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.

Absolutely.

The Office for Tax Simplification achieved nothing and the tax code grew exponentially with endless new irrational cliff-edges.

The "nudge unit" was my favourite Orwellian invention.

All totally crazy, when the big things that need to change are so blindingly obvious.

@TheWildRobot I agree with a great deal of that. The problem is it doesn't fit lots of things that were in the manifesto and a fair bit of it would take a fair amount of time to implement and a fair bit of cash to do so. I think the main reason many of us were stating much smaller personal bug bears in welfare/tax etc was because the OP was talking more I thought about the immediate .

When we lived in Copenhagen quite a lot of these things were more the norm- the difference to your list being they have quite high tax too to enable it- including low cost childcare right from birth ( hence most couples work) -

Personally if it hadn't been stated as such in the manifesto and repeated over and over I would have banged 2p on basic rate tax, removed the employee national insurance cut that was only ever a voting bribe as well. I think a great deal of your suggestions make sense, do I think people would vote for them - no- because the British have a unique combination of wanting European style services, protections and standards and wanting them at minimal cost in terms of taxation, national insurance IHT etc. could we get away with them whilst Labour are in power with a big majority I wonder?

@taxguru it was pretty impossible to set up a company just for that purpose-as I coincidentally had a new one set up 2 weeks before lockdown and it was excluded.

I suspect that there were plenty though who have dormant shell companies lying around for years that hadn't been doing anything that they activated exactly for that purpose

I completely agree that we should start doing the hard things as soon as possible - as I said, if the best time to start this project was 30 years ago the second-best time is today etc. But we do come up against the fundamental problem that time and time again people have shown they will not vote for the kind of fundamental change that I, personally, agree is needed.

@MoreDangerousThanAWomanScorned totally agree as I said below- we have to have bold action where the gvt think bollox to the press or future voting intentions etc- and I don't think anyone is forward enough thinking to do that -

Without going into too many details, I know a multi-millionaire family who massively took advantage of the Covid grant scheme. They had a restaurant they were running down with the intention of closing it at Easter 2020 for good. Their three grown- up children all had 'hobby businesses' they occasionally did for the odd payment - cake making, knitting, selling logs, that sort of thing. The family also had three holiday cottages, one in the name of each of the children, that were being renovated and had never seen a customer.
Because the hobby businesses were all registered to the restaurant, they all were in a premises paying business rates. When covid struck, they all got £10,000 grants, even though the turnover of all the 'businesses' together would have not turned over £10,000 in their lifetimes.
Plus they got grants because the restaurant 'had to close' plus for the holiday cottages even though they had ever been let out.
Then they got it again in the second round because they had been eligible first time round. Was there a third round? I can't remember.
Anyway, I reckon they netted at least £100,000 between them, for 'businesses' that never really existed.

I agree: the British public either need to accept that lower and middle income earners need to pay far more, or that they cannot have European levels of public services and will have to be far more self-sufficient. There is no other way to fund this, the maths doesn't stack up due to the sheer numbers of people in each earning bracket. The very wealthy (i.e. assets, not income) should pay more but this is hard to implement for the reasons we all know and more importantly - even if achieved - would not square that circle. A reality check is required and unfortunately it will come in the next decade or two either way because it is not avoidable.

Changing that mentality is of course a much longer-term project - if achievable at all - hence I'd focused on more immediate practical measures that are at least primarily within Government control having just been elected with a large majority a 5 years to go and the public rarely having ever been so desperate for change so perhaps more willing than usual to accept fundamental changes to the NHS and pensions (absolute necessities if we want a prosperous country again), particularly if the changes implemented are sensible ones that do finally start to increase living standards for the first time in decades and people start to see the benefits of this in their own circumstances. I fear that if instead the Government continues along the same lines as it has so far, the consequences (of changes being promised but appropriate ones that will improve things not being made, more devisive political ideolgy and more economic mismanagement and pipe dreams leading to further decline in living standards) will not be pretty, to put it mildly. I don't want to see that timeline in ten years' time. Significant changes, implemented by competent people, have to be made now. There is no more time after decades of mismanagement if the UK is to have a hope of recovery.

I was meaning set up a false business to secure the bounce back loan, get the loan, withdraw it from the company and beggar off leaving the company to be struck off eventually by Co House.

There was a massive shortage of "off the shelf " companies in Summer 2020. Formation agents etc always have a number of companies pre-formed and ready to sell so that the buyer could start trading straight away. These flew off the shelves (and many were sold on ebay for stupidly high amounts) as they had a "formation date" before covid, so the people buying them could lie and claim they'd been trading before covid, which was the criteria for the bounce back loans which basically had no oversight nor audit and just handed out like Smarties by the banks.

