[Finance] Rachel Reeves to reveal £20bn shortfall left by Conservative Government

WATFORD zero · Jul 30, 2024

Bozza said:
Both Hunt and Reeves can be duplicitous at the same time. And they are. Reeves will get a free pass from most on here though.

IFS analysis is that half of the "black hole" is to finance the public sector pay reviews being awarded, and is absolutely not unfunded commitments inherited from the Tories, as claimed.

And that's the disappointing thing. This government was elected on a promise of honesty with the electorate, and they've broken that already. I have no issue at all with public sector staff getting long-deserved uplifts in pay. I've recently spent every day for three months in Sussex hospitals with my mum, they are staffed by absolute heroes who deserve pay that recognises that.

If you are going to be honest and transparent, you would own that decision and not try to blame unpopular policy, such as the reduction in winter fuel payments, on the Tories.

Very, very poor from Starmer and Reeves.

The post you quoted was actually about the £6.5B immigration costs that Hunt was claiming didn't need to be budgeted for at all, as the Rwanda plan was going to save that money before the end of this year

But on the subject you have raised, I agree that a significant amount is down to public sector pay reviews. But when private sector pay rises are running at 5-6%, how realistic was the last Government's budget of 2% for the public sector ? They could have made it 0% and then blame the total cost of public sector pay rises on the New Government.

I agree the IFS are very good at giving balanced information and I found these two interesting.

https://ifs.org.uk/articles/ifs-response-rachel-reeves-spending-audit

And for the TL;DR brigade :wink:

KZNSeagull · Jul 30, 2024

Bozza said:
Both Hunt and Reeves can be duplicitous at the same time. And they are. Reeves will get a free pass from most on here though.

IFS analysis is that half of the "black hole" is to finance the public sector pay reviews being awarded, and is absolutely not unfunded commitments inherited from the Tories, as claimed.

And that's the disappointing thing. This government was elected on a promise of honesty with the electorate, and they've broken that already. I have no issue at all with public sector staff getting long-deserved uplifts in pay. I've recently spent every day for three months in Sussex hospitals with my mum, they are staffed by absolute heroes who deserve pay that recognises that.

If you are going to be honest and transparent, you would own that decision and not try to blame unpopular policy, such as the reduction in winter fuel payments, on the Tories.

Very, very poor from Starmer and Reeves.

Agreed. My new MP (Labour) is telling constituents that the country is bankrupt. Bankrupt entities do not award pay rises like those made yesterday.

DudsFarm · Jul 30, 2024

More importantly how I am now going to fund my case of Xmas wine without the winter bonus ??

Steve in Japan · Jul 30, 2024

ATFC Seagull said:
Weren't these done away with as soon as Cameron and Osborne came in? They were for teachers. It's still not a bad pension but compared to many I know with private ones it's comparable.

The official (Hutton) inquiry was started in 2010 and reported in 2011, but final salary type pensions were phased out from 2015 to 2022. So if you were already in one of those schemes in 2015 you could continue to accrue benefits until Apr 2022. And you would retain benefits banked up to that date. From Apr 22 you would be in the new pension scheme.
This is an oversimplification , the whole subject is complex and details vary by public sector group.

Chicken Run · Jul 30, 2024

Bozza said:
Both Hunt and Reeves can be duplicitous at the same time. And they are. Reeves will get a free pass from most on here though.

IFS analysis is that half of the "black hole" is to finance the public sector pay reviews being awarded, and is absolutely not unfunded commitments inherited from the Tories, as claimed.

And that's the disappointing thing. This government was elected on a promise of honesty with the electorate, and they've broken that already. I have no issue at all with public sector staff getting long-deserved uplifts in pay. I've recently spent every day for three months in Sussex hospitals with my mum, they are staffed by absolute heroes who deserve pay that recognises that.

If you are going to be honest and transparent, you would own that decision and not try to blame unpopular policy, such as the reduction in winter fuel payments, on the Tories.

Very, very poor from Starmer and Reeves.

It’s only taken the government 3 weeks then to start down this route!

The Antikythera Mechanism · Jul 30, 2024

Unless I’m wrong, under quantitative easing, the Bank of England created £895 billion of new money in the form of central bank reserves held by commercial banks, of which around £700 billion remains in circulation. The Bank pays interest on those reserves at Bank Rate, currently 5.25%. This equates to approx £37 billion a year paid in interest to banks. How can this be justified when banks have been bailed out in the past?

BLOCK F · Jul 30, 2024

DudsFarm said:
More importantly how I am now going to fund my case of Xmas wine without the winter bonus ??

Haha.
Buy a couple of extra bottles a month between now and Christmas and tuck them away, out of sight and out of the way of temptation and if they increase in value between now and Christmas, pray that Auntie Rachel doesn’t ban that kind of practice in her Autumn Budget and try to charge you CGT or something!

