Love the longer hair Rachel and the smiles!

I am feeling a bit more relaxed because Lucy Powell is now Deputy Party Leader and she’s is saying what I like to hear. Let’s hope she wins out.

What is she saying?

Saying they won't mustn't raise taxes is short sighted. What "workers" need is no rise in their overall tax burden while others, with greater capacity, pay more, not less than, the "workers".

It’s good to hear that the softer left Tribune* group is being revived:

www.theguardian.com/politics/2025/nov/06/labour-mps-revive-tribune-to-take-on-reform

And

www.theguardian.com/politics/2025/nov/06/lucy-powell-says-labour-must-stand-by-promise-not-to-raise-key-taxes

* Fond memories of the Trevor Griffiths TV drama Bill Brand starring Jack Shepherd about a new Labour MP who is persuaded to join The Journal group, a thinly disguised Tribune. It’s on YouTube if anyone’s interested.

Income tax is already continuing to rise by stealth due to the freezing of the tax personal allowance by Sunak from 2022, Hunt's extension of it to 2028 and Reeves leaving the freeze in place.

Unless she changes that, it's soon going to pull someone whose only income is the full new State Pension into the net making people in receipt of Pension Credit better off as the latter in not taxable.

I do wonder if she might reinstate the index linked tax personal allowance (aka the Rooker Wise amendment) alongside a penny on income tax and some more incremental bands rather than the 20%, 40%, 45% we have now.

The two tax experts I follow both argue against specific wealth taxes:

Tax expert Dan Neidle argues that wealth taxes would backfire, as they are likely to hit growth, employment, and investment, while being complex and slow to implement. He suggests that there are better, more practical ways to reform the tax system to tax the wealthy fairly, such as reforming capital gains tax, inheritance tax, or land tax. Neidle points to modelling that shows wealth taxes could lead to a long-term reduction in GDP.

Tax expert Richard Murphy argues that wealth taxes are not the best solution and would not work because they are a form of retrospective taxation, are difficult to implement, and create incentives for tax avoidance. He believes there are better ways to address wealth inequality, such as improving existing taxes and ensuring the wealthy pay their fair share through other means, like higher income or capital gains taxes, but a direct wealth tax is not his preferred approach.

Thank you MaizieD although I’m not worried that the UK is bankrupt (yet)! I understand the government bonds situation as you’ve explained, but what if those institutional investors lose confidence in government policy, or they can get a better safe return elsewhere and demand repayment? Wasn’t it the bond market dissatisfaction that brought down Liz Truss?

So, how would you feel PaynesGrey, if they raised Income Tax across the board but insured that National Insurance was reduced to leave "workers" with no increase in deductions?

I would leave the standard NI rate at 8% as it’s already considerably reduced from what it was in 2022 (13.25%) but increase the rate for higher workers. At the moment it’s 8% from 242.01 to £967 pw then only 2% after that (was 3.25%). That post-election sweetener from Hunt put a bit of a dent in the National Insurance Fund.

It’s tricky as there’s now only a single tier pension but what you pay and what you get back has never been a level playing field. As we know you only need 35 years of NIC to get a full pension but what of people who worked and paid NIC for many more years than that?

NIC can only fund the NHS and contributory benefits 95% of which is the State Pension.

The 2025 Uprating Report predicted there would be enough money (and considerable surplus) in the National Insurance Fund after the NHS allocation to continue to pay State Pension and other contributory benefits up to 2030. After that things start to look gloomier.

The last Quinquennial Review was 2020. I can’t find any record of 2025 having been published yet but 2020 shows the fund surplus flat-lining after 2040. Not the end of the world. It just means Treasury have to step in. But with an ageing population and a shrinking workforce, something needs to change about how the SP is funded.

www.gov.uk/government/news/up-rating-report-2025-report-on-the-national-insurance-fund

assets.publishing.service.gov.uk/media/62331075e90e070a53f689b0/QR_2020_Report_17_Mar_2022.pdf

Perhaps get rid of NIC altogether and increase income tax and business taxes with perhaps the reintroduction of the tax age allowance that Osborne abolished, to give pensioners some measure of relief for the years of NIC they did pay.

Thank you PaynesGrey, that's really helpful. I'll work through itax there are often changes I don't remember!

If I do remember this rightly there was a time when, if you were out of work, you got an amount relative to your previous income so it worked as an insurance would. I understand why it was changed but I do think we need to acknowledge the changes.

When the workplace pensions were started they were supposed to replace state pensions for most people but they seem to have just drifted.

I think those suggesting the moves i noted in my previous post are probably looking to do what you said re getting rid of NIC. It is not paid by everyone by any means and positively avoided by those who encourage "self-employment" of workers who work full time at their direction.

Slimming down the system certainly seems a good way to go but no doubt it will be the detail that matters.

sundowngirl

When is she going to stop blaming everyone else - The Conservatives, Brexit, the pandemic, Nigel Farage, Liz Truss Ukraine, etc etc
Her policy of squeezing employers by raising their NI has stifled growth in this country but she won't take accountability for that. U-turns every other month
Labour will probably still be using the 'excuse 14 years of Tory government' by the end of this parliament.
When will it stop

Yes a lot of my friends are commenting on this - it’s becoming tedious.

