9.41m UK Economically Inactive People Points To Wealth Tax
Published / Last Updated on 16/08/2024
The Office for National Statistics this week released its monthly report “Employment in the UK: August 2024”.
As well employment at 33.09m (74% on 16-64 year olds) and registered unemployed of 1.43m (4.2% of 16-64 year olds), it revealed that there has been an increase of 350,000 in economically inactive people in the last year to 9.41m people (over 22% of 16-64 year olds).
That’s more than a fifth of UK work age people not directly contributing to the public purse in terms of taxation or social security contributions. Of course, many will be contributing indirectly by spending money on goods and services, dividend taxes and rental income taxes, but benefits and state pensions are paid for on a ‘unfunded’ basis i.e., there is no reserve fund, what is paid in tax and national insurance this week is paid out roughly in 5-6 weeks and there is not enough consistently paid in to cover outgoings as the population ages and seemingly more and more working age people claiming benefits and credits.
In its report, the ONS highlights that 19.1% of inactive people are men and 25.1% are women.
Comment
With a fifth of those at working age being economically inactive and the state pension/social care system crumbling under the sheer weight of an ageing population, is it any wonder that pressure is on any government when it comes to huge increases in state pensions (after high inflation) and winter fuel payments being cut for all pensioners not on pension credit?
This is a continuing problem for successive governments with an ageing population and more people disengaging from economic activity either through early retirement or not wanting to work that will only get worse. It is a timebomb that we fear the only way for any government to protect itself from an ageing population with less workers is:
- To increase state pension age even further.
- To remove the 'triple lock' increase guarantee.
- Do not offer a personal allowance enhancement for those with state pensions over the personal tax allowance.
- The Labour Manifesto said it would not increase taxes for working people so an increase in stealth taxes for those not working e.g. landlords with property, capital gains tax increases, tougher inheritance tax rules and reduce tax breaks on savings and investments is a must.
- The Big One: A new wealth tax ….?