Why has spending gone up and tax revenue gone down if lots more work?

[Titanic99]

This question is baffling me as we approach the Election.

 

The Government probably quite legitimately claims there are millions more people in work than when they came to power yet the figures from their own department show the following:

 

Welfare spending has increased from 99 to 112 Billion

Income Tax revenue has gone down from 202.9 to 202.5 Billion

 

So how can this be, surely the logical assumption would be more people in work then less spent on Benefit and more received in taxation.

 

I suppose the obvious answer is the jobs are very low hours and low paid, and/or we are having to retire much later so people are still working that would previously have been retired.

 

Without wishing to doubt their figures, how can this anomaly be explained?

[The Joker]

I suppose the obvious answer is the jobs are very low hours and low paid. . .

 

At a guess. . . Low paid workers pay less tax and require more social security topups.

 

Therefore: tax revenues decrease while social security spending increases.

[Titanic99]

At a guess. . . Low paid workers pay less tax and require more social security topups.

 

Therefore: tax revenues decrease while social security spending increases.

 

Surely though if people were unemployed previously they'd come off Benefit and start paying a little tax, so the overall Benefit bill would reduce and tax revenue go up.

[Fogey]

Surely though if people were unemployed previously they'd come off Benefit and start paying a little tax, so the overall Benefit bill would reduce and tax revenue go up.

 

Probably people being made redundant from better paid full time jobs then getting lower paid and part time jobs. Shows up as more people in work.

[tzijlstra]

I am not sure what your figures refer to, so I will assume they are pre-government (ie. from the last elections) and current.

 

A large part of the increase in social welfare spending is related to the rise of pensions at or above inflation rate. Also in part due to an increase in part-time and low-paid workers as Joker says. I also wonder if despite/due to ATOS' efforts we are actually seeing an increase in disability allowances and so on.

 

Meanwhile tax-revenues have gone down due to a catalogue of factors, companies making less profit than before the crash, the top rate coming down to 45% from 50% (These are after all the people that produce most tax in relative terms) and the slow down in the housing market which drops the stamp-duty income for the state, people spending less, particularly on luxury goods which drops the VAT income.

[The Joker]

Pardon me for being a cynical old git, but could these government statistics be, ahem, massaged at all?

 

If, as I suspect, most of these new jobs are zero-hours contracts or temporary positions, or even two part-time jobs done by one person, how would that affect the results?

 

[Mecky]

I'm more concerned with the fact that the government have doubled the national debt since 2010 and what with all these cuts to services to save money, punishing the most vulnerable in society, just where is all the money going?

[Dardandec]

just where is all the money going?

The EU and interest on the debt.

[Mecky]

The EU and interest on the debt.

 

So borrowing more to pay off the debt?

 

I remember that TV advert from a few years back - Don't be in debt this Christmas, get a loan from us

[biotechpete]

Pardon me for being a cynical old git, but could these government statistics be, ahem, massaged at all?

 

If, as I suspect, most of these new jobs are zero-hours contracts or temporary positions, or even two part-time jobs done by one person, how would that affect the results?

 

 

Although, the numbers claiming job seekers allowance have also fallen.

 

Part of the drop in tax revenue will be due to the increase in the personal allowance and people paying down debt instead of spending the money on taxable goods.