The Labour Government

[gordondaviesmoustache]

But is it not the case that reducing taxation can ultimately increase the treasury’s revenue? Growth reduces debt, growth increases tax takes, increasing taxes reduces growth (so long as that tax is on money being put to some use in the UK).

Yes, I’m well aware of that theory, and it’s doubtless worked in the past, most notably in the late ‘80s, but such a perception is rooted in the demographics of the past imo. The same rules cannot surely apply as they did 30 odd years ago.

If it was that straightforward then the Tories would have cut tax as you describe and they manifestly did not.

 

[Vic]

The cut off date for the Article IV report, which is what you’re actually quoting, was July 1, the same day as the vote on the welfare bill.

So it’s highly unlikely that the shambles which ensued that day is reflected in the report’s comments on the need for tough fiscal choices, given the very limited fiscal headroom. And of course further concessions were given on the welfare bill after the IMF report was completed.

July 1 was the staff report date. "On July 21, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for the United Kingdom..." Like I said, you'd think the Executive Board might have noticed what happened to the welfare bill in Parliament, and taken that into account in its report.

 

[BobKowalski]

If you remove Africa from the equation then the global population has been in decline for most of this century.

To say that the global population will be reducing by the end of this century is akin to saying CD sales have been in decline for its first quarter. The extent of this decline will be severe, precipitous and catastrophic for many countries, and quite possibly humanity as a whole, at least for a couple of generations, if not ad infinitum. The rate of reduction is going to be mind blowing.

The impact on matters such as social care, as there simply won’t be the numbers of people of working age to deliver it, will be profound and may require a complete revaluation of how we assess matters such as ageing, euthanasia and life itself. AI may provide some solution to this issue in the form of robotics, although it’s hard to see how that will assist in making the elderly feeling less isolated and lonely, but that may be the only practical solution short of adopting a Logan’s Run type future.

The issues currently being debated in this thread are a microcosm (and the start) of what awaits us and I find myself in agreement with posters with whom I don’t always share the same political outlook, but we have to face up to reality.

Some resolution may come from taxing property and the very wealthiest in society, but to suggest that is a complete panacea, and not without risk, is completely misguided. It certainly isn’t a complete solution, despite what some posters seem to believe.

I think stagnant or weak growth are likely to be endemic going forward. It seems too embedded and long-standing now for that not to be the case. I certainly don’t think it’s wise to make any economic assumptions based around late ‘90s levels of growth as a predication for spending levels.

Defence spending absolutely has to increase along the lines already committed to, as we are currently at war with Russia and that is highly unlikely to change for the foreseeable. I don’t agree that net zero should be abandoned as I think it’s in the nation’s medium and long term strategic best interests to pursue that course, and it is achievable. I feel the issue of illegal immigration isn’t substantive enough (in financial terms) to warrant forming a significant part of this discussion. And any country that substantially reduces education spending is failing to invest in its future.

So that leaves health and welfare, not least because they represent such an overwhelming percentage of overall expenditure and one way or another this is where the savings will have to be made. Obviously this needs to be done in a way that avoids the greatest injustice, but it will be sadly painful for lots of people. The political messaging needs to be faithful to this reality, but that will require a level of courage not currently on display.

These challenges will be faced by most developed counties btw. A combination of the foregoing demographic changes and the decline in western hegemony are both combining to create a reality that has to be faced up to.

Ignoring it won’t make it go away.

Excellent summation. AI and tech is the wild card in that we have no roadmap for where that will take us. Currently we are in an AI bubble as the hype has not translated into productivity and there is no clear idea when that will happen (or even if it will happen).

Putting AI aside we need to address the failure to adequately tax larger corporations/individuals and the problem of the over accumulation of wealth by an increasingly smaller pool of people. We need to punch a hole in this - not so much a trickle down but a cascade. Accumulated wealth stagnates. Wealth and productivity needs to benefit everyone not just the few for the system to work.

If AI does boost productivity it will potentially be at the cost of needing fewer people and that will exacerbate the issues we face. The benefits of AI will need to be widely shared and not simply translate into increased profits, executive pay and corporate share buyback schemes to keep share prices high. I floated the idea of an AI tax and universal basic income as a means of circulating higher productivity more widely.

