Forum Topic

Is Britain poor or just most of its citizens?

We hear that we are now a poor country. Expectations managed down and down.I wonder though. When Britain was at the height of its power and wealth, with the biggest, richest empire the world had ever seen, most of its citizens lived in abject poverty and insecurity. 12 to 14 hour working day, subsistance wages. Dickens and other writers chronicled this.Conversely, I am part of the post war baby boomer generation and have done more than okay. Far better off than my parents and the following generations, able to "acquire assets" property, decent pension, generous redundancy in late 90s. And yet, the "boomers" inherited the direst economy Britain has ever had.Having gone over to a war economy, Britain ended the war with a staggering debt 275% of GDP and a destroyed or commandeered industrial infrastructure. Houses destroyed or badly damaged. Massive social upheaval, trauma and loss.From this massive debt and destruction the succeeding generation of ordinary folk achieved a level of prosperity their parents only dreamed of. Millions of houses were built, the NHS was established, free higher education and maintenance grants. We could buy houses, got decent pay and pensions, had a good standard of living. Looking at history, it seems the wealth of a country is not the only or main determinant of how wealthy ordinary citizens are.

Kathleen Healy ● 16d50 Comments

Money paid into SIPPS isn't taxed, in fact a rebate of 20% is added by Gov't. on up to 60k a year. The change means that 325k can still be passed on tax free, but above 325k. IHT will be paid on sums inherited.  Spouses and civil partners will not have to pay anything so it would be money passed on to children friend etc.Most people wouldn't have 60k a year to put into a pension and get a 20% top up from government. The top up is from other tax payers, which would incl. people on far lower incomes. Being able to claim a 20% tax rebate from surplus earnings, invest it in a SIPP and then pass the pot on tax free to anyone, was a useful vehicle for tax avoidance in estate planning for people with wealth above the average.The amount of wealth owned by a relatively small number of people starts to create distortions if it becomes very imbalanced, as it had in recent years. If the relatively small number of people with a lot of wealth are also able to avoid tax, in ways that the less wealthy can't, the tax burden falls heavier on those with less.The challenge affecting more and more people now, particularly young people, is having insufficient income to put any money into a pension. Anyone with a student loan pays an additional 9% rate of tax once earning over 28k. So someone wealthy enough to put 60k into a SIPP gets 20% tax rebate added. A young person earning over 28k pays an additional 9% tax for going to Uni.Who is being hard done by?

Kathleen Healy ● 7d

Totally agree with Sam, we know there are not sufficient funds to look after the elderly so why on earth has Reeves implemented such a bad and morally wrong policy by including pensions in IHT? We have been told for decades to contribution to pensions this government is totally immoral. Everyone I know have taken out the 25% tax free element as Labour will come after this next. It is utter madness. Increase the size of the state how on earth is this going to be funded?

Jayne Thorburn ● 8d

Agree with you Sam that people try to avoid being a burden on anyone, and if anything should be rewarded for that.

Janice Evans ● 9d

Reeves doesn’t have a long term strategy. You can see from her body language and face when she sits on the front bench that she is broken, finished! She’s aged ten years in a few months. She’s out of her depth. Don’t worry dear, it will soon be all over for you.

Steve Taylor ● 9d

John Hall: You say "Your comment makes no sense. If they were putting money in their SIPPs to avoid inheritance tax then that is not money they needed for their retirement."I see that I will need to expand on what I wrote. Many of us have money invested productively in SIPPs and not as you say "locked" up. This is what I call prudence. As I get older I realise that my medical needs increase and that I may need to employ carers, go into sheltered accommodation or have 24 care.  I did not wish to to be a financial burden on my family or come to that the state.The quid pro quo for me being prudent is that what is left of these funds (which many be nothing) can be passed on free of inheritance tax to my children.Rachel Reeves has enacted retrospective legislation that has destroyed many sensible and prudent peoples retirement plans. For centuriess UK legislators  carefully avoided retrospective legisaltion because it is immoral and unethical. It was "ethical" Gordon Brown who threw this time honoured rule on the bonfire.    The result of Rachel Reeve's short-sighted pensions grab is that fewer people will make proper provision for their retirement, and that those that do will invest less in their pensions.In the medium to long term this will dramatically increase the financial burden of care for the elderly that falls on families and the already overburdened state. Well done Rachel Reeves - but I wonder what happened to your long term strategy for getting this country out of the financial mess that it is in?

