Where are all the tax revenues going?

The simple answer is in this link www.ukpublicspending.co.uk/budget_pie_ukgs.php and this shows that most of the money goes on Social Welfare, pensions and education.

However it is a mistake to think because something is privatised it doesn't mean that the government foots the bill. Schools will still be funded by the government, even if not run by them. Health services privatised will again be paid by the government. Many bus services receive government or local government support and local authorities get much of their money from government coffers.

While some privatised inndustries did run at a loss and cost the government money, many were profitiable and paid their profits to the government that lost this income source. If you look back 40 to 50 years you will see that social benefits are far more generous than they were then. Developments in medicine means that keeping the nation in reasonable health is far more expensive than it was 50 years ago. The school leaving age has risen, unemployment has risen. The technological costs of education and quality of buildings has risen. All this makes running this country much more expensive than it was. This is why taxation rises and why governments in the past have borrowed money rather than cut social benefits. Every loan means interest costs, so government expenditure rises.

Good post Monica

M0nica This is why taxation rises and why governments in the past have borrowed money rather than cut social benefits. Every loan means interest costs, so government expenditure rises.

I wholly agree with the second part of your statement and would add that current government borrowing is at a record since records began in 1955. I partially agree with your first statement – I am thinking about VAT in particular – but income tax has reduced and so has corporation tax. When I started work in the 1970s, basic income tax was 33% but nowadays it is 20%.

There would be even more to worry about if everyone paid their fair share

Thank you Monica whilst I understand that pensions etc. comprise a large part of government spending and some privatised services are now being (extortionately) funded indirectly by the government. Actual manpower, pensions asset and infrastructure maintainence are now no longer a central government liability.
Post war, we were essentially a bankrupt nation however we still created a social and industrial infrastructure that provided work and welfare for the population with a better balance of payments, as a society, we built it, we owned it.
Our elderly were cared for, our roads were in better condition, our busses and trains did not just run on profitable routes. During this time we were not borrowing at the current out of control rate.
I recognise that our recent governments have turned us into a buy now pay later country through all of these PFI deals with ridiculous repayment terms, but still puzzle why I can see the country and its infrastructure descending in some instances to no better than a third world provision with a first world blinkered mentality.
We will never reduce the debt liability whilst the governments promote private investment funding of infrastructure meaning we never again own our infrastructure that has been sold off now resulting in infinite repayments and gross profit for investors.
Is this where our taxes are going?

Well said MOnica

Joelsnan it is quite difficult to compare now with post war as we all expect so much more now than then. For example, I was brought up without central heating and very few people went to university.

I agree that PFI was always a costly mistake and we are now seeing the results in Scotland. I do wonder however what was happening about building control in those schools, why didn't anyone watch what was being built?

I have to contest that technological innovation in health and education have resulted in higher cost services. These innovations have resulted in reduced manpower costs and in terms of healthcare shorter hospital inpatient stays.
As we all know central government payments to local governments have been slashed.
Borrowing was not undertaken to maintain social security, North Sea gas supported that during the dessimation of nationalised industries.
Are our expectations greater now to expect at least the same provision as we had before? to my mind we are paying more and getting less.

Joelsnan, I'm not sure what you mean by 'pensions asset and infrastructure maintenance are now no longer a central government liability'. Pensions and infrastructure are very much a state liability.
20% of state spending goes on pensions. Pensions, health care and education cost approximately 50% of all state spending. The state funds major infrastructure projects, even though they are contracted out. Unfortunately, it’s not spending enough to maintain infrastructure, which has a knock-on effect not only on the state of our roads and public buildings, etc, but also employment. In the 1930s, the UK built its way out of recession, which provided modern homes and employment, which was then recycled into the economy.

PS. Basic income tax is lower, but most working people still pay something over 30% of their income directly to the government, because National Insurance Contributions are now 12%.

"Are our expectations greater now to expect at least the same provision as we had before? to my mind we are paying more and getting less." Please clarify what you mean by this.

It is a simple fact that we have an ageing population. If you delve a bit deeper into the figures, you'll see that not only does the state spend 20% of its money on pensions, but the NHS spends a disproportionate amount of its funds on the elderly. Quite a high proportion of 'welfare' is also spent on the elderly for housing benefit, pension credit, bus passes, TV licences, etc. I think that's how it should be, but it needs to be paid for.

