To ask where has all the money gone/where does it go

[Blankscreen]

DH and I are late forties.

It feels like the country is crumbling around us and there is just no money for anything.

I've just seen something showing the tax thresholds that have been frozen for decades and this got me thinking where does all the tax go.

Why does the country feel so poor these days? Is it a slow.decline due to Brexit or it is world wide events wars etc that are biting.

The ridiculous summer savings scheme is hardly going to help but what can the govt actually do to get the wheels of the economy turning again.

There must some money but where has it all gone?

This isn't political just a genuine puzzlement that we are paying more tax than ever but the country and lots of people in it are skint.

Corruption, greed, inefficiency. I am nearly 70. Most things worked most of the time in the past.
Brexit ruined everything. A sad little rock in the North Sea.

Money is being spent supporting wars, that is costing a lot of money, no doubt.

The wealthy are hoarding it and instead of the government sorting it out, they just jump on the bandwagon and get greedy and take lots of money for themselves too.

On the other hand, tax the hardcore wealthy too much and they will just leave and take their businesses with them, causing the country and its people to be even worse off…..it’s a balance I guess but shouldn’t have been allowed to happen in the first place.

It was all that “trickle down” bullshit that’s ruined the country, as if it’s going to trickle down instead of them keeping it for themselves.

The biggest thing that fucks me off is working tax credit that is now lumped in with universal credit…that boils my piss and has robbed the working citizens of this country!

The government publishes a breakdown of spend - welfare, both including and not including pensions, is the largest chunk.

It’s a mix of things, but Brexit has absolutely made an already difficult situation worse.

The UK voted to put barriers between itself and its biggest trading partner. That’s resulted in more paperwork, more delays, higher costs for businesses, staff shortages in some sectors, less investment & slower growth.

The OBR has repeatedly said Brexit has reduced long term productivity & trade compared to where we’d otherwise be.

The problem with lower growth is that it affects almost everything else. Tax income rises more slowly, wages stagnate, public services get squeezed, councils go under, infrastructure gets delayed & people feel poorer even while taxes rise.

Then on top of that you’ve got Covid costing hundreds of billions, energy price shocks after Russia invaded Ukraine, years of underinvestment after austerity, an ageing population needing more NHS and pension spending & higher interest payments on government debt…

So we’ve ended up with a country where more money is being spent just standing still.

So yes, some of it is global to an extent (lots of countries were hit by Covid and inflation) but Brexit is one thing uniquely self inflicted by the UK. Other European countries have faced the same global shocks without simultaneously making trade harder for themselves.

Having spent two weeks in India and seeing the grit, hard work, the expansion (in a very corrupt country) we should really be in another place in the UK and we are not, it’s things like, wages have barely grown since 2008 but everything has gone expensive.

welfare, debt (interest rates), NHS, Infrastructure, pensions (huge burden now),

general bad governance eg HS2

Covid and the Ukraine war massively increased borrowing and energy costs

Anyway there is so much it’s all ‘struck’ in a relatively short period of time. Also we’ve stepped away from manufacturing - more service led. That’s why London is so much richer.

So firstly the Ukraine war and the Iran war caused a jump in energy prices - gas and electricity and petrol.
pretty much every business uses gas or electricity or petrol so they needed to put their prices up to keep being viable (although some closed).

it’s similar in a way to the 1970s oil price shock - if you google 1970s oil crisis you’ll find that also caused a lot of prices to go up and problems with the economy.

Brexit on its own has caused a slight drop in growth. We’re still growing at rates comparable with the other European economies.

also, during Covid the U.K. government paid for people to get their salaries and not go to work, other countries such as Australia or America did not have the lockdown financial support. The government paid that money out but it needed to borrow it.

the total cost of Covid support was about 169 billion (see here for example)
https://www.instituteforgovernment.org.uk/explainer/coronavirus-economic-support-individuals#:~:text=The%20latest%20figures%20from%20the,spent%20on%20business%20support%20schemes.

the government borrowed that money.

that means it needs to be paid back and that’s why the government at the moment is cutting spending - civil service jobs are going, you are probably noticing fewer road repairs (more potholes) and nhs hospitals are cutting staff.

The tax money is being wasted by people who have the attitude it's not my money and I need to keep my job so I will have lots of meetings and working parties.

We're in a situation where the civil service (and i mean that in the broadest sense, ie people who work for the government), especially at local council level and in the NHS are over staffed in management roles and not enough on thd front line. Despite austerity, nothing has changed that.

The civil service wastes huge amounts . A prime example Southmead hospital in Bristol has an atrium the size of 2 football pitches which needs cleaning, maintenance etc but has nothing to do with patent care. There's also a 1/4 million pound clock!

There are huge tracts of the country left with multi generation unemployment. The benefits system has expanded because we pay benefits to people with jobs...I had a guy 25 years ago in his 40s turn down a pay rise because it effected his benefits

There is a need to radically overhaul the tax system and start from scratch.