A population crunch will come at some point, but how that will impact with AI and tech advances in seventy years time is anyone’s guess. Right now we use immigration to fill our specific labour shortfall and that will continue because no one has a viable alternative that doesn’t involve collapsing our system on its arse. AI may alleviate some of this dependency over the next decade or so, but I have my doubts.

We need to reimagine our way of looking at our problems. The State cannot really find much else to realistically cut and the drive for ‘efficiency’ has left what remains - be it health, judicial, police, or whatever - on various stages of life support. Which leaves growth. I’d take a period of incremental growth right now and anything above that a bonus. I tend to be optimistic on the growth front (Trump, Putin aside), but we do need to have a serious grown up conversation about all of this and dial down the noise and the stupidity of a lot of our political discourse. I like the idea of a renewed social contract similar to the Beveridge Report in 1942 which laid the foundations of the post war State. We need some common ground a majority can coalesce around and build on.

 

[meltonblue]

But is it not the case that reducing taxation can ultimately increase the treasury’s revenue? Growth reduces debt, growth increases tax takes, increasing taxes reduces growth (so long as that tax is on money being put to some use in the UK).

I’m not sure that’s as valid as it was previously due to the disparity of wealth now. It needs earnings up across the board rather than significantly more so at the top end.

 

[Brewster's millions]

Sunak expressly and repeatedly differentiated future tax increases under Labour, with what the Tories would do if they were elected, where he emphasised the Tories’ inveterate tax reducing instincts. This was one of his totemic GE campaign mantras and gave the clear impression, by way of electoral campaigning, of tax reduction in the event of a Tory GE victory.

So either that mantra was misleading and dishonest, or reflected the policy in the manifesto, but either way if repeatedly presented as such by the party leader then it sits in all fours with the notion of campaigning on reducing the tax burden, irrespective of how it accorded with the particulars of the manifesto.

Which makes Sunak a rat faced, lying ****.

Still not right.

The manifesto did not promise a reduction in the tax burden.

Sunak referred to the prospect of tax cuts. Again, this could have either referred to individual tax cuts relative to what Labour had planned, or relative to the projections in the March 2024 budget. He didn’t refer to a reduction in the tax burden, which is what you suggested in your first post.

Again, 28 of the 29 budgets delivered in government outlined a rise in the tax burden. The other held it constant.

 

[Brewster's millions]

July 1 was the staff report date. "On July 21, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for the United Kingdom..." Like I said, you'd think the Executive Board might have noticed what happened to the welfare bill in Parliament, and taken that into account in its report.

It doesn’t work like that.

The Executive Board considers the staff report, which was completed on 1 July, and offers an assessment of whether they agree with it. In this case the board said it agreed with the thrust of the staff appraisal.

It doesn’t change or make amendments to the report; the staff report forms the basis of the board’s discussions. And the staff report is unlikely to have included the push back on the welfare reforms.

 

[Vic]

Still not right.

The manifesto did not promise a reduction in the tax burden.

Sunak referred to the prospect of tax cuts. Again, this could have either referred to individual tax cuts relative to what Labour had planned, or relative to the projections in the March 2024 budget. He didn’t refer to a reduction in the tax burden, which is what you suggested in your first post.

Again, 28 of the 29 budgets delivered in government outlined a rise in the tax burden. The other held it constant.

"Prospect" of tax cuts? They claimed "The tax burden on workers is falling, with the average earner paying the lowest effective personal tax rate since 1975" and made explicit promises:


Bold actions to deliver a secure future for our country and for your family

To support working people and secure a stronger economy

Cut tax for workers by taking another 2p off employee National Insurance so that we will have halved it from 12% at the beginning of this year to 6% by April 2027, a total tax cut of £1,350 for the average worker on £35,000 – and the next step in our long-term ambition to end the double tax on work when financial conditions allow.

Cut taxes to support the self-employed by abolishing the main rate of self-employed National Insurance entirely by the end of the Parliament.

 

[Vic]

It doesn’t work like that.

The Executive Board considers the staff report, which was completed on 1 July, and offers an assessment of whether they agree with it. In this case the board said it agreed with the thrust of the staff appraisal.

It doesn’t change or make amendments to the report; the staff report forms the basis of the board’s discussions. And the staff report is unlikely to have included the push back on the welfare reforms.

