of necessary goods and assets such as food, fuel and housing.

Whoever is causing asset price inflation, that's who's really squeezing the middle.

So you think it’s the increase in minimum wage that’s finished off this cafe owner?

Its around an £2700 for both NMW and NI changes according to the Centre for Policy Studies, most of which is NMW changes.

Not £4300

Though i guess many on here think the NMW should be scrapped, Reform want it gone.... according to our local Reform councillor.

Can only speak for two cafes near me, both with stunning views over the Tamar Valley... business is booming, i'm friends with one of the owners, they had to raise prices slightly.... 2 more cafes opened recently, anyone nr Lydford needs to check out Billies Cafe, open weekends atm.... stunning cake.

I think the increase in employer NI changes were a mistake. Not so much the percentage increase, which was expected, but the reduction in the threshold at which NI becomes payable, because that disproportionately hit small employers with staff on relatively low wages.

However, I think any business in central London which can't afford to pay a decent living wage to its staff isn't really viable and needs to re-think its business model. Workers need to be able to live, and it isn't reasonable to expect the taxpayer to constantly top up low wages because employers aren't paying people enough to live on.

Also not ideal to open a cafe in central
London and not pay London.l living wage rather than minimum wage…..

Over £10 million.

Per employee, that is quite a big tax hike @Alexandra2001 . The increase in NMW will not have helped. Making sandwiches and coffees doesn't make you rich, but it is vitally important to establishing a track record of being reliable at work. My DC is working as a crop technician propagating plants commercially at NMW in the SE UK. The career previously planned out has crashed and cratered, so time to do something else.

Even so, what DC earns per month doesn't cover the cost of rent, council tax and utility bills in the area where they need to live. Fortunately, we can afford to help. If parents can't, then what?

The NI tax hike per FT on NMW is £770 pa.

The thing is, i believe you re not far from me? we all know the local hospital is 45 years old, we need another district Hospital and we want our roads fixed and we want free childcare and keep our in work benefits and keep the triple lock and we want free dental care and no increases to state retirement age....

So if we don't want an NI rise, what taxes do we want to pay? they will all have a cost, either to business or consumer confidence.

Labour put another 29bn into the NHS, yes much went in wage rises and so they should, staff are a basic requirement!

OR we go the Tory route and have another decade of Austerity and still end up in debt and high taxes but shite services...

Totally agree that, if we want better public services, we need to pay more tax.

However, I would have preferred to see an increase in income tax rather than the changes to employer NI. And if we had to have the changes to employer NI, then I would have cut it differently so that it was a flat percentage increase and not the change in threshold.

But we have to get real about the fact that we can't have decent public services if we aren't willing to pay for them.

Are you pretending or for real?

It's a combination of NMW, NI, business rates, cost of raw materials etc. Combined with significant softening of demand.

NI were the last nail in the coffin.
And do check here Employers NIC Calculator FY 2025/26 UK | NI Calculator - the numbers I shared are correct.

It's very ironic that Labour say they don't tax working people.
Yes there was no direct taxation, but you don't need Oxbridge Economics 1st to understand that NMW and NI will be passed on to the consumer means you and I will pay for this from our net income. Oh, and don't forget VAT on increased prices.

Inflation two-three years ago was caused by war in Ukraine, the current spike is a direct consequence of Labour taxes.

If you have any insider knowledge of retail you'll know that demand is weakening substantially. Again, no need for high IQ to understand that the next step is recession with huge unemployment.

And how do you reconcile a wealth tax with Labour’s desperate need for growth?

Bear in mind that wealth taxes are laggy for 2-3 years (in terms of implementation and collection).

The NI tax hike per FT on NMW is £770 pa.

Please share this calculation.

You can just ask char gpt

Answer: With the threshold dropped to £5,000, the 1.2% employer NI rise would cost ~£207.70 per year per full-time minimum wage employee — about £49 more than under the old threshold.

Labour's changes effectively raised employer NI costs by 1.2 percentage points and lowered the contribution threshold from £9,100 to £5,000, resulting in around £615 extra per employee annually, disproportionately impacting firms with low-wage workers

We probably live within a km of each other. I'm happy to pay private dental because I have done so for 30 years, or more, and in a pinch I would pay for a GP appointment privately, if I was really worried, and even an extra penny or two on income tax would not be a vote changing issue.

