The budget will be 'painful'

[darada]

We're going to get absolutely bent over a barrel aren't we?

I fear the middle classes are going to be hit hardest because the poor don't pay that much (not unreasonably) and the very rich have access to accountants, lawyers and advisers and therefore will wriggle out of having to really pay.

I don't mind paying my fair share but I fear we're going to be squeezed and the money is going to be wasted a lot of it.

Anyone else feel a tad dispirited like me?

People want everyone else taxed more, just not themselves.

@fatherbrianeno

very curios about your background and sense of humor

It's already way beyond the level where it harms productivity.

Independent economic research commissioned by the previous Chancellor stated this. At all levels of earnings people are concluding it's simply not worth working full time because of the cliff-edges.

It was reported widely, e.g. in The Guardian, The Times. Did Hunt listen? No. Will Reeves? I highly doubt it.

Yet again we have a Government concerned with political optics (whatever their preferred flavour) rather than evidence-based policies that will actually work.

It's very depressing reading this thread. Almost all comments relate to how to divide up the scraps and vindictiveness against others: anyone who earns more than them, anyone who receives any state assistance, even disabled people!

None propose any sensible ways to actually improve the economic outlook of the UK and as you touched on, the only way to do so is to improve productivity. The UK has an enormous current account deficit - that has quadrupled since Brexit (unsurprisingly) so is very vulnerable and living on borrowed money, effectively: it does not create enough wealth to support what its population have come to demand in services. Trashing its trading relationships and the exports it had, and making it unattractive to foreign investors who plugged the gap in the current account deficit for years was obviously unwise, particular given its reliance on imports for necessities like food and fuel, so we have high levels of imported inflation.

Many of the "suggestions" here are also economically irrelevant in terms of scale and would make no difference whatsoever. MPs expenses, moving "free prescription" age to 60. I mean, the prescription charge is a tiny fraction of the costs of medicines regardless! All "political" issues but a rounding error if that economically. Tinkering around the edges with pointless measures.

If a Government actually wanted the UK to be prosperous it would:

1. Immediately begin negotiations with the EU to rejoin the single market and customs union. This alone is costing us around £50bn per year, rising annually.

2. Produce a proper industrial strategy for investment in our high-tech sectors with growth potential e.g. robotics, AI, life sciences, pharmaceuticals, tech. Public/ private partnerships for investment and financing of these. Support for start ups and small to medium-sized businesses that make up half of the UK economy, and better access to finance to prevent foreign buyouts.

3. Total overhaul of the NHS introducing a healthcare model comparable to that in France, Germany, Australia or similar.

4. Total overhaul of education, particularly proper SEN provision. Adult education implementing a model based on the Scandinavian countries. Also linking worthwhile technical apprenticeships with businesses to ensure relevant skills to meet demand, as in Germany, for example.

5. Overhaul state pensions to introduce a long-term model in a gradual process over decades where instead of being funded by current taxation they are saved as an individual "pot" contributed by the individual, therefore not subject to issues due to denographic changes.

6. Ensure a long-term cross party agreement is in place with a clear plan to ensure water, food and energy security in the coming decades.

7. This one is the one I mentioned in the first part of my post and - unlike the others - is within treasury power to implement instantly and have effect within just a few months: implement a fair tax system that encourages people to work at all levels of earnings. I.e. scrap the withdrawal of child benefit and the personal allowance, vastly reduce the Universal Credit taper rate, remove the means-testing of childcare funding (and make it sufficient to cover the costs of providers properly), levy tax on a household income basis like pretty much every other developed country to remove the huge economic distortions currently affecting economic participation.

None of this is complicated. All of it is what sensible, comparable (or, used to be comparable before we trashed ours) countries do already. No need to "reinvent the wheel". Follow the already-proven models that actually work and make a country prosperous.

But despite having a Chancellor for once who is an economist so doubtless does know that this is what she should be doing, I have little faith that she will. We have terrible politicians in this country, whichever party they come from, who care only for short-term politics not the long-term prosperity and wellbeing of their citizens. And an electorate who seem very ignorant about even basic economics so are happy for this to continue and do not demand that their MPs actually address the issues that matter.

The only way to phase out state pension is to say right from this year anyone under age of 15 will no longer get it since they are not working anyway it has zero impact on children up to working age.

