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/

Taxes are way too high here. We so want to leave. Apparently we're supposed to be happy at paying 45% tax.

Most of the current cohort were in the workplace at 14, 15 and 16 - only the lucky few (mostly MC) stayed on into higher ed.

Its entirely possible to have worked your arse off for 40-50 years and still not have a liveable pension after a lifetime in the world predating minimum wages and job protections and entitlement to join pension schemes. Especially if throughout that time you paid your NI stamp to earn a pension because that was what the government told you to do.

If you want to remove universal state pensions it needs to be a long term plan - 20-30 years at least and then some seed money for the oldest cohort. Australia has done something along these lines but requires a much higher percentage of income into the pension fund than auto enrolment and of course women usually do less well. You won’t get any party in the UK to make long term policy because our voting base always votes short term.

The reality is most pensioners are not wealthy (less than 10% pay the higher rate of tax), a third live in fuel poverty and most private pensions just add a few quid a week to the basic pension. That small percentage who retired with public sector professional grade pensions is exactly that - small (although apparently all their children seem to be whinging on MN).
The identitarian approach which insists that an entire category of human (pensioners) are all rich bastards is exactly the same nonsense as all the rest of identity based policy. Its economic class which drives need. As it is means testing the state pension before a long run up will save a lot less than lobby groups pretend unless you want to push pensioners back into absolute poverty (which was the reason for the triple lock - to reduce the costs of old people in poverty).

45% on incomes exceeding £125,140. I don't see what the problem is.

I'd argue that universality is much more cost effective, with a lower chance of exclusion error and ultimately, with the advent of AI, something that governments are going to have to seriously consider.

Google is your friend

https://www.euractiv.com/news/gender-changes-must-be-recognised-across-borders-eu-top-court-rules/

Google certainly is your friend in that it enables you to find "evidence" to back up any point of view.

I'm confused as to your argument. It seems to be that the recognition of transgender rights renders the EU an undesirable bloc. Which, if that's how you feel is... well, how you feel. But it's not a sustainable viewpoint. What if someone else felt that black and minority ethnic rights were beyond the pale? The rights of gay people? The rights of children? Nobody could sensibly argue that personal prejudice is a basis on which to join or leave a trading bloc.

The argument that universality is more cost effective comes up a lot but I think it’s a bit less clear cut now than it used to be. With modern digital systems means testing is far more efficient and less administratively burdensome than in the past.

If universality is always the better option, do you apply that to all benefits? It seems inconsistent to treat pensions differently without consider applying it more widely.

Given that pensioners now make up a much larger share of the population and spending on pensions accounts for between 50 and 60% of overall welfare spending, it feels reasonable to at least think about whether some level of means testing would improve sustainability without penalising those who do need the help.

Then leave. You've emigrated once. Depending on where you're from you'll probably have language skills that many don't have. And as someone who earns well I'm assuming you've got skills that are in need.

Well don’t be tempted to go to any of the main European countries because you’ll be paying more. Dubai is presumably also out of the question now. Interesting that you want to leave now, having taken full advantage of the taxpayer funded education system.

You’ll get posts saying leave, the issue is other countries realise tax attractiveness helps them thrive so do policies for that. They gain from it and our state dependency cycle gets worse.

People do indeed have very short memories.

They forget the first thing the Labour government did in 97/98 was hand more control over to the Bank of England so interest rates fell and house prices rose at a ridiculous level. My first flat doubled in price from purchasing it in 2001 to selling in 2004. Then they brought in tuition fees and wanted 50% of young people to have a degree, which has led to very basic jobs now being graduate only and contributed towards the wage stagnation for about 20 years now. And who can forget uncontrolled immigration? This led to people rather naively demanding Brexit as a knee jerk reaction to a population boom and the rather unsurprising dilution of public services. Then of course the slight matter of nearly bankrupting the country so the following Tory government had to introduce austerity measures and there was no money for anything in the public sector including the military, but every child born in the bulk of the labour years was given £250 to start a trust fund.

Oh yes, very short memories indeed! 🙄

I’d be interested to see the stats behind the claim that most of the current cohort were working from 14–16, that feels quite broad.

Many women towards the older end of current pension age didn’t have continuous paid employment at all. My own grandmother is in her 80s and bar a couple of informal cleaning jobs, she hasn't worked outside the home at all. She now has significant assets from the sale of her right to buy council home and receives both the state pension and attendance allowance. She certainly doesn't need either to live comfortably. Obviously that’s anecdotal but it’s not an unusual situation for that cohort particularly for homeowners.

