Chancellors statement tomorrow and as could have been predicted by almost anyone with an unbiased understanding of the workings of our economy and the importance of business sentiment, the OBR will cut the growth forecast and confirm that the Government has in fact borrowed more than projected ( who would have thought !) thus piling pressure on the chancellor to at least look like she will make an effort to balance the books.
All a week before businesses have to simultaneously swallow the N.I. Increase and the Increase in the Living wage, Pubs and restaurants will have their business rate relief reduced from 75 to 40 % , lower Stamp Duty kicks back in at 2% whilst continuing to fret about energy costs and green levy. Council Taxes rising and inflation still above target. It will be grim and the worst is still to come though she will blame the need to increase Defence spending etc .
In my view much of this is her own doing and she is beyond redemption and should go but I note the gnashing of teeth at the proposed cuts to Welfare and spending and the view of some that as a Labour Chancellor she should instead be choosing to " tax the rich" instead. I understand the sentiment but really ? .
Taxes are already at a post war high. As for the rich..
The Top 1% already pay 28.2% of all income tax. In 2005/6 that figure was 22.7%
The Top 10% already pay 60.2 % of all income tax. In 2005/6 that figure was 52.9%
And they don't pay their fair share ?
It could be said that part of that is reflection of widening wealth disparity and there may be an argument for some additional levy on the Super rich but as the government have found out with the Non - Dom debacle, these things tend not to pan out as now more than ever before the most wealthy can simply move their affairs to somewhere else in the world with a more relaxed tax regime. Already an ever-increasing number of brightest and most entrepreneurial are heading to Dubai etc , it would be a mistake to encourage this further.
Some 7 million taxpayers now pay some of their income at the 40% tax rate, 2.5 million more than would have done had the last government not frozen the threshold. In 2010 only 3.3M paid some tax in the higher band. Those with Student loans to re-pay will find themselves at this rate plus their loan re-payments with marginal rates over 60% on part of their earnings.
At the other end of the scale 35.6 % of the adult population pay no income tax at all.
Essentially, we have 28 million workers in the private sector who support 9 million economically inactive adults, 6 million public sector workers and 13 million pensioners. That is not sustainable and that to be fair is not down to Reeves and forget the supposed black hole - this is the real poison chalice she has inherited.
We are getting to the situation where those that don't work and pay tax are lecturing those that do on how much tax they should pay like they have some sort of moral high ground - they don't ! If ever there was an example of the tail wagging the dog then this must be it.
So Reeves having shafted the growth she claimed she would champion has nowhere to go for more tax ( though I am sure she will find somewhere in any event, but nothing like enough)
So cuts it must be...
Welfare cuts of £5 Billion by the end of the Parliament. There is no point in me re-stating the numbers that others have done before but given the scale of the spending, the ever-increasing number of claimants and the case that the system rewards people for categorising themselves as sick / disabled it appears to me that the system is abused. £5 Billion , not even now, by the end of the Parliament is a token amount given the sheer scale of the spend.
Beveridge's five giants of Idleness, Ignorance, Disease, Squalor and Want - How have we done ? I think a big tick for Disease, a massive improvement on Want, and a long way to go on Squalor. Ignorance gone backwards , Idleness is the UK's boom industry !
Aside from the 9 million economically inactive, millions more are caught in the working benefits trap , disincentivised to work hard and bereft of aspiration, stuck in a generational cycle of limited life chances.
Welfare was never supposed to be this. 80 years of the Welfare state and it is being tested to destruction in what is a shameful waste of human capital and money.
The rising economies of Asia have learned from our mistakes. The Chinese Communist Party believe that Welfarism like ours prolongs poverty as it disincentivises people from working hard and saving - on the evidence it is hard to disagree.
That said, of course there should be proper Welfare provision for those that genuinely cannot work and contribute to their own maintenance. Some of the posters on here have described their own circumstances and for people in such poor health then it should be within the means of our society to make provision for them. Unfortunately, too many who could provide themselves but do not have brought us to where we are now which put simply is that Welfare will either need to be less generous for all or more targeted. My preference is for more targeted but unfortunately that will mean more tests etc and I can but hope that those in genuine need are not impacted and I hope those in poor health and in need of support on this forum understand that and I genuinely would not want to deny you the support you should rightly receive.
A cut of £5 Billion in Welfare and move against PIP . I would rather cut our Asylum bill of £5.38 billion. Fat chance of that as the Migrant hotels that Starmer said he was going to close - well no he's not , they're going to be used for years to come according to the Home office and they will of course as the numbers are going up.
Similarly, I would prefer to have fewer of the migrants who are here to support the economy actually doing the opposite and not have 1.2 million of them on benefits claiming £7.5 billion in Universal credit .
How we can have a national conversation about reducing the welfare bill and causing anxiety to the genuinely sick and disabled and not call this out I don't know.
A £2 Billion cut in the Civil service - again playing at the margins . Headcount has gone up by 129,000 since 2016 . Productivity is still below Covid level . Cant think why ?
Actually get them to turn up to work and it will be amazing what could be saved.
We will see what else turns up tomorrow but as a final thought..
I have seen this government described on this forum by its supporters frequently and recently as " the adults in the room " or the ' adults back in charge" They are patently the opposite. They are much more students union politicians with no experience of the real world or an understanding of the consequences of their actions. That said , whilst I think they will not go anywhere near far enough in reducing the role of the state they are showing signs that they are able to adapt and understand that the solutions to our problems may not be what they once believed. So whilst I am not optimistic, I will be hoping for the best tomorrow and if she does go further in the very necessary cuts in spending I for one will support her .
