What other ways could Rachel Reeves have raised more money?

[Katypp]

As a former small business owner (thankfully former!), the additional costs would have crippled our company.
But according to some posters on MN, we should just have sucked them up from our profits and if we could not afford to do so, should not have been running a business in the first place. If only life were as simple as some (who clearly have never run a business) seem to think it is.

Anyway, I wondered if any other posters would like to contribute to a thread of suggestions of alternative ways money could have been raised. Specifics if possible, not general Tax The Rich type posts.

I'll go first ...

1. Restore employees' NI to the level it was before Jeremy Hunt tinkered with it last Budget. We've only had the uplift a few months so the pain would be minimal
2. Get rid of the pension triple lock and put pensioners on a level footing with other benefits increases.

I'm a public sector worker in my late 20s the pension has changed there's a lot of mass sweeping statements here

Are any of them mine @MotherOfRatios?
Happy to be corrected if so.

I have never had an employer contribution to a pension as started working for myself as a sole trader before auto enrolment came in - even when I was employed by a law firm there was no employer pension. At age 67 I will get at state pension of about £12k which will be halved because of income tax (as I will work until I die) and the balance will pay my council tax of £5000 a year and my heating bills. My NHS doctor sibling retired at 55 about 2 years ago and jokes he now has to live 30 years to get the rather large NHS pension (which also reflects his higher pay silver merit award thing too) and he also earns and has almost always earned more than the NHS salary too in private earnings. I was looking at NHS contracts last month for a client and a private sector medical one. NHS one allows second jobs in your free time and private sector one doesn't - which is exactly what I expected.

Policemen used to be able to retire before age 67 state retirement age. I am not sure if that is still the case.

@Xenia My mum's neighbour retired at 50 and took another job after that. My son's friend's dad retired at 52 and isn't working as far as I know. My neighbour retired at 55.

My policeman acquaintance retired at 48 after 30 years service and has spent the past 18 years having expensive holidays.

DH and I are in our mid 50’s and we retired this summer. I was working in corporate finance and DH was a GP.

I " retired" in my early 60s from a career in the third sector (medical research charity) when my younger husband got a particularly nasty cancer. He needed full time care for a few years. I took my charity pension of £500 a month to survive. Now I get my stste pension, it's taxed.

One of the things I recall was that if he spent over 25 consecutive days in hospital he would lose his PIP and I my carers allowance. Possibly fair, but it was costing me £800 a month in petrol plus £7.20 a day parking to be with him.

I look at the " diamond shoes" of most of our politicians and think they have absolutely no bloody idea about real people's lives.

So what would you do?
Which of the ideas do you not find ‘trivial’?

@TeatimeForTheSoul since you asked me, I would:

1. Rejoin the customs union and single market. The decision to leave these is catastrophic for the economy in the longer-term and already costing £40-45bn in lost tax revenue per year aside from the wider economic costs (more than raised by Reeve's additional taxes in this budget).

2. Rationalise and remove cliff edges from the tax system. Merge NI and income tax. Scrap the withdrawal of child benefit, the withdrawal of childcare funding, the withdrawal of the personal allowance, and lower the universal credit taper rate to 35%. This would result in a significant boost to productivity and growth within a matter of months because robust economic studies show that these cliff edges are creating peverse disincentives at various levels of earnings, discouraging work in skills shortage areas and holding back growth; there is robust evidence that doing what I've suggested would raise tax revenues significantly, not reduce them.

3. I would also have modernised our tax system in line with the models in pretty much every other developed country so that tax is levied on a "household unit" basis. This removes distortions and peverse incentives whereby two households with the same income often pay wildly different rates of tax because members of the "household unit" could choose to transfer tax allowances/ threshold amounts between them (but have the choice to not opt in to do so and keep finances separate if they wish, then being allocated 50% of the household allowances each by default to replicate current arrangements if they choose to). All tax thresholds would rise annually with inflation. The personal allowance would be significantly reduced but the basic income tax rate would be reduced to compensate; the UK's tax base is now too narrow and dangerously unstable. Like most developed countries capital gains would be taxed at the same rate as income tax but IHT would be abolished entirely (taxed as a capital gain by the recipient).