When state pensions were first introduced, they were from age 70 and most people only lived for a couple of years after that, even if they survived to 70. There was no housing benefit or pension credit, so if old people weren't quite wealthy, they had to live with families, who were expected to take care of them.

When I was researching my family history, I discovered one family in the early 20th century, who lived in a two bedroom house. One of the bedrooms was occupied by the two widowed mother-in-laws. Apparently they hated each other, so their last few years must have been hell for both of them. I can't imagine anybody these days would willingly tolerate those kind of conditions.

We came out of the both world wars with enormous debts and we still have debts from WW1 that have not yet been paid and exact annual interest payments.

But I do not think things were as ros yin the 50s as you paint them Joelsnan. Transport facilities were pretty awful, railway stock was extremely old, 50 years or more, stations were shabby and rundown. Ditto buses. The transport infrasctructure was partly protected and survived because of the mass exodus to the roads, which we used much less because most families were careful about buying petrol and using their car much.There were no motorwayas and much lower traffic densities and no huge heavy lorries meant that roads got much less wear and could be built to much lighter standards. I can remember casually accepting walks of up to 5 miles to get to somewhere I wanted to go because of the lack of buses or trains.

Nor was the care of the elderly anywhere as good as it is now, it was not unknown for elderly people to die of starvation and an aunt of mine who was a nurse, gave me some graphic descriptions of the condition of many of the elderly patients she was nursing, malnourished, frozen, living in one room with no facilities. Nowadays that can happen, but it is rare. No Pension Credit, no housing benefit or Council tax relief. All had to be paid from a meagre pension.

Electronics has not made health care cheaper. Until the 1960s hospitals could provided patient care; nursing, xrays and a few tests. Since then advances in medical care mean that many people who would simply have had nursing care until they died will live, but will need medication and ongoing out patients treatment until they died. Much run of the mill medical equipment such as CT and MRI scanners cost 100s of thousands of pounds and so does other equipment. Highly specialised beds, trolleys and other such equipment, much better salaries for medical workers all mean the cost of providing the health service has rocktted.

Daphnedill with the reduction in public service employees the government does not have to pay the work related pension. Of course there is still the state pension, but as tax payers we also paid the wages and pensions of those public service employeesf. Many of our infrastructure projects are now built by private investors and are rented back to end users. Majority new schools and hospitals are now built using this method. Sadly as a result of this our government now pays rent on building that were previously state owned and of course all of these private financed projects gave to pay investor dividends so rather than our taxes being reinvested into the treasury, they are now adding to the funds of mainly offshore investors.
Nonnie when I hear of 'older' people being thrown out of private nursing homes because of bankruptcy or similar when previously they would have been cared for in council run homes, when an 'older' person could get reasonable home help rather than the current maximum 15min slot. When you could safely drive on pothole free roads, when patients were not discharged from hospital 24 hours after major surgery. When new mothers received adequate pre and post natal care and support. These are a few off the issues that come to mind.

Daphnedill we have an ageing population is the stock statement to use for increased costs. It may be the case that the birth rate was falling, but is now levelling and this ageing generation is the healthiest of previous and potentially current generations. Financial input of this older generation through tax on savings and purchases is massive, only the most needy of this generation require pension credits or housing benefit as the majority have saved, bought their own homes, paid into private pensions, taken care of their health have been the longest working and therefore contributing than their predecessors. Even many of the younger generation will have worked fewer years due to longer stays in education. The older generation are therefore a lower burden on society than some would portray.

MOnica I certainly am not looking back to the 50's with rose tinted glasses. I came from a poor family, my father was a miner, he suffered badly from dermatitis exacerbated by his working environment so was frequently off work. I remember scrabbling on the coal waste tips for coal to burn on the fire, my mother would eke out food to almost homeopathic dilutions to feed us. I saw school friends die of TB and polio. But even then taxes went into the treasury to build, maintain and support, I don't think that this is wholly the case now.

