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

Again - fully agree.

But the only way to increase the intake and reduce the debt long term is to increase GDP and the only way to do that is to invest in workers and infrastructure for which you need to either borrow more and / or tax more.

Labour 1 improved public services reduced tax for the majority of earners and increased GDP without increasing the debt ratio.

The Conservative government increased the debt ratio by 80% (72% up from 40%) before Covid.

Despite the increased debt, public services were decimated, GDP flatlined, tax increased and
99.5% of earners (anyone on under £200,000 a year) were worse off as a result.

So if the money wasn't spent on services, infrastructure or other production costs - where did it go?

Other countries increased their debt to GDP ratio, but the only G7 country that did at a higher rate than us was Italy!

We still have a lower debt to GDP ratio than all the other G7 except Germany but the gap has narrowed considerably.

You can't blame Covid or the financial crash, and you can't even fully blame Brexit because the trend was set in prior to 2016.

That only leaves bad economic management OR increasing wealth gap through the intentional diversion of wealth.

I personally suspect a combination of both, but mostly the latter.

Just to be clear, you’re not blaming the Tories or media?

I don't understand your question, re read my post please.

Don’t forget to factor in global economic reality. For Blair he benefited from a boom, de regulation and high risk FS sector. Of course the crash followed and we felt that exposure in the recession. No pandemic too or energy shock.

He also isn’t a high tax politician and has recently made comments on lowering taxes which is at odds with Starmer’s Labour.

I think Blair got some stuff right and some wrong, but I’m closer to his thinking than Labour today. Apart from digital ID that is.

An issue rn is behaviour changing taxes creating a bigger hole, I think that’s why Starmer and Reeves are against the ropes with the markets on one side and their MPs on the other.

Cutting Welfare isn't going to raise 10s of billions

Guidance and methodology: Benefit expenditure and caseload tables - GOV.UK

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.

Cutting welfare absolutely can raise billions, both from direct spend but also via taxation of economic output generated by people who would have to increase working hours or start working. For example, do you know that about 25-30% of NHS nurses work part? only the hours required to get UC? with salary increases they reduce hours to stay on UC, means total amount they get remains the same (excl UC annual increases), but they work less?

ETA: before you jump about pensions - a significant part of this number goes to public sector pensions, not your mere 12k of full state pension.

It’s too confusing for me, so I prefer to keep it simple. Are the media responsible for Labours performance? Are the Tories responsible for Labours performance? Are Labour responsible for Labours performance? Nice and simple

Global economic reality affects all of the G7 though - so why did the UK specifically perform so much worse between the financial crash and Covid?

I preferred Blair's Labour to today's Labour - what they did in their first 100 days was absolutely astonishing and set the foundations for the improvements that came over the next 11 years.

Brown was massively underrated as a chancellor and was very unfairly lambasted about the financial crisis by the public. By economists and other world leaders, he was very much seen as a having the right approach. Unfortunately, financial crisis aside, as Prime Minister he opted for electioneering politics rather than financial common sense. This LSE blog lays some of it out quite well.

I wonder if Cameron would have won the election if Brown had been a better PM or if he had listened to Alistair Darling? If Labour had stayed in power, with the calibre of financial leadership that was praised through the financial crisis, would we be in the position we are today?

Chances are the debt burden would still be high, taxes may also have been higher but would be more proportional and growth may still have slowed, but I doubt the inequality gap would have increased as much as it has and public services certainly wouldn't be in the state they are.

Brexit wouldn't have happened, immigration would likely be lower, the schools RAAC scandal would have been avoided because 'Building Schools for the Future' would have been delivered. More would have got done, because parliamentary time would have been used to run the country and not argue over Brexit.

The current Labour leadership are no where near the quality that the Blair / Brown government were. I think Angela Raynor had potential and the stamp duty thing was a complete own goal and I like Jess Phillips, but I think she is better in an agitator role.

But even with that, I would still take them over the Conservatives - the economy is in the toilet either way and everything the Tories were doing was making it worse. If people are going to be poorer, then I'd rather it be in a country where what money there is, is flowing into public services and the pockets of billionaires!

PS - some of our earlier exchanges aside, in our last few posts, it's actually quite nice to have a discussion with someone who has differing views but where we can find some common ground and discuss differences without resorting to ad hominem attacks.

If only politicians could do that, we might actually get somewhere!

@EasternStandard - some interesting financial data here in relation to government spend, investment, debt and borrowing: https://obr.uk/public-finances-databank-2025-26/

The Aggregates (as a percent of GDP tab) lays out all of the borrowing, investment, deficit over the years on a single tab.

