To ask how much you think income tax will rise by?

[Wonderofwimbledon]

We’re absolutely financially at our limit… I’m so incredibly stressed. An income tax rise will break us and we won’t be able to afford it. We won’t have money to eat.

What do you think it’ll be? I just want to curl up and cry- we can’t take anymore increases our bills , mortgage everything has increased we have no spare money at all

There was some bad. But some genuine good as well. Unemployment halved between 2010 and 2019. Corporation tax was cut which made us attractive for FDI and grew our tech sectors. Tax free personal allowance increased. Tories did the National Living Wage as well.

Absolutely -

Here is the data showing the number of people claiming out of work benefits (claimant count):

Note the decline at the point the first Labour government got in, and the maintenance of the figure at below 1,000,000 right up until the financial crash. Although Labour had started to bring this down, the coalition did not continue the trend and it took until 2015 for the proportion of people claiming out of work benefits to hit 2.3% - the low achieved by Labour.

They managed to hold it steady at between 2.1% and 2.3% until March 2018 when it started to increase, hitting 3.3% before the pandemic. This was brought down to 4.1% by June 2022 and held steady between 4.0% and 4.2% up until April 2024.

It had already been increasing between April and July when Labour came to power and was 4.6% in the July. However, Labour have held that steady since.

The % of people who are economically inactive is falling - down to 21% from 21.9% when Labour came into power

The unemployment numbers and economic inactivity numbers show that while unemployment has risen slightly, the proportion of people who are economically inactive is falling - this means that as people start to move into work the number of people claiming sickness benefit or out of work benefit (the claimant count) will decrease.

This data shows the spend on welfare benefits. I've pulled out the benefit spend for people aged 16-64 in the graph below. It shows that the cost of working age benefits was kept steady by the last Labour government and even when actual spend increased, it remained low as a proportion of GDP because unsurprisingly, investment in public services and tax credits which enable people to work increases GDP. Child poverty also reduced massively during this time.

In 1997 the working age benefit bill was 3.5% compared to 2.6% just before the crash and 3.2% when they left power.

The Tories managed to get it down to 2.7% in 2016, never quite hitting Labour's lowest. But while Labour had reduced the percentage of spend by increasing investment in services and helping people into work, thus increasing GDP and NDP, the Tories chose to do it by cutting benefits and services, causing growth to flatline and child poverty to increase.

The benefits bill as a percentage of GDP did not come down much post covid and was back on the increase by the time of the general election last year at 4.1%. The forecasts show a very slight increase to 4.2% in 2026/27 before the proportion drops back to 4.1% and holds steady.

In real terms, the Thatcher / Major governments increased spend on working age benefits by 157.1%, the Blair/Brown government by 11.9% (actually reducing it by 1.7% prior to the financial crash), the Tories increased it by 62.5% (by 4.5% prior to Covid).

The forecast up to 2029/30 shows an increase of 8.2% but with a corresponding increase in GDP which keeps the percentage of spend level.

When I said different to showing that they are bad for the economy, I was talking about Labour, not taxes, as I said, I don't agree with the proposed cuts to pension contributions, nor do I agree with raising the income tax threshold for basic rate tax payers. I think there are better ways of raising the money by closing tax loopholes, stopping money from flowing out of the country, and putting measures in place which make it more attractive to invest in UK businesses.

I'm just looking at some interesting data about where the tax burden lies and how it has changed over time....will post it in a minute

Well - yes, which is why I said it was badly managed! But PFI started under Major and did not finish until 2018 - so it is not solely a Labour issue.

Using the private sector to support capital investment could work really well - the public sector have the money, the private sector have the efficiency.

Where it all goes wrong is how the funding is deployed, forcing the private sector to take out loans at higher costs which then then pass down with added profit, when the contracts are too inflexible and complex to properly manage performance, the penalties for not performing are too low and the private sector decide to start suing the government and each other at every opportunity.

But a better thought out model where the government borrow the money at lower interest rates and lend to the private sector at cost, in exchange, the private sector agree to reduce prices and a profits limit and contracts are simple but strong enough to effectively manage performance, then it could work really, really well.

A good mix could also be a partially government owned construction / FM company, but which is run as a private sector entity - much like EDF in France. That way you would get the best of both worlds!

I still don't understand why the government did not use the opportunity to buy up Carillion to do that when it went bust!

Correct me if I’m wrong but I asked
‘Can you please post the published data showing tax rises are not bad for the economy and that benefits are not increasing.’
You’ve posted data showing benefits are increasing and are forecast to continue to do so and no data showing tax rises are not bad for the economy.

You hate the funding model for the NHS you mean?

I agree about European style funding models - the French model is particularly good because it separates out and ring-fences different strands of social security. I particularly like the fact that there is a separate insurance strand for social care, which you can use to protect against future care home fees.

However, you do realise that to fund that sort of model, taxes would need to go up even more right?