So that's where the money had gone

A huge amount is spent on servicing the interest on the national debt. The government can't afford to pay the interest, so I borrowing more to pay, with no hope currently of even touching the capital.

That clock is so stupid!! Didnt realise it was clock for ages!!

Well I'm no economist but I'm going to take a few wild guesses.

If we want stuff to be cheap (food, toys, technology, building materials, etc), we have 2 options:

1. grow or make it within our own country whilst expecting the people involved in doing that work to be content with the sort of shitty standard of living that would keep prices down and make us globally competitive;

2. get it from other countries on the basis that we expect the people from there to accept having a shitty standard of living.

Wildcard: Some countries try to bypass the issue by creating a group of second class citizens living like modern slaves who come to work but get trapped in a shitty standard of living (the Dubai Model / Atlantic Slave Trade Model / slavery throughout human history model).

All colonial powers used to operate based on a combination of all 3 of these options. As our own labour movement won more rights for workers, the expansion of education and increases in wages, option 1 became increasingly unsustainable in the western world. We exploited people in other places to make up for it becoming more difficult to exploit our own. Standards of living improved but prices rose too.

We have more recently tended to go for option 2. The wildcard option has operated at times (not slavery in name of course) but with those workers who came here from other places either getting fed up and realising they can get a better deal elsewhere, or staying long enough to join the 'first class citizen' ranks.

Global circumstances - demands for increased standards of living across the world; our decreasing levels of both hard and soft power - mean that we struggle to survive on option 2. We have outsourced our food and materials and are now therefore at the mercy of other states over whom we have no control.

Add into the mix also that as a nation we are short on the skills we need (like how to make stuff or grow stuff or fix stuff), which further pushes prices up. We are also short on the young. So we live longer and it all costs more and more and there is no one to pay for it. Many of us have come to expect things that human beings have simply not been able to expect in almost any place or time in human history (like a long retirement, exotic holidays even if you don't have much money, and access to a wide variety of cheap food and clothes to fulfil our every whim), and are understandably horrified by these things becoming less available, but I don't think our collective lifestyle is sustainable.

PS when people talk about how our services are inefficient and we 'waste' money on bloated NHS management jobs etc, I'm not saying they are necessarily wrong. I will say however that it is a drop in the ocean compared to the big picture of what is wrong - the trajectory that means our standards of living are probably going to go downhill across Europe for quite some time. Cutting government waste is effectively tinkering around the edges.

Disclaimer: I am a grumpy socialist and a pessimist, so I hope other posters will give you answers with more hope in them!

@NotAnotherScarf so no sense of shared values, decency, be responsible for self, doing without and so on?

I do not like this creep towards pensions being classed as ‘welfare.’ Pension credit yes, not pensions, which for generations has been understood as the result of NI contributions over decades of work.

You may as well call the money spent on education as ‘welfare’.

As to @Blankscreen ‘s question , we now spend almost as much as the pension bill on govt debt interest rates. Thanks Liz Truss.

(I do think the triple lock needs a discussion.)

So why is growth in the UK higher than both France and Germany?

I was listening to something about this the other day. Most tax receipts go on servicing our debt, then more money has to be borrowed to pay for services etc. Governments have been borrowing for expenditure for centuries but levels of borrowing have been very high for the last few years, especially with things like the pandemic. Also, lenders have set higher borrowing criteria for the UK since Brexit when the pound depreciated and our credit rating was lowered, alongside persistently high inflation, which makes repayments higher. There has also been a reduction in inward investment (again, thanks Brexit).

This has become an ongoing cycle and it would take some sort of big structural change to make any real difference. The constant narrow focus on immigration does nothing to solve the real economic problems.

Old Ken Clarke, former Chancellor, was on the radio last week explaining exactly this. We are having to pay the price for the furlough, and all the other support schemes that we had during Covid times. He further explained that we had borrowed at a worse rate than other countries had done.

Public sector debt is currently at under 100% of gdp which is the measure the EU has used in the past for whether the debt is sustainable.

see eg
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/april2026#the-public-sector-balance-sheet

the government is quite capable of paying the interest in the debt and does so.

From this statistical bulletin:

debt interest spending is currently approx 8% of government spending.

https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/debt-interest-central-government-net/

@JimBobsWife
Because ‘growth this year’ and ‘overall economic damage’ are two different things.

Germany’s been hit particularly hard by energy prices and manufacturing slowdown & France has had its own issues with pension strikes and political instability after elections. A country can outperform another in one year without meaning all its decisions were good long term.

The point about Brexit isn’t that Britain can never grow again, it’s that we’re growing from a lower base than we likely would have been otherwise.

Wealth inequality - whilst income is taxed, other wealth is not to the same extent - and it needs to be.

