[Politics] Cost of Living Crisis

[PILTDOWN MAN]

Right, thanks very much. Very interesting

I can see the points raised have merit. I do believe sometimes these days every child has to be classified, especially those in need. In my day you had those considered plain thick. That was wrong and thankfully more is now recognised however you will still always have levels of intelligence and no amount of education will help some. We can't all be brain surgeons. Inherited intellect is proven, two people of lower intelligence are unlikely, though not always, to have a highly intelligent child. Because poorer people have less opportunity to a good education and are less likely to be transient, their lives are almost mapped out for them at birth. This does mean the gene pool from where they come from is smaller and the inherited issues are continued and in fact become compounded.

Interestingly these issues, though often hidden, were also suffered by the upper classes in the 19th century where they would procreate between a very small population. The royals of many countries, all being related, suffered, many with mental health issues.

 

[Weststander]

I can see the points raised have merit. I do believe sometimes these days every child has to be classified, especially those in need. In my day you had those considered plain thick. That was wrong and thankfully more is now recognised however you will still always have levels of intelligence and no amount of education will help some. We can't all be brain surgeons. Inherited intellect is proven, two people of lower intelligence are unlikely, though not always, to have a highly intelligent child. Because poorer people have less opportunity to a good education and are less likely to be transient, their lives are almost mapped out for them at birth. This does mean the gene pool from where they come from is smaller and the inherited issues are continued and in fact become compounded.

Interestingly these issues, though often hidden, were also suffered by the upper classes in the 19th century where they would procreate between a very small population. The royals of many countries, all being related, suffered, many with mental health issues.

Mental health issues are class and wealth less.

I realise people in the ideal world should have equal opportunities, but interestingly many, many folk from the wrong side of the tracks (the state system, grammar schools, rough and tumble comp's), excel in life. I put this down to a hunger to succeed. Lots of people in the nsc parish, also from the state comp I went to, have excelled in their careers. From my year at school alone - scientists, successful business folk, very senior positions in the NHS, linguists, medical practicioners. Without pushy parents!

Similarly, those largely ignored by their parents, can have that hunger to prosper and do.

 

[Stat Brother]

That was a bit of kite-flying, I can't see that happening: not yet, at least. But it's beginning to be clear that something needs to be done - the UK's on an unsustainable path that needs to be halted. The low birth rate has been masked by high levels of immigration but if those are cut, we're really exposed.

Assuming we're not going for the Logan's Run solution, there are three options: reinstate immigration levels; provide greater financial incentives for having kids (tax concessions, free childcare etc) or raise the pension age considerably (70, 75, possibly 80 in time). Sooner or later, a government is going to have to tackle this issue

#TeamLogan'sRun.



One for the kidz.

 

[Audax]

The issue of children is about to really take off, I think. For so long people have said “if you can’t afford children then don’t have them” which has some merit but huge consequences. My wife and I reckoned two kids was about what we could afford sensibly but we’re blessed (I think that is what I am supposed to say) with twins. Some of the government policies stop for two kids so instant impact for some there, I believe.

The latest census data shows there has been a huge decline in births. People are having fewer children and waiting until they are older. For lots of the population the penny has not dropped yet for what a drop in the number of births actually means. They view this as “good less of a burden on services” but in reality none of us stay babies forever and the idea is that we grow to be productive in the workforce. With people living as long as ever and the birth rate dropping we are heading to a massive imbalance in the economy with too many old people with not enough workers. This will lead to demands for more immigrants etc. I Beleive some have labelled this as agequake which seems quite an appropriate name.

Childcare is incredibly expensive and I know for a fact is putting people off having children and pulling people out of the workforce to care for their children until they reach school age. I have often wondered why school is provided for free and even the 30 hour entitlement for 3 year olds but the first few years of life are ridiculously expensive. My wife had a pretty good job but it made no economic sense for her to work full time while we had three kids under 3 for 15 months. In fact, she stayed part time until all the kids were at school.

I suspect that affordable childcare and proper support for parents will be a key part of next election as the penny drops that we need people to have kids. Especially the middle classes.