Our current tax burden is around 36% and we spend $5500 per head on the health service.

The French tax burden is just over 45% with a 20% of gross wage social security contribution on top of income tax (compared to our 8% NI) and employers contributions of 45% of gross salary. They spend around $6600 per head on health.

The German tax burden is 47.9%. Employees and employers both pay around 20% of gross salary each in contributions and they spend over $8000 per head on health care.

In both the German and French models, you can top up your health and social care insurance with additional private insurance, but certainly in the French model, that would be on top of the 20% contribution to the state insurance.

@BloominNoraI appreciate your numerical take but you haven’t said why Reeves needed to hold the pre budget press conference if all is going well?

I never said taxes were bad for the economy and I clarified that in my response. But just for additional clarity here is the original paragraph which prompted your question with the correction:

But...that is a different issue to saying that they Labour are bad for the economy, that services aren't improving or that they encourage more people to claim benefits - because all of those things are demonstrably evidenced through published data as not being true!

And no - I haven't given you data showing that benefits are decreasing. I've given you data that shows that they are stabilising as a proportion of GDP following massive increases under the last government and also figures which show that the percentage of people who are economically inactive is also reducing which means that fewer people will be claiming benefits.

I've also given you the historical data which shows that it is in fact Tory governments that are responsible for increasing the benefits bill not Labour governments.

Could you answer my question to you? What was it about the 14 years of the Tory government you thought was so great?

Do you acknowledge that the Tory government, which you seem to think is so great, are the ones responsible for increasing the tax burden to its highest rate since 1949?

Do you also acknowledge that the reduction in the percentage of people who are economically inactive that has happened under this Labour government is a good thing?

So you answered a different question, that’s fine. From this I can conclude that benefits are going up and are set to go up further under this Government and that increasing tax will not aid the economy? In fact will subdue growth? At least that’s what the published data suggests. Would that be a fair conclusion do you think ?

Could you answer my question to you? What was it about the 14 years of the Tory government you thought was so great?
Can you quote where I said this please.

I'd have thought my reply was clear... i will give them more time, as i did Cameron.

I assume you mean Religion? which tbh coming from you is a bit rich.

Well, thats rather a lot of cherry picking, unemployment shot up to 8% under the Tories, they did bring it down but as we can now see, that was done by moving people onto disability benefits.

Yes they cut CT to 19% & then put it right up to 25%....

They froze personal allowances, up to 2028.

National Living Wage? they just changed the name, with the NLW applying to over 21's....

I have no idea - she may be the first to hold a formal pre-budget press conference, but she is certainly not the first to brief the press on the potential contents of the budget before the statement.

Rishi Sunak was reprimanded for it by the Speaker

Alistair Darling made announcements prior to the budget through his pre-budget reports too

My assumption would be she had either:

• got wind of a leak and wanted to head it off at the pass,
• warn people about what was coming, get a feel for the response to some of the proposals,
• spread a load of doom and gloom so that if the actual budget isn't as bad, people feel like they've not been done over as much as they could have been.

Any of which are fairly common political strategies

Ok still in the zone there, how about this?

Barclays is forecasting that Reeves will be looking for £41bn in tax rises in the budget, up from their prediction of £26.5bn in September.

And the manifesto pledge being broken? Still all going well?

Unemployment was up and then it fell.

They had to raise it back to 25%. We needed to pay for the COVID expenditure.

They did a lot of good on decarbonisation, renewable energy and air quality.

Yes I meant religion. Fair enough, it’s going to be hard for us to continue this conversation without any metrics or a time frame for when the Government can be deemed responsible for their actions though. I think I’ll bow out for now, but don’t worry I’ll check back in periodically to see when it’s not the Tories or AI’s fault.

Something that's being spoken about a lot at our workplace is how Civil service and teachers pensions are contributed to at 25.5% er contributions (ish, I know it's variable) while private sector pensions are lucky to have their employer pay in more than 5% a huge money make would be to reduce the public sector contributions by 1%, still keeping them way over private sector schemes but saving over 4billion a year in costs.

I don't think 15 months is enough to pass judgement on the economy, when we have such high Nation debt, Tariffs and Ukraine.

Like i said the next 2 to 3 years is a more realistic time frame.

You asked: Can you please post the published data showing tax rises are not bad for the economy and that benefits are not increasing.

I showed you published data that shows benefits are not increasing - you just don't like the answer.

The proportion of people claiming out of work benefits went up under the Tories and is coming down under Labour (4.1% is less than 4.6%)

The cost of benefits went up under the Tories and are set to stabilise under Labour (4.1% of GDP up to 4.2% GDP for one year and then back down to a consistent 4.1% is not 'going up further').

The percentage of people on sickness benefits is reducing as evidenced by the falling numbers of people who are economically inactive (20% is less than 21.9%)

The only way you can interpret the working age benefit data as showing that benefits are going up is if you look at them in real £££ - which is a meaningless without taking into account GDP - and even then, they are not increasing at anywhere near the rate they were under the Tories (8.5% is less than 62.5%).

