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.

they prob count on tough years resulting in people shortened life spans in general 😂

Well, enjoyed learning from everyone. Thanks for the good conversations.

And here’s an assisted dying bill i prepared earlier….

This government is truly dystopian. I can’t believe people still don’t see it 😢

And yet they’re now incentivising people to burn through and spend their private pensions, which insulate them from future reliance on the state. You couldn’t make it up!!

Indeed. Totally ridiculous. The IHT exemption wasn't a loophole, it was a design feature that was necessary to encourage prudent spending because nobody can predict their date of death. An idiotic policy to abolish it and it will lower future pension savings and encourage those who already have significant funds to spend them asap, so cost the state far more in elderley dependence that it will gain through additional taxes.

The concept of cause and effect is utterly alien to them. Thick as shit.

If the cuts have to come from somewhere, then maybe decent earners with pip could consider to be less priority, given nhs is free.

Many of the additional costs arising from being disabled have nothing to do with the NHS. They are related to social care, transport, heating, home adaptions, specialist equipment the need for additional services in the home, etc. The entire point of PIP is to level the playing field a little (the average award is a fraction of the average additional costs incurred by disabled people just to perform basic daily functions, as research on the topic demonstrates). In addition, many disabled people are only able to afford to work because they receive PIP so it encourages participation in society and those taxes would be lost if it was removed.

As I said, this is the very last item in the welfare bill anybody sensible would mess around with given the practical consequences of doing so, the immense expense involved in administering means-testing so there is no economic sense to your proposal. You'd just create another earnings-related cliff-edge that would discourage economic activity: things we should be eliminating. Aside from the moral point that disabled people and children should be the two categories of people that any decent society would most want to protect.

So many sensible measures that can be taken and you seem fixed on this which is quite unpleasant really as well as not being any kind of solution to our economic problems.

So in a way it has been acted upon, just not rolled over yet

No, it hasn't. And RR has just made it even less likely that it will be fixed.

As the IMF have said, they've done the right balance, even if that does impact business and wage rises.

We need growth, jury's out if their policies will work

All independent economists seem to have assessed what they've done as being very unlikely to achieve any sustainable growth or productivity increases. They are forecasting a short-term and inlfationary boost to demand then higher borrowing costs and lower disposable household income, lower exports and putchasing power

She should have taxed rich people far more.

Ah Tax The Rich!
Would you like to elaborate how exactly this can be done? And who would you define as The Rich?

Such as allowing people to get at their pensions at 55? a huge reason we've so many early retirees, inc me!!! thanks George!!! but still a stupid policy and not one available in most of Europe.

With low tax TH, people taking more of their pensions will pay a lot more tax & in the case of annuities and DB pensions, taking more isnt an option.

Thick as shit indeed!

Not all but most have, however Labour's defence is that this is just the first budget and there is more to do on the growth agenda, they can't do more as it will spook the bond markets if they move too fast....

I would like to know why such damming judgements are being made after just 4 months?

The alternative Govt had 14 years to increase growth but did not.... we have been the slowest of the G7 economies to recover from CV and we took the biggest hit too.

Short memories.

Bet the ‘rich’ is anyone who earns more than you! 1% of people pay 30% of the tax. And people who are deemed rich can often afford an accountant.

Look at a European model for the NHS. Labour won’t do it. Smash the gangs…yeah right. A lot of what they are planning to do is already being done. Giving the NHS more money will fail. They waste so much and they don’t want to modernise - they would rather stick with their old legacy systems which don’t talk to each other. I have personal experience of this from a previous role.

Messing around with pension pots etc will drive people’s behaviour. We both have large pots because we are still working so don’t necessarily need it yet. I will be dammed if it goes to people who won’t look after their health, who won’t do over 16 hours a week because it affects their benefits or who have children without thinking who will be a paying for them.

Personally I would have put 1-2p on income tax

Personally I would have put 1-2p on income tax

...and raised 7 to 14billlion.... not enough, 5p is what would be required.

Modernising NHS IT would cost 10s of billions and not lead, in the short term to a single extra patient being treated and by the time it was done, be out of support.
there isn't the money available to do this, it will have to be done over time, bit by bit, esp as legacy systems still have to operate & integrate alongside newer systems.

Look at TSB to see what happens when this isn't done.

@Alexandra2001 I've been very "damning", as you put it, about the last Government also.

That doesn't mean we should be happy that the current Government are also making stupid decisions. People were hoping for a competent Government, not just "oh, the last lot were worse". We should expect higher standards than that.

I don't think anybody expected them to fix things in 4 months. What people had hoped for was to see sensible behaviour and positive moves in the right direction.