There was a piece in The Times yesterday suggesting the idea of "negative child benefit" - effectively taxing those who can't/won't/don't have kids:

"Introduce a “negative child benefit” tax for those who do not have offspring. This may seem unfair on those who can’t or won’t have children, but it recognises that we all rely on there being a next generation and that everyone should contribute to the cost of creating that generation. Use the funds to fix the UK’s broken, expensive early-years care system."

an idea so terrible that I'm only surprised it isn't already official government policy

So ... My take on this (only quoting the start of the convo, but not ignoring the rest of it!):

1. Any economy that is built on the premise of continuous population growth to fuel economic growth is fundamentally broken. Because:

2. Our country, and indeed our planet, is a finite resource that contains finite resources. So:

3. Until and unless we can colonise other planets, continuous population growth eventually ends in collapse. Thus:

4. We must begin looking for sustainable solutions to generating economic growth that do not rely on population growth.

The above probably means making some really hard decisions in some areas of social support. In particular pensions for the retired. There needs to be a shift away from state-funded guaranteed pensions for all and towards responsible self-funded pensions with government funded pensions being a safety net only. (And yes, I practice what I preach here - I'm putting a voluntary 9% of my salary into pension currently. And will increase that if and when my budgets allow)

Also take a fresh new look at how taxation affects employment. If it's cheaper for businesses to employ one person working 37 hours per week than 2 people working 18.5 hours each, then we're in a bad place.

I'd also take a long look at how we tax employees. The current system of taxing individuals is unfair once you start looking at family units (although I suspect it works great for the government). I'd prefer to see tax calculated on a family unit basis. Scale it based on total family income such that it doesn't matter whether it's all earned by one parent or split between two. If Family A has the Mother earning £50k per year and the Father £10k, and Family B has both parents each earning £30k ... well, that's a £60k total and both families should be paying exactly the same tax (everything else being equal, of course).

I could go on ... but I'm supposed to be working.

 

[PILTDOWN MAN]

Mental health issues are class and wealth less.

I realise people in the ideal world should have equal opportunities, but interestingly many, many folk from the wrong side of the tracks (the state system, grammar schools, rough and tumble comp's), excel in life. I put this down to a hunger to succeed. Lots of people in the nsc parish, also from the state comp I went to, have excelled in their careers. From my year at school alone - scientists, successful business folk, very senior positions in the NHS, linguists, medical practicioners. Without pushy parents!

Similarly, those largely ignored by their parents, can have that hunger to prosper and do.

Oh I do agree. I'm sure you like me would want your children to succeed and though I've never considered myself pushy I have tried to guide them. Looking back I'd say I had a decent education, Forest Boys Horsham Secondary Modern. Those that wanted to learn did so. I don't think it's the same for all though, sadly.

 

[Gwylan]

1. Any economy that is built on the premise of continuous population growth to fuel economic growth is fundamentally broken..

The above probably means making some really hard decisions in some areas of social support. In particular pensions for the retired. There needs to be a shift away from state-funded guaranteed pensions for all and towards responsible self-funded pensions with government funded pensions being a safety net only.

It's not population growth per se that's the issue, it's the growth of an elderly population that needs more support and greater sums spent on pensions.

But you do offer an option I didn't think of - the reduction (or removal) of state pensions. That would certainly need a multi-party approach - no party in its right mind would offer a manifesto that proposes this. As Sir Humphrey would say "That's a brave move, prime minister."

There's another option BTW. And that's to ban over 65s from voting. At the moment, everything is geared towards the old: free bus passes, triple-locked pensions, most of the NHS expenditure. If their vote didn't count, we may see governments introduce more youth-friendly policies. Introducing this would certainly mean some radical changes in policy ... but would be even braver.

 

[PILTDOWN MAN]

It's not population growth per se that's the issue, it's the growth of an elderly population that needs more support and greater sums spent on pensions.

But you do offer an option I didn't think of - the reduction (or removal) of state pensions. That would certainly need a multi-party approach - no party in its right mind would offer a manifesto that proposes this. As Sir Humphrey would say "That's a brave move, prime minister."

There's another option BTW. And that's to ban over 65s from voting. At the moment, everything is geared towards the old: free bus passes, triple-locked pensions, most of the NHS expenditure. If their vote didn't count, we may see governments introduce more youth-friendly policies. Introducing this would certainly mean some radical changes in policy ... but would be even braver.

Blimey that's thinking out of the box might lead to more being in it.

 

[Audax]

It's not population growth per se that's the issue, it's the growth of an elderly population that needs more support and greater sums spent on pensions.

Massive growth of the elderly population is certainly a part of the problem. But it's one that has come about for two big reasons (among others):

1. Historic population-growth-driven economic policies. We have a massive overhead of legacy systems (tax, social policy, etc) that is built out of historic population-growth driven approaches to economic growth.

