Cost of living squeeze in 2022

[Welshbeef]

captain_cynic said:

Welshbeef said:

You then have the so called tax sinkholes

£50-60k can be an effective 60% tax rate
£100-125k is an effective 60% tax rate
3.25% new NI above the max threshold is a tax load

So what can you do - and this is if it’s affordable - pay into your pension so every extra £40k you put in a gross £100 into your pension. An amazing return.

This is long term planning for sure but it means you can drag forward the time you can financially retire + inheritance tax with pensions can be extremely efficient.

I think lack of education can't critical thinking skills is one of the biggest impedements.

Take the above for example. I earn over £50K and I'm nowhere near paying 60%. I get over £3K per month into my bank account and there is no dodgy tax avoidance here. That is what I get after PAYE.

Then again I know I'm in the top 10% of income earners in the UK on that rate.

The issue isnt for those earning millions, they aren't even paying the same tax rate as I am.

I stated the £50-60k range CAN be an effective 60% tax rate - this is because of you have children and child benefit the benefit is removed from you between £50-60k. If you have no children or don’t draw child benefit then it will not be.

The £100-125k exists as a tax sink.
The £100k and £150k starting points for removal of tax free threshold and the 45% have never been moved from their creation which is what 12-15years and rates are frozen for another 5 years. This is major fiscal drag.
£100k today isn’t anything like £100k was back in 2003 (iirc is when it came in). Criminal.
The only good thing the £100-125k does is - unless you need the cash - makes you pay into pension and basically be up to £40k a year paid into it meaning those who are in this range will have a very decent pension (kind of enforced by govt) take our 25% of the pot when you retire tax free then draw down 4-6% of remaining pot value for the rest of your life.

[BigMon]

I was furloughed and it was an eye opener for me in that, (rightly) fearing redundancy, I pared my spending right back and realised that I was just as happy and had been spending loads of money on ste basically.

Consequently I've carried that forward and we're living a lifestyle that costs far below what we actually earn. Not deliberately or as a result of being tighter than two coats of paint but just happenstance really. My office also moved so I can walk to work, so I sold my car rather than having it sat on the road being shat on by birds.

However, we're also incredibly lucky to be in a position where we can weather the increases that are coming. For the people who aren't I don't know what the answer is, but they're going to need help. People are already choosing between heating and eating through no fault of their own.

[Welshbeef]

Energy increases there are some simple solutions

Use less energy
Turn the heating down
Don’t leave lights on in rooms your not in
Cook batches of food - less cooking = less energy
Wear more clothes - jumpers work very well

[bitchstewie]

For some perhaps yes but it doesn't work that way when you're already choosing between topping up the energy card or buying food.

Those would be nice options to have.

[Gecko1978]

Kawasicki said:

Energy crisis only exists because renewable energy hasn’t been rolled out extensively enough!

or maybe it does not work....or is more expensive than say nuclear which was proven a low C02

[valiant]

Welshbeef said:

Energy increases there are some simple solutions

Use less energy
Turn the heating down
Don’t leave lights on in rooms your not in
Cook batches of food - less cooking = less energy
Wear more clothes - jumpers work very well

What do you say to people who are already doing these things and will now face increases of what? 50% over the next few months?

Many PHers seem to live in some sort of bubble that doesn’t acknowledge that many people are struggling now and the belt is as tight as it can be. Stuff like the above is fine if there’s a bit of fat on your monthly budget but if the pips are already being as squeezed as can be, what happens when bd Electric Co tell you your direct debit is going up yet again?

[BigMon]

valiant said:

Welshbeef said:

Energy increases there are some simple solutions

Use less energy
Turn the heating down
Don’t leave lights on in rooms your not in
Cook batches of food - less cooking = less energy
Wear more clothes - jumpers work very well

What do you say to people who are already doing these things and will now face increases of what? 50% over the next few months?

Many PHers seem to live in some sort of bubble that doesn’t acknowledge that many people are struggling now and the belt is as tight as it can be. Stuff like the above is fine if there’s a bit of fat on your monthly budget but if the pips are already being as squeezed as can be, what happens when bd Electric Co tell you your direct debit is going up yet again?

Exactly.

[bitchstewie]

There's a lady called into LBC just now who has disabilities and other conditions including angina and is living with her son who has aspergers.

She's explained that between bills and shopping there is simply nothing left to the point where she and her son have had a discussion about no longer buying meat to save a little more money.

