AIBU to very nervous about what Reeves is doing to the economy?

[ProudAmberTurtle]

The data for the last financial year is out and, for the first time in British history, the benefits bill (£333 billion) was higher than income tax receipts (£331 billion).

This didn't even happen during financial crises like when the banks were bailed out in 2008-09, or during Covid when the government paid private sector staff's wages.

What's worse is that the government did not predict this and the benefits bill is projected to rise significantly over the next three years to about £390 billion.

In fact, from what I can understand, income tax receipts have always been significantly higher than the benefits bill, and there's always been an understanding between the two main parties since the 1940s that that needs to be the case for an economy to function properly.

I've worked very hard for more than a quarter of a century and always plan for the future, ie paying the maximum in NI so that my partner and I will receive the full state pension. For the first time in my life, this year the amount I'm earning in savings is going up at below the rate of inflation, even though I've got the highest interest rate available, because I've hit an income tax threshold (£50k) which means 40% of everything I gain in interest goes to the Treasury. This means my savings are actually depreciating in value.

AIBU to think this is just the start? That it's inevitable that taxes will have to rise even further and the state pension will be cut?

www.telegraph.co.uk/news/2026/04/04/labour-welfare-bill-income-tax-revenue/

Ok

Brexit impacted the economy, that has impacted people's chances of finding work/well paid work, that means more people being paid benefits.

So John Vincent who was employed by the Tories in 2013? He did good work but I'm not convinced he's unbiased.

Ok businesses not to be listened to either? Labour have lost pretty much all support there.

Why so adamant on behalf of Labour? Do you see the job figures?

And on looking him up he was critical of Brexit anyway, it’s odd on mn that some get stuck on that but stall at Labour’s policies.

I'm not. I just understand that the current economic issues can be firmly traced back to brexit, Johnson, Truss etc

Do you accept that Brexit damaged the economy?

My understanding is that Brexit created a lot of uncertainty which businesses don’t like. This leads to a stalling of investment as businesses and investors wait to see what the new regulatory and trading landscape will look like. Some investment was already in the pipeline post 2016 so there wasn’t an immediate impact, but as I understand it estimates are that we have lost about 5% of what we would have had as an economy had we not left the EU, ie our economy has grown but would have grown more. We were always stronger than our EU neighbours but maybe less so now (haven’t got stats to back this up but this is my general understanding). Some sectors are affected more than others which is why yours - a strong service sector - hasn’t been damaged as much as those trying to import and export goods, which are coping with a much increased paperwork burden.

The impact of Brexit is hard to fully distinguish from other subsequent shocks like the Ukraine war and Truss’s mini budget but I do think it’s generally accepted to be a factor in our economic problems. I agree that some of Reeves’ decisions have been poor but I also think she has inherited an almost impossible situation with the legacy of the previous governments and the international situation goes from bad to worse.

I’ve posted a few times I didn’t vote for it, the reason for that was mostly economics. I disagree that’s it.

Labour’s policies add damage, to businesses and more are saying that, even those who criticised Brexit (Leon).

It is possible to not be so adamant that you can’t see the obvious impacts of Labour’s policies.

Saying you didn't vote for it isn't the same as accepting that it, and by extension, the tories damaged the economy.

I did vote Remain and then I discovered that the EU believes that men wearing their wives' knickers are literally women, and was rather pleased that we did leave those crazy guys behind!

So if there's a moral dimension to the running of welfare systems (gratitude/reward for the "right" behaviour), what makes one regime type morally superior to another? Why isn't it better to rely on collective effort than personal, or vice versa? Is the state better placed to provide than the family? Or the other way round?
There is no neutral ground, in my view, to running a welfare state. Everything is subjective, everything is shaped by opinion which can be manipulated. Otherwise we'd not be in the position where people take fright at numbers or advocate for sustained child poverty on the basis of "fairness".

I, and many businesses, still don’t want Labour to make it worse through their policies. Which is what’s happening.

Zealous.

You do understand that people's circumstances can change for reasons out of their control?

We had 14 years of Tory rule in which the benefits bill was never close to income tax receipts.

Labour come in and increase the already never-been-this-high-before benefits bill to new levels that every economist has said is unsustainable, and in less than two years the benefits bill overtakes income tax receipts.

People of MN: Nothing to do with Labour - it's Trump, Brexit, Truss and the Tories.

You just can't bring yourself to criticise the tories can you? Like a football fan worshipping their team

I'm happy to praise them when they've done good things. Thatcher's government brought in rumble strips on motorways, saving lives. Cameron brought in gay marriage, Johnson's support for Ukraine was good. Can't think of anything for Truss though

It’s rare that something happens that is so out of the blue the parent couldn’t have adequately prepared for it though. Life insurance, critical illness insurance, savings, moving back in with parents are all things that should be used before accessing the welfare state.

Personally I think the dithering about by MPs between the initial vote and Boris's landslide "just get it done" GE result which finally lead to Brexit being actioned, caused more harm than Brexit itself. It caused a few years of complete stagnation with businesses not knowing what kind of Brexit they had to deal with.

Are you happy to remove the triple lock? Or means test state pension? That would cut a huge amount of welfare spending.

I just said I didn’t vote for it because of economic reasons.

I think it’s you that can’t criticise like a football team.

Brexit wasn’t what I wanted, it wasn’t a good idea, Labour on top is making it worse.

Can you say that? Can you criticise both Brexit and Labour?

So you’re happy for one government to waste money on vanity projects instead of people, (ive heard it said that Boris Johnson wasted money like a drunken sailor) just so you can feel happy and settled that the benefits bill is low and disadvantaged children remain in poverty in a first world country? Sounds reasonable(!)

Is it rare? Relationships break down all the time. I couldn't have foreseen the end of my marriage. If I could have...I wouldn't have married him. Is there insurance against cheating spouses?

It's not rare at all. My child has global development delay. I had no idea until they missed their developmental milestones. They now attend a SEN school with many other parents like us, who didn't expect that particular throw of the dice. You cannot adequately prepare for your child's disability being such that (a) you cannot work and (b) they will be a lifelong recipient of benefits and additional services. The only way would be not to have children and I'm sure you can see the ensuring problems if everyone chose that.

Because you would only be paying higher tax on what you earn over the threshold. You'd still be better off than you are now.

It’s always ‘rare’ for people who believe it will never happen to them because they themselves are immune to sickness, disability or any other adverse condition.

Still avoiding directly criticising the tories. Lol. Go on, give it a go. Look at them with honesty unbiased eyes.

Labour shouldn't have gone to war in the gulf, they should stop the triple lock, and they aren't going far enough in getting closer to the EU.

@Wolffie17

I agree that some of Reeves’ decisions have been poor but I also think she has inherited an almost impossible situation with the legacy of the previous governments and the international situation goes from bad to worse.

She and Starmer went into the GE in full knowledge of the country's financial situation, yet they still made unsustainable pledges at the GE not to increase taxation, but did so anyway. Then she made a series of catastrophically damaging changes to tax which have all made things considerably worse, mostly on the pedestal of politics of envy rather than sensible economic decisions. She's managed to make things even worse and yes, they were bad enough anyway.