Given your stuff on the Conservative manifesto, I'm disinclined to bow to your extensive knowledge that the Executive Board of the IMF just rubber stamps what "the staff" say. Even then, if "the board said it agreed with the thrust of the staff appraisal" that would be in the knowledge of the welfare bill changes.

 

[Brewster's millions]

"Prospect" of tax cuts? They claimed "The tax burden on workers is falling, with the average earner paying the lowest effective personal tax rate since 1975" and made explicit promises:


Bold actions to deliver a secure future for our country and for your family

To support working people and secure a stronger economy

Cut tax for workers by taking another 2p off employee National Insurance so that we will have halved it from 12% at the beginning of this year to 6% by April 2027, a total tax cut of £1,350 for the average worker on £35,000 – and the next step in our long-term ambition to end the double tax on work when financial conditions allow.

Cut taxes to support the self-employed by abolishing the main rate of self-employed National Insurance entirely by the end of the Parliament.

Again, doesn’t refer to the tax burden as a whole, so it doesn’t change the argument.

Are you suggesting that referring to a lower or unchanged tax burden on working people, while pushing up the tax burden overall, is somehow misleading or dishonest?

Have a think about that one.

 

[Brewster's millions]

Given your stuff on the Conservative manifesto, I'm disinclined to bow to your extensive knowledge that the Executive Board of the IMF just rubber stamps what "the staff" say. Even then, if "the board said it agreed with the thrust of the staff appraisal" that would be in the knowledge of the welfare bill changes.

The process around the Article IV discussions and the IMF staff report is detailed in the latest Article IV papers for the UK. A footnote explains it all in the first few pages, so it doesn’t require any extensive or inside knowledge of the protocols, you simply need to read the first few pages of the document. Which, clearly, you’ve failed to do.

Also, I didn’t refer to any rubber stamping of the staff report. I suggest you have a read of the document, and then you’d have a better understanding of it all.

 

[inchy14]

Not sure what the first bit means regarding I'm alright, but: I pointed out the facts of where the money is spent. Of course changes and savings need to be made.

I've previously suggested changes to the state pension that would affect me adversely. How many on here are genuinely prepared to put their money where their mouth is and be adversely affected?

Now, where shall we start from those categories above?

I’d argue nobody working full time should be claiming universal credit. Salaries should be higher, employers like the big supermarket chains should be using some of their obscene profits to pay their staff better wages so they in turn aren’t claiming benefits. It’s a scandal that a full time job isn’t enough to survive on for many.

 

[Vic]

I’d argue nobody working full time should be claiming universal credit. Salaries should be higher, employers like the big supermarket chains should be using some of their obscene profits to pay their staff better wages so they in turn aren’t claiming benefits. It’s a scandal that a full time job isn’t enough to survive on for many.

I've not really explored how it would work (or wouldn't) but instead of paying in-work benefits I like the idea of firms paying proper wages, and giving subsidies or tax breaks to SMEs especially startups.

 

[hilts]

If you remove Africa from the equation then the global population has been in decline for most of this century.

To say that the global population will be reducing by the end of this century is akin to saying CD sales have been in decline for its first quarter. The extent of this decline will be severe, precipitous and catastrophic for many countries, and quite possibly humanity as a whole, at least for a couple of generations, if not ad infinitum. The rate of reduction is going to be mind blowing.

The impact on matters such as social care, as there simply won’t be the numbers of people of working age to deliver it, will be profound and may require a complete revaluation of how we assess matters such as ageing, euthanasia and life itself. AI may provide some solution to this issue in the form of robotics, although it’s hard to see how that will assist in making the elderly feeling less isolated and lonely, but that may be the only practical solution short of adopting a Logan’s Run type future.

The issues currently being debated in this thread are a microcosm (and the start) of what awaits us and I find myself in agreement with posters with whom I don’t always share the same political outlook, but we have to face up to reality.

Some resolution may come from taxing property and the very wealthiest in society, but to suggest that is a complete panacea, and not without risk, is completely misguided. It certainly isn’t a complete solution, despite what some posters seem to believe.