She's worrying about how to heat her home as she can't do so without her sons help and how to afford to eat not about how much tax relief she can get on each extra £40K she can stuff into her pension.

[Fusion777]

We will see if this has any effect on the rampant house and car price inflation we’ve seen over the past few years. It’s scary how reliant on debt we are as a nation.

[ant1973]

captain_cynic said:

Gecko1978 said:

Kawasicki said:

Energy crisis only exists because renewable energy hasn’t been rolled out extensively enough!

or maybe it does not work....or is more expensive than say nuclear which was proven a low C02

The UK gets half of its power from burning fossil fuels

42% natural gas.
9% coal

21% nuclear.

24.1% from renewables. This is everything from wind to biomass.

The big issue is gas... Namely the cost of it. Renewables are working to get us off our dependence on foreign fossil fuel supplies.

Sorry if the evidence does not fit your theories.

I think the issue is that if we were still burning coal, energy prices would be lower. Ditto if we were still bringing more carbon energy online. This is where the green agenda meets reality. People are in favour of the green agenda, as long as someone else is paying.... Rising energy prices have the potential to make the poll tax riots look like a small pub fight...

[Gecko1978]

bhstewie said:

For some perhaps yes but it doesn't work that way when you're already choosing between topping up the energy card or buying food.

Those would be nice options to have.

Are you saying they already have turned the heating off you mean in all other cases you can use less. But for some I agree it will be eat or heat but that i suspect is same today. Issue we might face is a lot in the middle might be eat heat / mortgage that would be a political problem for the Tory's. Tax rises would actually make it worse an that red wall would srping back up

[Murph7355]

ClaphamGT3 said:

I have been predicting for some while now that this is going to be what does for Johnson - not sleaze, 2020 Christmas parties or vacillation over Covid.

The catch-22 for Johnson is that every fiscal move that he makes to ameliorate the impact for the blue-wall constituencies will be at the expense of the traditional true-blue shires, but he needs them both on-side.

Ditto...

The second the furlough scheme was announced I sensed major trouble. And those wanting Sunak as a replacement for Johnson need to look closely at that.

It was a rushed policy, at the behest of social and traditional media, and will cost the country dear.

The distractions of Covid (across the board - the understandable stuff and the not so) has also lost a lot of time in developing and implementing decent economic strategy. That, of course, assumes there was a strategy beyond soundbites anyway. Which I admit is a stretch.

They do have time to make some inroads IMO, but the money situation is now difficult. Maybe this is where they need to go st or bust as I think stongle regularly alludes to...spend a bit of time getting proper controls in place and then open the funding taps big time, and put the money on the never, never, avoiding increasing taxes right now.

If they get it badly wrong, Labour in at the next election and the Tories have done a full reverse MO and left Labour with a st bomb. If it goes right, then they get voted in again and maybe get a full term without distraction excuses.

[valiant]

bhstewie said:

There's a lady called into LBC just now who has disabilities and other conditions including angina and is living with her son who has aspergers.

She's explained that between bills and shopping there is simply nothing left to the point where she and her son have had a discussion about no longer buying meat to save a little more money.

She's worrying about how to heat her home as she can't do so without her sons help and how to afford to eat not about how much tax relief she can get on each extra £40K she can stuff into her pension.

Weird thing is is that people in work who are struggling will be looking at their pension payments and deciding that they can no longer afford the contributions despite all the tax breaks.

It’ll only be for a year or two, they’ll say, until things get back to normal but you just know that it’ll be for far longer than that leading to pension poverty further down the line.

[tannhauser]

NerveAgent said:

Earthdweller said:

I come from a part of the country with high rates of social deprivation and an average wage several thousand below the National average

There has always been a large section of society that lives pretty much hand to mouth and £10 is the difference between eating/not eating

A lot of these people have been hit really hard by Covid as their zero hours/minimum wage jobs have been decimated

But, my real concern is the large numbers in good jobs, with mortgages and “good lifestyles” that are absolutely maxed to the hilt and have zero savings and zero spare every month, with commitments that meet or exceed their monthly income

They aren’t actually far off the situation of the first group as they have a lifestyle built on low prices/cheap credit, in someways the first group living in social housing might be in a better place if it all comes tumbling down around them

On talking to people I’ve been quite shocked to find the number living in nice houses with nice cars and great social lives that really don’t have a pot to piss in

It could be interesting times ahead

Lots of “comfortable middle class wfh” types have been spunking money at an alarming rate he past couple of years. Huge mortgages, extra mortgages on extensions, little savings etc etc

I hope these people get completely fked over.