I can't be terribly sympa on childcare issues because when I had mine, there was zero help. I could have claimed the cost of a secretary against tax as I was SE, but not the nanny I employed who made it possible for me to continue working and paying tax. The whole situation is so far removed from party politics that I despair. Nobody, least of all me, wants austerity revisited. But I am totally lost politically; I don't buy any of the major parties' spiels, at any level, Not going to vote for Reform, or for Jeremy. I shall probably vote for Kemi, whom I quite like. I am as you have probably guessed an old time Tory because I don't have any issues at all with race, skin colour or gender preferences. Sensible policies, keeping what works sounds good. New problems, new policies obviously.

I posted this sometime ago on another thread but this is still relevant. The below is summary of info on gov sites with links supporting every number.

Top 1% (about 310,000 people, on £160k taxable min) pay 29% of all income UK taxes. This is about 80bn.

Top 10% pay 60%, which is 166bn.

About one third of working age population don't pay any tax at all.

Social security spending in Great Britain
In 2025 to 2026 the government is forecast to spend £316.1 billion on the social security system in Great Britain. Total GB welfare spending is forecast to be 10.6% of GDP and 23.5% of the total amount the government spends in 2025 to 2026.

Around 55% of social security expenditure goes to pensioners; in 2025 to 2026 we will spend £174.9 billion on benefits for pensioners in GB. This includes spending on the State Pension which is forecast to be £145.6 billion in 2025 to 2026.

In 2025 to 2026 we will spend £141.2 billion on working age and children welfare. This includes spending on Universal Credit and its predecessors, and non-DWP welfare spending.

In 2025 to 2026 we will spend £75.3 billion on benefits to support disabled people and people with health conditions, and £35.3 billion on housing benefits.
Guidance and methodology: Benefit expenditure and caseload tables - GOV.UK
So welfare payments are only 4.4bn less that all state pensions.

Only 35% of UC claimants are working.
Proportion of Universal Credit claimants in employment in England | LG Inform

There were 7.5 million people on Universal Credit in January 2025, up from 6.4 million people on Universal Credit in January 2024

Universal Credit statistics, 29 April 2013 to 9 January 2025 - GOV.UK
23.7 million people claimed some combination of DWP benefits in August 2024 (of the 17 benefits included in these statistics). Of these:

• 13.1 million were of State Pension Age (including those in receipt of their State Pension)
• 9.9 million were of Working Age
• 750,000 were under 16 (and in receipt of DLA as a child)

Interesting stats on PIP, incl assessment process 1 Link looks strange, but it's Scottish Gov doc. Number of disability benefits recipients in the UK is dramatically higher than in Denmark, France, Norway, Sweden - all comparable countries. "This research has found that extra costs benefits are uncommon in other countries. Indeed, in a New Policy Institute report for the Joseph Rowntree Foundation, MacInnes et al (2014 – emphasis added) argue that, as far as they are aware: ‘no other European or OECD country […] makes such extensive use of a cash benefit to meet the additional costs of disability.’7 As a result, the sample of countries examined was necessarily constrained – including only countries with broadly comparable benefits. To this end, this report presents an examination of assessment for disability benefits in: Denmark, France, New Zealand, Norway, and Sweden. Even in countries where extra-costs disability benefits are offered, their reach is far more limited than in Scotland/UK (see Table 2)." 1

If you spend so much on direct welfare payments and 25% of working age population are economically inactive, your only choice is either to cut services to the bone or to increase taxes until you bleed productive part of society dry.

We do not need more taxation. We need to fundamentally reform welfare system, it's both expensive and doesn't leave any money for investment in public services, but prevents growth.

Agreed..means testing pensions is just robbing from those that prepared for retirement.

Use the calculator that you linked to earlier. Put the current minimum wage into it and compare rates for this year and next year. You'll see that the figures are roughly in line with what the posted.

I think you're measuring it by comparing NI on the old minimum wage and the new minimum wage. Which is of course the increase that employers need to pay, but it isn't technically the increase in Employer NI because employers would have been paying more NI on a higher NMW in any case.

As an employer, I totally understand that the increase in NMW is painful (or indeed the increase in real living wage for those of us who are committed to paying it) but what's the alternative. It simply isn't reasonable or sustainable for businesses to pay salaries that staff are unable to live on, and if a business can't afford the NMW increase, they need to rethink their business model.

As I've already stated, I would have preferred an income tax rise rather than the employer NI increase, but I totally support the increase in NMW. If anything, I think it should be higher.