Guy Fawkes · Jul 30, 2024

Haven't read the whole thread yet but hasn't virtually every Government this country has had ended up with a shortfall between taxation and their spending? and has had to rely on borrowing to close that gap, hence why the national debt is so big? with the cost of servicing that debt is eating more and more tax revenue raised making it harder to provide public services?

fly high · Jul 30, 2024

Mellor 3 Ward 4 said:
Martin Lewis seems to agree with me:

Martin Lewis, founder of MoneySavingExpert, immediately warned the targeting of the payments was “too narrow with the winter we have coming”, adding: “The energy price cap is likely to rise 10% this October and stay high across the winter, leaving most energy bills nearly double those pre-crisis, at levels unaffordable for millions.

“Many pensioners eke out the £100 to £300 winter fuel payments to allow them to keep some heating on through the cold months.

“While there’s an argument for ending its universality due to tight national finances, it’s being squeezed to too narrow a group – just those on benefits and pension credit. Yet again, those just above the thresholds will be hardest hit.”

He is so right. There's 10s of thousands entitled to claim pensions credit but don't, some because they don't know how to claim, some who don't want the state prying into their privacy and some just too proud. Then you have 10s of thousands who are just over the limit. Both these groups have been reliant on the winter payment to stay warm even before the massive increase in cost. Obviously there are many who don't need it but it seems Labour give a shit for those who do.

Bold Seagull · Jul 30, 2024

Bozza said:
Both Hunt and Reeves can be duplicitous at the same time. And they are. Reeves will get a free pass from most on here though.

IFS analysis is that half of the "black hole" is to finance the public sector pay reviews being awarded, and is absolutely not unfunded commitments inherited from the Tories, as claimed.

And that's the disappointing thing. This government was elected on a promise of honesty with the electorate, and they've broken that already. I have no issue at all with public sector staff getting long-deserved uplifts in pay. I've recently spent every day for three months in Sussex hospitals with my mum, they are staffed by absolute heroes who deserve pay that recognises that.

If you are going to be honest and transparent, you would own that decision and not try to blame unpopular policy, such as the reduction in winter fuel payments, on the Tories.

Very, very poor from Starmer and Reeves.

Let's see if Richard Hughes head of the OBR who has taken the unprecedented step of instigating a formal review of Hunt's Spring forecasts agrees with you or not.

Bold Seagull · Jul 30, 2024

Guy Fawkes said:
Haven't read the whole thread yet but hasn't virtually every Government this country has had ended up with a shortfall between taxation and their spending? and has had to rely on borrowing to close that gap, hence why the national debt is so big? with the cost of servicing that debt is eating more and more tax revenue raised making it harder to provide public services?

1997 to 2001 didn't.

Bozza · Jul 30, 2024

Bold Seagull said:
Let's see if Richard Hughes head of the OBR who has taken the unprecedented step of instigating a formal review of Hunt's Spring forecasts agrees with you or not.

*sigh*

As I said - it's possible for both Hunt and Reeves to be economic (pun intended) with the truth here.

Hunt being found culpable doesn't mean that Reeves isn't either.

You'll not find fault with Labour's actions though - I know that much.

Bozza · Jul 30, 2024

fly high said:
He is so right. There's 10s of thousands entitled to claim pensions credit but don't, some because they don't know how to claim, some who don't want the state prying into their privacy and some just too proud. Then you have 10s of thousands who are just over the limit. Both these groups have been reliant on the winter payment to stay warm even before the massive increase in cost. Obviously there are many who don't need it but it seems Labour give a shit for those who do.

Because of my mother's rapidly diminishing physical and mental health, I've become very hands-on in helping with her finances to make sure things are OK, she's not spending where she shouldn't be, isn't being ripped off and is getting value for money.

As part of that, I found out she had only recently started receiving pension credits as someone else had advised her to claim. Her state pension is very, very small. The additional money from pension credits is a help in and of itself, but probably more important is the other things that being in receipt of pension credits unlocks.

For examine she paid over £300 the last time she required new dentures. They were lost in hospital so I've been taking her through the process of getting them replaces. Again the dentist said they were going to be £300+. but then added "...unlesss your mother is on pension credits". So, that's another £300 saved.

As such, I can well believe there are a lot of older folk who are missing out on what could be absolutely vital additional financial assistance.

Bold Seagull · Jul 30, 2024

Bozza said:
*sigh*

As I said - it's possible for both Hunt and Reeves to be economic (pun intended) with the truth here.

Hunt being found culpable doesn't mean that Reeves isn't either.

You'll not find fault with Labour's actions though - I know that much.

You specifically said they're both duplicitous. I agree it doesn't mean there isn't potential for Reeves to being economic with the truth, but that doesn't mean she's being duplicitous. In turn Hunt being found culpable doesn't mean Reeves is either.