We over inflated housing, which created a perception of wealth, but a house is still a house - and we have ended up paying enormous amounts of state money to private owners in housing benefit (many of whom do not live and pay tax here)

We have 'high standard' for what we expect from the state and it's services but 'low expectations' of what we owe each other/the state. We need to accept a more basic level of service and that nothing is perfect.

We are a capitalist individualist society - we have been taught to endlessly consume, so logically we now have too much stuff and are obese and that it's all about us. We spend too much money on individuals and too little on projects and infrastructure that works for everybody.

Our service economy is ridiculous and depends on people having disposable income for those services. The actual things that we really need - safe housing, decent public transport, clean water, sustainable food production are usually in private hands, being asset stripped for maximum profit with no care to the future.

We are short termist, wanting our 'jam today' when we quite frankly need to accept plain bread for a few decades whilst we rebuild some sort of future for our children and grandchildren.

We have massive generational inequality. We spend too much on the older generations and too little on the younger and then we wonder why our young people are unhappy and unwilling to work low paid miserable demanding jobs so that others can go on another cruise.

You will get various answers to this question from people depending on their political leanings OP. In my opinion it will be a mixture of things.

There is a wealth divide in this country, and I think a lot of the money that was rushed out by the government during the pandemic ended up in the hands of the super rich, who are well adept to exploiting situations to get rich from them (that’s why they’re rich in the first place).

The economy is in free fall for a lot of reasons. I don’t think Reeve’s increase in employers’ NI contributions will have helped businesses - especially in these hard times when costs have already gone up by so much. Successive governments have sat back and done nothing as UK industry (I’m thinking manufacturing especially) has been sold off to foreign investors. The result is we are now buying in. We aren’t in a position to produce our wealth anymore because the means for doing so have been sold off e.g Steel production.

The cost of social care has gone up massively. Look at any local authority adult care budget for example, and you will see they are massively overspent and have huge gaps in their budgets. We have an aging population as fewer young people are choosing to have children (and frankly, given the current state of the world / UK, who can blame them?). I heard recently that young adults can now typically have to wait until they are in their late 30’s to early 40’s before they get on the housing ladder - if at all.

Cost of everything has gone up due to COVID, Brexit, and geopolitical events such as the war in Ukraine and Iran war. All pushing up the cost of things like grain (Ukraine), oil and gas - which pushes up the cost of practically everything.

The cost of welfare in the UK is also eye wateringly huge. People will have lat their jobs as the economy is on its knees, cost of illegal migration will almost certainly be contributing to the problem, and then there is the issue of those who seek to exploit the system because they can’t be bothered to go out to work. I was listening to LBC recently and they said the cost of welfare in the UK is £100bn per year more than the cost of healthcare. With figures like that, it’s no wonder the UK is on its knees.

Years ago, there used to be hard times, but it was accepted that eventually things would pick up again. But now it’s feeling like we are on a permanent downward spiral. I have two children, and I worry about their future constantly.

It's due to a combination of things.

1. Brexit

1. Global wars having economic impacts

1. Ageing population - people are living a lot longer than they used to, but....

1. People are living unhealthier lives so far more people are unable to work than with previous generations

1. Mental health across the developed world is far worse, due to a combination of things like social media, busier lives, no way to switch off

1. Medical advances continue to be made, so people are kept alive longer, but they're still not healthy enough to work and often cost a huge amount in treatment and care fees

1. Social care - families no longer care for their aging relatives, the state is expected to do this now

1. The pensions triple lock and other favourable treatment of pensioners because they tend to vote whilst many younger people don't bother

1. The need to spend lots on defence, which recent events have shown is vital

There are other reasons too, but these are a good start.

And no, I don't know what the answer is beyond radical reforms to the way we live, work and treat people, which I don't think the country is ready to accept yet.

Overall economic damage from Brexit is not a settled matter. Economists do not agree on the figures. The predicted recession did not happen and the city of London has not suffered. That’s not to say trading has not been made harder for some sectors, of course it has.

I would say the problems we are experiencing are far more complex than Brexit alone. Thirty years of questionable economic policies and mass immigration compounded by a global financial shock, Brexit, Covid and Ukraine have been too much to bear.

1. The government bailed out the banks during the financial crash, and paid for it with more borrowing.

1. We shut down the economy, reducing tax and growth, for six months ( at least) during covid and then paid half the country to not work. Paid for it with more borrowing.

1. Interest rates have gone up so the cost of borrowing has gone up and the amount the government has to pay has gone up.

Therefore the money is going on debt servicing mainly due to covid.

If we didn't have the covid debt things would be broadly ok.

Everything else is tinkering around the edges compared to this. It was the decisions taken around covid and the eye watering cost of those which means there is no money to do anything else

Pensions are the second largest, health is the largest.

Source:Breakdown of govt spending

Edited as link didn't show!

Have you got a source for the Covid borrowing being the biggest chunk of government debt?

The bulk of govt borrowing historically has been for big infrastructure type projects that have a long payback period. I find it hard to believe that the Covid borrowing exceeded all of that.