3 ms·

I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship. In t

I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship. In the UK, however, austerity has been a persistent policy for over 13 years. Low taxation, low spending, persistent erosion of workers rights. No spending even when times were better, leaving it all the more fragile the next time. Compare to the US, Canada and elsewhere, which performed strong austerity measures immediately following the 2009 crash, then dialled them back - as per economists recommendations - and recovered much faster than the UK.

JetSetWilly 3y ago
Taxation in the UK is currently at the highest levels in recorded history. It is not true to say that "taxation is low". It is also not really true to say that government spending is low recently either, so it is a bit of a myth that there's some ongoign "austerity" in all the 15 years since 2009. In addition, we just came through a pandemic where a large portion of the population were paid to do nothing. The "austerity" narrative just isn't reflected by facts. What's going on is that the UK population is greying and far older than it once was, and huge portions of the UK budget are going towards paying pensioners, the NHS etc. Worse, the triple lock ensures that this part of the UK budget is essentially inflexible. The perceived "austerity" is jsut a reflection of demographic trends.
- smeagull 3y ago
  Nope. It was at it's highest in 2010.
  - lotsofpulp 3y ago
    Decreasing the purchasing power of the currency is also taxation. For example, a country might want to increase its money supply to nominally satisfy obligations to old people, while the supply of labor and goods does not keep up with the demand. Manifests as higher prices and longer wait times. Or the country can experience a reduction in the quality of goods and services being delivered, for example instead of being able to see a doctor, some portion of the population is now expected to consult with someone less qualified.
- bigfudge 3y ago
  Tax in the UK is still low relative to European neighbours https://www.dannydorling.org/?p=9541 https://www.dannydorling.org/?p=9541 It's high in historical perspective because the austerity years of the 2010s and Brexit choked growth. But we could still choose to spend more on services without being unusual in European terms
- CraigJPerry 3y ago
  The top income tax rate was 90% for decades until it dropped to 75% in the 70s (although you could still end up paying 90% in some cases even then). Today it’s 45% Since 1965 companies pay a much lower corporation tax. Tax to GDP has been a little bit up and down but only recently did it breach the 1970s peaks. I don’t think this matches with “ Taxation in the UK is currently at the highest levels in recorded history.”
  - berdario 3y ago
    > Since 1965 companies pay a much lower corporation tax Since it's not straightforward to get figures for before 1965: https://en.wikipedia.org/wiki/United_Kingdom_corporation_tax#History https://en.wikipedia.org/wiki/United_Kingdom_corporation_tax... > Until 1965, companies were subject to income tax on their profits[11] at the same rates as was levied on individual taxpayers > In addition to income tax, companies were also subject to a profits tax, which was deducted from company profits when determining the income tax liability > At the time of Hugh Gaitskell's 1951 budget, the profits tax was 50% for distributed profits and 10% for undistributed profits. > The tax rates fell to 22.5% on distributed profits and 2.5% on undistributed profits by 1957 This means that in 1951, if a company had a profit of 100, the taxes were *at least* (I'm using undistributed profits, not taking into account higher rates, etc.etc.) 52.75 (10% of 100, plus 47.5% of the remaining 90% of 100) The 47.5% is the standard rate of "nine shillings and sixpence in the pound", per https://api.parliament.uk/historic-hansard/commons/1951/apr/10/income-tax-1 https://api.parliament.uk/historic-hansard/commons/1951/apr/... In 1959, a company with a profit of 100, would've instead paid in taxes *at least* 40.28 (2.5% of 100, plus 38.75% of the remaining 97.5% of 100) The 38.75 is the standard rate per https://hansard.parliament.uk/commons/1989-03-03/debates/3ccce9ae-35fc-429a-8c0c-bf40a44b0999/TaxThresholdsAndIncomeTax https://hansard.parliament.uk/commons/1989-03-03/debates/3cc... see also: "seven shillings and ninepence in the pound" per https://api.parliament.uk/historic-hansard/commons/1959/apr/07/income-tax https://api.parliament.uk/historic-hansard/commons/1959/apr/... The current corporation tax main rate is 25% (the small profits rate is even less: 19%)