4. Replace unfunded public sector DB pension schemes with DC schemes, as Australia had the foresight to do, and did successfully, decades ago. Meanwhile, over the next decade employer and employee mandatory pension contribution would be gradually ratcheted up to double the percentages they are currently, and remove the opt out for auto enrollment. A commitment would be made not to retrospectively change pension rules again as this discourages saving.

5. I would implement a healthcare system following one of the successful European models that have far better health outcomes for patients for a very similar percentage of national income (and in many cases, much lower absolute cost on a nominal basis per person) than the NHS. This new system would include proper dentistry and also a genuinely hypothecated tax levied for insurance for social care costs.

6. I would make grants/ very low interest rate long-term loans available for SMEs and startups, administered by a panel of business experts (NOT politicians). This budget has hammered SMEs which are the backbone of our economy and our only real hope for furture growth. Instead, I would make financing available with Government backing to enable them to grow, large tax reliefs for R&D, a big focus on high productivity key growth sectors where the UK has existing skills/ knowledge clusters (tech, pharma, AI, engineering, the arts, defence, new farming/ energy technology etc). This would be far more effective than throwing billions at white elephants and huge corporations with minimal oversight. I'd also provide a centralised service to assist SMEs with tax/ legislative issues at low/ no cost to them to encourage them to export without worrying about the bureacracy: much cheaper than them all duplicating the effort invidividually.

7. I'd review the tax laws around transfer pricing to ensure that large corporations pay proper taxes on revenues generated in the UK.

8. I would implement a proper industrial strategy covering infrastructure, energy security and food security overseen by cross-party commissions of MPs AND experts from the relevant industries with long-term outlooks (time horizons of 10-20 yrs minimum).

9. I would double the education budget for primary and secondary schools (plenty of revenue spare to do this given the measures above) and cut class sizes by at least 1/3, aiming for no more than 15 children per class in time. Fix the absurd shambles of an SEN system by establishing sufficient schools for children with different needs. I would include far more choice in subjects to study from age 14 onwards (while maintaining core subjects) and set up proper technical colleges with genuine apprenticeships teaching valuable skills in partnership with links to businesses like in Germany, and cut the number of students going to university to 1/3 of current levels but abolish student loans. I would make available funding for adult learning and retraining.

10. Identity cards introduced that need to be produced to access state benefits/ rent housing/ register children in schools etc, linked to tax records. Welfare to be on a contributory basis like most countries so no access to unemployment payments etc unless you have 5 years of contributions to income tax except in cases of significant disability. PIP and carers allowance I would increase significantly, while removing access to unemployment benefits etc for people who have never worked but are not disabled. Identity cards would also prevent much of the "black economy" and tax evasion that goes on: when paying self-employed contractors identity card numbers would be required on their invoices. It would be an offence to pay for services without checking this therefore people couldn't commit tax evasion working for cash. These identity cards would also be linked to the electoral role as well as tax records.

11. I'd cut the number of MPs to 1/3 and triple their salaries so that we might get some competent people prepared to do the role who aren't either completely inexperienced and incapable, or only using it as a stepping stone to more lucrative careers once they leave Parliament. MPs would need to demonstrate skills, experience and qualifications relevant to a department before becoming the Minister for that department, as with any other job someone might wish to apply for.

12. I would put in place effective and powerful regulators for environment, education and other sectors so that illegal behaviour is appropriately dealt with and significant financial penalities levied against e.g. companies that behave like the water companies have done. Review the Companies Act rules regarding paying dividends that clearly exceed these companies having left sufficient money in their businesses to fund required levels of infrastructure investment to meet minimum required service levels which would be clearly specified by the regulator and enforced with sufficiently significant fines to bankrupt them if they don't comply.

Plenty more but this is what I'd have done immediately if I was the new Government.