People's issues with their behaviour so far are:

1. They stated repeatedly they would focus on growth yet the majority of measures they've taken so far will actively hinder it;

2. None of the measures they have announced that they have claimed are designed to promote growth is actually forecast to generate any significant growth at all;

3. Obvious measures that could have been taken quickly to promote growth haven't been taken despite plenty of economic evidence of what these are. Then there would have been scope for the longer-term measures required to be taken once things were moving in the right direction.

This budget took them 4 months to produce, which is far too long. Wasted time and indicates perhaps a lack of preparation, then when finally delivered it doesn't do what they claimed it would do even though they had so long to think it all through. This long delay also damaged confidence and reduced economic activity further due to the uncertainty. Then there was endless deliberate leaking to the press to float ideas and guage public reaction, effectively treating the media like a giant focus group. This is inappropriate, and also appears to demonstrate a lack of vision/ strategic planning and instead an obsession with political optics which is why poor decisions get made so quite worrying if this is how they will continue to manage things going forward.

Then there is the issue of the dishonesty with the electorate: they have gone back on much of what they repeatedly stated pre-election already, and then tried to pretend they haven't done so which makes it worse. At a time where trust in politics needs to be restored this is far from ideal. The goodwill that was felt post-election has largely evaporated already because of this behaviour. It's not remotely believable that they had no plans to raise tax before the election, as Paul Johnson pointed out at the time.

A small selection of Reeve's pre-election comments:

Labour's manifesto is, "fully funded and fully costed - no ifs, no ands, no buts… no additional tax rises."

"I have been very clear that every policy we announce, and every line in our manifesto, will be fully costed and fully funded."

“Nothing in our plans requires any additional tax to be increased.”

“We’ve got the Office for Budget Responsibility now… You don’t need to win an election to find out [about the public finances].”

“I don’t believe that fiddling around with tax rates is the best way to grow the economy.”

Overall it's just very disappointing. There doesn't seem to be any joined up thinking about how economic policy decisions have effects and consequences and how they interact with each other. Then implementing a very growth-stifling set of tax measures before you've created any growth is not wise and from that it can only really be concluded that either growth/ productivity is not their main priority as they stated (in which case we are all screwed since that is the only way to stop the decline in living standards) or that they are incompetent (ditto - the UK cannot afford another 5+ years of incompetent Government).

The decisions made so far they seem to be focused on dividing up and redistributing an ever smaller, increasingly mouldy cake rather than doing a fresh batch of baking. Unsurprisingly, most people don't find the mouldy cake crumbs very appetising.

Don’t forget the wholly unsubstantiated £40bn black hole… another lie? Probably.

And the rampant hypocrisy. Is Starmer coughing up the £43k he owes in tax for his gifts and jollies? Tumbleweed on that one…

The deficit the OBR discovered?

https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/

The truth on the "black hole", as usual, is somewhere in the middle.

The Conservatives deliberately left Labour in a difficult position with the additional pre-election NI cut. The departmental spending cuts in their March plans were totally unrealistic. However, Reeves knew this (it's all in the OBR report and was highlighted repeatedly by the IFS etc before the election). Also, Reeves would have had access to briefings from Treasury officials for months prior to the election as Shadow Chancellor, as is standard practice. Therefore, her claim there would be "no return to austerity" and public services would be "fixed" was incompatible with the existing spending plans which included real-terms cuts. She claimed she would not borrow more for day to day spending, and also claimed that there would be no tax rises. It was impossible for all three statements to be true and she knew it.

Not all spending is predictable so there is always a contingency buffer in a budget. The Conservatives were fully utilising this so there were some baked-in costs if which she wouldn't necessarily have seen a breakdown like the larger than expected costs of housing asylum seekers. They'd also not budgeted for the Post Office and infected blood compensation, apparently. However, she could have asked Treasury officials for these figures pre-election as they regularly meet the opposition pre-election for preparatory meetings in case there is a change of Government.

Regardless, this £22bn is actually only 1.5% of the total UK Government expenditure (£1.3trn). The huge fuss made about it was clearly a political ploy, to deflect blame for the tax rises that it seems obvious were always intended to take place (the only other options being austerity or to borrow more for day to day spending, both of which she also said she wouldn't do). And then the tax rises she made far exceeded £22bn anyway.

It's all just rather disingenuous, insulting our intelligence, and tiresome political point scoring when they need to be focusing on governing competently. The country can't afford for them to make a mess of it and it seems like they're much too focused on ideology and redistribution when we desperately need some pragmatists who will take evidence-based decisions and focus on productivity. Before the election she kept emphasising that she knew this, growth would be the focus, yet she's done the opposite. <sigh>.

Her plans to borrow more for investment are the right ones IMO and markets will support that IF it is spent wisely on genuine investments that will generate productivity increases. Economists have been recommending more public capital investment for some time. The concern is that nothing she's announced so far is expected to generate any meaningful growth or address the underlying issues holding it back. If this money is borrowed then doesn't generate growth we'll be in an even worse situation than currently (more debt to pay interest on AND likely higher interest rates for Government and all of us).