2. Advances in medicine that now mean we (on average) live a lot longer.

Put the two together and you have a problem. But you cannot solve the problem of a big elderly population by going for more population-driven economic growth - that will only result in making the problem worse in the future. We need to break that cycle, and break it ASAP

But you do offer an option I didn't think of - the reduction (or removal) of state pensions. That would certainly need a multi-party approach - no party in its right mind would offer a manifesto that proposes this. As Sir Humphrey would say "That's a brave move, prime minister."

Australia already has compulsory self-funded pensions (aka Superannuation). If you're employed, you're paying in. They do still have a state pension as well, but it's a safety net - access to it is means-tested.

But yes, I agree it would take a brave government to do it here in the UK. But then, we're not that far away from it already. They've already moved us to a personal pension regime that requires you to opt-out. The next step is to simply p) remove the opt-out option and means test access to the state pension.

Of course, I know the latter will result in backlash. Which is where I think we maybe borrow an idea from New Zealand and how they've legislated to ban smoking. Bring it in for anyone aged, say, 25 or younger the next time they start a new job. Then increase that age threshold by a year every year. Couple that with strong education campaigns around the value and benefits of self-funded pensions. It'll take a while, but you'll eventually have every working-age person in the country on the mandatory self-funded pension and, along side that, have been able to reduce the elderly-support budget for government - allowing a lot of the funding to be redirected into other initiatives (like support for those who genuinely need it rather than those who failed to plan ahead).

 

[Gwylan]

Blimey that's thinking out of the box might lead to more being in it.

Maybe. But we did have a big issue in this country in the discrepancy between young and old voters: under 30s don't tend to vote; under 60s do in droves. Parties (particularly the Tories) are aware of this - hence the friendly policies towards the elderly. That's why, for example, the RMT seeking a 6% rise are enemies of the people but the pensioners get a 10% hike.

But the issue that's being talked about (the ever-ageing population) is not going away and governments continue to implement pensioner-friendly policies, we're going to be in financial trouble pretty quickly.

I just can't see any government addressing this, not while there's this surplus of 60+ voters

 

[PILTDOWN MAN]

I just can't see any government addressing this, not while there's this surplus of 60+ voters

China did maybe!

Perhaps we need Shipman's working for the NHS.

Think I'm on to something

Here's a new booster jab.

 

[Pavilionaire]

Also take a fresh new look at how taxation affects employment. If it's cheaper for businesses to employ one person working 37 hours per week than 2 people working 18.5 hours each, then we're in a bad place.

I'd also take a long look at how we tax employees. The current system of taxing individuals is unfair once you start looking at family units (although I suspect it works great for the government). I'd prefer to see tax calculated on a family unit basis. Scale it based on total family income such that it doesn't matter whether it's all earned by one parent or split between two. If Family A has the Mother earning £50k per year and the Father £10k, and Family B has both parents each earning £30k ... well, that's a £60k total and both families should be paying exactly the same tax (everything else being equal, of course).

1. It is CHEAPER for employers to employ 2 x p/t workers than 1 x full-time worker. This is because individuals can earn £758 per month before the employer has to start paying Employer's Class 1 NI.

If you have a job paying £18,192 a year then 1 full-time worker will cost the employer an extra £1,369, compared to 2 p/t workers on £9,096 a year.

As for taxing 'families', you've referenced Mothers and Fathers. Are you suggesting they be taxed differently once they start living together, or when they get married, or once they've had children?

The principle of the individual being taxed on his/her earnings was not always with us, and I would be wary of returning to the days when the wife's earnings were - in effect - regarded as earnings of the husband.

I think the concept of those with the broadest shoulders should take more of the burden is one rooted in fairness, and all main political parties subscribe to it. A low paid worker may pay £NIL tax / NI whereas employees earning over £100K will pay a marginal rate of 63.25% on every £1 earned between £100K and £125,140 which - by historic standards - is high.

For me I would look to get rid of NI and re-jig the thresholds so the same amount of money is recovered via tax overall, i.e. £Nil to £15K = tax-free. £15K - £60K = 30%, £60K - £150K = 40%, £150K+ = 50%.

Corporation Tax would be 30% but no Employer's NI, which is a tax on jobs.

We need to eliminate the tax advantages of, say, being limited over being a sole trader, and getting rid of NI while having a flatter taxation system would help.

 

[portlock seagull]

1. It is CHEAPER for employers to employ 2 x p/t workers than 1 x full-time worker. This is because individuals can earn £758 per month before the employer has to start paying Employer's Class 1 NI.

