The Labour Government

[Chippy_boy]

I think the flaw in this thinking is if you look at the flow of wealth over the last 30/40 years the trajectory is such that squeezing the middle classes is at very best a temporary band aid. It might feel good for a while that they are taking the kind of medicine the less well off have had to take, it might also feel good that we are seemingly taking action to fix things. Except it won't address the fundamental issue we have which is massive outflows of wealth to a tiny percentage of the population and that the version of capitalism we've ended up with is focused on large scale wealth extraction and hoarding by a tiny group at the expense of the vast majority. When the post war social consensus broke down this is what replaced it. The argument that their existing taxes pay for a significant proportion of the state is irrelevant because (a) they often make their fortunes by extracting wealth from states in the first place (b) things are continuing to get worse for the vast majority of people anyway.

If we cannot stop rising inequality and decelerate the flow of wealth to the super rich then talk of taking the medicine sounds reasonable but is futile. The poor and middle income 'classes' cannot fix this problem on their own, at least not through shouldering more burden.

The globalisation and financialisation of the economy seems to make fixing this problem head spinningly hard. If I had the answers I wouldn't be sat on here pontificating. But we'd be better devoting our efforts to working that out than donning financial sack cloth and ashes in the hope it provides a miracle that isn't going to come.

I am truly glad for your sister and you that she has had access to the pioneering treatment. Hopefully, as is often the case with advancements, the costs of such treatment can be reduced to increase access to others too. At one level £500k is a very big number, but another way of looking at it is it takes Jeff Bezo about 30-40 seconds to increase his wealth by that amount. Does taking all of Jeffrey's money off him magically solve the problem? Of course not, but it does highlight the insanity of the system we are trying to fix.

Even if we could fix it temporarily by ordinary folk taking yet another hair cut, what happens when the super rich come back for more?

Please don't take this as just being argumentative, because I hear you and agree with quite a bit of it. But I'll focus on the bits I don't agree with, or are worth me commenting on.

First, I think it's a sweeping (and IMO wrong) generalization that the super rich extract money from the state in the first place. I don't know anyone in the UK who is super rich, and the only one I do know made his money fair and square. Left Texas Instruments, set up his own software company and made himself hundreds of millions of dollars. He didn't steal it off anyone, and certainly not off the state. It was a reflection of the value of the company, which was freely invested in by the likes of you and me, and the institutional investors. In building his company, he paid VAST amounts of tax, and hired a lot of people - me included - and had 6,000 people on the payroll, all of whom were paid handsomely, and all of whom also paid a lot of tax. What is remotely wrong with this? I think this route to being a billionaire is the norm, not the exception.

Second, I was not suggesting that ONLY the "poor and middle income 'classes'" should bear the burden of fixing society's issues/financial woes. Merely that it is not feasible for that group to be excluded from any pain. Trying to tax only those not in that group, won't work.

Finally, the disparity between rich and poor. I can see that in an ideal world, the gap seems ludicrously large. But I think it's a facet of successful capitalist economies. The motivation to get rich is what drives people - like my former boss - to risk everything, and to do so many times over. I think efforts to curtail this - unless globally coordinated, and that's not happening in any relevant timescale - will just cause the uber rich to make their money elsewhere. It is sad IMO that Elon Musk, Jeff Bezos, Bill Gates, Warren Buffet, Mark Zuckerberg, Larry Page, Larry Ellison etc etc - I could go on - are not English and not living in England. There's a reason they are all in the US and not here. And making "here' even less attractive would only make things worse, not better.

Footnote: I don't see any complaints about how much we had to pay KDB or Haaland or anyone else. Absolutely ludicrous differential between their pay and that of either the tea lady, or even a 3rd division player. But we accept that if you want the best, you have to pay them. Same in any business.

 

[threespires]

Putting a few pennies on income tax won't make any difference. Many taxpayers either don't pay income tax or don't pay a lot. However, one big chunk of income tax is paid by the wealthiest but there are far less of them so a few pennies aren't going to make much difference.

There is still an honest and difficult conversation to be had about taxation of assets.

