The autumn budget should cut benefits before increasing tax

[Leett]

There is talk of Labour breaking their election pledge and increasing income tax by 2p. I doubt they'd do that because voters will revolt. However they need to do something with the state pension due to increase by 4.7% next year.
I really hope they cut benefits / pensions before the deciding to increase taxes.

Would people vote it in here? I’m not sure

Of course they wouldn't.

Other European countries have higher taxes on lower and middle earners (I accept that housing & childcare costs impacts that approach here). NI equivalents are higher on companies to fund pensions & healthcare. We do not pay enough but still want it all free.

And how would that make Amazon or Google pay more tax?

Previous study recommendations are not for the cutting down of PIP, they are for a complete root and branch reform of the benefit to make it fairer and more sustainable. There has just been a major consultation on the redesign of the benefit so that disabled people can be included in the plans and have their say in what they would want and need from it.

It’s also not rocket science that several studies of PIP and other disability benefits have pointed out that the benefits are not designed to cover all of the cost of living with disability - it’s a contribution.

I don't have an issue with people who are disabled getting benefits and in some cases they are too low. Although I am unsure why millionaires can claim DLA or AA. But benefits for anxiety or ADHD? not affordable

Not all pensioners have lower costs. Not all pensioners have fully paid for houses. 🙄

Not all pensioners have lower costs. Not all pensioners have fully paid for houses.

Future generations will be even less likely too but it hasn't stopped them raising the state pension age.

Health is far and away the biggest expenditure (18.3% in 2022-23)

This is incorrect.
Without googling much - If you go to HMRC your own tax return there is a section "How your tax is spent":

The top item is welfare, only then healthcare. State pensions are substantially lower

Pip isn't an out of work benefit though and 40% of Universal Credit Claimants are in full time work.

PIP has already been systematically cut over the years. If they want to save £ through this avenue they should start with those who have undeclared savings. They'd save a fortune there alone.

Well that’s confused - you seam to say uk state pensions are not the lowest and then explain that the system is differnt and imply that in fact the statement is true because there is less private provision

are you saying Europe has lower state pensions and so their pensioners are even more worse off because they don’t have private either ?

We need to spend less on unhealthy people but cutting it at point of need seems wrong / we need to focus on fewer people needing that help - and that’s clearly possible as we are a very sick nation

There has just been a major consultation on the redesign of the benefit so that disabled people can be included in the plans and have their say in what they would want and need from it.

Which is ridiculous as no one who meets the current definitions of disabled is going to stick their hand up and say "actually my needs are much less than others, reduce my eligibility for PIP/give me less money".

No one wants less money but there is not enough to pay for such a huge proportion of people. It must be limited to those with the greatest clinical needs.

If you’ve been reading the thread then you will have seen the explanations re pensioners and private pensions.

I am not a sheep has nothing to do with being a sheep 😆

That’s a useful graphic. It’s very high isn’t it.

we need to focus on fewer people needing that help - and that’s clearly possible as we are a very sick nation

We really aren't. We've medicalised normal ranges of human emotion and experience. We have to accept that our lives will include peaks and troughs, we will face struggles amd challenges and we can't allow our worries to overwhelm us. We have got to be a bit more resilient. Our kids are seeing too manu adults collapse when times get tough, withdraw from things that are a bit uncomfortable. All they are learning is that when the going gets tough.... you give up. It needs to stop.

How do you think society would function without people doing jobs like childcare and retail? People can’t just magic better paid jobs with more hours.

Seriously have a think about your average week and how you’d cope without these sorts of jobs being filled.

I really think you should have to pass an intelligence test before you are allowed online.

Quite a lot needs to change for our economy to be made sustainable and productivity to increase, which is the only way to raise living standards sustainably. Fundamentally it requires a huge improvement in the efficiency of spending, a coherent industrial and trade policy, investment in infrastructure and education and a large redirecting of public spending from the old to the young.

