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 often wonder if the Daily Mail pays someone to start this type of thread on the day they have a new splash about Rachel Reeves and the economy. It happens every single time.

Why wouldn’t mners talk about the economy and jobs?

It’s pretty key.

It's the regularity though.

The article and immediately the thread driving home the DM take. Every single time.

We don’t even have enough suitable housing for the increase in older people.

How privileged a life do you have to live to think that a declining economy, the lack of jobs and the poverty associated with it, is something that people are only bothered about if they're whipped up about it into a frenzy by a newspaper?

There’s always been threads on the gov in power on mn. Which happens to be Labour atm

And as the op says jobs and the economy impact everyone.

There definitely seemed to be fewer threads a few years ago. When I would moan about fiscal drag when the Tories froze bands 5 years ago or cliff edges it never got much traction. Perhaps more only notice it now.

And scrapping the triple lock has never been popular.

He just comes on here to mansplain and make snide one liners so that we women understand how wrong we are.

Do those countries have such a distorted housing market though? And so much wealth tied up in pensions & housing?

Yes, many other OECDs, if not all of them, experienced significant growth of house prices.

It realistically the only place to tap for tax
This triggers behaviors - every single over 50-55 I know who has some degree of wealth stop working or reduces the hours drastically. People can't pass it on to their children so they prefer to spend it all now / work less. It's hugely damaging. We need to stop thinking about more taxation. We need to push people into work, reduce spending and promote growth.

Has anyone proposed this?
Yes, both Tory and Reform

Nail on the head. Utter stupidity to deliberately crash the economy with the repeated and prolonged lock downs. Not to mention the failures/mistakes of the grants/supports which left 3 million people excluded, mostly for no fault of their own, just down to stupid mistakes in the eligibility criteria, which caused huge numbers of small businesses to close permanently.

Holding thresholds and cliff edges temporarily is never a problem, but when they're held for several years it IS a problem. Fiscal drag for a year or two doesn't affect people, but fiscal drag for a decade certainly does.

Yes, many other OECDs, if not all of them, experienced significant growth of house prices

I asked if they were as distorted? The below suggests not quite.

https://www.resolutionfoundation.org/publications/housing-outlook-q1-2024/

This triggers behaviors - every single over 50-55 I know who has some degree of wealth stop working or reduces the hours drastically. People can't pass it on to their children so they prefer to spend it all now / work less. It's hugely damaging. We need to stop thinking about more taxation. We need to push people into work, reduce spending and promote growth

But inequality and high housing costs impact productivity too. I’m under 50 and don’t work full time because it will take me over the threshold. I personally don’t think increasing inheritance allowances will lead to a more productive society. Young people with good jobs/salaries who can’t afford to get on the ladder or find it’s taking up too much of their income will look elsewhere. It’s damaging that’s wages have stagnated for so many years and inheritance can be more important than your actual job.

Yes, both Tory and Reform

Weird that the Tories dragged more families into paying it whilst in power.

https://www.telegraph.co.uk/money/tax/inheritance/tories-promised-cut-inheritance-tax-did-very-opposite/

It’s almost like you can’t believe a thing anyone says until they are actually in power!

So why did the Tories extend it to 2028?

That happened with the additional tax rate imposed by Labour in their last year in power and reversed by the Tories in their first (2010-2011). The tax revenue from the lower additional rate was higher than the year before when the additional rate was higher.

Labour repeatedly ignore the behavioural aspects of their tax/benefits policies - they didn't take it into account between 1997 and 2010 and aren't taking it into account now.

It is never a child’s responsibility though, is it? We have a social responsibility to help the most vulnerable - and children in deprivation are incredibly vulnerable. Intervention in childhood also leads to better outcomes in health, education, life chances, so it benefits us all long-term too.

What’s the alternative? Just let children unfortunate enough to be born into poverty be punished and stigmatised for this?

And can we also stop pretending that all children in poverty have feckless / irresponsible parents; there are many parents facing incredibly difficult circumstances and poverty who are working hard and trying their best.

But inequality and high housing costs impact productivity too. I’m under 50 and don’t work full time because it will take me over the threshold. I personally don’t think increasing inheritance allowances will lead to a more productive society. Young people with good jobs/salaries who can’t afford to get on the ladder or find it’s taking up too much of their income will look elsewhere. It’s damaging that’s wages have stagnated for so many years and inheritance can be more important than your actual job.

You're just proving my point. You don't want to work FT because of taxes. I presume you're in favor of IHT because it doesn't affect you. But it does affect other people who make their decisions based on tax policy. And they emigrate or reduce their contribution as well. I retired way much earlier than I originally planned precisely because Rachel put pensions into IHT estate. So we both contribute less to economy than we could because of taxes. Those who are at a lower pay levels don't want to work because they can get the same money from UC and PIP so everyone's having anxiety and depression.
The only way out of it is to reduce spending and reduce taxes. Both will increase economic activity, generate growth and increase tax receipts.

they simultaneously reduced NI so the total tax reduced. Labour actually broke manifesto by increasing taxes on dividends and interest.

We are still working, if only PT, at 70! Not because we have to, but if DH didn't, the small company he formed 34 years ago which is quite significant in the maintenance of RN and merchant vessels, would have closed with the loss of jobs that support several families in addition to our own. We hope that we've worked out a transfer to key staff that will save it, but fingers crossed.

It's the tax on the DC pension we've built up over the last 30 years that irks me. Osborne's pension freedoms and the rules made in 2014 that we've followed since have been scrambled, and heaven alone knows how the DC is going to navigate the tax due on an illiquid asset. We'll do what we can to spend the cash though, which should be music to the Chancellor's ears!

It doesn’t help everyone is claiming DLA for not a lot really. One friend decided her DS had autism after he started school, no diagnosis or any financial implications but within a few weeks of coming to this conclusion she is claiming DLA! It’s so wrong

My MIL who worked five years her whole life gets around £450 per month in non means tested AA despite having over £1m assets. She doesn’t need it and doesn’t spend it.

I see this all the time in my job, it just sits in their accounts building up as they already have so much money. Most of them aren't even paying for any care, many just use it to pay for their huge landscaped gardens to be kept immaculate. And don't get me started on how easily it's awarded, no assessment, nothing.

Perhaps for those who've been in receipt of AA for years. I was turned down last year.

Really? This is what you’re nervous about right now? Ffs!

A diagnosis isn't required for DLA because it is based on care needs but medical evidence is required and must back up what is said on the forms.

Also, just because someone puts a claim in, it doesn't mean they will automatically get it.