There was a period in post ww2 history where assets and labour grew wealth if not equitably then at least in a broadly aligned fashion. Since the 1980s the balance has changed enormously in favour of asset driven wealth but as you say our taxation system simply hasn't reflected that sea change. It is a difficult conversation made harder by the fact we've sat on the issue for too long, but without the conversation how do we fix things?

 

[Chippy_boy]

There was a period in post ww2 history where assets and labour grew wealth if not equitably then at least in a broadly aligned fashion. Since the 1980s the balance has changed enormously in favour of asset driven wealth but as you say our taxation system simply hasn't reflected that sea change. It is a difficult conversation made harder by the fact we've sat on the issue for too long, but without the conversation how do we fix things?

I don't have all the answers (obviously) but for a start, no-one working in the public sector generates wealth. Sorry, I know that offends some but that's the reality. They play an important part of course - a vital part. They keep the system working and support those who are earning the wealth. To use a Wimbledon analogy, they are Sinner's support team that travel the globe with him. He canot win without them - they are essential - but he is the guy who wins the trophies and earns the money. They may feel that the team earns the money and I can see that perspective, but Sinner is the guy to whom the cheque is made payable, not the physio.

Today we have too many support staff and not enough tennis players. There's too few people working and paying taxes to pay for everyone else. The "business" - UK plc - has got out of balance.

We need a two-pronged approach to fix this. (a) We have to accept that some public sector cuts have to be made. We just cannot afford to carry on with this level of cost base. And wastage is EVERYWHERE. Councils spending money on utter bollocks, whilst at the same time pleading poverty. Happens all over the country, every week. And (b) we need to get people back to work, get welfare payments back to pre-COVID levels and as soon as possible, so we can lower taxes not raise them. There's a direct correlation between periods of strong economic growth and lower taxes, vs higher rates and slow growth. That bit is not rocket science.

 

[Chippy_boy]

Putting a few pennies on income tax won't make any difference. Many taxpayers either don't pay income tax or don't pay a lot. However, one big chunk of income tax is paid by the wealthiest but there are far less of them so a few pennies aren't going to make much difference.

There is still an honest and difficult conversation to be had about taxation of assets.

1p on the basic income tax fixes Reeves' new "black hole" and raises around £6bn or £7bn in additional tax. I don't like it as a long term solution - I'd like to see us raise more taxation through growth and a bigger economy. But it would fix the short term hole.

 

[bluethrunthru]

when Times Politics tried to smear Labour and the UK workforce

 

[threespires]

Please don't take this as just being argumentative, because I hear you and agree with quite a bit of it. But I'll focus on the bits I don't agree with, or are worth me commenting on.

First, I think it's a sweeping (and IMO wrong) generalization that the super rich extract money from the state in the first place. I don't know anyone in the UK who is super rich, and the only one I do know made his money fair and square. Left Texas Instruments, set up his own software company and made himself hundreds of millions of dollars. He didn't steal it off anyone, and certainly not off the state. It was a reflection of the value of the company, which was freely invested in by the likes of you and me, and the institutional investors. In building his company, he paid VAST amounts of tax, and hired a lot of people - me included - and had 6,000 people on the payroll, all of whom were paid handsomely, and all of whom also paid a lot of tax. What is remotely wrong with this? I think this route to being a billionaire is the norm, not the exception.

Second, I was not suggesting that ONLY the "poor and middle income 'classes'" should bear the burden of fixing society's issues/financial woes. Merely that it is not feasible for that group to be excluded from any pain. Trying to tax only those not in that group, won't work.

Finally, the disparity between rich and poor. I can see that in an ideal world, the gap seems ludicrously large. But I think it's a facet of successful capitalist economies. The motivation to get rich is what drives people - like my former boss - to risk everything, and to do so many times over. I think efforts to curtail this - unless globally coordinated, and that's not happening in any relevant timescale - will just cause the uber rich to make their money elsewhere. It is sad IMO that Elon Musk, Jeff Bezos, Bill Gates, Warren Buffet, Mark Zuckerberg, Larry Page, Larry Ellison etc etc - I could go on - are not English and not living in England. There's a reason they are all in the US and not here. And making "here' even less attractive would only make things worse, not better.