Sam Hearn ● 9d

Ah yes. Another nail in the coffin of this despicable government for refusing to compensate the WASPI’s after campaigning to pay them when they were in opposition. Rachel Reeves has behaved abhorrently. I’m sure thousands of women will not forgive her backstabbing!

Steve Taylor ● 10d

"It should be law that NO government can do retrospective of anyone policy affect pensioners."What you wrote above appears to be inconsistent with your opinion about the women who were adversely affected by the changes in the state pension age.

Andrew Jones ● 10d

Labour, Conservatives and the Cons Liberal coalition have made changes to the state pension, opening the door to further changes.It is an issue on which there seems to be party unity.

Kathleen Healy ● 10d

Pensions should never be means tested for obvious reasons each generation has funded the pensioner of the day. Thank you labour for destroying private pensions by bringing it into IHT utterly disgraceful. It should be law that NO government can do retrospective of anyone policy affect pensioners. Pensioners have no comeback it’s evil & immoral thats Labour…….

Jayne Thorburn ● 10d

Correction To employ sorry

Jayne Thorburn ● 11d

We can’t live in the past, times have changed and there are still fantastic opportunities for young people. I am fortunate enough not employ plenty. How we manage the economic has to change Labour have reverted back to tax & spend there is zero creativity. Just talking pensions there are many who don't need a state pension (e.g. all public servants on final salary pensions) so why don’t the government encourage pensioners not to draw down against the state and increase their tax free threshold? Just by increasing the tax free allowance by say 3K per person NOT drawing the state pension would save the state a fortune. As I say zero creative thinking by this government. They are taxing everything then spending to create state employment and yet still nothing works. The private sector must thrive for obvious reasons. This government policies are totally unsustainable. Traditionally Labour overspend so Tories have to sort out their mess. Putting Covid to one side where the Tories were over generous with handouts thats is what has happened over the decades.

Jayne Thorburn ● 11d

What's 'spare' about hard eared coin that you want to pass on to your offspring?

Keith Iddon ● 11d

Would think a lot of it tied up in property.

Janice Evans ● 11d

Your comment makes no sense. If they were putting money in their SIPPs to avoid inheritance tax then that is not money they needed for their retirement. Moreover, it is a good thing that they are withdrawing these funds that would be locked up until their children inherited them and spending them now instead which will grow the economy. Pension schemes should not be inheritance tax dodges. 

John Hall ● 11d

I see that around £100bn a year is passed on through inheritances, so there must be quite a lot of spare money sloshing about!

Peter Evans ● 11d

I've heard of people taking the equity on their homes to give children the deposit.

Janice Evans ● 11d

"Ordinary" people invested in pension schemes (SIPPs) on the understanding that these could be inherited free of inhertance tax. Rachel Reeves is putting a stop to this from April 2027. Many have acted in panic and withdrawn tax free sums from their pension schemes and are putting their retirement living standards at risk. The sums involved a reportedly massive. Yet another remarkable own-goal by the Chancellor.

Sam Hearn ● 11d

Most would start handing over their cash long before they need a care home which is why so many are able to put deposits down and get on the property ladder.

Steve Taylor ● 12d

Think most of it goes on care homes with families having to top up.

Janice Evans ● 12d

Baby Boomers are leaving huge inheritances to their ‘babies’. Especially since Thatcher started the ridiculous ‘Right to Buy’ scheme which caused chaos to the property market.

Steve Taylor ● 12d

The younger generation, currently helping pay the pensions of the older generation, who started drawing pensions at 60 or 65,  will find that they have to wait longer to get a pension. If there are further changes to the starting age they may be very old before they get anything. How is that a benefit?They will also differ from the post war generation in that many more will not have acquired assets in their working life. They won't own property or have entitlement to a two thirds final salary pension.I've read a couple of articles about this shift to many more people likely to have little in the way of assets when they retire in the future, It sounds very dry, but the consequences of it will be severe.It will mean many more people needing to claim housing benefit and other benefits when they are too old to work. In a way increasing the age to draw a pension is a bit of smoke and mirrors. The state will have to support older people without assets more heavily in the future or let them become destitute.

Kathleen Healy ● 12d

The younger generation will also benefit in the long run since  the age at which both men and women die (on average) continues to increase. As the proportion of the population that is in work and paying taxes decreases there must inevitably be a realignment of income taxes so that those pensioners with larger incomes pay more tax.As I have argued in the past, part of the solution will most probably involve abolishing employees national insurance and merging it with income tax. Those retirees with significant private pensions and investment income often pay a lower top rate of income tax (including NI) than those in work.