A good start would be to:

1. means test the state pension with a gradual taper rate like in Australia, so that it reaches zero when the PLSA income level for a moderate retirement for an individual/ couple is met (or assets sufficient to generate this income). This would create absolutely zero poverty because it is set at a level which allows for foreign holidays, running a car, eating out regularly, etc: the only impact would be that those pensioners who don’t need the state pension and are currently spending it on extra luxuries no longer receive it/ all of it. This would save £70-90bn per year - these completely unnecessary welfare payments to wealthy pensioners are by far the most wasteful part of public spending and it needs to stop. The quid pro quo can be no further raises in state retirement age. There is no rational argument for the status quo. The current generation of retirees are - on average - extracting £200k per person more in welfare and state services than they paid in tax over their lifetimes, in real terms. This is not sustainable and cannot continue. They didn’t pay sufficient tax to fund their demands on the current working aged population and neither did they provide anything like what they are demanding for their own parents and grandparents. It’s crippling our economy.

2. The above measure would enable significant investment in productive parts of the economy that have been starved of cash in which investment is essential to generate growth: education and infrastructure in particular. We need a lower proportion of people going to university and far more technical colleges with apprenticeships set up in conjunction with businesses leading to respected and useful vocational qualifications that lead directly into employment with the training employer, more similar to the German model. We also need to increase funding for schools by 50% to ensure smaller class sizes and a wider range of schools to suit different needs - some more academic in focus like the old grammar schools and some more focused on arts or sports or practical and technical skills. Trying to pretend all children are identical is ridiculous and we need to abandon the failed model of forcing almost all children into one-size-fits-all mainstream education which serves nobody well. Fund SEND education properly and put a proper regulator in place for education which will impose fines and sanctions and strip qualifications from people or even impose prison sentences when the law is broken, as is the case in every other sector (law, medicine, finance) rather than individual parents being expected to enforce the law. In the long run, the failure of education and enabling every child to reach their potential is going to cost us orders of magnitude more in terms of welfare, lower growth, higher justice and healthcare costs, etc, so underfunding education is economic insanity.

3. All responsibility for the provision of education and social care should also be taken back within the remit of the relevant central Government departments so that there is accountability, even if they delegate implementation tasks to Local Authorities. The recently mooted plans to redistribute Council tax across the country just add another layer of bureaucracy to achieve the same effective central funding outcome but with no accountability allowing central Government to blame Councils for the failures when they are underfunded and not capable anyway of administering these systems competently and this has led to a huge squandering of resources on ineffective systems designed more to try to circumvent their statutory responsibilities than actually implement the required services. Social care whether in the home or out of the home should be treated equally in terms of funding. General taxation can rise slightly to fund this and Council tax be significantly lowered with Local Authorities responsible only for local services such as waste collection, leisure centres, road maintenance, libraries etc.

4. The savings from point 1) also would enable us to remove the op-out for auto-enrolment and significantly increase the level of mandatory contributions for both employees and employers whilst making tax cuts to make this fiscally neutral and ensure that there is a stable pensions system in place for the future. A similar mandatory scheme should be introduced for the self-employed unless they can demonstrate sufficient levels of independent assets to fund their own retirement entirely independently. Meanwhile the Government should commit - as independent report after independent report into the pensions industry in the UK has advised them for years now - NOT to make any further changes to the rules around withdrawals, tax relief, etc because this is undermining any faith in people trusting the system sufficiently to invest their money into it, knowing rules might be changed in the future.

5. Abandon the failed NHS model and emulate on of the far superior European models like those in France or Germany which have been shown to deliver far better patient outcomes and value for money.

6. Rejoin the single market and customs union as quickly as possible and implement a coherent industrial strategy and trade policy, focusing on Government support for start-ups in key high-productivity sectors where the UK has an existing competitive advantage and knowledge base (tech, pharmaceuticals, engineering, the arts, finance and professional services, defence, life sciences etc) linking these up with grants, research from our best universities, knowledge clusters and business support networks including a new Government export assistance service for small businesses to help them overcome the costs of legal hurdles and compliance documentation with templates/ paperwork assistance etc.

