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/

I’ll take that as a no then @randomchap

Yes. They’ll also be preaching Christian values whilst raging about helping children in poverty.

It always seems so short-sighted too - an investment in children born into deprivation by keeping them in safe housing, well-fed, etc. leads to healthier children more likely to do well in school and improve their life chances overall, which is better for everyone long-term.

I hope the Telegraph & co have voiced an equal amount of outrage at the £46.8 billion tax gap reported last summer. Although their ‘Five ways to beat the HMRC’ type articles suggest otherwise…

In 2010 if you were assessed as unable to work but not very very sick you would have got about £91 per week. In 2026 you still get about £91 a week. So there’s a big tranche of sick people where the increase in benefits over 16 years is zero. This happened because the extra amount added for sickness was removed for new claimants in around 2017.
In addition the amount paid to cover rent hasn’t risen anything like rents have. Also council tax reduction varies by council now so there’s a new bill there.
This is one reason why more people are claiming PIP as it’s the only way to add to that £91.
In addition we have long Covid affecting quite a lot of people, we have the increased state pension age so people who would have been able to claim their pension which is almost double what’s paid the working age population are claiming UC and PIP. We have people waiting years for operations so they get back to work.
Just few examples.

Doing well in school is about to become even harder…. The piss- poor SEN provision available now - which already means the other children are more or less ignored while the teacher juggles everything/ everyone else with no support is about to become even more stretched - all in the name of inclusion. Which will essentially be - no one gets a cat in hells chance of doing ok.

Taking money off me has no impact on my spending. Taking £100 quid a month off me will not affect my spending, it will affect my saving. Giving someone who is in poverty an extra £100 quid a month, that money goes in to the economy.

But I’ll play along. Go ahead, incentivise @SpidersAreShitheads to work. Be aware that first she will need long term 24/7 care for her disabled teenagers. She will also need regular care for her husband and her mother. Put those in place and I’m sure she will be able to go out and get a low paid job because people will see she hasn’t worked full time for over 16 years and won’t want to hire her in a more skilled profession. And she is not an anomaly. Her situation is not vanishingly rare. There are nearly 6 million unpaid carers (73% women) in England and Wales, only about 1.4 million of whom claim the pittance that is carer’s allowance. The amount of money these people are saving the public purse in providing care for disabled and elderly people is phenomenal. You think cutting her benefit will magically make her able to work?

Jesus, with all that you are doing and having to cope with I think you should see if you are getting enough financial help from benefits and related adjustments because you really should not be working.
You are going to burn out and deserve all the help you can get.
I really wish you the best going forward.

Yep. Fiscal drag is a real thing.

My favourite example of this is the £10 bonus my daughter gets with her CDP. Introduced in 1972, its equivalent value was about £150 quid. The amount hasn’t changed in over 50 years. When introduced it could pay for a weekly shop for a family, now you’d be lucky to get a Mumsnet chicken out of it. It’s actually insulting.

Thanks for the anecdote. On a population level, taxing people, businesses etc and funnelling the money into welfare has a massive affect on the economy. You can't rinse the productive in favour of the unproductive without disincentivising being productive.

It's how taxes work. You raise them if you want to disincentivise something. In this case work but could equally be smoking, carbon, whatever.

Conversely, if you want to incentivise something, you shovel money at it. In this case, welfare.

All Labour Governments do this though. Things will change abruptly once they have bankrupted us.

Why should I bother. It's blatantly obvious. The studies back it up.

The only people who are saying it's not brexit are the people who voted for it, or pushed for it in the first place.

Like I say. Read the study.

Of course, if you have one that says brexit has been an economic success, then link to it.

Whereas 1 in 3 children live in poverty. Why is a poverty rate in children twice that in pensioners acceptable ? One could argue that pensioners have had more choice about their circumstances than children...

"The studies" 🤣

Brexit has an impact, I didn’t vote for it, and Reeves / Starmer’s policies are adding to it as a pp said.

Because the responsibility of children's poverty is their parent's. They made the decision to have children. Not someone on a low wage having to pay tax for someone else's children.

Yes, multiple studies. Had enough of experts have you?

This. 18 months of relatively conservative small scale changes under a Labour government are hardly the reason for it are they

Personally, I am far more concerned about what Trump is doing to the world economy. That is the biggest threat to us all.

It doesn’t take much to hammer SMEs and jobs, which is one side of it, then Labour MPs voting for higher benefits.

This . Labour are working very hard to make us all poor . It’s a race to the bottom .

They need to be bringing the benefit bill down - massively. Not bloody well adding to it!

Absolutely. God forbid a couple that have professional, well-paid jobs expect a very much better quality of life than those that don't work. Lets even it out so there isn't much difference - yes, that seems fair!

This!

Less than 1% of spending is on overseas aid. Tax the rich, close the tax dodging
loopholes.

People were getting poorer under the Tories & paying more tax. This didn’t all happen under labour & Reform are not going to fix it.

Do you think Labour are responsible for the state of the Royal Navy?
How long does it take to commission and build a warship?

A few months apparently 🙄