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/

It's not their money though..they didn't earn it. They are handed it. And it's paid for by people who work and earn.

Yes they "spend it". We'd have spent it as well if we could keep more of the money we earn.

If wages don’t keep up with the cost of living, more people end up needing top ups through in work benefits.

It's a frequent line here, that those on low pay need top ups.
Only 32% of the people on Universal Credit were in employment in December 2025.

Universal Credit statistics, 29 April 2013 to 8 January 2026 - GOV.UK

Simultaneously, in the last five years there was 2.6m increase in claimants with no work requirements. I'm struggling to believe that 6% of UK working age population became so disabled in the last five years that they aren't expected to work.

What proportion of people have a profoundly disabled child that prevents the child attending school and both parents taking on any form of paid work? Call me naive but I really don’t think it’s that common.

Can we agree that not incentivising work at the bottom of the pay scale is bad and needs fixed as well as not incentivising work at the top of the payscale?

Seriously? People on here seem to get Botox, have dogs,get their nails done, spend £250 on hair, go on days out to Alton towers, eat out regularly and get takeaways regularly. If these people spend on these sorts of things before getting insurance to protect their income then they really are foolish.

As I acknowledged, some people really do have no money though.

If you hit businesses hard when the economy isn’t booming then jobs dry up, companies don’t invest and growth doesn’t happen. Less jobs = more benefits being paid out.

This is something which Rached from Accounts has not yet learned. That there is a circularity to all this. She has scored massive own goals by increases in NMW and employers NI. Not to mention the removal of the 2 child benefits cap.

Both parents? That would be unusual but it isn't unusual at all for one parent to not be able to work when they have a disabled child.

What financial measures are used to ‘lure the Muslim vote’? Interested.

And the other parent works and they survive? You wouldn’t get by in Kensington say but there are plenty of areas in the UK where you can live fine off one salary.

I posted this up thread. One example given in the press was someone working in London, earning £99,999 with 2 children in childcare. As soon as they earn £100k, the tax changes, loss of childcare free hours etc means that they are actually worse off. And their salary would have to increase all the way up to £149k in order for them to break even and have the same net income as they did on £99k. This is what stops people working and going part time. It's not just the headline tax rate, it's everything else on top as well. And in some in cases, like medicine, other knock on effects also include increased waiting lists because so many medical staff have gone part time to avoid being in this situation.

I don't think Labour can fix a problem it inherited.

As for state pension. I'd probably focus on a private pension. Who's going to pay your state pension if you get there? Birth rates are low.

Their policies aren’t helping, it’s the opposite.

That's what you're really complaining about isn't it? Tbf I thought there would be more threads. I've only seen 2, including this one.

You're saying you're wanting a state pension. We need babies to be born for that.

Auto-enrolment began in 2012 under the Coalition, and expanded down to the smallest SMEs by 2018. At some point, there will be a cut off for the state pension and no option to opt out. Something like pension credit will be available for the totally indigent.

I don't see an alternative.

I worked in pensions and investments for several years in my mid-20s, but as I became freelance at 34, my pension was right up there with my mortgage. Didn't become a parent until I was 43.

It will be mainly the defined benefit pension holders that will face state pension means testing. Mainly public sector workers.

@gamerchick , yes, that's one of my cavils with this Government. The introduction of the two child cap took three years so no one could plead ignorance of the rules. Children born before the cap took effect are still exempt as are multiple births.

I'm with you 100% - I'm sorry but we need to stop being such a welfare state. Some people need help for sure and that should be there until not needed but supporting generations of jobless families with multiple kids is not welfare - its enabling. And it creates exactly the grudges you see now where hard working self sufficient people are no longer willing to support this .

I live in Yorkshire and the only way we survive is with benefit top ups. We wouldn't be able to survive on DH's salary alone.

I admire your confidence, but I don't share it. A great many small entrepreneurs, with their accountants and financial advisers, spend a lot of time and effort building their DC pension pots. Mine has been 35 years in the making. I'm happy to have my drawdowns taxed as income because it was contributed free of tax, but it was written as a family trust to cover sequential generations in retirement.

Until the shit hits the fan and we need IMF bail outs. The IMF will then impose cost savings/tax rises as part of the bail out.

I'd love to know what this government are playing at. Every decision they make seems to make the middle earners poorer and those that don't work, better off. While not going after the people at the very top. Couldn't make it up. I'm so glad I don't have children and I'm old enough not to give more of a 5hit than I would if I was 30 years younger.

I read a great theory that the government are trying to destroy this country before other European countries so that we are ahead of the queue in getting a bailout.

More and more towns and cities outside London are seeing housing costs increase massively. Usually due to them being tourist towns/cities, often made worse by having universities, so lots of housing stock is lost to permanent residents and instead used for holiday lets and student lets, so making the remaining housing stock more expensive due to lack of supply and high demand.

Exactly. It isn't just London that has high housing costs. Although given the way the capital is going, I assume most people are trying to get out.