@TheWildRobot

I agree with most of that, but would also support the couple of points that I wouldn't particularly be in favour of, due to the "whole" package working and being coherent and logical.

Have you ever considering standing for Parliament?? We need people with common sense and real life experience, like it sounds you have, if we're going to have a hope in hell's chance of solving our current financial problems.

If you turned your post into a Political Party Manifesto, you'd win a huge number of votes! Tory and Labour parties should take note as they repeatedly fail to understand the basics nor understand how so many people are entirely fed up and disenfranchised by them!

I am a very private person so would have to be paid a LOT to be prepared to do that role. I would hate it and the inpact it'd have on my children. Maybe in the 70s or 80s but with the online abuse, endless TV cycle etc now, it wouldn't be for me at all. Perhaps a Government strategist or adviser I would be prepared to consider, but only for sufficient pay...

It would be unaffordable for me to take the cut in pay involved in becoming an MP even if it was appealing and wouldn't decrease my quality of life by taking away our privac. This is the problem: if we want skilled and experienced people who actually understand economics, business and how to get things done to do these roles that are actually quite unpleasant then we'll need to pay them salaries that reflect the market rate of those skills (again, as they do in most other comparable countries).

But it's good to hear I'm not the only one who is frustrated with the situation with the UK oscillating from one extreme to the other: no long-term vision, no pragmatic or evidence-based policy making, no grasp of economics it seems (a disappointment in Reeve's case as I had hoped - perhaps optimistically - that her economics background might mean she was more competent).

It is the focus on slogans and political optics and party politics that is frustrating. None if them seem interested in listening to the evidence on what works. The only way to raise living standards sustainably is to raise productivity, yet no policies ir strategy on this from any political party for decades. It's baffling. Instead people are encouraged to fight like rats in a sack over the crumbs.

We don't need to reinvent the wheel: there are models for healthcare and pensions and social care and education and trade that we know actually work because there is decades of evidence from other countries proving this to be the case, yet for some reason UK politicians wilfully ignore all of this evidence and all of the studies from economists and advice from the much-malligned experts. And sadly the UK electorate allow this to continue because economics isn't taught as part of compulsory education and people are too lazy to actually read about it themselves, hence some of the insane comments on threads like this, so nothing will change.

This week's budget was extremely depressing. Per the OBR report - after a short-term boost due to increased demand via minimum wage increases and the spending splurge - there will be higher inflation, higher interest rates, lower disposable household income i.e. by the end of this Parliament everybody will be even poorer. Just what we needed after two decades of no real-terms pay growth and falling living standards. Their estimation is that Reeve's measures may increase GDP by 1.4% over the next 50 YEARS. If that's their growth strategy then I despair.

Gosh, talk about the politics of envy...

@TheWildRobot

This week's budget was extremely depressing. Per the OBR report - after a short-term boost due to increased demand via minimum wage increases and the spending splurge - there will be higher inflation, higher interest rates, lower disposable household income i.e. by the end of this Parliament everybody will be even poorer. Just what we needed after two decades of no real-terms pay growth and falling living standards. Their estimation is that Reeve's measures may increase GDP by 1.4% over the next 50 YEARS. If that's their growth strategy then I despair.

I agree, I'm despairing too after reading it. Just consigned to at least another five years of stagnation with no "green shoots" at all. Just the same lazy old politics of envy that will do more harm than good.

They absolutely wouldn't. People would see the bits that would negatively affect them and vote accordingly. There is a reason that most of that list are things that economists think should be done but that politicians never do. Combining NI and income tax, for instance, is regularly discussed, makes perfect sense, but no one will do it because it's completely politically toxic and no one dares point out that no one has actually paid their own way by 'paying my stamp'. A party who said they would do it and be transparent about what that looks like would never get elected. See also: changing the NHS to European-style insurance models.

If people would just vote for things because they were generally good sense and made sense for the country as a whole no party would find these things so hard. But then you wouldn't get whole threads of people explaining why the one tax that Must Not Be Touched is the one that affects them (in this case, employer NI) and that instead it is clear - obvious to all but a simpleton! - that instead you should change Things That Affect Other People.