If you want a sliding doors what if moment I’d go for David Miliband over Ed.

And another, partygate not being created by Cummings.

Those two things being different could have kept either party in imo

But one can’t go back and the public are experiencing this Labour gov with Starmer and Reeves. If they do keep putting taxes up I’d say they’ll struggle.

I would have preferred Sunak’s economic approach at last GE. I have voted for both major parties, I just saw that tax the rich stuff pre GE that even Blair didn’t do and thought we’d end up here.

btw always happy to discuss without rancour, I agree it’s better.

Yes! Definitely David over Ed. And Andy Burnham over bloody Corbyn!

I used to wonder what the conversation around the Miliband dinner table was after that debacle!

I think it is the tax the rich element where we start to move into ideology rather than common sense, centrist policy and maybe where we start to differ.

I do think we should tax the rich - the wealth gap is an abomination - but my definition of rich is not Reeves and Starmer's version.

I can't remember whether I have said it on this thread or another, but I would broadly (exact numbers would need to be modelled to see what worked best):

• Raise the tax threshold to £20,000 - at the very least for pensioners, if not everyone.
• Create a middle level of tax between 32% and 45% for those earning £50k or more,
• 45% over something like £100k and 60% over £175k
• Make the tax bands progressive to avoid cliff edges

That would reduce tax for everyone earning under £200,000 which is 99.5% of earners. I would also:

• Stop money flowing out of the country into tax havens and close tax loopholes
• Equalise dividend and income tax (for dividends over a certain amount (£5000 a year maybe), so that it captures people who are using dividends to avoid Income Tax rather than retail investors)
• Provide an incentive for investing in British business by creating a British Investment ISA with a £40k limit (rather than reducing the cash ISA limit, as has been rumoured)
• Give British businesses that pay corporation tax incentives / priority for public contracts (the only benefit of Brexit IMHO)
• Increase tax on capital gains / stamp duty where property is being bought / sold by foreign investors
• Bring utilities back into public ownership, not through traditional re-nationalisation but through government purchase of shares (like the French government and EDF), and have them run as not for profit businesses
• Introduce the a French style social security system

No i wasn't going to mention pensions, however, you did! so a good pension means pensioners don't claim welfare.... LGPS is self funding.

NHS staff work part time, yes many do, its got a large % of women, my DD is FT but has got a large number of PT in her team, main reason is stress, followed by childcare issues, evening, w/e and night working cannot be catered for by normal childcare.
Some have high earning partners, they don't need the money nor any UC.

Housing benefits? well, hopefully building more council housing will lower rents = less HB paid.
Who failed to build council housing over the last 14 years? and before you jump in, neither did Blair.
Bear in mind, someone on NMW could easily be paying 2/3rds of the take home pay in rent, if you want them working, then HB has to be paid.

I'm not saying we shouldn't cut Welfare and tighten criteria but i also remember the howls on here, by regular right wing posters whose standard reply was "Labour hate pensioners, farmers and now the disabled"

I’m not against all this tbh

My issue pre GE was a rhetoric that we hadn’t seen for a while, not with Blair even, that would lead to anti growth policies. The first budget NI policy is a prime example and I think will hinder Labour for their term.

It’s leading to higher taxes on ‘working people’ which could include police, teachers etc. They’ll find it hard to overcome that if so.

I’m not against other methods that don’t disincentivise if they can be found - not sure about the dividends one but others you listed maybe.

And if anyone can put forward a solution to the incoming wealth in an AI world v everyone else I’m very happy to listen.

Unfunded public sector pensions are actually forecast to be in surplus this year following the changes that were made to the schemes that the mean the employer contributions now come from department budgets.

Coupled with wage increases and additional staff, mostly in health following Covid and to support the aging population which also mean increased employee contributions.

From 2029-30 it is forecast that public sector pensions will be adding a surplus of £3.6 billion back into the AME pot and therefore not just self-funding for current retired public sector workers, but also subsidising the state pension.

https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/public-service-pension-payments-net/

You could argue that the employer contributions which now come from departmental budgets should be cut to the legal minimum of 3%, because it is still public money but then you would also have to cut employee contributions to the 5% legal minimum and increase salaries to compete with the private sector.

With fewer pension contributions into the AME and any departmental savings wiped out by increased salaries, it would end up costing a lot more.

For example, do you know that about 25-30% of NHS nurses work part? only the hours required to get UC? with salary increases they reduce hours to stay on UC, means total amount they get remains the same (excl UC annual increases), but they work less?