Footnote: I don't see any complaints about how much we had to pay KDB or Haaland or anyone else. Absolutely ludicrous differential between their pay and that of either the tea lady, or even a 3rd division player. But we accept that if you want the best, you have to pay them. Same in any business.

I don't think you're being argumentative, you're raising reasonable counterpoints and as someone who benefited from a similar situation (in my case a company founded by an ex IBMer) which in turn allowed me to set up a company of my own I have a degree of affinity with what you are saying.

I would disagree in one important way though. I'm not sure what the era was re your ex bosses company and whether it was product or services, product I guess to have achieved a significant multiplyer but I think the route to becoming a billionaire has in fact changed and not in a good way.

Traditionally people became super wealthy by being an industrial or manufacturing titan; or by building a huge retail/consumer goods empires. From the 90s onwards this has shifted to different models that are less valuable and productive to the real economy as people feel it. Let's use technology as an example particularly as it is one of the key routes to great wealth these days, your ex TI boss was (I assume) a technologist who took risks, paid a lot of taxes, created well paid jobs that in turn generated more taxes. This is not the same model that the technologists driving the gig economy are using .Their model involves limited personal risk and the generation of economic insecurity in the wider population. So the likes of Kalanick etc become extremely rich whilst the consequences of that large scale economic insecurity their software creates are then picked up by the state in terms of welfare benefits. This is pretty much the opposite of your old bosses model.

In fact coming up with business models that privatise the profit and socialise the risk is almost an artfom for the modern billionaire. Whether it's bail outs or rigging markets or intense lobbying or plain blackmail there are many ways to fleece the state.

Beyond technology the other key channels to vast wealth these days are things like speculative capital and real estate and pharma/biotech. All of which have horror stories associated with them. The opiod crisis in the US is a classic example of how the current rapacious form of capitalism is a step change from the past as is the speed at which billionaire status is typically made these days.

To be clear, my problem isn't super rich people per se, it's the decoupling of wealth creation and national prosperity that the latest generation of the super rich have achieved. Once decoupled we are left with a situation where the state can hope that wealth finds it's way into the real economy but that's entirely at the largesse of the billionaires and it's not working.

 

[Vic]

It might be useful at this point to remember what Labour did actually promise, from their manifesto, page 19.

"We will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT"

Does it say Employees National Insurance? No. National Insurace. We will NOT increase National Insurace. It could not be more clear.

They have now changed their tune and a 3-line whip has any Labour representative on TV saying "we promised not to raise Employees National Insurance". NO. You promised not to raise NI, period.

Will be interesting in the coming weeks/months whether the "higher or additional rates of income Tax" promise is conveniently forgotten too.

It says (before your editing out the start of the sentence):

"Labour will not increase taxes on working
people, which is why we will not
increase National Insurance, the
basic, higher, or additional rates
of Income Tax, or VAT."

 

[Vic]

I think the flaw in this thinking is if you look at the flow of wealth over the last 30/40 years the trajectory is such that squeezing the middle classes is at very best a temporary band aid. It might feel good for a while that they are taking the kind of medicine the less well off have had to take, it might also feel good that we are seemingly taking action to fix things. Except it won't address the fundamental issue we have which is massive outflows of wealth to a tiny percentage of the population and that the version of capitalism we've ended up with is focused on large scale wealth extraction and hoarding by a tiny group at the expense of the vast majority. When the post war social consensus broke down this is what replaced it. The argument that their existing taxes pay for a significant proportion of the state is irrelevant because (a) they often make their fortunes by extracting wealth from states in the first place (b) things are continuing to get worse for the vast majority of people anyway.

If we cannot stop rising inequality and decelerate the flow of wealth to the super rich then talk of taking the medicine sounds reasonable but is futile. The poor and middle income 'classes' cannot fix this problem on their own, at least not through shouldering more burden.

The globalisation and financialisation of the economy seems to make fixing this problem head spinningly hard. If I had the answers I wouldn't be sat on here pontificating. But we'd be better devoting our efforts to working that out than donning financial sack cloth and ashes in the hope it provides a miracle that isn't going to come.