DaisyAnneReturns

I not only liked the new hair style and more relaxed public speaking I am hoping this was because she has found a way to raise tax on those who currently get away paying less than their fair share without breaking her promise not to raise overall take from "workers". It can be done.

How?
Do you havem or are there new ideas?

How long would it take?

And why hasnt it been done and being done?
I have all but given up on it personally.

GANNET

sundowngirl

When is she going to stop blaming everyone else - The Conservatives, Brexit, the pandemic, Nigel Farage, Liz Truss Ukraine, etc etc
Her policy of squeezing employers by raising their NI has stifled growth in this country but she won't take accountability for that. U-turns every other month
Labour will probably still be using the 'excuse 14 years of Tory government' by the end of this parliament.
When will it stop

Yes a lot of my friends are commenting on this - it’s becoming tedious.

I also imagine she didnt think the conservatives had all those hurdles so couldnt possibly have done any better themselves.

https://www.gransnet.com/uploads/talk/202511/medium-8e24fb-cuts-to-nic.png https://www.gransnet.com/uploads/talk/202511/medium-df7smx-pier-chart-pensions.png

Thanks DAR.

My brain wasn’t working well this morning. In my last I should have said Hunt pre-election sweetener.

6 March 2024

Jeremy Hunt has gambled his budget on a £10bn national insurance cut …

The two-percentage-point cut for 27 million workers comes after an identical reduction in national insurance in the autumn statement. The total reduction is worth about £900 a year to the average worker, and means earners will now pay 8% of their taxable salary in national insurance contributions, down from 12% in 2023.

Workplace pensions are seen as an alternative to the Graduated Retirement Benefit (GRB) and then the Additional State Pension paid for through the State Earnings Related Pension Scheme (SERPS) and its successors hence some employers contacting out with the retiree receiving a Guarenteed Minimum Payment (GMP) from their workplace scheme.

The best paper I have seen to explain this is by former Lib Dem Pensions Minister under the Coalition, Steve Webb.

Why is money being deducted from my state pension? The mysteries of CODs, COPEs and Contracting Out explained

www.lcp.com/media/1150050/why-is-money-being-deducted-from-my-state-pension.pdf

At the moment we have far more people receiving the old basic state pension plus additional state pension, cost around £90 billion pa, than single tier new state pension cost round £57 billion. However, any per capita saving which was envisaged by the introduction of the latter is going to be wiped out by the increase in the number of pensioners. At the moment, it's around 600,000 deaths per year and 750,000 new pensioners.

We’ve seeing a gradual change in workplace pension provision as defined benefit (DB) schemes aka final salary schemes are replaced by defined contribution schemes.

A defined benefit pension provides a guaranteed income for life based on your salary and length of service, while a defined contribution pension provides a retirement pot of money based on contributions and investment performance. The main difference is who bears the investment risk: the employer in a defined benefit plan, and the employee in a defined contribution plan.

This week we’ve seen Reform wanting to make public sector pension schemes less generous:

Tice … said he would want to change public-sector pensions from a defined benefit system to a DC scheme for new entrants, a move that would mirror what has happened in the private sector and would result in less generous payouts in retirement.

www.theguardian.com/politics/2025/nov/05/reform-uk-public-sector-pensions-plan-could-costs-billions-extra-prospect-union-warns

If workplace pensions are going to become less generous, then I can’t envision a siuation where the State Pension would disappear altogther as, on it's own, especially for single person households in rented accomodation, it's barely enough to keep people out of poverty.

There is much pessimism around the future of the SP - see

The future of the state pension: a new way forward

ifs.org.uk/publications/future-state-pension

4 Despite its new-found simplicity, there is a mixture of confusion and pessimism about the state pension. Although the state pension has increased at least as fast as inflation every year since 1975, 38% of people think that in the next 10 years it will not keep up with inflation. Pessimism is also widespread; a third of people do not think the state pension will exist in 30 years’ time.

Also in there is:

13. There is a good case for simplifying the complicated eligibility rules and moving further towards a universal pension where essentially all people build entitlement to a state pension each year of life they live in the UK (up to a cap). This would be a more transparent and arguably fairer system. To the extent that this move would have a cost to the exchequer, the number of years required for a full state pension could rise slightly from 35 years to make it cost neutral (or, if so desired, could be raised further).

It’s a real challenge for the goverment (any goverment) to get this right. I don’t envy them at all.

It's interesting when you see just how much has been said or written about this isn't it PaynesGrey.

The different ways of achieving additional state pension became quite a mess really. Steve Webb had been working on understanding the pension system for some time before coalition, and looking at other countries systems.

We haven't pursued workplace pensions deeply enough but they can be used, in time, to put the state pension in the position to be the minority way of providing pensions, rather than the majority. Most governments simply don't look that far ahead. Could a rebalanced, like the more income tax/less NI idea, be used here, i.e., more employer Workplace Pension less Employer NI? Other countries took this bull by the horns but maybe their tax system wasn't so complicated.