- deleted 3y ago
  [deleted]
- teamonkey 3y ago
  This year, the tax burden is higher than the OECD average for the first time since 2011[1]. As the graphs on that page show, the UK's tax burden being below the OECD average - and certainly lower than France/Germany - is the general rule since the '80s. In any case, the low rate of taxation is only one element of the persistent austerity policies that have been in place since the 2009 economic crash. In terms of government spending, we have easily-obtainable data on the NHS[2] and those available by thinktanks like IFS[3]. The NHS spending is low (and again consistently lower than our peers in Europe). I find the charts from the IFS interesting because it doesn't show a lot of change in spending year-on-year (relative to GDP) since the '90s, except for the catastrophes. But the table at the bottom is very interesting. Health £ spending up, but equivalent to 2-3% increase YoY, which barely keeps up with inflation. Education, public order & housing spending are all DOWN in absolute terms, forget about inflation. Defense, social security, transport all increased at a rate less than inflation. (Obviously a huge increase in debt spending recently due to Covid measures.) That there is long-term austerity exemplified. No myth. [1] https://www.oecd.org/tax/revenue-statistics-united-kingdom.pdf https://www.oecd.org/tax/revenue-statistics-united-kingdom.p... [2] https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-... [3] https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-government-spend-money https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-gov...
gadders 3y ago
>> Low taxation Er, no. The UK currently has the highest tax burden for 70 years.
- bigfudge 3y ago
  This is true, but we still tax/spend less than many European competitors. The reason tax is historically high (for the UK) is that we've had no growth and our population is getting older.
  - gadders 3y ago
    And we have 5 million people on out of work benefits and probably are providing services that we shouldn't. https://www.spectator.co.uk/article/yes-five-million-are-on-out-of-work-benefits-heres-the-proof/ https://www.spectator.co.uk/article/yes-five-million-are-on-...
    - bigfudge 3y ago
      One large driver of out of work benefits are NHS waiting lists: https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/economicinactivity/articles/halfamillionmorepeopleareoutofthelabourforcebecauseoflongtermsickness/2022-11-10 https://www.ons.gov.uk/employmentandlabourmarket/peoplenotin...
slothtrop 3y ago
> I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship. Which by definition is austerity.
leshow 3y ago
It's usually the opposite. In a crash or time of hardship you want to spend more. Austerity in a downturn creates a virtuous cycle. That's the insight of Keynes and what got the world out of the Great Depression. The austerity policy you're suggesting has been overwhelmingly found to have failed almost everywhere it's been tried. Cutting spending in a downturn creates slower growth, which makes it even harder to recover. The book in OP argues that austerity is not about recovery, it's about disciplining workers. https://www.theguardian.com/commentisfree/2017/jul/07/imf-austerity-doesnt-work-immigrants-working-class https://www.theguardian.com/commentisfree/2017/jul/07/imf-au...
- teamonkey 3y ago
  Yeah, I do agree. I meant that there may need to be a temporary refocus of spending (with the emphesis on temporary) during the difficult period, which may include some cutting-back on development, spending instead of expanding infrastructure, etc. Totally agree that austerity as practiced in this country is dogmatic and about keeping people in place.
marcosdumay 3y ago
> governments may have to temporarily rein in some spending following a crash or time of economic hardship The most popular theory (and one with some quite good empirical support) is that government should increase spending exactly following a crash or time of economic hardship. That has been the mainstream economical thinking for near a century. What people mostly disagree with each other is what to do on times of strong growth.