I think stagnant or weak growth are likely to be endemic going forward. It seems too embedded and long-standing now for that not to be the case. I certainly don’t think it’s wise to make any economic assumptions based around late ‘90s levels of growth as a predication for spending levels.

Defence spending absolutely has to increase along the lines already committed to, as we are currently at war with Russia and that is highly unlikely to change for the foreseeable. I don’t agree that net zero should be abandoned as I think it’s in the nation’s medium and long term strategic best interests to pursue that course, and it is achievable. I feel the issue of illegal immigration isn’t substantive enough (in financial terms) to warrant forming a significant part of this discussion. And any country that substantially reduces education spending is failing to invest in its future.

So that leaves health and welfare, not least because they represent such an overwhelming percentage of overall expenditure and one way or another this is where the savings will have to be made. Obviously this needs to be done in a way that avoids the greatest injustice, but it will be sadly painful for lots of people. The political messaging needs to be faithful to this reality, but that will require a level of courage not currently on display.

These challenges will be faced by most developed counties btw. A combination of the foregoing demographic changes and the decline in western hegemony are both combining to create a reality that has to be faced up to.

Ignoring it won’t make it go away.

Ignore it we shall though

 

[ganganvince]

If you remove Africa from the equation then the global population has been in decline for most of this century.

To say that the global population will be reducing by the end of this century is akin to saying CD sales have been in decline for its first quarter. The extent of this decline will be severe, precipitous and catastrophic for many countries, and quite possibly humanity as a whole, at least for a couple of generations, if not ad infinitum. The rate of reduction is going to be mind blowing.

The impact on matters such as social care, as there simply won’t be the numbers of people of working age to deliver it, will be profound and may require a complete revaluation of how we assess matters such as ageing, euthanasia and life itself. AI may provide some solution to this issue in the form of robotics, although it’s hard to see how that will assist in making the elderly feeling less isolated and lonely, but that may be the only practical solution short of adopting a Logan’s Run type future.

The issues currently being debated in this thread are a microcosm (and the start) of what awaits us and I find myself in agreement with posters with whom I don’t always share the same political outlook, but we have to face up to reality.

Some resolution may come from taxing property and the very wealthiest in society, but to suggest that is a complete panacea, and not without risk, is completely misguided. It certainly isn’t a complete solution, despite what some posters seem to believe.

I think stagnant or weak growth are likely to be endemic going forward. It seems too embedded and long-standing now for that not to be the case. I certainly don’t think it’s wise to make any economic assumptions based around late ‘90s levels of growth as a predication for spending levels.

Defence spending absolutely has to increase along the lines already committed to, as we are currently at war with Russia and that is highly unlikely to change for the foreseeable. I don’t agree that net zero should be abandoned as I think it’s in the nation’s medium and long term strategic best interests to pursue that course, and it is achievable. I feel the issue of illegal immigration isn’t substantive enough (in financial terms) to warrant forming a significant part of this discussion. And any country that substantially reduces education spending is failing to invest in its future.

So that leaves health and welfare, not least because they represent such an overwhelming percentage of overall expenditure and one way or another this is where the savings will have to be made. Obviously this needs to be done in a way that avoids the greatest injustice, but it will be sadly painful for lots of people. The political messaging needs to be faithful to this reality, but that will require a level of courage not currently on display.

These challenges will be faced by most developed counties btw. A combination of the foregoing demographic changes and the decline in western hegemony are both combining to create a reality that has to be faced up to.

Ignoring it won’t make it go away.

Are you ignoring India? (:

 

[bluethrunthru]

I hope the first question from Reynolds is

"before we start with your concerns can you let me know is Sir John Bamford going to hand over the £500m back tax he owes HMRC then we can discuss your concerns "

Business secretary to meet JCB boss after concerns raised about US tariffs

Jonathan Reynolds will meet the boss of JCB after the company was among those which raised the alarm about the impact of new US tariffs on British businesses. JCB chief executive Graeme Macdonald called on the UK Government to get a “deal done quickly” with the US on steel, after hundreds of...

uk.finance.yahoo.com

 

[metalblue]

Yes, I’m well aware of that theory, and it’s doubtless worked in the past, most notably in the late ‘80s, but such a perception is rooted in the demographics of the past imo. The same rules cannot surely apply as they did 30 odd years ago.

