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/

Genuine question - how did Brexit result in the welfare bill being higher than income from tax?

See also housebuilding, infrastructure, NHS, etc etc

@Ablondiebutagoody what do you think the Tories did to the above?

We are a sicker nation
An older nation
Fewer of us own our homes

This impacts the welfare bill, it really isn’t rocket science.

”Starving children” “poverty” - if children are starving in this country then that is not financial poverty but neglect.

The pp with terribly unfortunate circumstances obviously needs help - a lot of it - but I, who actually don’t know masses of people - know a fair few who are living pretty decently on benefits. Frankly you can’t blame them; they have made a rational economic decision.

This is a good way of illustrating the spend. We cannot afford the triple lock

Well it is now.
The finances of the country were fucked, now we are double screwed.

“An ageing population coupled with state pension rises is expected to push the annual bill to £171.7bn in 2029-30, up from £136.6bn in 2024-25, according to official estimates”

That debt interest figure is ridiculous.
I think it is only going to get worse.

Of course it is as we haven’t had any meaningful growth in the economy for years. To boost growth you need investment but we are just playing catch up now.

You can't blame Reeves for that!

People need to realise that to have all the emergency spending we've had over the last 6 years (particularly furlough, energy prices) we have to spend less when times are good, so we can build up a budget surplus. Otherwise the debt grows, and more and more of taxation income goes on servicing that debt. You can't have the "state spending to stimulate a slow economy" bit of Keynesianism without the "prudent spending through periods of economic growth" part as well.

We spend an unsustainable amount on pensions and no I'm not suggesting we euthanise pensioners - but when Reeves tried to address welfare spending on pensions by means testing the WFA, people lost their minds. Of course there are some desperately poor pensioners, there are also lots of incredibly wealthy ones who certainly don't need the state pension, or the WFA. For some reason, once a person reaches retirement age, the rhetoric around only taking what you need from the state and providing for yourself vanishes.

She literally lifted the two child benefit cap - which costs £3bn per year - YESTERDAY

This won't have had an impact on welfare spending yet as no ones had any of the money. The earliest people will start to receive it is May. So although it will certainly increase spending - it isn't the cause of the figures for last year - which means there was a problem already. They've also reduced welfare for people who are unfit for work medically (LCWRA/LCW), I have no idea if the two are comparable, but its not increases all round.

They want equality. If that means everyone ends up poor, that suits them (as long as they are the rich minority themselves). They can't do with some "normal" people being better off than others, even if they're trained, educated, hard working etc. It's all the race to the bottom.

But who decides who’s a poor pensioner? What level of income denotes you don’t need the state pension? I think it needs a radical overhaul though

But then there'll be no point in working? The whole system will collapse. If I could pack in work tomorrow and have barely any affect on my standard of living, I'd be an idiot to carry on working - with all the stress and additional cost of it.

Same happened in the Brown years when he carried on a budget deficit even in the "good years" and had to keep extended the fiscal cycle to fudge his own rule of balancing out the deficit and surplus over the fiscal cycle. Of course, he got away with it in the end due to the 2008 financial crash and no longer had to try to excuse away his incompetence. I think there was only 1 or 2 years of small surplus over his 13 years as Chancellor/PM, with 10/11 years of deficit, meaning he left office with national debt far higher than when he started, even without the 2008 crash taken into account.

This. What if someone has done the right thing, worked all of their life and saved a decent pension - say a pension of £30k per year. Are they expected to lose the £12k state pension while someone else hasn't worked gets to keep it? Eh?

I would worry more about what Trump will do to our economy, to be honest. 🤷‍♀️

But that's where a lot of people are already sitting today, i.e. no point in working, as, especially at lower income levels, you can be worse off by working due to the tax/nic and reduction in benefits. Likewise those at other cliff edges, i.e. staying under £100k when they could work and earn more due to losing free childcare and losing the tax free personal allowance. If we're serious about improving the economy, we need a failsafe of always being at least 50p better off (after considering everything) for every extra £1 you earn working - that way there's a genuine incentive for people at all income levels to work more and guarantee they're adequately better off.

The means testing cut off would be higher than £30k - more likely the £60k as per child benefit or £100k as per free childcare.

Agreed. This isn't something that can be pinned on the current chancellor. It's been a long time coming.

I think it needs to be at least loosely aligned with the average wage.

Everyone is entitled to the state pension at present, whether they've got no other income or have billions in the bank. That can't be right when we're at breaking point financially.

This. What if someone has done the right thing, worked all of their life and saved a decent pension - say a pension of £30k per year. Are they expected to lose the £12k state pension while someone else hasn't worked gets to keep it? Eh?

Do what they do in other countries, base it on how much NI you have paid.