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/

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.

Other countries means test but for some reason it’s unreasonable to that here. Bar disability benefits don’t we means test everything else?

And get rid of the cliff edges, I won’t go FT as it will take me over the threshold for higher tax, why bother.

Not sure what the 'eh?' is about. I haven't said that at all. We currently pay the state pension to everyone - whether they have £1 or £1bn in the bank. That can't be right when we're in the state we are.

Working all your life (or not) shouldn't equate what you take from the state in handouts. It should be based on need. Tax & NI pay for more than just pensions - it's not a savings pot. Some people will never use the NHS in a significant way, some will never need the service of a fire engine, some might never have children and need the education system etc - we pay in so we have a functioning society & a safety net for those that need it. Not everyone needs £241.60 per week in state assistance. It shouldn't be so outrageous to suggest that.

Working all your life (or not) shouldn't equate what you take from the state in handouts. It should be based on need

I don’t understand why everything else is ok to be based on need but not pensions?

Yes, but everything that Reeves and Starmer have done have made things worse - they've done nothing to help make things better. Just lots of anti-business policies that are causing unemployment and lower growth/stagnation, at a time when we need to encourage business to grow. And of course the politics of envy and spite such as the IHT changes and VAT on private schools that are set to yield a negative result when you factor in the inevitable consequences.

Yes this.

@Badbadbunny what do you think they should have done?

Damn right. Only 4 more years.

Op their first moves when they took power were utterly ridiculous and disastrous.
The simplest thing they could have done to give us all a boost especially those of us grazing the minimum wage would have been to: raise the tax thresholds !!
That would have put money into everyone's pocket and given us the money to spend on stuff /business is crying out fro us to do.

Rachel said business was desperate for spending so what did she do ! She taxed growth not profit with the ridiculous ni stuff

Then attacked business even more with pushing the min wage up.
My own place of work is public sector and really struggling ! They told us how much they had to find for the NI raise
We got a pay rise of about 1.3 %.
The whole thing is a disaster.

Yes compared to Europe non of us are doing well at all. However compared to perhaps.a more reasonable comparator the G7 we are doing worst of all.

Now they have pushed us down into the mud, miliband wants to suppress us further with his ridiculous net zero even the unions are screaming at him to : stop.
And now we are hit with the Iran war in this weak and terrible position

I cannot stand them ,their childish spite and meanest.

What government is going to change things though? The necessary steps needed that might result in growth won’t be popular to the electorate.

I saw might because I’m not even sure we can achieve decent growth again.

• the unions can't seem to stand them either

It's all fairly simple:

Taxation discourages behaviour- for example cigarettes tax, fuel tax, alcohol tax or even speeding fines are a form of taxation.

Subsidies or Benefits are designed to encourage behaviour- for example heat pumps, or EVs .

When you increase taxation and increase benefits then don't be surprised if more people choose to either leave the country (if very rich) or retire early (if you have a generous final salary pension) or failing that as a PP mentioned reducing your hours.This in turn lowers productivity.

Also if you tax companies too high then they will either move overseas or not expand or not set up in the first place.

In short you can't grow the economy (or will shrink it) with higher taxes.

When you increase taxation and increase benefits then don't be surprised if more people choose to either leave the country (if very rich) or retire early (if you have a generous final salary pension) or failing that as a PP mentioned reducing your hours.This in turn lowers productivity.

But productivity never recovered from the 08 crash despite years of cheap money and austerity.

Housing costs are a huge problem in the UK, they are too high.

Many other European countries have higher taxes for their low & middle earners. It’s only our higher earners that are in line.

I would change the NHS model to something like the French model because again it’s not sustainable. But people will not vote for that.

People want free healthcare, state pension, etc but lower taxes. Something has to give.

I can blame her for not doing anything about it, and actually making things worse with her tax and spend on welfare policies.

Exactly this. I’m former U. S. military, and served alongside BA forces in Iraq. Most people on MN have no idea of how completely British armed forces have been hollowed out in the last few decades. People here consistently assume that the UK still has military capabilities that were cut long ago, or never had in the first place.

@MissConductUS is that all Labours fault?

Did I mention Labour?

I’m a Yank and haven’t tracked British defense spending by political party for the last 40 years, oddly enough.

No, it was the decision to spaff the Peace Dividend of 1989, which once paid for preparations against the USSR, on ever more generous social welfare subsidy. By governments of all parties.

Now our military is a toothless tiger. HMS Toothless (Dragon) limped down to the Mediterranean. We can't keep three submarines at sea for lack of submariners, who are leaving en masse since their deployments were extended from 80 days to 200. Amongst other idiocies.

@MissConductUS I misunderstood since you replied to a post that did mention labour & said “Exactly this”.

This 100%.

PIP not being means tested is absolutely madness.

Separately I honestly think anyone claiming inability to work due to mental health issues should have to have an independent assessment by a psychiatrist- not just going on the say so of their GP, who isn't trained or resourced to tell if they are exaggerating symptoms to avoid work.

PIP not being means tested is absolutely madness

AA should be too.

If Labour are going to get the blame for our ageing population, the obvious answer is mandatory euthanasia for the over 65s.

Never mind money flowing out, too much is flowing to the benefits bill which is completely unsustainable. Public services barely fit for purpose and everyone struggling. Higher tax payers leaving for climes where aspiration is celebrated, not punished with “mansion” taxes and the like.