Thursday 7 March 2013

The Con in Economy as the Poor get Poorer

I have wanted to write this post for quite some time, but because every time I do a political tweet it seems to result in an extended row exchange, I thought I would steer clear of that on my blog.

But, I listen to @LBC973 a lot and they talk about subjects that get me riled several times a day.

It is true that you don't know something until you have walked in a person's shoes and I have been out of work for 8 months, (after working for 24 years) so am no longer in the rat race that dulls your brain, and makes you only think about home, dinner, bed and work again.  Once you get off that treadmill you see the bigger picture and as much as I am spiritual, it aint pretty.

A caller rang in @LBC973 and said the poor are getting poorer because a Secretary now is getting 10 times what she would have got 20 years ago, but the property prices are 20 times as much.  Hearing that, I immediately rung in, (and spoke to Emma Barnett this week) as the situation is actually way worse.  I will illustrate with a PERSONAL, REAL example.

In 1989 I worked in C&A (remember them?) and I was on £5.82 an hour and was over 18.  I was not a Manager, not even a Senior Sales, I was just a part-time Sales Assistant, whilst studying my A-levels and then during the vacations of my first year at University.  I WAS in London, but NOT in the West End.

Roll forward 24 years, and look what the National Minimum Wage is now! 
  • for workers aged 21 years or more: £6.19 per hour
  • for workers aged 18 to 20 inclusive: £4.98 per hour
The rate for 18 to 20 year olds did NOT increase in October 2012 and was actually FROZEN.  The other only rose by 1.8%

Now most reputable retailers pay the higher rate £6 something, even if their workforce is 18.  They do it largely so that they don't have to keep an eye on birthdays, and so as to be competitive with other retailers.

When I worked in C&A Marks and Spencer were having to keep pace with us, such was our wage!

Anyway, for a small retailer, and in particularly a non-London one, where they don't have to compete for employees, they are going to be less inclined to pay the higher rate and may be inclined to pay closer to £5 per hour.  That is less than I was getting 24 years ago.

And we wonder why youth unemployment is so high!

Yes, they are better off on benefits!

We are not encouraging our youth to work with wages such as this.

In ONE generation, from my parent's to mine, I have watched us as a society, go from needing one bread-winner per family to two, and now I am watching teenagers who can only get by if they live at home until they are 30!

Rents are hiked up, as they are subsidised by housing benefit, wages are kept low, as they are subsidised by benefits.  The workforce willing to work for this wage are shipped in from overseas.  In fact Hotels largely recruit direct from other countries, via agencies... And all the while, corporates are getting away with accounting practices that allow them to pretend they are making a loss in the UK.  Trust me I worked for one, but by the end, we were actually indeed making a loss.

It's got to the stage where petrol, heating and food are so expensive, I don't know how the current e-CON-omy is sustainable.

The media keeps pitching the working poor against the non-working poor in a divide and conquer way that is so very transparent it is sick!

I am meant to be yogic, and spiritual, and thus believe in prosperity, but with listening to @lbc973 everyday, I keep being reminded of the economic situation which is not pretty.

The early 1990s recession completely passed me by, because I was at University (back when we got full grants).  My Mum and Step Dad both worked.  They did not get repossessed.  I don't think they even suffered negative equity.

BUT this recession... I am feeling every minute of it, and considering it started in 2008 I really want to know if it is planning on ending any time soon...

40% tax kicks in at a measley £34,371, which in London (or ANY expensive city) is not a lot of money... yet I NEVER hear people making a fuss about it.  AND I just went online to get the EXACT figure for this post and was HORRIFIED to find that in April of this year it is going down not up, i.e. 40% tax will kick in at £32,011.

Don't you think that is very out of date?
Don't you think, that in a society where hard work and ambition should be motivated, that it is very unmotivating to find yourself at that bracket, at a not very large salary.
To my mind that discourages people from doing overtime or seeking promotion.

And I haven't heard ANY hoo-ha about it.

If you are more clued up than me, please point me in the direction of an explanation for this....
What I would also like to know, is how long it has been at this £35k, (2011-12) £34k, (2012-2013) £32k (2013-2014) crazy low level...

We regularly hear the media talking about benefit scroungers, the Amazons and Googles of this world, and those

From April 2013 people on over £150k will go DOWN from 50% tax to 45% and everyone else continues to be the SQUEEZED MIDDLE.

Well, if you are anything like me when I was working, you are squeezed because you are too busy doing long hours to even stand by look at the situation and do anything about it...

If anyone is speaking up about this, please let me know as I think it is outrageous...

If there is any reason I am way off the mark, let me know in the comments.

I have just had a pleasant exchange with
Kara ‏@ChelseaMamma

Rachel @mummyglitzer

on Twitter

and Rachel pointed out that the drop in the salary for higher rate tax to kick in may be to balance out the benefit from the tax free amount increasing, but I just looked that up and it over compensates, so that hundreds of thousands of MORE people WILL find themselves paying 40% tax.

Like the heading of this blog post, it is the con in economy. I found this a relevant article which is linked to here (below) and was written back in 2012, so this has been coming for a while:

This is Money

As it says here: Food has been going up in price in the UK at twice the EU average...

Liska x


  1. Brilliantly put! E CON omy - says it all. Love your new look blog and domain XX

  2. Your crazy low level for the 40% rate of income tax is crazy low because it's wrong. Easy to spot why though, tax information isn't given very clearly.

    Everyone gets a Personal allowance and this can differ quite radically depending on a lot of things (refunds given for previous periods through coding, taxable benefits, age, etc etc); some people even get a negative allowance (denoted by a K on the end of their tax code). The 2012/2013 basic personal allowance is £8,105. The 2011/2012 personal allowance was £7,475. This means, all things being equal, in 2012/2013 the 40% rate starts at £42,475, and it 2011/2012 it started at £42,475. The increase in personal allowance has been offset by a reduction in the limit for 40% tax to cut in. So nobody is paying any more tax than they used to.

    For 2013/2014 though you're right, it equates to an extra £205 of tax (the £1,025 lowering of the rate at the difference between the 20% and 40% rate). That's a bummer. But to earn enough to pay the 40% rate, you've got to be earning £15k over the national average. And the national average (£26k for full time employment)is heavily skewed by a few hundred/thousand people earning millions.

    Swings and roundabouts innit?

    1. Thanks for explaining that, but I did address that (the £42k) in the final paragraphs where I linked to an article that explains that the tax free threshold increase is over compensated for meaning that hundreds of thousands of extra people will fall into the 40%. Please read the article I linked to at the end.

      I still think it is far too low for 40% to kick in, especially with the cost of living in London and other metropolitan cities in the UK. With the cost of fuel, and food. Fool has doubled I think, over 10 years (or something like that) and salaries certainly have not.

      And hey, (1) the national average aint great either and (2) as you say it is not even accurate but skewed and (3) the jump between 20% tax and 40%...? Yet there isn't then another jump till £££££S and even that is now going to be 45 instead of 50%.

      SURELY you can see something is not right.

      The only winners are people who can reduce tax by becoming a company, and those who can send money off shore which is why the world and his wife are doing exactly that.

      What about the ordinary man on the street? That not you then?

      Please don't take offence, I would love to know your response to my reply to yours.

      Liska xx

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  4. With you all the way, time this government got to grips with the likes of Amazon and looked after those of us putting something back on the economy and those who need support.

  5. With you all the way, time this government got to grips with the likes of Amazon and looked after those of us putting something back on the economy and those who need support.

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