I am truly glad for your sister and you that she has had access to the pioneering treatment. Hopefully, as is often the case with advancements, the costs of such treatment can be reduced to increase access to others too. At one level £500k is a very big number, but another way of looking at it is it takes Jeff Bezo about 30-40 seconds to increase his wealth by that amount. Does taking all of Jeffrey's money off him magically solve the problem? Of course not, but it does highlight the insanity of the system we are trying to fix.

Even if we could fix it temporarily by ordinary folk taking yet another hair cut, what happens when the super rich come back for more?

Perhaps the most outlandish promise / claim / lie of recent times is Cameron's "We're all in it together".

We're all in this together, says PM. Really, Mr Cameron?

The Prime Minister's reluctance to interfere with the bonus system of taxpayer-owned banks is a far cry from his pledges while in opposition. Brian Brady, Emily Dugan and Jane Merrick report

www.independent.co.uk

 

[Chippy_boy]

It says (before your editing out the start of the sentence):

"Labour will not increase taxes on working
people, which is why we will not
increase National Insurance, the
basic, higher, or additional rates
of Income Tax, or VAT."

It wasn't "editing". I changed nothing. It's called Quoting

The manifesto says lots of other things as well, none of which contradict the explicit commitment to not raise NI.

It's fantasy to imagine that they meant only employees NI. This is a carefully drafted document which has been scrutinised by many, pre-publication and had lawyers review it with a fine toothed comb before releasing it. As is the norm.

Had they meant they would not increase only employees NI they would have said so. They did not. That is not the commitment they made.

My strong suspicion is that once in office and trying to think of pots to raid, they figured they could cheat and hide behind this "ambiguity" when in fact their meaning was clear. Like trying to hide behind a fictitious £22bn black hole which not only did not exist, moreover the books were available to them long before the feigned "surprise".

 

[hampshireblue]

So a few of us have indicated where and how taxes may/could/should rise. That still leaves a whole load of regular contributors who, by their silence, suggest they are not prepared for any personal rises at all. On that basis, which services are we all prepared to allow to go without?

 

[Palerider]

Nerd that I am, I have had a play with a tax calculator (in a basic way, no messing with tax codes or pension contributions)

For someone on £35,000 - Tax + NI = £6,280 per year. Take home around £28,720 per year.

For a top, top footballer on £19,000,000 - Tax + NI = £8,917,213. Take home around £10,082,000 per year.

Interesting thing is it would take the £35,000 standard earner 351 years to earn one year of the footballers take home pay.

However, it would take a massive 1420 years for the £35,000 standard earner to pay the tax and NI that the footballer pays in one year.

If you take City's wage bill as a whole then when we play at home the players tax contributions are roughly equivalent to 17,250 standard wage earners. It's quite possible with the number of pensioners, children and non tax payers at a match that the players and staff tax contribution is actually very close to the entire crowd.

Essentially a player may get paid a disproportional amount of pay to ourselves but they contribute an even more disproportional amount in tax and NI contributions.

 

[Palerider]

So a few of us have indicated where and how taxes may/could/should rise. That still leaves a whole load of regular contributors who, by their silence, suggest they are not prepared for any personal rises at all. On that basis, which services are we all prepared to allow to go without?

As I have posted above, the tax and NI payment on a basic salary of £35,000 is only £6,280 which combined with the average Council Tax of £1500 (split between the entire household) probably means that most average tax payers are only contributing £7000 per year for everything. Incredible value.

Contrasting with Germany,

From Internet,
the standard health insurance contribution rate for statutory (public) health insurance is 14.6% of gross salary, shared equally between employer and employee. Additionally, each insurance provider can levy an individual supplementary contribution, with an average of 2.5% in 2025.
End of internet

By my calcalations, 14.6% of £35,000 would be £5,111.

So the Germans pay at least £5111 just for Health Care (possibly 2.5% more) whereas we pay £7000 for everything! We need a political party with the balls to tell us the hard truth and the tenacity to tackle both tax avoidance and benefit fraud.

 

[hilts]

Perhaps the most outlandish promise / claim / lie of recent times is Cameron's "We're all in it together".

We're all in this together, says PM. Really, Mr Cameron?