If it was that straightforward then the Tories would have cut tax as you describe and they manifestly did not.

I’m not so sure it’s welded in the past. If we consider Brexit and the cost to the UK economy is a very recently example of how less money in the system (due to taxes and additional costs) has negatively impacted growth - although it’s not exactly similar.

The biggest problem to these sorts of solutions is they take a long time to feed through versus the instant impact of tax increases to the exchequer with a longer term negative impact - ie solving your problem now but building problems up for future governments.

 

[Gray]

Lord Blunkett is now telling the Government to pull their fingers out over illegal immigration. New poll saying 70% of the population are not satisfied with how this issue is being dealt with.

 

[metalblue]

I’m not sure that’s as valid as it was previously due to the disparity of wealth now. It needs earnings up across the board rather than significantly more so at the top end.

Low wages are for sure a huge problem, people in full time employment receiving tax top ups is mental but it’s the reality for many.

The super rich don’t get much sympathy, and nor should they, but the lower and middle end is where we should focus tax reduction and to their credit the coalition did a good job in setting the groundwork for increasing the threshold people pay taxes.

 

[meltonblue]

Low wages are for sure a huge problem, people in full time employment receiving tax top ups is mental but it’s the reality for many.

The super rich don’t get much sympathy, and nor should they, but the lower and middle end is where we should focus tax reduction and to their credit the coalition did a good job in setting the groundwork for increasing the threshold people pay taxes.

I agree but it really needs to come with an increase in salary too if possible, it’s far better for us and the treasury to have the lower and middle end earning as they spend more as a collective than the super rich, that’s why the tax revenue ultimately goes up.

 

[gordondaviesmoustache]

Still not right.

The manifesto did not promise a reduction in the tax burden.

Sunak referred to the prospect of tax cuts. Again, this could have either referred to individual tax cuts relative to what Labour had planned, or relative to the projections in the March 2024 budget. He didn’t refer to a reduction in the tax burden, which is what you suggested in your first post.

Again, 28 of the 29 budgets delivered in government outlined a rise in the tax burden. The other held it constant.

I didn’t say the manifesto promised a reduction in the tax burden, I said the Tories campaigned on reducing taxation, which isn’t the same thing. I said the notion that the tax burden could be reduced was preposterous and went on to say that if the manifesto didn’t make this commitment then Sunak was presenting the Tory tax plans dishonestly, as he plainly gave the impression that it would be. The fact he failed to specify whether he was referring to individual tax cuts relative to what Labour had planned, or relative to the projections in the March 2024 budget adds a further layer of dishonesty.

Here’s what he said in June 2024 during the campaign:

But he vowed that if re-elected, his party would "keep cutting taxes in the coming years", including by reducing employee NI by 1p next April, and 2p by April 2027.

That is estimated to cost the Treasury £10.3bn in lost revenue by 2030.

The document also committed to reduce the amount of NI self-employed people pay on profits between £12,570 and £50,270 by 1p each year, meaning by April 2029 they would pay nothing at all.

The manifesto presented the cuts as a "further downpayment" on the Tories' long-term ambition to abolish NI altogether at an unspecified point in the future.

"As Conservatives, we believe that hard work shouldn't be taxed twice. That's unfair," the prime minister added.

He added that Labour's Sir Keir Starmer "takes a very different view".

"He says he's a socialist and we all know what socialists do, don't we? They take more of your money because they think it belongs to them," Mr Sunak added.

Rishi Sunak pledges further tax cuts in Tory election manifesto

The prime minister puts further cuts to National Insurance at the heart of his offer to voters.

www.bbc.co.uk

“Keep cutting taxes in the coming years” clearly connotes a (dishonest) notion of the tax burden being reduced. I’m not sure what other sensible conclusion can be drawn from that statement, if it is held at face value. The juxtaposition he emphasised with Labour taking “more of your money” further accentuated that illusion.

Every government cuts some taxes and increases others. That’s perfectly normal. To present the former as the extent of your tax policy and ignore the latter is plainly dishonest as it doesn’t present a true and fair picture. This is the sleight of hand that Sunak deployed throughout that campaign in respect of his tax plans. He gave the clear impression that he would reduce taxes (overall) if elected but this was never going to happen, and he would have known it.

Rat faced **** that he is.