JetSetWilly 3y ago

Taxation in the UK is currently at the highest levels in recorded history. It is not true to say that "taxation is low". It is also not really true to say that government spending is low recently either, so it is a bit of a myth that there's some ongoign "austerity" in all the 15 years since 2009. In addition, we just came through a pandemic where a large portion of the population were paid to do nothing. The "austerity" narrative just isn't reflected by facts. What's going on is that the UK population is greying and far older than it once was, and huge portions of the UK budget are going towards paying pensioners, the NHS etc. Worse, the triple lock ensures that this part of the UK budget is essentially inflexible. The perceived "austerity" is jsut a reflection of demographic trends.

smeagull 3y ago
Nope. It was at it's highest in 2010.
- lotsofpulp 3y ago
  Decreasing the purchasing power of the currency is also taxation. For example, a country might want to increase its money supply to nominally satisfy obligations to old people, while the supply of labor and goods does not keep up with the demand. Manifests as higher prices and longer wait times. Or the country can experience a reduction in the quality of goods and services being delivered, for example instead of being able to see a doctor, some portion of the population is now expected to consult with someone less qualified.
bigfudge 3y ago
Tax in the UK is still low relative to European neighbours https://www.dannydorling.org/?p=9541 https://www.dannydorling.org/?p=9541 It's high in historical perspective because the austerity years of the 2010s and Brexit choked growth. But we could still choose to spend more on services without being unusual in European terms
CraigJPerry 3y ago
The top income tax rate was 90% for decades until it dropped to 75% in the 70s (although you could still end up paying 90% in some cases even then). Today it’s 45% Since 1965 companies pay a much lower corporation tax. Tax to GDP has been a little bit up and down but only recently did it breach the 1970s peaks. I don’t think this matches with “ Taxation in the UK is currently at the highest levels in recorded history.”
- berdario 3y ago
  > Since 1965 companies pay a much lower corporation tax Since it's not straightforward to get figures for before 1965: https://en.wikipedia.org/wiki/United_Kingdom_corporation_tax#History https://en.wikipedia.org/wiki/United_Kingdom_corporation_tax... > Until 1965, companies were subject to income tax on their profits[11] at the same rates as was levied on individual taxpayers > In addition to income tax, companies were also subject to a profits tax, which was deducted from company profits when determining the income tax liability > At the time of Hugh Gaitskell's 1951 budget, the profits tax was 50% for distributed profits and 10% for undistributed profits. > The tax rates fell to 22.5% on distributed profits and 2.5% on undistributed profits by 1957 This means that in 1951, if a company had a profit of 100, the taxes were *at least* (I'm using undistributed profits, not taking into account higher rates, etc.etc.) 52.75 (10% of 100, plus 47.5% of the remaining 90% of 100) The 47.5% is the standard rate of "nine shillings and sixpence in the pound", per https://api.parliament.uk/historic-hansard/commons/1951/apr/10/income-tax-1 https://api.parliament.uk/historic-hansard/commons/1951/apr/... In 1959, a company with a profit of 100, would've instead paid in taxes *at least* 40.28 (2.5% of 100, plus 38.75% of the remaining 97.5% of 100) The 38.75 is the standard rate per https://hansard.parliament.uk/commons/1989-03-03/debates/3ccce9ae-35fc-429a-8c0c-bf40a44b0999/TaxThresholdsAndIncomeTax https://hansard.parliament.uk/commons/1989-03-03/debates/3cc... see also: "seven shillings and ninepence in the pound" per https://api.parliament.uk/historic-hansard/commons/1959/apr/07/income-tax https://api.parliament.uk/historic-hansard/commons/1959/apr/... The current corporation tax main rate is 25% (the small profits rate is even less: 19%)
deleted 3y ago
[deleted]
teamonkey 3y ago
This year, the tax burden is higher than the OECD average for the first time since 2011[1]. As the graphs on that page show, the UK's tax burden being below the OECD average - and certainly lower than France/Germany - is the general rule since the '80s. In any case, the low rate of taxation is only one element of the persistent austerity policies that have been in place since the 2009 economic crash. In terms of government spending, we have easily-obtainable data on the NHS[2] and those available by thinktanks like IFS[3]. The NHS spending is low (and again consistently lower than our peers in Europe). I find the charts from the IFS interesting because it doesn't show a lot of change in spending year-on-year (relative to GDP) since the '90s, except for the catastrophes. But the table at the bottom is very interesting. Health £ spending up, but equivalent to 2-3% increase YoY, which barely keeps up with inflation. Education, public order & housing spending are all DOWN in absolute terms, forget about inflation. Defense, social security, transport all increased at a rate less than inflation. (Obviously a huge increase in debt spending recently due to Covid measures.) That there is long-term austerity exemplified. No myth. [1] https://www.oecd.org/tax/revenue-statistics-united-kingdom.pdf https://www.oecd.org/tax/revenue-statistics-united-kingdom.p... [2] https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-... [3] https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-government-spend-money https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-gov...

gadders 3y ago

>> Low taxation Er, no. The UK currently has the highest tax burden for 70 years.

bigfudge 3y ago
This is true, but we still tax/spend less than many European competitors. The reason tax is historically high (for the UK) is that we've had no growth and our population is getting older.
- gadders 3y ago
  And we have 5 million people on out of work benefits and probably are providing services that we shouldn't. https://www.spectator.co.uk/article/yes-five-million-are-on-out-of-work-benefits-heres-the-proof/ https://www.spectator.co.uk/article/yes-five-million-are-on-...
  - bigfudge 3y ago
    One large driver of out of work benefits are NHS waiting lists: https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/economicinactivity/articles/halfamillionmorepeopleareoutofthelabourforcebecauseoflongtermsickness/2022-11-10 https://www.ons.gov.uk/employmentandlabourmarket/peoplenotin...

slothtrop 3y ago

> I think even people against Austerity agree that governments may have to temporarily rein in some spending following a crash or time of economic hardship. Which by definition is austerity.

leshow 3y ago

It's usually the opposite. In a crash or time of hardship you want to spend more. Austerity in a downturn creates a virtuous cycle. That's the insight of Keynes and what got the world out of the Great Depression. The austerity policy you're suggesting has been overwhelmingly found to have failed almost everywhere it's been tried. Cutting spending in a downturn creates slower growth, which makes it even harder to recover. The book in OP argues that austerity is not about recovery, it's about disciplining workers. https://www.theguardian.com/commentisfree/2017/jul/07/imf-austerity-doesnt-work-immigrants-working-class https://www.theguardian.com/commentisfree/2017/jul/07/imf-au...

teamonkey 3y ago
Yeah, I do agree. I meant that there may need to be a temporary refocus of spending (with the emphesis on temporary) during the difficult period, which may include some cutting-back on development, spending instead of expanding infrastructure, etc. Totally agree that austerity as practiced in this country is dogmatic and about keeping people in place.

marcosdumay 3y ago

> governments may have to temporarily rein in some spending following a crash or time of economic hardship The most popular theory (and one with some quite good empirical support) is that government should increase spending exactly following a crash or time of economic hardship. That has been the mainstream economical thinking for near a century. What people mostly disagree with each other is what to do on times of strong growth.