Or if you include pensions - which would be incredibly disingenuous.

So no, benefits are not "going up and are set to go up further under this Government"

I didn't answer your question about whether increasing taxes are good for the economy because I never said they were and it is a complicated thing because it depends on what those taxes are spent on.

As a simplified example you could look at Germany and Denmark compared to the UK - Germany has an average personal tax burden of 47.9% and a tax to GDP ratio of 38.1%, Denmark has a personal tax burden of 45% and a tax to GDP ratio of 45.8%, the UK has a personal tax burden of 34% and a tax to GDP ratio of 35%.

Both Denmark and Germany have less public sector debt, higher average wages, higher GDP per Capita and seen better GDP per capita growth than the UK.

We also have spend less on health as a percentage of spending, have fewer doctors and nurses per head of population and worse outcomes: https://www.kingsfund.org.uk/insight-and-analysis/blogs/comparing-nhs-to-health-care-systems-other-countries

Could you answer my question to you? What was it about the 14 years of the Tory government you thought was so great?
Can you quote where I said this please.

Absolutely:

BionicWomansAnkle · Yesterday 13:54
Relative to the last 14 months it was a huge success and that was with Brexit and a global pandemic that shut down the economy for months on end.

You said this in response to @strawberrybubblegum saying that they wished Rachel Reeves would use Kemi Badenoch's financial plan and @Alexandra2001 replying that the last 14 years of those politics and economics had not been a success.

So again - I will ask you what is it about the last 14 months of:

• falling NHS waiting lists,
• increased school funding,
• improved growth
• reduction in the numbers of economically inactive people

that you think is so bad that it makes 14 years of the following such a huge success?:

• NHS destruction and increased waiting lists
• increasing number of people unable to work due to sickness
• Deteriorating school infrastructure
• Deteriorating outcomes for Early Years
• Increased knife crime as a result of the defunding of youth services and reduction in community policing
• increasing public debt
• Highest tax burden since 1949

I would also appreciate it if you could answer my question to you about why you are cherry picking the unemployment data and not acknowledging it is in the wider context of stable employment figures and falling numbers of economically inactive people that the increase has happened, which means it isn't inherently a bad thing?

It wont help quickly. Basically, the unfunded schemes like TPS and Civils Service, means the money current members pay (the employer and employee contribution) goes straight to the treasury, not a pension pot. The treasury then pays out of general tax to the members of the scheme who are receiving pensions. You could symbolically reduce the employer contribution by 1% but the treasury would still be paying it as there's no actual pot.

To reform pensions you'd need to go to a defined contribution scheme, rather than benefit and make them funded schemes, like the local government pension scheme where there is an actual pot, it doesnt just go to the tressury. . But I dont think it wouldnt be a quick win.

The country will not bear that timescale.

thankyou @Fearfulsaints that makes complete sense, I knew there was no pot as such in these schemes but didn't connect that with current costings. I do think reform in that area is required though, as even the 'lower' salaries in public sector aren't often 20% worth of a pension scheme lower.

Well, thats your opinion, the reality is, that the next GE is 3.5 years away.

I do not share your doom and gloom.

It is.

I predict the 26th will foment significant disquiet amongst the ‘broadest shoulders’ and the ‘working people’ who fall outside of Labours Orwellian definition.

Not long to wait.

I hate to be pedantic but again I asked
‘Can you please post the published data showing tax rises are not bad for the economy and that benefits are not increasing.’
Would you mind just answering these questions and providing links.

Yes, I think you have my answer in the quote regarding ‘relative to the last 14 months’ Tories were a huge success. It’s slightly tongue in cheek as Brexit and the pandemic were awful, but it was over a long period. To squeeze civil unrest, custodial sentences for tweets, education tax, two black holes totalling 70 billion, 2 attempted whitewashing of the grooming gang scandals, the corruption minister resigning for corruption, the Secretary of State for housing resigning for housing shenanigans, the Secretary of education laughing about schools closing, the chancellor of the exchequer forgetting her property license, the breaking of their no tax rise manifesto commitment twice, the labelling of people who earn over £45k as non working people, the biggest and quickest drop in the polls ever recorded all into 14 months is remarkable and that’s before we get to all the goodies coming over the next few weeks. That’s what I meant.

The doom and gloom is because the next GE is 3.5 years away.

One thing became v clear after July 24, the Tories hated losing, thats the reason you and others feel gloomy.

As i pointed out earlier, the bond markets are more settled, growth has continued its slow upward path, we ve avoided a recession, unlike in Q3 2023...FTSE up - 9899, it was 8200 on july 3rd.... thats a real boost for UK listed companies, our pensions and investments too.

But i also acknowledge Labours errors too, its a pity you cannot admit the Cons got most things very wrong.