After 3 weeks, no I haven't found much fault in their actions yet, will be interesting what conclusions the OBR come to because that will highlight how economic Reeves is being.

Sorry to hear about your mum, wishing you and her the best. Not easy. I know looking into my Grandad's finances he had 4 separate insurances on his Sky box, plus other things he'd been sold. We had to change his phone number because he was obviously on some kind of 'easy target' telephone database.

Uh_huh_him · Jul 30, 2024

cunning fergus said:
I am indeed, however the effect of that is a tax and NI rate of 62%.

These are the super rich I presume?

Wouldn't that be nice.
T
he top rate is actually 45% + 2% NI - for those earning an income.
That is for plebs who have to earn a living and aren't just sitting around accruing wealth from their assets.

The Super Rich are able to manage their overall taxation down to much lower levels than that.
Sunak admitted his overall taxation level worked out at about 22%.

Presumably he was paying the 45% on some of his PM income (pin money)
His real wealth is taxed at a much lower level.

dsr-burnley · Jul 30, 2024

Uh_huh_him said:
Wouldn't that be nice.
T
he top rate is actually 45% + 2% NI - for those earning an income.
That is for plebs who have to earn a living and aren't just sitting around accruing wealth from their assets.

The Super Rich are able to manage their overall taxation down to much lower levels than that.
Sunak admitted his overall taxation level worked out at about 22%.

Presumably he was paying the 45% on some of his PM income (pin money)
His real wealth is taxed at a much lower level.

Marginal rate on income between £100k and £125k is 62%, It's because that's the level where they phase out the personal allowance.

Jim in the West · Jul 30, 2024

WATFORD zero said:
The fantasy of Rwanda continues, and was going to apparently save the Government 6.5 billion of completely unbudgeted immigration costs and that's why they hadn't budgeted for them

What Hunt is claiming is quite clearly ludicrous.

Having been a Finance Director for many years, if I produced a budget/forecast based on a similarly highly improbable assumption, I would have lost all credibility. The crazy thing is, Hunt is an intelligent guy and would 100% have known that the Tories' forecasts didn't add up. Let's hope neither he nor the Tories come anywhere near managing the public finances for a VERY long time.

Thunder Bolt · Jul 30, 2024

Bozza said:
Because of my mother's rapidly diminishing physical and mental health, I've become very hands-on in helping with her finances to make sure things are OK, she's not spending where she shouldn't be, isn't being ripped off and is getting value for money.

As part of that, I found out she had only recently started receiving pension credits as someone else had advised her to claim. Her state pension is very, very small. The additional money from pension credits is a help in and of itself, but probably more important is the other things that being in receipt of pension credits unlocks.

For examine she paid over £300 the last time she required new dentures. They were lost in hospital so I've been taking her through the process of getting them replaces. Again the dentist said they were going to be £300+. nut then added "...unlesss your mother is on pension credits". So, that's another £300 saved.

As such, I can well believe there are a lot of older folk who are missing out on what could be absolutely vital additional financial assistance.

When the Winter Fuel Allowance was discussed yesterday, it was stated 800,000 pensioners who were entitled to Pension Credit hadn’t claimed it.
In my mind, this is the sort of thing Age UK should be advising oaps to claim, plus a reduction in council tax if they are the sole occupant of a property.

WATFORD zero · Jul 30, 2024

Jim in the West said:
What Hunt is claiming is quite clearly ludicrous.

Having been a Finance Director for many years, if I produced a budget/forecast based on a similarly highly improbable assumption, I would have lost all credibility. The crazy thing is, Hunt is an intelligent guy and would 100% have known that the Tories' forecasts didn't add up. Let's hope neither he nor the Tories come anywhere near managing the public finances for a VERY long time.

I think that there were a variety of reasons that Sunak had to call an early election even though it was obvious they were going to get wiped out. The state of the economy compared to their last budgetary forecast was one of the major ones.

It wouldn't have taken long for the shit to hit the fan with only 2% forecasted for public sector pay, when private sector has been increasing at 5-6%, the £6.5B of immigration costs, totally unfunded and being covered by the thousands of asylum seekers who were supposedly going to be shipped to Rwanda before the end of this year. The various road building programs, also totally unfunded in the budget, no funding allowance for the impending prison place crisis in the budget whilst Hammond decides to give away £20B in April in NI cuts :shootself

I don't think we'll really know what's actually in there until we see the OBR report, but it was the desperation of this becoming clear within weeks that forced the election.

Uh_huh_him · Jul 30, 2024

Thunder Bolt said:
When the Winter Fuel Allowance was discussed yesterday, it was stated 800,000 pensioners who were entitled to Pension Credit hadn’t claimed it.
In my mind, this is the sort of thing Age UK should be advising oaps to claim, plus a reduction in council tax if they are the sole occupant of a property.

Is that specific to pensioners or the standard 25% discount for sole occupancy.

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