[tannhauser]

Earthdweller said:

mike74 said:

Earthdweller said:

But, my real concern is the large numbers in good jobs, with mortgages and “good lifestyles” that are absolutely maxed to the hilt and have zero savings and zero spare every month, with commitments that meet or exceed their monthly income

Why do you have concern for these people?

I don’t

I have a concern about the impact the collapse of their lifestyles will have on the economy and everyone else

There’s a difference

This 100%

[bitchstewie]

Gecko1978 said:

Are you saying they already have turned the heating off you mean in all other cases you can use less. But for some I agree it will be eat or heat but that i suspect is same today. Issue we might face is a lot in the middle might be eat heat / mortgage that would be a political problem for the Tory's. Tax rises would actually make it worse an that red wall would srping back up

I'm saying that telling someone who's already got to choose between heating and eating to "put another jumper on" is perhaps slightly missing the point.

[valiant]

tannhauser said:

NerveAgent said:

Earthdweller said:

I come from a part of the country with high rates of social deprivation and an average wage several thousand below the National average

There has always been a large section of society that lives pretty much hand to mouth and £10 is the difference between eating/not eating

A lot of these people have been hit really hard by Covid as their zero hours/minimum wage jobs have been decimated

But, my real concern is the large numbers in good jobs, with mortgages and “good lifestyles” that are absolutely maxed to the hilt and have zero savings and zero spare every month, with commitments that meet or exceed their monthly income

They aren’t actually far off the situation of the first group as they have a lifestyle built on low prices/cheap credit, in someways the first group living in social housing might be in a better place if it all comes tumbling down around them

On talking to people I’ve been quite shocked to find the number living in nice houses with nice cars and great social lives that really don’t have a pot to piss in

It could be interesting times ahead

Lots of “comfortable middle class wfh” types have been spunking money at an alarming rate he past couple of years. Huge mortgages, extra mortgages on extensions, little savings etc etc

I hope these people get completely fked over.

Whilst I don’t want to see anyone ‘fked over’, it does seem that those who’ve experienced a comfortable pandemic where they’ve been able to work from home and are making serious savings on work related costs (rail season tickets, petrol, lunches, etc) have done little with those savings to cover themselves when things start to get tight. They see an extra £500 in their take home and immediately spend it on kitchens, cars, etc rather than hold back and build a decent buffer for hard times.

It will be a tough year ahead for many people who would have never expected to be in such a position previously.

[bitchstewie]

valiant said:

Whilst I don’t want to see anyone ‘fked over’, it does seem that those who’ve experienced a comfortable pandemic where they’ve been able to work from home and are making serious savings on work related costs (rail season tickets, petrol, lunches, etc) have done little with those savings to cover themselves when things start to get tight. They see an extra £500 in their take home and immediately spend it on kitchens, cars, etc rather than hold back and build a decent buffer for hard times.

It will be a tough year ahead for many people who would have never expected to be in such a position previously.

Saw something yesterday about 7x mortgages now being offered.

What could possibly go wrong.

[JagLover]

The "cost of living crisis" has many components, some of which have been building for a long time, some the result of the supply chain disruption due to Covid/lockdown and some the result of QE to pay for said lockdown.

I think above all though it illustrates how detached our governing class have become from reality.

For example we will be burning oil and gas for many years to come and yet not only have they stopped us fracking for gas they are now saying we shouldn't exploit potential new fields in the North sea. Furthermore a big chunk of the energy bills that people will be suffering from next year are due to green and social levies.

Then we come to the colossal costs of lockdown which have been disregarded by many as almost an irrelevance. "Oh we will just print the hundreds of billions required". Well a country in charge of its own currency is unlikely to default on its debts but devaluing the currency has a cost, as we have seen.

It all leads back to a governing class in their own bubble, detached from reality, and incapable, or unwilling, of governing in the interests of ordinary people.

Edited by JagLover on Wednesday 29th December 12:20

Edited by JagLover on Wednesday 29th December 12:21

[Donbot]

bhstewie said:

I'm saying that telling someone who's already got to choose between heating and eating to "put another jumper on" is perhaps slightly missing the point.

People believe what they read in the Daily mail about people on low incomes and dole scroungers rolling in cash, while people on double the average income can barely afford to put food on the table. It makes it easy for the people on the bottom to be dismissed.