7. A huge investment in our failing infrastructure (water, internet, road, rail, housing - but with acceptable standards for homebuilding unlike now) and plans for food security, water security, energy security, climate change protection (e.g. flood defences). Markets will be favourable to a coherent long-term investment plan in such areas because of their impact on long-term productivity and growth rate therefore this would not negatively impact the UK credit rating. This would also generate more highly skilled jobs and demand for the apprenticeships per point 2).

8. Stop selling indexed links gilts! Most comparable European countries have a tiny amount of their debt issued on an index-linked basis and are therefore paying much lower interest than us on similar debt levels. This was gross economic mismanagement.

9. Fix the ridiculous UK tax system which is harming productivity. These points are not in priority order and frankly this one should be done immediately because the effect would be almost instantaneous unlike some other items on the list and it is entirely within Government control to fix. Anomalies and perverse incentives little the system at every level. All taxes and welfare should be levied on a household unit basis, as in pretty much every other developed country. Couples could choose to opt out and be separate “household units” splitting their household tax allowances/ thresholds between them equally if they wish to maintain separate finances. Obviously those in HMOs or adult children living with parents would be separate “household units”. This is how the system operates in all sensible countries of which I am aware. Then two households with the same household income will be taxed the same amount regardless of whether they’re a single parent or couple or how the earnings are split between the adults. This is a matter of basic fairness. Income tax does need to rise but this needs to be through the basic rate (due to sheer mathematics). This should be done transparently by simply changing the rate. Fiscal drag is economically damaging and a commitment should be made to uprate all tax thresholds annually with inflation.

10. As well as the above, the cliff-edges in the tax system need to be removed. Child benefit, childcare funding and the personal allowance should be made universal again, and the universal credit taper rate reduced significantly because there is robust independent economic evidence demonstrating that this would generate more economic growth, reduce long-term welfare dependency and raise tax revenues and economic participation rates significantly. This would also reduce the number of people cutting their hours/ retiring early/ emigrating and therefore reduce skills shortages and the need for immigration. Rationalise the tax system so that pensioners pay NI given they are by far the highest users of welfare and healthcare which it was supposedly meant to fund (obviously we all know it isn’t hypothecated and does no such thing anyway, but there’s no reason they should be exempt). Adjust tax rates to reduce the discrepancy between the level of tax on earned income and investment income (some is justified to generate investment and risk taking, but the current level is too extreme with employees being taxed far too heavily proportionately). There’s absolutely no excuse for this Government or the last one not to have taken the measures in points 10) and 9) to fix the tax system given the very clear evidence of the economic harm that the current system is causing, suppressing growth and productivity. And certainly no excuse to be telling us they need to make “tough decisions” and make cuts/ raise taxes without taking these measures first.

11. Link up Government IT systems properly so that healthcare records, HMRC records, DWP records, CMS records are all linked together. Ask the Estonians if we can buy their integrated IT system from them given our Governments are so terrible at IT projects. This will enable much easier identification of fraud and tax evasion. Digital ID cards should be required and added to traders’ invoices so that their transactions are logged and they cannot do “cash work” and under-declare and make it an offence to pay for work over a de minimis value without this digital ID number to stamp out black market. These ID cards can also be used to reduce black market working generally. There is a huge amount of tax evasion going on. Implement a system like those in other countries where absent parents who don’t pay something resembling 50% of the cost of housing and raising their children (not the laughable current CMS rates) have their driving licences and passports confiscated and if they still don’t pay then they will be sent to prison i.e. treating these debts with the same severity as money owed to HMRC.