I know it was nigh on impossible for "genuine" businesses that had start trading properly in the year or two before covid to get the grants. Funny that the govt could find no way of differentiating between genuine businesses who were unlucky enough to be excluded by one of the many stupid exclusions and fraudsters who could easily lie to get bounce back loans for businesses that didn't exist for which they had no intention of paying nor using for genuine business purposes.

When a political party gains power with a huge majority, that's the time to put some of those unpopular policies into play as they know they'll not face a back bench revolt and know they're in office for the full five year term.

As it is, Labour have probably massively damaged their chance of winning the next GE in five years time for not actually doing things that would start to show improvements in a few years yet making some stupid "politics of envy" changes that are pretty irrelevant and trivial and just playing to a small audience.

Why it is unfunded, when both employers and employees contributed to it? re: "unfunded public sector DB schemes". Was it not costed properly?

Same with a holiday lets owner I had as a client. Never bothered registering for business rates. He had a house converted into four self contained holiday flats in a very popular tourist city. Never made much money because he didn't do any work himself - he used an agency to market them and deal with bookings, admin, repairs, etc and had cleaners to do the changeovers. He probably made a profit of £2/£3k per flat per year.

Not only did he continue operating during covid - he was allowed to as each flat was self contained, so no communal areas, each having it's own direct access to outside, and took in long term renters such as hospital workers as it was also close to the city infirmary. The local authority allowed him to back date his business rate registration, so that he qualified for the council grants which over the two years amounted to £28k PER FLAT. He made an absolute shed load of cash, and only had to pay a few hundred in business rates for one year for each flat - the council didn't even bother billing him for all the years he should have been registered but hadn't!

Over the two years, combined profits made up of longer term rentals AND covid grants was close to £150k. Not bad when over that same period, had it not been for covid, his profits would have been maybe £10-£15k! At least he ended up paying a shed load of tax as it pushed him into higher rates for those two years, so at least HMRC got some of it back.

When that was allowed (if not encouraged), yet at the same time genuine businesses were excluded due to falling foul of some crazy rules, it leaves a sour taste in the mouth.

@TheWildRobot I totally agree with you on all that.

My own view is that some kind of Norway type deal could be brought in quickly and would make a fairly big difference almost immediately- to give you an idea our mail order to EU and US ( not forgetting the EU had a deal on items under a certain value with US ) dropped by 50% - main reason isn't VAT etc ( we've sorted that aspect at considerable cost) its handling fees in receiving country's and it's erratic- we've had Germans being charged £21 for a £12 item and we ourselves when we lived in Copenhagen had a £16 handling pay on a £10 item- and it's erratic whether you are charged or not- so people can't order in confidence- A lot of very good small businesses ( and our is part of an £8 million turnover business) had mail order direct to consumer as part of it. The reverse isn't true though- UK post not charging it- so actually as it is the EU businesses hold all the cards, not the UK.

I don't think apart from maybe 20% of population - most people would now give a shit- they have seen Brexit solved nothing - cost £300 billion and most certainly hasn't solved immigration issues- quite the opposite in fact.

NHS - I see nothing wrong at all with looking at other models in country's with good healthcare- although I do think Labour will put money into clearing some things via use of private sector - long term though that cannot be a solution- I think we need to pay in - but not like the US style system- I am also pro everyone getting an annual MOT on baselines and bloods done as part of it and incentivise people to take it up - £50 of Boots vouchers or something- so much could be saved by better preventative care.

Care system- I think again it would be better if we all paid in an insurance premium from 40 onwards at not stupid rates and enabled them to bring in the policy of £80k tops for care can be taken from assets - leaving more wealth to trickle down generations hopefully .

For some PS schemes, there is no "fund". Monies paid by the employer and employee aren't actually paid into the scheme. They're used to pay pensions for existing pensioners. A bit like NIC contributions and the state pension, again no "fund". That's where the term "unfunded" comes from. Basically been robbing Peter to pay Paul ever since inception.

Why it is unfunded, when both employers and employees contributed to it? re: "unfunded public sector DB schemes". Was it not costed properly?

Some are funded. The unfunded ones are paying current pensioners from current contributions from working employees plus taxpayers making up the difference. I.e. a ponzi scheme. All contributions the employees have made have been spent already. There is no fund of money whatsoever to pay their pensions. They are expecting future generations (with a lower ratio of working age people to pensioners) to fund their pensions for them to continue to prop up the completely unrealistic amounts of money they've been promised that would be nowhere near covered by the contributions they are making even if these were saved and invested and had capital growth over their lifetimes, and they are not being saved and invested.