Sam Hearn ● 12d

When the age to draw a pension was extended, the precedent was set that the state pension is discretionary not a contractual right. Having established that changes can be made, that can continue and the age to starting drawing increased. Once again, it will be the younger generations who will lose out. Unless gov't made changes to existing claimants payments.

Kathleen Healy ● 14d

I'm sorry you didn't get to go to art college. I was told once that people regret the things they don't do in life rather that things they've done. I think that's true.If someone is creative, not being able to pursue and express that must create a sense of something lost.Those who got the chance to go to art college in 60's and 70's, many working class and the first in family to go to Uni, had, by all accounts, an amazing experience and for some the chance to become influential; Keith Richards, Bowie, Mary Quant. I am not creative but have grown to love gardening later in life. Being able to switch off and lose yourself in something is very relaxing and satisfying. Maybe it’s never too late to pursue something that we are drawn to. Accept you can’t capture the experience that you would have had though.

Kathleen Healy ● 14d

Just because something is taxable doesn't mean it isn't a benefit e.g. Job Seekers Allowance is a taxable benefit.

Andrew Jones ● 14d

The State Pension is not a benefit. It is taxable. The talk therefore of means testing it is nonscence. My increase this month is taxed at my highest rate of tax.An argument can be made for stopping the triple lock and increasing personal allowances. Over to our incompetent Chancellor.

Chris Dakers ● 14d

It’s much easier to blame the poor than to help them.

Peter Evans ● 14d

You'd have to blame someone else if you can't blame those on benefits.  Don't fascists always need to have enemies?

Philippa Bond ● 14d

Kathleen, suppose we have to weigh up if we have done everything we wanted to in life, with or without wealth.  My regret was not being allowed to go to Art College.

Janice Evans ● 14d

Yet many politicians still dine out on the ‘grifters v grafters’ division, maintaining the impression that anyone on ‘benefits’ or ‘welfare’ is somehow cheating the system and undeserving and needs to be ‘encouraged back into work’.  Pensioners should certainly be excluded from this category.

Peter Evans ● 14d

Andrew, I don't know the reasons behind it, just guessing, it's probably all on google but it gives me migraine if I read too much so not going into it.

Janice Evans ● 14d

If you look at the OECD we are at the lower end of the table for benefits!

Nicholas Beard ● 14d

What I don't understand is that our state pension is pretty low compared to a lot of other European countries. France for example has a higher state pension with a retirement age oge of 62 years. Have a look at Luxembourg state pension and see for oneself!

Nicholas Beard ● 14d

People do want different things, but when it comes to wealth, how much we have is largely down to circumstances of birth.Those who hold the most wealth, mostly inherited it. Poverty is also largely an inherited state.  Warren Buffet, once the world's richest man, known as the sage of Omaha said that wealth is largely determined by when and where we are born.To have been born in Britain post war was lucky, from a time and geography perspective. Opportunities existed that were not there for previous or succeeding generations.

Kathleen Healy ● 14d

Unless of course people feel there is some sort of stigma about receiving benefits payments.

Andrew Jones ● 14d

Not that it makes a difference, but the reason the State Pension is considered to be a benefit, is due to legislation introduced in 1992, when, if memory serves me right, one John Major, MP for Huntingdon, was PM.I really don’t see why people object to the State Pension being considered to be a non-means tested benefit for people who have reached the age of 67.

Andrew Jones ● 14d

Peter, I never quite get the inequality argument, people want different things,

Janice Evans ● 15d

They will lose out on the elderly who are removing charity gifts from their wills, people really should think of the implications when they make these decisions.