If you have a job paying £18,192 a year then 1 full-time worker will cost the employer an extra £1,369, compared to 2 p/t workers on £9,096 a year.

As for taxing 'families', you've referenced Mothers and Fathers. Are you suggesting they be taxed differently once they start living together, or when they get married, or once they've had children?

The principle of the individual being taxed on his/her earnings was not always with us, and I would be wary of returning to the days when the wife's earnings were - in effect - regarded as earnings of the husband.

I think the concept of those with the broadest shoulders should take more of the burden is one rooted in fairness, and all main political parties subscribe to it. A low paid worker may pay £NIL tax / NI whereas employees earning over £100K will pay a marginal rate of 63.25% on every £1 earned between £100K and £125,140 which - by historic standards - is high.

For me I would look to get rid of NI and re-jig the thresholds so the same amount of money is recovered via tax overall, i.e. £Nil to £15K = tax-free. £15K - £60K = 30%, £60K - £150K = 40%, £150K+ = 50%.

Corporation Tax would be 30% but no Employer's NI, which is a tax on jobs.

We need to eliminate the tax advantages of, say, being limited over being a sole trader, and getting rid of NI while having a flatter taxation system would help.

Not to mention that the poor will always be the vast majority in most societies, and you don’t want too many peasants revolting. Or revolting peasants either.

 

[Gwylan]

China did maybe!

China did the complete opposite - restricted people to one child. It's a policy that the Chinese now admit was misguided.

 

[Machiavelli]

Well, I think you're both wrong. The notion that all labour will be performed by a machine in 40 years time, and that the next generations will be enjoying a leisure-rich life is for the birds.
We're currently working more, despite predictions from the likes of Keynes that we'd be working 15 hour weeks. I'm a strong advocate that we should develop a politics around all of us working collectively less among other things, but this still remains one of the many unpopular positions that I have that attracts scant support.

It is one metric but it's the metric you used: you were the one who said that the hours worked in a week was increasing and that's patently not true. I agree that the fall is well within the margin of statistical error but you certainly can't say we're working more.

I do agree however that we do need to work on redressing the way we handle and allocate work. There are examples of people working two or even three jobs to make a living while we have people taking early retirement or working part-time as they've bolstered their retirement funds. It's certainly going to be a tricky balancing act for a future government

Not quite. But I can see how you came to that conclusion and, as we've found common ground, I'll stop wasting your time For now at least...

 

[PILTDOWN MAN]

China did the complete opposite - restricted people to one child. It's a policy that the Chinese now admit was misguided.

No I meant killing off their elderly (COVID)

 

[Machiavelli]

Well, I think you're both wrong. The notion that all labour will be performed by a machine in 40 years time, and that the next generations will be enjoying a leisure-rich life is for the birds.
We're currently working more, despite predictions from the likes of Keynes that we'd be working 15 hour weeks. I'm a strong advocate that we should develop a politics around all of us working collectively less among other things, but this still remains one of the many unpopular positions that I have that attracts scant support.

Please tell me when you’ve organised your political party, I’ll vote for you. I have to say it’s refreshing to read your posts on politics.

As South Park so beautifully articulated 18 years ago with their “Douche and Turd” episode, we’re so often left with two dreadful options at the ballot box.

To do that, we'd need an extremely brilliant rhetorician, a ruthless organiser, and a bottomless pit of money. Do indicate what you're going to bring to the party

 

[WATFORD zero]

Maybe. But we did have a big issue in this country in the discrepancy between young and old voters: under 30s don't tend to vote; under 60s do in droves. Parties (particularly the Tories) are aware of this - hence the friendly policies towards the elderly. That's why, for example, the RMT seeking a 6% rise are enemies of the people but the pensioners get a 10% hike.

But the issue that's being talked about (the ever-ageing population) is not going away and governments continue to implement pensioner-friendly policies, we're going to be in financial trouble pretty quickly.

I just can't see any government addressing this, not while there's this surplus of 60+ voters

Without wanting to go off topic, I believe that these are exactly the type of issues that FPTP voting encourages party politics to ignore. All that matters is getting into 'power'.

With some sort of proportional representation or AV system, collaboration between parties is actively encouraged and when similar numbers of MPs from each party start getting returned regularly reflecting the small changes in actual voting patterns, it takes away the ability to constantly blame the 'other lot' and offers the opportunity for more mature, long term government to address the important, rather than populist issues.

I live in hope

 

[Audax]

1. It is CHEAPER for employers to employ 2 x p/t workers than 1 x full-time worker. This is because individuals can earn £758 per month before the employer has to start paying Employer's Class 1 NI.