Sorry, Reeves'!! And other typos.

Typing too fast and attempting to multi-task. I should know better.

I agree with you @taxguru about the disenfranchisement. Falling turnout in elections, apathy, people being forced to choose the least appalling option when it's clear that none of the manifestos put forward (even if the party elected actually implemented what they'd committed to do, which they never do) was going to improve things because all of them ignored the major issues that need to be addressed for the prospects for the UK to become anything other than managed decline (or, more accurately, the totally mismanaged decline that we are now apparently expected to accept as the status quo.

The strategy from all political parties seems to be encourage to blame whatever other group of people they're choosing to target to deflect attention for the fact that they have totally screwed us all over... depending on your political persuasion it may be: the "feckless and workshy" who are largely children raised in poverty that nobody bothered to educate or to provide training to so that they could obtain decent jobs; the "rich", which never seems to refer to the genuinely wealthy rather highly qualified professionals on PAYE who are continually hammered instead with some of the most punitive tax rates in the entire world that in some cases already exceed 100%; "the disabled" who are told they're to blame for a failing health service and inflexible employment policies; "greedy business people" who are in fact those who we desperately need and rely on to create wealth and employment and should be supporting so they can grow and invest and increase productivity and pay higher salaries and not be penalised so heavily that all of our successful startups are bought out; "the immigrants" when our economy cannot function without them because of the appalling skills shortages due to failed education policies; "public sector employees" who are paid far less here for comparable skills than in Canada, Australia, Ireland, German, France etc hence so many emigrating; "landlords" i.e. people who have invested in property given our Governments totally withdrew from the rental market and wanted a tangible asset to invest in because of the scandalous way that successive Governments have raided other investments like pensions over and over again... on and on blaming each other and none of this of course does anything to actually fix any of the issues with the economy. Bread and circuses.

It's depressing so many people are sucked in by this and that we have nobody with any vision anywhere to be seen.

There is a reason that most of that list are things that economists think should be done but that politicians never do. Combining NI and income tax, for instance, is regularly discussed, makes perfect sense, but no one will do it because it's completely politically toxic and no one dares point out that no one has actually paid their own way by 'paying my stamp'.

I agree, however, this just proves my point in that the politicians we have are not people going into it as a matter of public service, to do the right thing.

A Government elected with a large majority absolutely has the power to do all of this. As we have seen repeatedly, there is no legal obligation (and apparently from their perspective, also no moral obligation) to stick to their manifestos. So, any Government elected with a large majority (we've had two in the last 5 years) could easily have done these things if they chose to: they know these things are in the national interest and will work and improve living standards for all. They decided to do other things instead that they knew would lower living standards for all.

Why does it matter if it's politically toxic if you are actually complying with the ethical requirements as an MP/ Minister to act in the best interests of the country/ constituents? Worst case scenario you are an MP for only 5 years then go back to whatever you were doing previously. This would only matter if you prioritised the ideologies of your political party/ making a career out of politics for yourself over complying with the minimum ethical standards you signed up to as part of your job...

I think this is a fundamental misunderstanding of democracy as a system. Politicians put forward manifestos to say what they will do and people vote for them. If they then got into office and said actually they were going to do different things that people wouldn't have voted for but they know are better ideas - that they'll do what people should want, rather than what they do want - then it renders a representative system, and the voting itself, completely null. You are essentially a parliament of (you think) benign dictators at that point. MPs should be public servants and if they can't persuade people to share their vision of what's right they shouldn't just impose it. I actually don't think Labour have broken their manifesto promise not to raise taxes on working people, but look at the reaction from those who do feel that raising employer NI violated it.

On a more practical level, almost nothing on your list could be completed within five years anyway.

MPs should be public servants and if they can't persuade people to share their vision of what's right they shouldn't just impose it.

This x 💯. Anything else is a denial of democracy.