To be honest as a single childfree person the more I'm taxed I think fuck it my mortgage is done at 52, my full NI contributions at 54. I'll work to 60 putting away enough so I cam then either reduce my work significantly to 2 or 3 days to just pay the bills and live off my private pension which i can tske from age of 60 and savings until my state one kicks in. There is fuck all Ince time for me to continue to work 5 days a week if I just hand over more.

I agree with all this . Hopefully they don't increase vat to small businesses like mine tho as it's already pretty unmanageable for the hospitality industry . I'm really hoping there's some help for small businesses in some way to get the high streets back and stop the millions of businesses that are failing from finally going bankrupt.

Except most people with a £1.2m IHT-liable home won’t have paid that much for it, it will be worth that much due to house price rises. Why shouldn’t tax be paid on un-earned assets?

Like many others, I don’t mind paying taxes if I am getting a decent service. However fixing the health and education needs more than just money, it needs a solution that no one seems to be able to find.

The problem when people say this is that they often don't seem to understand the distortions in the tax system and that higher (but bot super-wealthy) middle-class earners paid through PAYE have been carrying everyone else for a decade already. Many pay marginal tax rates (once you factor in the withdrawal of childcare funding etc) of 85% up to even over 100%! Hence them cutting hours, as it is not worth it.

The taxes levied on this income bracket are among the very highest in the world. Of all groups, they can't be squeezed any further. Meanwhile the truly wealthy - whose income comes from capital - pay far, far lower rates. As do self-employed people. These things all distort economic activity and reduce productivity.

Similar is true for Universal Credit claimaints: the severe taper rate makes working more hours not seem worthwhile.

The first thing a sensible Chancellor would do is to remove these distortions and cliff-edges.

But fundamentally what the UK public will have to accept is that if they wish to have Scandinavian or even French/ German levels of services it is middle income earners who pay far, far less tax in the UK than in those countries. Higher earners already pay Scandinavian rates, but receive services of the level of a developing country in return. That is how you break the social contract and destroy social cohesion, as we are seeing increasingly.

I've yet to meet a higher earner who isn't accepting of paying more than lower earners, but to suggest they're not pulling their weight is factually inaccurate. They have been funding everyone else for years already. It is middle-income earners that must pay far more if they wish to have "European" level services, and no, I don't mean £50 per month more, I mean a significantly higher percentage of salary. Otherwise it is mathematically impossible. Although economic measures to improve productivity would obviously vastly improve salaries and living standards for everyone, per my post above.

Obviously the super-wealthy should be taxed far more also but due to their very small number this is not and will never be sufficient to fund what people expect. The "someone else should pay it" attitude means decent services in the UK will be unachievable, alongside its dysfunctional tax system, lack of appropriate industrial strategy, refusal to adapt its public institutions like the NHS and education to make them fit for purpose, and then as the icing on the cake deciding to shoot itself in the face with Brexit, like letting off a bomb on a sinking ship.

It’s the talented high earners who innovate, take risks, employ people…taxed till the pip squeaks, they will retire or emigrate!

I would be supportive of increased taxation on some goods.

The problem with taxing ‘unhealthy’ food is who decides what is healthy? The sugar tax showed this to be an area of disagreement. As poverty and poor diet are linked, it could risk disproportionately affecting the already marginalised, much as I believe that a healthy diet should be accessible and affordable for all.

I would definitely support higher and realistic alcohol taxation. The cost to the country of excessive alcohol consumption is something that needs to be addressed, so reducing intake and raising tax would be doubly-beneficial across all sectors of society.

Australia managed perfectly well to phase out state pension to being a means-tested payment for basic living costs by introducing a contributory system like we have but gradually increasing minimum contribution levels for employees and employers. This is what we should be doing, but haven't. It is a long-term plan rather than short-term political point scoring, so obviously UK Governments haven't done what they should have. Just like with failing to fix reform the NHS and education/ skills, and industrial policy to capitalise on our expertise in high-growth sectors, and food/ energy/ water security, and international trade policy, etc i.e. the things that matter for the long-term prosperity and wellbeing of their citizens.

Not child free but empty nesters. This is exactly our plan. I went full time this year- plan is to save as much as poss for the next 5 years, stop at 60 then move to a min wage job part time to top up income from private pension til state pension kicks in.

Oh, and the suggestions to remove tax relief on pensions are bonkers and the absolute opposite of what any Government that was trying to create growth would do. This - obviously - would obliterate pension saving making many more reliant on the state in old age, but also, what do people think pension funds are invested in? Primarily companies, the ones that we need more investment in (not less!) if we want any chance of growth and rising living standards.