@nearlylovemyusername

You may reduce the welfare bill for the additional UC but you would either have to increase Departmental budgets to account for paying additional hours, or you would have cut the number of positions.

That would mean more people who would be unemployed or having to take up even lower paying jobs and still claiming UC. Fewer posts would also mean that you lose resilience, potentially leading to higher spend on agency and bank staff to plug the gaps.

It's swings and roundabouts!

Not at all - we'd reduce reliance on legal migration, approx 300,000 people coming here each year on work visas (and bringing another 100k or so families with them), to do jobs which British people don't want to do.

TBF 400k is a lot less than we had under Bojo and Sunak, then it was 1m per year.... the only way either could get any growth in the economy.

That 300k inc students, temporary visas and people who have the skills we do not have enough of.

My post was not about pensions. I tried to show the numbers on spent welfare in response to PP saying that cutting welfare won't save £bn. It will, most definitely, and do a lot of good for economy by bringing labour in.

I did not say it wouldn't save money, i agreed it would, so don't misquote me.

I said it wouldn't bring in what you think, its seems an easy target but the reality is it really isn't.

When Labour tried, it bought howls of protest from the 'right and from right leaning posters on here too.

However, at least on this, Reform are honest, they want to scrap MH benefits and bring back the Blue Disability 3 wheeler, so yes they would be able to save a great deal of money.

Looks like its a vote winner too, so something for the 26th.

1m was total, I'm talking specifically about work visas.
Net migration report (accessible) - GOV.UK
Work visas issued rose from 125,000 in 2021 to 467,000 2 years later. Of this 342,000 increase, 57,000 was on the main Skilled Worker (SW) route and 285,000 was on the Health and Care worker (H&CW) route.

Can you imagine British healthcare workers now start working full time, stop claiming benefits and 285k of imported labour is not needed anymore? this would be great even from housing situation.

And no, it doesn't include students, read the link I posted.
Re 57k SW visas - mostly it's IT people from Indian offshore companies like Infosys, TCS and the like

A FT HCW on NMW or 10p ph extra, with rent and say 2 children, would be claiming benefits, he she couldn't afford to live on their FT salary.

They'd also be claiming childcare, another benefit.

Care work is hard, community care means you need a car, care providers give you the bare min on mileage rates and nothing towards repairs, some even pay no or below NMW for travel time.

The Indian carers who were looking after my neighbour all left and returned to India, then came some Africans, they lasted a few months, before packing it in too.
She now has Agency and Hospital support workers, that costs the state a fortune.

I was responding to the last para of your post:

ETA: before you jump about pensions - a significant part of this number goes to public sector pensions, not your mere 12k of full state pension.

Which isn't true.

Public sector pensions are (from this year) a net contributor which means they are not a significant part of the 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.

They actually contribute to lowering that spend rather than being part of it.

You can tell that public sector pensions are not part of the £174.9 billion because the paragraph explicitly states that State Pension is £145.6 billion

£174.9 - £145.6 = £29.3

Public sector pension pay out is around £50 billion a year.

The difference between the state pension and the total spend on pensioners is Pension Credit, PIP, AA etc.

Bloominora’s links aren’t even answering the original question they responded to
ie
how much money in real terms has VAT on Indis brought in

All that’s been posted is the education budget
That’s irrelevant

So actually no intel on the ££ benefit to the country on that 20% tax introduction
including of course the offset from additional cost of kids moving to state and the added VAT claims by the schools

This is what I mean

To drop my hours to 22.5 even though I’m a single parent? | Mumsnet

Top ups - if needed, but they have to work full time. There are masses of people do the same as OP and claim

Agree PIP is too high but disagree on a blanket ban on mh issues for PIP

Many people receive PIP when their condition hardly, if at all, affects their living costs. Meanwhile some people with mh issues do in fact have higher living costs.
A blanket ban on conditions that we know affect costs is unreasonable
Whilst in the same breathe An acceptance that certain currently accepted conditions for PIP do not ( re severity ) is ignoring the point of PIP

That thread got just 2 pages, her situation is unique to her, single parent for starters, spending time with her son, is very important to her.

She also wants to go FT once he is older.

If she worked FT she would cost the state a great deal of money in childcare, even if possible, as her shifts are outside of normal CC hours.....plus she'd also be exhausted

Perhaps what the Govt could do is reduce the claw back, i think its around 65% now on UC, a ridiculously high amount, completely discourages those who can work extra.