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/

Defence spending was 2.5% of GDP in 2010, fell to a low of 2% in 2015 back up to 2.3% in 2024 and is estimated to be at 2.4 % in 2026.

Building the navy back up etc is a problem under Labour because global instability suggest increased defence spending is advisable. It is Labour's problem because Labour are the current Government, just as it would be the Conservatives problem if they were in power.

Does nobody replace them?

Gosh. I saw the OP and thought I'd contribute but the discussion seems to have ranged far and wide....

Maybe someone's already made this point, but of course we should worry about the state of the economy and government finances. But.

When it's couched in terms of Reeves doing this, Starmer not doing that (or previously Boris/Rishi/Truss being the problem) we're in danger of boiling a complex set of problems and choices down to our view of the (very odd) people in charge and lose sight of the actual issues.

I’m a farmer with two working parents well into their 70’s and 80’s! It was for a part time job with very little physical work - that was clearly not the reason he wasn’t working!

This was one example of many I can quote. I’ve been doing this 20 years and there has been the odd chances but there are so many now it makes me really worry for society.

We work incredibly hard. Long hours, constant work on the weekend as well. DH needs to travel a lot from work and be away from home.

We see how much is taken from us and we've had enough.

In very practical terms regarding defence spending over the last 20 years, it means that the RN (our major customer until recently) has used contractors like us to keep the (very well designed and specced) Type 23 Frigates going long past the date they were planned for decommissioning 15 or 20 YEARS past their sell by date to keep them operational. DH's SME has repaired, maintained and remanufactured parts for naval vessels since 1992.

We also deal with power generation companies, waste companies, railways, factories and all sorts of industrial heating and cooling plant used in general industry. Oh and cruise ships and ferries. And breweries. Our growing market is agricultural biogas which feed unwanted root vegetables into systems to generate electricity. We have recycled almost everything since we started. A modest agri-generating operation earns £1600 per MW hour, so they are happy to pay for the maintenance that keeps the spondulicks rolling, now they have worked out that maintenance is not money wasted.

The ships that have been built recently have been built to a lesser specification, using lesser materials for lower prices, but in a salt water environment, they don't last as well, so need replacement much quicker. The skills do still just exist, but most of our people are 55 or older; we have just one engineer in his 30s, and he's good at today's products but still depends on DH who is 70 to answer the odd question.

But ours is a hands-on engineering company. Until very recently, when the chap died, we used a soft solder engineer who was nearly 80, an artist who learned his trade in the late 1950s. He could braze almost any two metals into a solid union, but no technical body has thought that skill worth teaching or learning for 40 years, and it may be better to do three-D ceramic/printed parts in future.

DH is 70 now and doesn't work full time. But I totally understand why @Gdnddn would want to move elsewhere. We have built a business, and made reasonable money, not riches. Neither of us wants to see it spewed into general taxation and wasted. Which is the direction this 'Labour' party wants to take us.

I don’t believe stories like this - the DWP is very strict. If you are not considered disabled, you have a work coach and you have to provide evidence to them that you are applying for jobs every week. If you don’t, you are sanctioned. I’ve seen threads on here, where people are panicking because they were sanctioned because they made an error with their obligations. People are warned not to go on holiday, too because they are expected to be applying for jobs and going to interviews.

If you quit a job to go on benefits ‘instead’ you aren’t allowed to claim. It’s as simple as that.

If your story is true about the man not going back to his job, ever, then he will have circumstances that exempt him. Eg, receiving carers allowance or PIP.

And as for loads of employers interviewing people and wanting to take them on, it’s not my understanding that loads of jobs are available atm. I hear of companies (especially small companies) who need people but cannot afford to pay them.

We could afford to pay people with the right skills, but we can't afford to train unknown quantities. This is a big barrier to taking on an apprentice. Because we live in a tradie universe, we hear all the stories about 'never off his phone' 'won't change his plans'. Sorry folk, that really is the reality of small enterprise. The people you build around are the ones who turn up on a Saturday when it matters.

A working couple with three children would need to earn approximately £71,000 annually before tax to match the income of a similar non-working couple receiving full Universal Credit, including housing support and child elements.

Now a joint salary of £71k is a lot in many parts of the UK, so
the logical choice would be to not work.

And this is why the current taxation and benefits system actively discourages going to work.

Source: https://www.centreforsocialjustice.org.uk/newsroom/post-budget-research

Part of my job role is assisting people to find work. I'm convinced the DWP has a deal with Indeed because people are told by their work coaches to apply for three jobs on Indeed every day or two. The problem is the applicants almost never hear back. It feels like an exercise in data gathering. I work with people desperate to find employment and people whose lives are made a misery by the DWP and in my experience there is not much available. Applicants just carry on being scared of getting sanctioned, using food banks and handing over their personal details in return for nothing.

In our corner of the SW, a two earner couple is successful if they earn over £80k. My general builder, an allrounder star, who can do most things has reluctantly had to register for VAT. It has restricted the work he is willing to consider. Your very small job, that might save you a fortune done promptly, are hard to have fixed.

I find it interesting that @MyTrivia can write that the DWP is 'very strict' with a straight face. Probably because they are tied to their desks and computers doing x,000 key strokes per hour.

Nope. An average couple with three children would not be able to sit on UC. And local housing allowance doesn't meet typical rents anywhere in the country so they'd not be getting their rent paid.

Figures like that are rage bait but they're meaningless.

They expect a lot from people on their caseload. I have direct experience of that through my work.

So all those stories of people weighting their keyboards to demonstrate productivity are apocryphal?

Sorry, I know there are tireless people working hard, but for almost every one, there's another doing half of SFA. I am old, and possibly cynical.

They didn’t cut the debt which is what they were supposed to be cutting public services to ribbons to achieve.

And actually, why are we faffing around discussing public sector lack of productivity? Is it because you'd not have a job for very long if you tried the same stunt in the private sector?

The big difference between public sector work and private sector work is that you are measured on your value, which might be your ability to save money, or on your ability to earn it.

You get good and bad people in every job but I tend to see a lot of the same "regulars" at work and they're expected to do a lot in exchange for their UC. They're in every day to use the computers and get advice. It's a full time job although to be honest a lot have no chance of ever being employed because of various issues - age, mental health and so on. It would be better if options were more varied so they weren't constantly chasing paid employment they'll never get. It's setting people up to fail yet they'd be fine if they could do something like voluntary work.

That was discredited months ago.

I am sure you're right. It's not an environment that I know very much about. But it is frustrating that we have apparently so many people who should be useful productive tax payers being ground down and feeling worthless.

Sorry, please revise that comment to 'useful citizens' rather than 'taxpayers'. It is entirely possible to be a valuable citizen without paying tax.

I feel the same. Voluntary work could even be used as a pathway into work but nope. Three jobs on Indeed, day in and day out. It's such a waste of potential.

I can see this might be the case but it goes back to the op’s thread title still.

Labour’s policies are making it harder for job seekers because SMEs are more reluctant to hire.

Actually maybe not just SMEs