I completely agree that there are people who’ve worked for decades and still don’t have a liveable retirement income and they absolutely should be protected. But that’s kind of the point...need isn’t universal across pensioners.

Perhaps in the past we could afford to pay all pensioners regardless - today that's clearly not the case. I can just never get my head around someone being perfectly happy to pay people that don't need the money but demonise others.

And who can forget uncontrolled immigration?

Indeed. Who can forget the Boriswave?

Then of course the slight matter of nearly bankrupting the country so the following Tory government had to introduce austerity measures and there was no money for anything in the public sector

You’re blaming the government in 2008 for a global economic crisis? Of course austerity didn’t work - just as virtually every economist warned it wouldn’t - and debt rose throughout the (ideological) austerity years. The mystery is where all the money allegedly saved by slashing and burning public services went. What happened to it?

And where are these hours coming from? Not a UC claimant but my children are now 16 and 18 and I've been trying to go from 3 days to full time for the past three years. I've managed to get to four days, and then up to 34 hours temporarily and now back to four days again. Specialist graduate level role in the public sector so my four days pay the same as a full time role on MW but I'm desperate to work full time again. There's just no full time jobs, jobs that aren't a fixed term contract or even just another 7.5 hours available in my current role to take me to full time. It's ridiculous!

Our taxes more than covered it.

Indeed. Who can forget the Boriswave?

As I understand it, at least people were keeping count of the Boris Wave, it was the Blair Wave where we really lost control and nobody could answer how many people had entered the country!

School leaving age was 16 for boomers, which was when the vast majority finished their education. Remember only around 5% went on to higher education. Someone claiming their state pension this year could easily have worked for 51 years.

Did they?

I know it was, so the idea that most were working at 14 is outside of what was the norm?

I haven't mentioned higher education, or the fact that some could have worked for 51 years.

My argument was (and is) if you've worked for 51 years, or not at all, and need help in retirement - fine. If you've worked for 51 years, or not at all, and don't need help from the state to live - we can no longer afford to give it just as a reward for making it to retirement age. Or we carry on giving it to all and everyone realises that's where most welfare spending goes and accepts it.

DH and I as a family are looking at shifting. We are encouraging DC to shift as well.

Rate (£100,000–£125,140): The personal allowance is reduced by £1 for every £2 earned over £100,000, creating an effective 40% tax rate + 20% tax from lost allowance, plus 2% NI and 9% student loan, totaling 71% for Plan 2/3 borrowers (40% + 20% + 2% + 9%).

(Over £125,140): 45% tax + 2% NI + 9% student loan = 56%.

Rate(£50,270–£100,000):Higher-rate taxpayers (40% income tax) who have student loans (9%) and pay NI (2%) face a marginal rate of 51%.

At these rates I can fully understand why some people choose to either reduce their hours (why would anyone work when they receive only £5 for every £10 they earn let alone £2.90!) or retire early or if wealthy enough leave the country.

Taxation discourages behaviour (cigarettes, alcohol etc) so don't be surprised when you have high levels of income tax that people choose to work less. It's not difficult to understand.

Nobody demanded Brexit. EU membership was a non contentious issue for the majority until several factors (Russian desire for destabilisation of Europe, Cameron's wish to be seen as the master politician who put the schism in the Tory party to rest) combined.

Is that the same as your understanding of the economy? Figure 2 on this link might interest you.

https://migrationobservatory.ox.ac.uk/resources/briefings/long-term-international-migration-flows-to-and-from-the-uk/

An interesting question on why Government debt rose when Government spending was cut:

1. Austerity reduced the deficit, but the UK was still borrowing every year, meaning debt still went up, albeit at a slower pace.
2. Slow economic growth after the financial crisis = lower tax revenues.
3. Interest payments on existing debt
4. Population pressures - largely from immigration
5. Policy choices (pace of austerity) - Faster cuts might have reduced debt growth sooner but risked deeper recession.
6. Brexit- uncertainty around Brexit slowed investment and growth.

Except that public services in the UK are not paying as you go. Nobody is independent here. We all rely on public services and resources that are collectively funded. You can go on as much as you like about your self perceived position as entirely autonomous but you're not. If you should be run over by a bus tomorrow, medical staff wouldn't stop working to help you when your personal contribution ran out.

There are very few societies that operate in your preferred way and frankly anyone with a grain of sanity wouldn't want to live in one of them.