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/

There is a huge correlation between how your parents lived their lives and how their children are likely to end up. Of course there will always be exceptions but on average the claim is correct.

I was brought up in an environment where everyone worked. I don’t know anyone who didn’t. Now all their children work as they were brought up with that being the only realistic option to choose.

When I read about the benefits bill and the number of people not in work it feels like another world to me.

It is an indisputable fact from an economic aspect if society could choose who should have more children it wouldn’t choose the current arrangements.

On threads like this, there is a disturbing underlying feeling of people thinking that parents on benefits should not be having children at all. No one says it outright, but it is obvious.
I was brought up to see benefits as something shameful, but also that any job was good. Leave school and get into work. Hardly anyone in my extended family have degrees. But not many are net contributors either. But they are still in jobs that need doing. If they need top ups because of the cost of living go up, that is not their fault.

"the dregs of society" - that is shocking language to use.

Read back and you will hopefully be able to understand what I'm saying.

Re insurance - life insurance requires the person insured to die or have evidenced months to live before it pays out - health insurance requires the person insured to have a critical or terminal health condition (evidenced) that renders them incapable of any work before it pays out.

There is no insurance for disabled children or children who become unable to attend school as a result of their needs. At least one parent will need to become their full time carer because there is no other provision. This is not a lifestyle choice.

Indeed. There is a statistic out here about how many parents of disabled chidlren have contemplated suicide. It was a shocking amount.

We’re not saying benefit claimants shouldn’t have kids but should fund them themselves like everyone else does.

Um, if someone is funding their own kids then they are not a benefit claimant.

Benefit claiments, such as disabled people and those on low income, are allowed to have kids.

Very few people completely fund their own children.

There will hopefully be explanation on the current economical position in the coming days/weeks.

Will the stark black and white figures of more welfare payments than income tax receipts halt/slow the benefits bill? Will the introduction of pension age rising to 67 this year, month by month, make enough of a difference?

I think I can see what Labour are trying to do, make the changes, especially to lower paid jobs, making them be at least sustainable for a basic standard of living, they are closing dividend loopholes, which few people mention and closing overseas income and non- dom status. Clawing back some NI from business to balance out the necessary UC for lower paid workers, is that such a bad idea?

Get a larger chunk of lower paid workers and tax loopholes sorted out first and then look at the welfare bill.

Big sweeping changes jitters markets and reduces economic confidence. Inflation due to international conditions and climate stress are things that all economies will be facing, there is only so much you can push onto a consumer.

When you have huge percentages of young workers priced out of the housing market, due to cost of living, interest rates and house prices, will that market start to drop and become more realistic for more people?

I don’t think the two child cap lifting is going to make as much difference to the birth rate, the Torys and Reform, who may as a coalition, be the next government are both saying they would remove it again. If you need that money, need it, to have a third child would you risk it when in 4 years time it gets removed again?

Most people know just the state pension will cover the average basics, but not much extra, if people want more they need it from family or their own investments, most people know the benefits for children do not cover a luxurious childhood. But ensures children are less likely to be hungry or without a mattress.

The increase in state pension, and a freeze on pension credits, will mean in a few years pension credits, and everything else that accompanies them, will be removed.

It’s small nudges that keep markets settled, which is a huge part of our unseen, or unfelt, economy, until they are ruffled and then everyone complains we shouldn’t have moved so fast.

I think it could be a lot worse.

Why are you assuming that people on benefits are only buying stuff from China?

Do you have some figures to back up this statement?

Temu and Shein are cheap, hence why people buy from them. But that is not limited to benefit claimants.

I don't see that at all.

When Labour came in, they were adamant that they would not be removing the two child benefit cap. Rosie Duffield resigned over it.

Then Labour tried to reduce the benefits bill but their backbenchers wouldn't allow it.

Then came the poll rating collapse and Labour MPs were openly plotting about replacing Starmer and Reeves.

They responded by giving them anything they wanted, no matter the cost. The MPs thought that lifting the two child benefit cap would at least stem the flow of their base leaving them for the Green Party.

They were wrong about that but what is far worse is that we're all now suffering for this reckless short-term survivalist approach to handling the economy.

The economy is much more than the benefits bill, are you including the full welfare meaning pension bill, or just benefits?

However and for whatever reason the decisions a current chancellor takes, it should be nudges, not jumping around here and there.

What do people want? Hungry children? The disabled begging on the streets? Only well-to-do families having children?

Everyone wants their pie complete and they don’t care about anyone else’s pie. Managing the needs and finances for approx 70million people with global influences can’t be easy.

If people were honest what they want is for their own personal economic position to be reflected in their outward status. Everyone is as selfish and vain as everyone else.

There are winners and losers in every system. People vote, largely economically, for the party they think will make them more of a winner.

Vote Reform if you think they will take enough benefits from the people you think undeserving. That is why we have choice.

Personally I think this is the turning point nudge. There cannot be, politically, any further rises in the welfare bill. I would expect going forward, benefit bands frozen, lower than inflation rises, a tightening of criteria for claimants. As I can see the political will to do that. Especially with the squeeze on businesses and wage stagnation.

Short term pain for a longer term nudge back to a growth economy where working actually pays and benefits slip towards a more basic standard of living, to cover the essentials.

The watering down of the benefits bill was bad enough.
when the child benefit cap lifting kicks in - it’s going to be even worse. Great.

and any small amount of savings you may have goes incredibly quick when something unexpected happens. I was also let go from my job due to all the time off I needed due to my disabled child so sometimes it is also one thing after another too.

Lifting the two child benefit cap was the morally correct thing to do. From a government that seemingly left any principle at the ballot box, it was an encouraging move.

IIRC at least 60% of British public disagree with you

Then those people need to step up and replace the generation we're missing.

Or we can take another countries way of dealing with the falling birth rate, ban abortion and take away contraceptive choices.

Well if you remember that correctly, then 60% of the British public is wrong. You can either advocate for child poverty or you can be a decent person. Pick one. You can't have both.

If that is true then it’s because many people have seen their own standards of living drop, have become bitter and are now looking for people to blame.

Or don't have kids you can't afford. 2 is Plenty. They still got their benefits, just a bit less.

Nope because that's not part of the straight binary choice between being in favour of children being cold, hungry and having their life chances destroyed or being a normal, compassionate human being.

I hardly need to point out the flaws in what you say, the fact that circumstances can change or that children don't deserve to suffer for what some deem the wrong choices of their parents. Those things have been explained so often that, at this point, those who ignore them are just being wilfully obtuse. It really is a straight choice between being an arsehole or being a decent person. Like I say. Make your decision.

Let's all just pack in our jobs and go on benefits. Very tempting quite frankly. It doesn't stop when your child reaches 18 either. They are not entitled to a full maintenance loan. Mine live at home and attend local universities due to being apparently 'high earners'. While lower earning parents get full maintenance loan for their kids to study whatever they like. Could be a load of unemployable bullshit at the end but hey, better this than helping all adult kids. It never fucking stops. I'm encouraging my kids to emigrate to not have to deal with this being sucked dry.