Not all but most have, however Labour's defence is that this is just the first budget and there is more to do on the growth agenda, they can't do more as it will spook the bond markets if they move too fast....

Also this makes no sense. That is precisely why this first budget should have been absolutely focused on measures to create growth: reassure the markets that they were making sensible decisions and meant what they said pre-election.

The UK is hugely reliant on external investors being prepared to continually fund its budget deficit. We are in an extremely vulnerable position. Brexit has quadrupled the already large trade deficit as well and this gap was largely plugged by FDI. It is essential that investors are convinced that the Government's plans are competent and they can trust that what it says will be done will actually be done otherwise the UK currently cannot fund itself. The result would be austerity on steroids, over which the Government would have zero choice.

This budget should have been laser-focused on the fastest measures to generate growth. Then, confidence grows, private sector investment would increase, productivity would rise, living standards would rise, trade deficit and budget deficit decrease. Then once you've generated some growth there is more money to tax and people wouldn't mind so much raising some (sensible, not anti-growth) additional taxes because they are seeing their living standards rise even with the extra taxes. Some extra taxes might slow the growth a little, but at least we'd still be in an upwards spiral not downwards, and if the taxes were then spent on the longer-term measures needed to further increase growth then the spiral continues, and you have scope to do some redustribution as well.

She's tried to do stage 2 before stage 1, apparently unaware that stage 2 was entirely dependent on stage 1 having taken place. She's tried to build the house before laying the foundations, effectively. Hence the short term boost to demand (oh look, that new house they're building looks nice!), which will then become unstable (higher inflation and higher borrowing costs because it isn't underpinned by any productivity increases) and then end up in a pile of rubble on the floor (our living standards: living in a derelict building).

It's all very depressing.

@Alexandra2001 I agree with you about the pension thing totally. I personally would make it 62. If you can get by retiring at 55 without drawing big lump sums off pension then great- but it has certainly meant that a lot of middle and high earners with big pension pots and paying good tax sums have thought 'bollox to this' in the world of work. I don't blame them if I'm honest, but it certainly hasn't helped the public purse.

And people living on handouts (who are not genuinely disabled) should be paying back into society through service whilst they’re looking for work.

No. They need actual jobs. This "service" you mention would reduce the time available for job-hunting. At best, it would reduce the number of jobs available because why would the council pay a litter picker when they can get a dole claimant to do it for free? At worst, you'd have people being forced to staff charity shops who don't want to be there and are ill-suited to the work.

The NHS don't pay for the groceries to be delivered, preventing me from having a meltdown in the middle of the supemarket. They don't pay for taxis home on the days when I'm so wrecked after work that I cannot do the return commute on crowded public transport. They don't pay for pre-sliced veg so that I can keep my wrists sufficiently unstrained to do my job. The NHS don't pay for earplugs, headphones, or sunglasses.

@TheWildRobot what specific/fastest measures to generate growth? that don't require money, raise taxes and or increased borrowing.

Sorry but you re just talking generalities and wish lists.

I'd like to see Labour break one pre election promise and make moves to go back into the SM/CU, it may not be possible but i think we should, we need to undo what the Tories have done in regard to Brexit..

The budget in this country has been given a relatively poor score but internationally, thats not been the case, the IMF said it strikes the right balance, as did HSBC's CEO..... stability is what will get us back more investment, something missing since 2016.

people who won’t look after their health

This is harder when you are poor, disabled, or both than if you are rich and not disabled

who won’t do over 16 hours a week because it affects their benefits

The current benefits structure encourages this behaviour. I'm not going to condemn people who are unlucky enough to be on means-tested benefits for acting in their own best interests here. They would be irrational if they didn't keep their hours below 16.

They [NHS] waste so much and they don’t want to modernise - they would rather stick with their old legacy systems which don’t talk to each other.

I'd like to introduce you to a piece of legislation called Data Protection Act 2018 and something called the common law expectation of privacy. These systems not talking to each other is often because key data stores are locked down very tightly to keep the data on them safe. I don't want them all joined up, thanks. My dentist doesn't need to know about my gynecological history.

I agree totally @Alexandra2001 . Fastest way to get some quick growth is SM/CU . My son knows quite a few in various roles within politics - both parliamentary type roles and civil service and has said the biggest worry seems to be if they have to have free movement as part of it then many middle/high earners 'with options' will bugger off along with their tax whilst the country is in such a mess- it's very hard to get growth without it too because you certainly won't get a ton of high end international business- that mainly has a large enough UK market without being reliant on any imports/exports. I wouldn't invest here for a business of that level.