12. All benefits other than disability benefits should be contributory like in most European countries, so that they resemble the insurance-based system that they were intended to be. This would enable them to be set at a level where they are a percentage of previous salary, again in line with most European countries, so that they do actually provide a genuine safety net for all sufficient to cover their baked-in existing living costs which is important for the social contract (and those with higher costs will have been paying proportionately more tax to fund this while working). This will also prevent people claiming unemployment benefits as a “career” without ever working at all (unless severely disabled). Benefits like the child element of UC should be replaced by an additional tax allowance based on the number of children (again, a model that’s worked well in other countries for decades) because this encourages work rather than disincentivising it, while still recognising the additional costs involved in raising children.

13. Implement something akin to the EU Directive on Tax Transparency which Brexit was largely designed to avoid being implemented in the UK, requiring publication of the beneficial ownership of all accounts held in UK offshore tax haven territories. Reform rules around transfer pricing which enable large companies to move profits abroad and transfer costs into countries where revenue is generated to eliminate their profits. Reform the rules around dividend distribution linking them to the requirement to provide disclosures on long-term viability so that a company cannot make distributions unless it can demonstrate sufficient cash is being kept in the business to meet long-term investment requirements (e.g. water companies needing to invest in infrastructure as population changes/ upgrades are required).

These would be obvious first steps for a Government genuinely wanting to generate growth and rising living standards. None of it is rocket science.

Re UC I’m referring to those that don’t work full time and those couples that don’t both work full time.

Re PIP I’m referring to the ever increasing number of claimants who are fit to work including those that do and the increasing number of health issues included, as per the white paper review. ( I’m fully aware it is not an out of work benefit)

Fucking hell. 'Should have worked harder at school'?

You do realise people are born with different intelligence and aptitude levels, right? Landing a well paid job is not simply a matter of working hard enough.

Good of you to 'accept' the woeful state of care funding in this country though, I must pass the news on to my mum's carer whose car keeps breaking down because she can't afford to fix/replace it. I'm sure she'll be so grateful for your 'acceptance'.

You sound utterly clueless.

@Chenecinquantecinq you must know this is bollocks so stop with the faux outrage and stories about being aware of people with no need somehow gaining sufficient evidence to receive benefit that they spend on Botox and clubbing!

We in the know are aware that a condition must have existed for 6 months, impact quite severely on daily living to score any points at assessment and reams of evidence are required from specialist care teams and even then a significant number of claimants have to request MR or go to tribunal before needs are recognised.

What you are claiming makes no sense. It’s hard for your relative who needs 24 hour care but the same system that requires evidence and crazy amounts of admin is easy for those with no need to scam? Is no evidence or admin required for people with ‘mild’ anxiety.

Not all pensioners have lower costs. Not all pensioners have fully paid for houses. 🙄

74% of pensioners own their own home outright, with no mortgage (see office of national statistics).

17% are on social rents, so much lower than private rents most younger people pay.

Only 4 or 5% have mortages and about 5% private rent.

There is pension credit and other UC elements available for the poorest who aren't homeowners. Huge swathes of people receiving state pension are very comfortably off while their working age neighbours are desperate. It is disingenuous not to recognise the inequity of this.

PIP is in an in work benefit but around 84% of people receiving it don't work, and most if those who do work do so only very part time.

@childofthe607080s you cannot compare different schemes and ignore that fact people pay in different amounts.

PIP is in an in work benefit but around 84% of people receiving it don't work, and most if those who do work do so only very part time.

Would you need to work full time though as the maximum is almost 10k a year. I appreciate some are unable to work.

@TheClaaaw excellent post but so many don't want things to change.

PIP isn’t means tested so l’m unsure as to whether you mean to start means testing it or whether undeclared saving refers to UC. It’s very difficult to keep savings or indeed income from UC as they’ve started to regularly request bank account details again, and they scrutinise for evidence of fraud or error. And as far as I’m aware from next year bank monitoring of claimant accounts is being introduced so AI will report to the DWP where it sees an anomaly.