5% transaction tax on any online companies operating in the UK and declaring a non UK head office for tax purposes and thereby avoiding corporation tax etc - you can't get away with this in many other country's and no Amazon hasn't left all these other country's!!

Factoring in maintenance for calculation of UC payments after 12 months of consistent payments. At the moment 'some ' women are getting pretty large payments as well as full UC and rent paid etc and are better off than many women working a lot of hours on modest salaries with low or no UC or maintenance and I find it hugely unfair on these women and unfair on tax payers too.

I think this is a fundamental misunderstanding of democracy as a system. Politicians put forward manifestos to say what they will do and people vote for them. If they then got into office and said actually they were going to do different things that people wouldn't have voted for but they know are better ideas - that they'll do what people should want, rather than what they do want - then it renders a representative system, and the voting itself, completely null

No misunderstanding on my part. What I am saying is that they are already completely ignoring their manifestos and doing whatever they feel like anyway: breaking manifesto pledges, not implementing others that they had committed to, making significant changes that have never been mentioned in manifestos and would have changed voting decisions had they been disclosed... so if we're to accept such a system where they can't be held to account for complying with their manifestos (I'm not saying I agree with that, but it is the status quo and has been the case and exploited by many of our Governments) then the "check and balance" against that is meant to be ethical codes they sign up to comply with which state that their fundamental duty is to act in the best interests of their constituents (not their party members or their own demographic of voters or their own preferences with an eye on future career prospects etc). So my point is, they are already ignoring their manifestos and doing whatever they feel like, so it would be nice if those non-manifesto measures were at least something that would benefit their constituents and raise UK living standards across the board.

I was being rather flippant, obviously. Clearly our political system is completely broken. Democracy is a very useful tool because it creates apathy due to the illusion that "the people" are really in control so dissuades rebellion.

To quote The Usual Suspects: "the greatest trick the Devil ever pulled was convincing the world that he didn't exist".

Well yes. Which causes diversion.
Can you come up with a good reason why all taxpayers fund the pensions of public servants and their terms are so vastly superior?
We obviously need public servants and we obviously need to fund pensions, clearly. But why we are funding contributions way, way in excess of any other pension scheme is quite beyond me.
Over to you.

I agree with this. As I have said upthread, I am not a hypocrite and I am sure I would be taking full advantage of eg early retirement if I was a public servant. I hope I am self-aware enough to see that.
I think the problem is that some people can't see beyond their individual circumstances and acknowledge what they have is basically not sustainable/unfair to the country as a whole. See the thread running last week arguing that young families with children should get a huge list of Nice Things in the Budget and bugger everyone else. I would hazard a guess that the poster had a young family and couldn't see her manifesto was hugely advantageous to her circumstances but a massive drag to other taxpayers.
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It has always been seen as part of a package that includes wages below market rates. We are seeing currently in the NHS and in teaching what happens if you make these jobs unattractive, and no one seems to like the result.

I don't actually have a problem with moving to DC pensions where that hasn't already happened, as it has in many areas of the public sector. I just thought your 'it isn't FAAAAIR' whinging was a bit ironic in the context of the thread.

Really? So is it fair then? Is it fair that my neighbour can have a very comfortable standard of living and retire at 55? Funded by other taxpayers who are suffering cuts to all public services to fund it? Saying something is unfair isn't childish. Some things are genuinely not fair. And this is one of them. It is a complete mystery to me why others justify it, although I assume it's mostly public sector workers doing the justification (see my last post).
And don't get me started about low wages. Complete nonsense.

Lower wages isn’t complete nonsense. Why do you think the public sector has such a massive recruitment problem? It can’t even recruit to jobs that barely exist in the private sector. Anyone who thinks public sector pensions are unfair and envy them is entirely at liberty to work there, God knows there are plenty of vacancies.

Unfortunately my job does not exist in the public sector, or I would be there like a shot. Really.
I would hazard a guess that at least part of the recruitment problem is the impression given by workers and their unions that nowhere is as badly paid, hard work or as badly organised than the public sector.