Obviously using any form of stick driven personal pension means you would end up with a means-tested state pension. Sadly, lack of understanding means the loudest outcry against that comes from the older, already retired pensioners who are likely to see few, if any, changes.

I'll read more and come back!

If you want good public services and a well funded NHS you have to pay higher taxes . The super rich and oligarchs should pay more tax than they do.We are an ageing population and are an expensive drain on services.As vegansrockrightly said Brexit and the 14 years of Tory government are some of the reasons we are in this mess.

So convenient to remove Blair and Gordon Brown from the discussion isn’t it? Annma

You say "you" have to pay higher taxes but then rightly point out that it is a particular group who should be paying.

To me this should be those not paying NI on earnings passive or active, for whatever reason, and those paying less tax on extremely high incomes - often less than someone on the first tranche of earnings above the Personal Allowance and less than those on median income.

Sorry, above in reply to Annma.

Annma

If you want good public services and a well funded NHS you have to pay higher taxes . The super rich and oligarchs should pay more tax than they do.We are an ageing population and are an expensive drain on services.As vegansrockrightly said Brexit and the 14 years of Tory government are some of the reasons we are in this mess.

And yet again Brexit and the Tory government are used as this woeful government's excuse - when will it stop?? They must take accountability for the damage to businesses that resulted from the dreadful budget last year and the possible tax rises this year.
Perhaps they should look at the public sector 'gold plated' pension schemes. The majority of private sector companies have long since replaced their Defined Benefit (final/average salary) schemes with Defined Contribution (money purchase) schemes as they were aware that DB schemes were unsustainable.
Rachel seems to continually squeeze the private sector while placating the unions with eye watering pay rises, like the train drivers. The private sector are the wealth builders and she seems to forget that

The private sector are the wealth builders and she seems to forget that

The private sector are not 'wealth builders', they are the vehicle for wealth accumulation for the already wealthy.

The only way that the sector could build any wealth is by bringing foreign money into the UK through exports. As we import more than we export more of our money is leaving the UK than foreign earnings are coming in. So we can forget about the private sector building any wealth for the country through foreign trade.

So, with regard to the domestic economy I will ask yet again that people who consider the private sector to be 'wealth builders', by which I presume that they mean that the sector adds to the UK's stock of money, to explain how they do it.

Interesting view on what we have been talking about.

www.youtube.com/watch?v=i8lojjrzB-A

Phil Moorhouse is giving more political view than economic one, which is interesting. He's generally no slouch economically but isn't an economist.

Thanks DAR. I do enjoy Phil’s take on things. He talks at speed and crams a lot in so I tend to copy paste the YouTube auto transcripts, strip out the formatting and take my time reading what he’s just said. I was tempted to post it here but it’s long even for my standards! So I picked these paragraphs which focus on a possible rise in income tax:

The Labour leadership made it clear last year they were aware that some of their initial work would be unpopular, but that what mattered was how voters saw it come election time, which is spot on.

As long as you don't carry on doing unpopular stuff beyond the initial phase of the cycle, and as long as the wider party holds its nerve, which is in serious doubt right now, it's also the case that I genuinely can't think of a manifesto in my lifetime that was implemented in full by the winning government. In other words, manifesto promises are always broken and nobody makes a big fuss.

So if, as the Resolution Foundation argues, income tax is increased by a couple of percent, employees national insurance is reduced by the same amount, meaning that Labour's working people, as they define them as being on up to £46,000, a year, won't pay a penny extra in tax. This would be a good policy economically.

Representatives of the market have suggested that they would be happy with this policy because it would protect the investments which support the jobs and businesses which ultimately pay them their returns. I've also seen reports that Labour MPs don't seem overly concerned about breaking this specific manifesto promise as long as lower paid workers aren't hit, which they wouldn't be if the rumours are correct. In fact, some Labour MPs have said they thought it was a mistake to promise not to increase these big taxes in the first place, although I am less sure about that.

Spare a thought for the pensioners on below £46k and likely to be caught out by the increase in council tax if in bands g and h. G band certainly encompasses a wide actual price with few approaching £2 million in my area. £7800 a year is a suggested council tax for living in a family home in the south east. I hope this is wild rumour.

So, with regard to the domestic economy I will ask yet again that people who consider the private sector to be 'wealth builders', by which I presume that they mean that the sector adds to the UK's stock of money, to explain how they do it.

If the businesses they run employ people - who then pay UK tax and spend their wages - aren’t they ‘wealth builders for the economy’ MaizieD?

FriedGreenTomatoes2

^So, with regard to the domestic economy I will ask yet again that people who consider the private sector to be 'wealth builders', by which I presume that they mean that the sector adds to the UK's stock of money, to explain how they do it.^

If the businesses they run employ people - who then pay UK tax and spend their wages - aren’t they ‘wealth builders for the economy’ MaizieD?

I take the term 'wealth builder' to mean someone who increases the total amount of money in the UK. If that isn't happening, if the amount of money isn't increased, they're just moving the existing money around.

'Are these people actually creating more money?' is the question you have to ask yourself.

But thanks for answering.