JN, The government DOES still have to pay the pensions of former public servants. Local authority pensions have never been paid by the state. Employees pay quite a hefty chunk of their income and the employers (whether they are the local authority or a private provider) pay about the same. The reduction in the number of public servants actually means that the pension funds are having to pay the pensions of retired employees with a reduced income from existing employees. The Teachers' Pension Fund has always been different, because it is 'not funded'. The money from contributions goes directly into the general Treasury 'pot', which pays out to retired teachers. The scheme has actually become much more expensive for employees over the last few years and former public seervice employees won't get the full new state pension. The public has never directly subsidised the pension funds of public service employees. Most pension funds are actually in surplus. The public pays indirectly whenever a service or product is provided by human beings, but that's the same if you bought anything from a company which operates a pension scheme, because the cost of employer contributions will be factored into the cost of the product or service.

However, it's the cost of STATE pensions and all the associated costs of an ageing population which are the big expense to the government.

As for PFI buildings, the state still pays for them. I agree with you that they are a big liability and, with hindsight, the contracts were expensive. They were supposed to save money and stop the government from having to borrow money to pay for crumbling schools and hospitals, which had been neglected for years.

I agree with you about the deterioration in social care. I would add libraries, leisure centres, adult education and school transport to that list. There is no doubt that it is becoming more difficult for people at the bottom of the income ladder to access many services. Personally, I think it's short-sighted, but money has been taken out of the system. I would love to know how much money is being siphoned off to shareholders and CEOs of services previously provided by the state. I read somewhere that the internal market is currently costing the NHS approximately £3 billion a year for procurement teams - the accountants and lawyers who arrange for private companies to provide care. Academy chains are also top-slicing money from the education budget...and so it goes on.

JN: 'But even then taxes went into the treasury to build, maintain and support, I don't think that this is wholly the case now.'

I agree with you. The post-war consensus is being dismantled.

Joelsnan, Yes, the 'ageing population' is the stock answer because it happens to be a fact. The elderly have never been so relatively wealthy as they are now and they live for much longer than even 30 or 40 years ago.

Don't get me wrong. Of course the elderly should have good health care and live in relative comfort etc, but the current generation of pensioners didn't pay enough, so somebody has to pay for it.

daphnedill I recognise that the government do still have the ongoing costs of current running civil service pensions, however this liability is drastically reduced through privatisation of services. I am not sure what the pension liability is to those employees TUPE'd from public to private employment. I assume that contributions will have been transferred to the private employers pension scheme at that time and the pension liability will have ceased.

I thought that a lot of tax etc revenue goes to pay off the interest on the national debt, which continues to soar.
France has a special tax levied for the same thing (social charges.)

This is the current spending on pensioners:

Social security spending on pensioners, 2015---16

State pensions £92.1bn
Disability living allowance and attendance allowance £10.7bn
Housing benefit £6.8bn
Pension credit £6.5bn
Winter fuel payments and TV licences £2.8bn
Other £2.1bn

Total £121.0bn

www.ifs.org.uk/uploads/gb/gb2015/ch9_gb2015.pdf

This is about 55% of all social security spending and about 20% of all state spending and it's increasing in real terms and as a percentage every year, as spending in other areas is cut.

To put the amount into context, the Education Budget is about £84bn.

Interest on the national debt costs about 6% of the Treasury's total income.

JN, only a small percentage of public service employees are civil servants. The majority work for the NHS, schools, police, fire service, local authorities, etc. Their pension schemes are all separate.

The liability to pay retired civil servants will hardly have been reduced by cuts in the current workforce, except that there are now fewer people to pay the current liabilities, which is why current workers have seen massive rises in their pension contributions and an increase in the age when they can claim. This is to pay for the current pensioners.

It has always been the case that current workers pay the state pensions of current pensioners.

Workers in private companies have also had to increase their contribution by a lot or have reduced pensions. My choice was to take a lower pension overall or pay more and still get a lower pension but not as low as if my contributions had been the same. Very, very few private pensions are inflation linked.

I don't want to start a squabble about private versus public pensions. I was just correcting some misunderstandings.You are correct that current workers pay the pensions of current pensioners, which is why cutting the number of public service workers INCREASES the amount they're having to pay for current pensioners, who are living longer than the people they paid for.

You wanted to know where the national income goes and you've been given the figures. Just over half goes on state pensions and benefits for the elderly, the NHS and education.