If you have a job paying £18,192 a year then 1 full-time worker will cost the employer an extra £1,369, compared to 2 p/t workers on £9,096 a year.

Good then - more needs to be done to explore how we could use this sort of thing to help those who are struggling to get into a career path that will support them.

As for taxing 'families', you've referenced Mothers and Fathers. Are you suggesting they be taxed differently once they start living together, or when they get married, or once they've had children?

The principle of the individual being taxed on his/her earnings was not always with us, and I would be wary of returning to the days when the wife's earnings were - in effect - regarded as earnings of the husband.

Mother / Father was just an example. Family units are of course very diverse, and any system put in place would need to recognise that. I deliberately avoided using the term "household", because I wanted to avoid getting caught up in how to handle home of multiple occupancy and all that (which would have to be treated separately). I should have also avoided referencing children - in my view whether children are part of the family unit or not is irrelevant until you get into the social support side of things.

Some form of legal framework that establishes when and how a "legal single entity" for taxation purposes is created. I certainly would want (as you've alluded to) any return to the bad old days of husband controlling the finances. However, I do strongly believe something needs to be done to create a more level playing field. Back in Australia when I was growing up, there was a term that developed to refer to those who were felt to have an unfair financial advantage - these were the Dinks (Double-income, no kids). Dinks were seen to have an unfair advantage in terms of the tax burden they faced compared to a single-income household, which was then exacerbated by not having kids - those who had kids, and were thus more likely to be reliant on a single income, looked on the dinks with envy.

There are some elements of what I would like to see happen already here in the UK, but they are too restricted. For example, if one partner in a couple isn't earning enough to use their entire tax-free allowance it can be passed to the other partner. It's a good concept, but IMO doesn't go anywhere near far enough.

I'm very happy to pay more when earning more - I'm very bought in to the concept of those who can afford to contribute more, should contribute more. There are quirks to the current system, though, that make for a rather bumpy playing field and I'd like to see that levelled out a bit.

Things like the threshold for Child Benefit being linked to the highest earner in the family. If family A has Earner 1 on £30k and Earner 2 on £60k, their child benefit is gone. If family B has both Earners on £45k, they still get full rate Child Benefit.

There has to be a way the system can be simplified and made fairer for all, removing the stupid quirks and all the sodding loopholes that people with the means to afford an accountant can jump through.

 

[Weststander]

1. It is CHEAPER for employers to employ 2 x p/t workers than 1 x full-time worker. This is because individuals can earn £758 per month before the employer has to start paying Employer's Class 1 NI.

If you have a job paying £18,192 a year then 1 full-time worker will cost the employer an extra £1,369, compared to 2 p/t workers on £9,096 a year.

As for taxing 'families', you've referenced Mothers and Fathers. Are you suggesting they be taxed differently once they start living together, or when they get married, or once they've had children?

The principle of the individual being taxed on his/her earnings was not always with us, and I would be wary of returning to the days when the wife's earnings were - in effect - regarded as earnings of the husband.

I think the concept of those with the broadest shoulders should take more of the burden is one rooted in fairness, and all main political parties subscribe to it. A low paid worker may pay £NIL tax / NI whereas employees earning over £100K will pay a marginal rate of 63.25% on every £1 earned between £100K and £125,140 which - by historic standards - is high.

For me I would look to get rid of NI and re-jig the thresholds so the same amount of money is recovered via tax overall, i.e. £Nil to £15K = tax-free. £15K - £60K = 30%, £60K - £150K = 40%, £150K+ = 50%.

Corporation Tax would be 30% but no Employer's NI, which is a tax on jobs.

We need to eliminate the tax advantages of, say, being limited over being a sole trader, and getting rid of NI while having a flatter taxation system would help.

With tapering, to deter tax planning at all levels to £1 below the next tax band.

Personally I’d cap any marginal tax rate to 45%. Two reasons - so the recipient always keeps the majority of every £1 earned or gained. Also, again to deter tax planning, encourage enterprise etc.

 

[beorhthelm]

There has to be a way the system can be simplified and made fairer for all, removing the stupid quirks and all the sodding loopholes that people with the means to afford an accountant can jump through.

asking people to form tax partnerships is not simplifying anything. loopholes can be dealt with be less tinkering to favour one group of another, the source of quirks, just stick to basic tax structure the flatter the rate the better. there's an entire other side to the issue you're looking at, which is that kids cost money to educate and those without any are contributing to that.