It would be suicidal to do this if the Government has any hope of pulling the UK out of its downwards spiral of decline. It's hard to think of a more damaging measure they could come up with, economically or politically. They'd have to be mad.

All studies on the topic have stated that the most vital thing for pensions is a stable platform if regulation and rules and that people - if they are going to tie up their money for decades - must be able to trust that the rules won't be changed, so a stable regulatory regime is vital.

If they go for pensions/ tax relief/ lump sums upon which people have based decades-long plans, not only would they be breaking their promise not to increase income tax, and their promise not to increase tax on working people, but they're be committing economic and electoral suicide.

It is crazy that people think these are the solutions: raiding pension tax relief, withdrawing disability benefits! Not the obvious measures that can be taken to improve growth so that the UK can actually afford to pay for the services people want.

100% this. The UK is obsessed with taxing income through PAYE, as opposed to wealth.
it’s doesn’t, hasn’t and won’t work. We can’t raise enough tax receipts and productivity is in decline because ‘why bother’ if you see nothing in return.
The NHS needs reform. The European insurance model makes sense but even suggest reform to the NHS and there is revolt.
Things need to change but until the political system changes nothing meaningful will happen. Labour, weeks after an election, are implementing changes they didn’t even mention and down right denied.
The system is utterly broken.

Let's start with billionaires. Nobody in history has ever "earned" a billion pounds. It's literally impossible to be paid for work and end up with a billion. You get a billion by having other people work for it, then taking it, by not paying them the wage that their work, whatever it was, deserved.

"Talented" thieves! Let them emigrate. If innovation means sodding off to Singapore to avoid tax (like tax dodging James Dyson) then who needs it?

Those wealth creators, employers and net contributors - get them out I say! 🤦‍♀️

The idiocy in some of the comments explains exactly why we end up with Governments who get away with ignoring every single significant issue they should be focusing on and instead spend their entire time focusing on irrelevancies and slogans: so many ignorant voters who are happy to vote for these incompetent people, swinging from one colour to the other or vehemently supporting one or the other, but never asking their MPs why they are not taking the very obvious measures that would improve things for everyone.

Agree with you on that, madness

Exactly the sort of case I had in mind!

This argumentation seems to deny the existence of skills shortages in the workforce - I assure you there are a number of roles that persistently go unfilled or under filled. The market will sort these imbalances …. eventually. Eventually can be a decade or more. In the meantime the lack of skilled workers dampens growth for the business as well as the broader economy.

When you are talking about very highly skilled workers, you either need to train up your own staff through a long term scheme, or import staff. A friend worked around the world on year long contracts as her skills were extremely specialist and she was well paid for those skills.

But you weren’t talking about billionaires, you said no one should earn more than 100k.

The poor are looked after, the very rich look after themselves and the poor sods in the middle, earning 100k pay for both of them!

Not necessarily - it isn’t always practical for the private sector to do this, and sometimes it isn’t possible because they are looking for skills that aren’t well established within their industry. But it’s a moot point - regardless of who develops the talent, once you have it you have to retain it.

you are correct that at top levels the talent pool is global, and frequently pretty mobile. A global company can frequently be flexible about where a coveted employee is based, and a country’s tax policy can make a big difference in ability to attract and retain talent in certain geographies over others. I know a number of Scandinavian based companies that have opened ‘headquarters’ in Switzerland as it is so much easier to attract global talent due favourable tax schemes. One of my Danish clients was looking for a new ceo and really struggled to find good candidates who were willing to move to Copenhagen, largely due to how difficult it was to put forward an attractive package under Danish taxation rules.

@Labraradabrador you mean you have to offer higher salaries if those candidates will be taxed more?
Its not always practical for every firm to train up people long term. I know people with very specialist skills who have been very highly paid to work for start up firms. But some of the larger firms simply under invest.

100k isn’t the ‘middle’, it’s the top 2%. £66k is the top 10%. The real ‘squeezed middle’ earn a hell of a lot less than most privileged Mumsnetters realise.

They should really do something about the thresholds for increased taxation because they are stupid. The child benefit threshold was always one but at least that’s a bit higher now.

The £100k threshold is particularly daft given how much someone loses by going over plus losing tax free childcare/free hours. There is a massive disincentive to earn more than that figure. At the moment people just over the threshold would put money in pensions but if they go after pension tax relief that would be a big hit and then you have big incentives to work less. Some jobs might not be possible part time but I’m sure people would be looking more seriously at a few weeks of unpaid leave to reduce income.