Worse still it's all held "off-balance sheet" so no even included in the Government's quoted debt figure. It simply can't be paid but no politician wants to be the one to admit it.

I presume given your question you're not signed up to such an unfunded scheme or you would have ensured you knew where your money was going before doing so, so count yourself lucky really. The promises may look nice but won't be paid because the UK literally cannot pay them given the demographic changes so like all ponzi schemes they will, inevitably collapse. Each batch of politicians just hopes it won't happen on their watch and ignores it: the exact short-termism that is replicated across UK economic policy hence it being such a mess.

@taxguru I honestly don't think the public realise how many of these things work - be it DB schemes or NI - with NI many think itsall ringfenced into a big holding for pensions and NHS etc -it may at one point been so , I'm not sure- but doesn't work like that these days.

Nonsense. Do you really think the long term unemployed are spending 8 hours a day job hunting?

It never has been. When state pensions were first introduced they were paid from general taxation. Nothing has changed in a century, they were affordable for decades because while the boomer generation was working, working people
outnumbered pensioners by quite a margin. Now we have the biggest generation drawing pensions funded by an ever decreasing number of workers somewhat ameliorated by most pensioners also being tax payers.

All of which was foreseen for several decades but completely ignored by a succession of politicians of both major parties. Actuaries have been warning about it for decades. All we've had in the UK have been governments flip-flopping and changes the pension rules (both state and private) almost as often as changing their socks. We've had state graduated pensions, SERPS, S2P, contracting out, all have come, cost millions/billions in setting up and admin fees, then scrapped, then current workplace pensions have been in force for the last few years. But even they are still no compulsory as employees still have the option to opt out!!

Other countries facing the same demographic time bomb have embraced a long term strategy to mitigate what could otherwise be an eventual collapse (as happens to every Ponzi scheme). Countries such as Australia and New Zealand, Canada, etc., actually have a strategy. Whether or not their strategies will solve the crises is a different matter, but at least they're tackling it and hopefully the long term pain won't be so bad if they can avoid complete collapse.

mmmmmm Growth has escaped all of Europe over the last decade or so, escaped 14 years of the Tories, escaped Reeves too but now a random poster on MN has all the solutions......

Lol indeed!!

Sorry but i found your earlier post, wishlists, just as your idea that Govts can roll out schemes that are sound and secure.

There is a reason the Covid loans were taken advantage of by fraudsters.

All of which was foreseen for several decades but completely ignored by a succession of politicians of both major parties.

Yes it was but since we don’t have a time machine we’re stuck with it. I don’t believe any government, however good their intentions, can solve it without immigration. It’s the only solution.

When a political party gains power with a huge majority, that's the time to put some of those unpopular policies into play as they know they'll not face a back bench revolt and know they're in office for the full five year term.

As it is, Labour have probably massively damaged their chance of winning the next GE in five years time for not actually doing things that would start to show improvements in a few years yet making some stupid "politics of envy" changes that are pretty irrelevant and trivial and just playing to a small audience.

Precisely @taxguru ☹️

Hilarious.

Yes, there are other solutions, like those other countries put in place to change their systems when the demographic time-bomb became apparent. The UK choosing to sit around watching the fuse burn down until the bomb finally explodes is a choice.

Immigration isn't a "solution" to this issue for obvious mathematical reasons. All ponzi schemes inevitably collapse.

Also, you might remember that the good people of this country decided to deter all of the net contributer EU immigrants that used to come here who helped to plug such holes in our finances. Now that the vast majority of immigration is non-EU, on average every immigrant is costing us money rather than making us better off. How you think that will help to fund pensions is beyond me, but based on the comments you've made on this thread I'm not surprised that you wrote something so nonsensical.

Obviously everyone but you is an imbecile @TheWildRobot. Personal attacks are against MN guidelines.

Immigration can only be the solution if the fundamental problems are addressed, otherwise it will just feed the Ponzi scheme and the end result will be an even bigger crash. Today’s immigrants will likewise require health, care and pensions when they hit pension age.

I didn't make any personal attack. I stated that I am not surprised at what you wrote given your other comments on this thread also made no sense. They all seem to be ideologically driven rather than engaging in thoughtful discussion like everyone else. Your suggestion that immigration would somehow fix the pension issue is mathematically incoherent. It's not a "personal attack" to point this out.

Nobody mentioned the word "imbecile" but you. How unpleasanf.

I have seen you do this to other posters on other threads, attacking and baiting people who disagree with you rather than engaging in genuine discussion and I'm afraid I'm not interested in being engaged in it.