The Prime Minister's reluctance to interfere with the bonus system of taxpayer-owned banks is a far cry from his pledges while in opposition. Brian Brady, Emily Dugan and Jane Merrick report

www.independent.co.uk

Look over there a Tory from the past :-)

 

[Chippy_boy]

As I have posted above, the tax and NI payment on a basic salary of £35,000 is only £6,280 which combined with the average Council Tax of £1500 (split between the entire household) probably means that most average tax payers are only contributing £7000 per year for everything. Incredible value.

Contrasting with Germany,

From Internet,
the standard health insurance contribution rate for statutory (public) health insurance is 14.6% of gross salary, shared equally between employer and employee. Additionally, each insurance provider can levy an individual supplementary contribution, with an average of 2.5% in 2025.
End of internet

By my calcalations, 14.6% of £35,000 would be £5,111.

So the Germans pay at least £5111 just for Health Care (possibly 2.5% more) whereas we pay £7000 for everything! We need a political party with the balls to tell us the hard truth and the tenacity to tackle both tax avoidance and benefit fraud.

Precisely!

 

[Hertzblue]

So a few of us have indicated where and how taxes may/could/should rise. That still leaves a whole load of regular contributors who, by their silence, suggest they are not prepared for any personal rises at all. On that basis, which services are we all prepared to allow to go without?

 

[Hertzblue]

when Times Politics tried to smear Labour and the UK workforce

Nothing to do with approx 5 million women entering the workplace since the 70s and the rise in part time opportunities ?

 

[Hertzblue]

I'm not sure it would be legal tbh. Especially someone like my Mrs handing over thousands in discretionary NI top up explicitly to get a full pension, only to be told you're not getting it? Nah, that has class action lawsuit written all over it. Hell, I'd even start one.

FFS,
My Mrs is battering me now on this, we handed over a few grand to top up hers as well.
Lesson learned I suppose, never start an argument about reducing pensions in a room full of FOC's.
I need a younger audience ...

 

[Hertzblue]

It says (before your editing out the start of the sentence):

"Labour will not increase taxes on working
people, which is why we will not
increase National Insurance, the
basic, higher, or additional rates
of Income Tax, or VAT."

Ah , please help me understand Vic.

"Labour will not increase taxes on working
people,

Can you please clarify who are " working people"
In the past ( I think it might have been Nandy) has said people on £100k could be working people, Starmer has said it could perhaps be only those who couldn't afford to repair their own washing machine and the vibe now is that it could only be those on "modest" incomes.
Help us all please .

 

[Vic]

I don't have all the answers (obviously) but for a start, no-one working in the public sector generates wealth. Sorry, I know that offends some but that's the reality. ...

It's not offensive, just nonsensical.

East Coast trains, failed twice as private companies, taken over by government directly so suddenly public sector and making a profit.

Did private road hauliers in the 50s and 60s contribute to wealth but not the nationalised BRS?

And not quite the same thing, but I'll tell it anyway. The nationalised British Rail in the 70s ran special day trips at weekends that made money, using older coaches, so only cost was train crew wages and fuel. That would include maybe 20 trains to a Wembley cup final. That generated wealth. Thatcher sent in the accountants who said using the coaches only at weekends was poor stock utilisation so that marginal profit was lost. They also priced freight at marginal rates to get timber companies in Scotland on the West Highland line to send logs south by train, until the accountants said all freight had to bear its full share of fixed costs; the price went up, the timber went back on the roads, and the loss-making passenger trains still had to bear all the fixed costs.

 

[Vic]

It wasn't "editing". I changed nothing. It's called Quoting

The manifesto says lots of other things as well, none of which contradict the explicit commitment to not raise NI.

It's fantasy to imagine that they meant only employees NI. This is a carefully drafted document which has been scrutinised by many, pre-publication and had lawyers review it with a fine toothed comb before releasing it. As is the norm.

Had they meant they would not increase only employees NI they would have said so. They did not. That is not the commitment they made.

My strong suspicion is that once in office and trying to think of pots to raid, they figured they could cheat and hide behind this "ambiguity" when in fact their meaning was clear. Like trying to hide behind a fictitious £22bn black hole which not only did not exist, moreover the books were available to them long before the feigned "surprise".

Starting a quote in the middle of a sentence sounds like selective quoting.

Chippy is an idiot.

Edited from "If you didn't know him, you'd think Chippy is an idiot".