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/

That’s a lot of strong language! Which tax changes specifically are ‘catastrophic’?

What are you on about? Lol

Is this the chap part coming out? I can see what the pp means.

I just said what I thought of Brexit, they were in power at the time, it was Cameron’s call. And I thought they spent far too much in Covid, and said so at the time.

As for your criticisms any acknowledgment that Labour’s policies are damaging businesses and jobs rn as Leon co founder is saying today. Can you do that?

But there's other costs of working too, such as childcare, commuting, etc., not just the extra tax, nic, student loan repayments, etc., and potentially also loss of benefits such as some child benefit if income over £60k etc.

Same with those on very low incomes claiming UC and other benefits. In theory, taking just tax into account, they're also going to be "better off", but when you factor in the loss of benefits, they can very easily find themselves worse off for working extra days/shifts etc.

This. Insurance isn't the panacea that people it is, particularly for people with pre-existing conditions and comorbidities. First you have the added expense, then the companies will do all they can to link an event to those and thus wriggle out of paying out...

I'll wait to see what the letter says if that's OK with you.

I totally agree with you. I think they see denial or blame as insurance. They're too superior to let these things happen to them! And if something did happen, they'd deal with it so much better than everyone else.

It’s not a letter. It’s an interview as I said. It’ll be picked up by the press.

Plus you don’t have to wait, you can admit the damage just by looking generally at what’s happening.

If not too wedded like that football team you mentioned.

The damage I'm seeing can be traced back to brexit/covid/tories.

Reeves doesn't have much room for manoeuvre due to the dire state of the economy she inherited and the global shocks that Putin and Trump are causing

Ok so you can’t admit it. Ok

You’re in a shrinking group on that.

The football team like loyalty is kicking in for you.

Labour MPs rebelled against the benefits bill and it was watered down so significantly - that and the lifting of the child benefit cap have got us into this mess.

KS is a weak leader - he and the whips office should have made absolutely sure that these (mainly) new MPs didn’t have the power to dilute this bill. If he had any backbone at all he should have done a deal with the tories to get it through and removed the whip from all of these rebels. It is terrible that we can be held to ransom by a few new Labour MPs in v marginal seats - voting against this to save their own jobs rather than considering the economy as a whole. This is simply an unsustainable situation.

The benefits system needs a wholesale change. But that ship has sailed now.

This kind of shoddy mismanagement of his own party and lack of leadership is handing the country to reform at the next election. Which could be even worse.

The problem with KS is that he doesn’t really appear to know what he stands for. He can’t lead or inspire his party members or MPs. I can’t think of a worst prime minister since Ted Heath. Although Cameron (Brexit) was petty dire.

What are labour’s policies to encourage business growth and employment?

The catastrophic tax things they did were during the election campaign when they promised not to raise NIC, income tax or VAT just as Jeremy hunt was slashing employee NIC to levels totally unaffordable and in a manner that he knew full well would hobble an incoming Labour government. She made her bed and she’s lying in it.

Labour MPs rebelled against the benefits bill and it was watered down so significantly - that and the lifting of the child benefit cap have got us into this mess.

How so? The cap was only removed two days ago, no one has seen the benefit of it yet and the figures OP was referring to were from last year?

The employers ni increases have been petty catastrophic for businesses and employment. IMO.

Says the person who can't criticise the tories.

Like I said previously, Labour should be moving much closer to Europe politically, this should help alleviate some of the issues we're seeing now. I'm definitely critical of that.

To be fair to Rachel Reeves, she did not want to lift the two-child benefit cap. But the Labour centrists are outnumbered by backbenchers who are either v left wing or scared of losing their seats to Greens/Islam candidates. (In fact a few cowards are supposedly trying to join the Greens - want to hang on to that cushty MP’s salary…)

But becoming unable to work through sickness is easily insurable. So many people cannot be bothered to do it. Not everyone is on the bones of their arse. They want to spend money on nonsense and expect the state to pick up the tab instead.

Are you not reading? I’ll say two again and add one more for you.

Top three criticisms - Cameron Brexit and walking off / Truss not dealing with OBR properly first / spending too much in Covid.

This is all in the past though. The problem now is Labour’s policies are hitting businesses rn. Those impacted are saying this clearly and you can see it with jobs figures. Only the most loyal stop looking at the economics of Labour’s policies as they currently are.

She ONLY had to do this because she’d backed herself into a corner by promising not to reverse Jeremy hunts unaffordable employee NICs cuts. She’s a fool.

All business? I wouldn't agree with that. Obviously there will be some that couldn't withstand it but ‘catastrophic for business and employment’ feels like a stretch.

There's no right answer really, if income tax was raised instead, the cost just shifts to the benefits system anyway with taxpayers subsidising low pay as UC entitlement is calculated on net income.

People don't seem to want businesses to pay more, don't want the wealthy to pay more on assets, don't want to means test pensions and don't want the benefits bill to rise to subsidise low incomes. I'm not sure what the perfect solution would be to keep everyone happy.

The cap removal was announced months ago, so it's impact is already taken into account by those who are bank-rolling the UK's deficit. I believe the interest rate the UK is being charged at the moment is higher than under Liz Truss as the investors who are lending money to the UK consider us a higher risk now, due, in part, to the decisions Rachel has made, the low growth, the increasing unemployment etc.

If it's unsustainable then yes. But we've just removed the two child benefit cap this week - costing the country billions.

Let's start with that.

@MyLuckyHelper

People don't seem to want businesses to pay more, don't want the wealthy to pay more on assets, don't want to means test pensions and don't want the benefits bill to rise to subsidise low incomes. I'm not sure what the perfect solution would be to keep everyone happy.

You can't keep everyone happy, that's Starmer's problem/weakness. He has no back bone and won't make the hard decisions needed because he doesn't want to be unpopular. Trouble is that he's pleasing no one at the moment.

MyTrivia - the current tax system is CAUSING the poverty

Money going to benefit claimants isn't money lost to the economy. Apart from housing benefit, most of it is spent. It's not disappearing offshore.

There is nothing left wing about this Labour government. They tried to strip away people’s disability benefits to a point that many, many genuine claimants would have lost all of their entitlement via a rule that dictates you must receive 4 points in one category.

They are also now in the process of removing legal enforcement for appropriate educational provision for kids with SEN. They make the changes sound good - ie schools have access to banks of professionals. But if councils can’t be held accountable for their mistakes any more then that’s going to create a whole load of different problems.

How is it that people see them as left wing? The benefit changes they’ve made are moderate and are designed to lift children out of poverty at a time when a lot of us are struggling, poor, disabled or not.