Janice Evans ● 15d

Anyone looking through the 1926 irish census will see the poverty endured in Ireland. Many census returns show families of 10 or more in just 2 or 3 rooms. My grandfather was a laundry man and listed as single and living with his mother in the 1911 census. By 1926 he was still living with his mother but was widowed with 7 kids. Soon after the census he married my granny who also worked in the laundry and they had 12 kids all packed into the damp 3 bed cottage with one coal fire where I used to stay for summer holidays. My grandfather lost his first wife & their three eldest girls to TB & my granny lost three kids before she was widowed at the age of 46 with 9 surviving kids. As there were no benefits she had to start work to support the family & got a civil service job thanks to Liam Cosgrave's mother in Dail Eireann until she retired. During winter snow when there were no buses she had to walk 6 miles to work into central Dublin yet I never heard her or any of my aunts or uncles complain about life . My parents both left school at 14 and work was hard to find but because they could read, write and add up they could seek their fortune in England in 1954, By the early 60s they were earning £12 pw and had jobs for life, index linked pensions  and there was never any threat of redundancy. They bought their first house for £2000 (woth £1.2m today) in Shepherds Bush then bought a house in Airedale Avenue for £8000 (worth £2.1m today). The only holidays we had were two weeks in Ireland & I didn't get a passport until I was 27. Most kids today need to spend £50k on a worthless degree from a worthless university just to get a job, housing is unaffordable and now there is the threat of Ai that could make over 10m unemployed & claiming benefits while those responsible move their profits & tax liability overseas. Today's kids have little prospect of owning a home, having a pension & everyone nowadays faces uncertainty about their future and they seem depressed despite all their holidays, cars, restaurants & endless subscriptions. Being a child of the 60s I lived through a better society with respect, certainty and a simpler care free society for children to grow up in where work was plentiful and with good public services most of which has been destroyed.With the mounting health, welfare & pension bill for the elderly it does not surprise me that parliament is now pushing for assisted dying.

Jo Vaughan ● 15d

did look on google, see there had been a petition to Government to stop calling pensions a benefit, maybe because it makes the benefit bill looka lot more (and would think because it was paid for in N.I.) never went into what the petition was about,  It was originally just called 'old age pension' from 1906, it was paid from the age of 70.

Janice Evans ● 15d

Government announcement is confusing:‘ In 2025 to 2026 the government is forecast to spend £322.6 billion on the social security system in Great Britain…’(Of this) ‘..we will spend £177.7 billion on benefits for pensioners in GB (which) includes spending on the State Pension.. forecast to be £146.1 billion.’‘We will spend £145.0 billion on working age and children welfare.. including on Universal Credit..  £77.1 billion on benefits to support disabled people and people with health conditions, and £37.3 billion on housing benefits.’So about half the ‘benefits bill’ goes on pensions, which most people wouldn’t consider as ‘welfare’ in the same way as unemployment or disability payments. To the main question, the UK is supposed to be ‘the 6th richest country in the world’ but because of widespread inequality, wealth is concentrated in the hands of the top few percent, so the rest feel -and are - comparatively ‘poor’. This could easily be changed were there the political will to do so.

Peter Evans ● 15d

It used to be called State Pension, so was changed for some reason.

Janice Evans ● 15d

Then why is it called a benefit, it gives wrong figures for spending on benefits.

Janice Evans ● 15d

Yes, Rachel Thieves has got it in for those darn Boomers! More sensible people accept that although state pensions are officially classified as social security benefits they are commonly viewed as an earned entitlement or contractual right due to National Insurance (NI) contributions.

Steve Taylor ● 15d

55% (£177.8 billion), is spent on pensioner benefits (primarily the State Pension). Those darned boomers again.

Kathleen Healy ● 15d

It’s pretty obvious why Britain is now poor. Unless the Benefits Bill is reduced substantially, Britain will remain poor. It’s why the Conservatives and Reform are  determined to reform Benefits. Labour, Lib Dims and Greens are determined to keep Britain poor. “ Thd benefits bill is forecast to reach £333 billion to £334 billion for the 2025–26 financial year. This represents a significant portion of government expenditure—roughly 23.6% of total spending—and is currently higher than the total revenue raised from Income Tax.”

Steve Taylor ● 15d

By the lates 70s UK debt as a % of GDP was down to around 40%. Impressive. And done whilst investing in building housing, offering free higher education, building the NHS. I started work in 1979, cheap housing, utilities, public transport. My employer, Barclays, offered me day release to go to college to get a degree, refunded the fees, which weren't much anyway. Two cheap to access works sports clubs in London, one with an open air pool. Rowing Club in Putney. Non contributory two thirds final salary pension, Profit sharing. Barclays was very profitable shares went up.

Kathleen Healy ● 15d

Also we didn't finish paying off the post war debt until the nineties.

Nicholas Beard ● 15d

Well said. I've found myself wondering the same thing of late.

Anne England ● 16d

Years ago I don't remember prices rising as much as they do now, think it started after decimalisation and recently it's everything, All Bills, Insurances, anything you need basically, Apart from the increase in food prices, it's a difficult time even if you have a good pension would have thought.

Janice Evans ● 16d