Private sector employees are funding the benefits and public sector pay rise bonanza

I was horrified to see this headline UK disposable income rises as benefits payouts soar ahead of wages

It adds to my concern that tax payers  are being taken for a ride.  It's also a concern that the government sees this as good news.....

So let's dig into the numbers

Real household disposable income per head rose by 1% during Q2 2026.

Social benefits increased by £5.3Bn

Wages and salaries increased by £2.8Bn

That in itself is a concern that benefits increased way more than salaries (and therefore taxation). Government borrowing has to increased to balance the equation.

It's also a concern that if you break down the wages and salaries increase, it's public sector workers (ie tax payer funded) who are getting inflation busting awards.

The ONS reports that in April–June 2026:

  • Public-sector regular pay growth: 6.1%
  • Private-sector regular pay growth: 2.8% Office for National Statistics
  • Public-sector employment was about 6.21 million, or 18% of employment. 
So if the £2.8 Bn 

Public sector: ~£0.9bn
Private sector: ~£1.9bn

So returning to workers versus benefits. So just 35% of the 1% increase was associated with wages rather than benefits.

So, stripping out the benefit-driven increase, disposable income appears to have risen by roughly 0.35%.  And therefore those of benefits have benefited more.

Lets dig a little deeper

For State Pension recipients, the increase was 4.8%, giving a real gain of 1.8% after inflation.

Working-age benefits increased by 3.8% resulting in a real increase of 0.8% 

State employees were better off with a 3.1% real increase.

So with private sector workers getting an average of 2.8% pay increase their real increase after inflation was -0.2%. Not an increase at all - they are worse off.  Clearly private sector workers are at the bottom of this giant Ponzi scheme and getting shafted.

The real winners were all tax payer funded - those working for the bloated state or on benefits.   

I don't begrudge the pensioners getting an increase - they at least paid into this.


Comments

Post a Comment

Popular posts from this blog

Energy Performance of Privately Rent Properties - expect crazy things as we approach 2028

 The wonderful Labour government has very generously given private Landlords until 2030 to improve the energy performance of rental properties to an EPC of C for incumbent tenants.  For new tenants they need to achieve this by 2028. I agree with the idea of energy efficiency in the home but it needs to be economically viable. Ignoring the fact that the EPC scoring system  is a work of fiction (for example installing triple glazed windows doesnt improve scores) I thought it would be interesting to work through the financial side of the EPC targets.  Social and council tenants currently do not have EPC targets of E (the current minimum for private landlords) although Labour seem to be suggesting that there won't be a 2 Tier system and that council and social landlords will also have to achieve C by 2030 (previously it was 2050 to achieve E). Although I suspect the council and social landlords wont have huge fines if they fail to achieve C.  Anyway it seems  c...
Read more

It's fair to tax landlords and dividend income like workers [the gospel according to Rachel]

St Rachel is the patron saint of mansplaining and misogyny.  The gospel according to St Rachel was uttered [leaked] on the holy High Shambles Budget day of 26th November 2025. Her words of wisdom were delivered unto  electorate ( that she believes is stupid): "Currently, a landlord with an INCOME of £25,000 will pay nearly £1,200 less in tax than their tenant with the same salary … because no National Insurance is charged on property, dividend or savings income.  It’s not fair that the tax system treats different types of income so differently… " Hang on - s ince when was rental income earned income ?  The message has always been that rental income is investment income therefore cannot be earned income and therefore national insurance should not apply. I suppose the one thing St Rachel accidentally let slip is that National Insurance is a TAX and nothing more. So let's work though the numbers using Rachel's example. So let's take someone earning £25,000 salary pe...
Read more

Rachel planning to charge National Insurance on rental income

 The rumour mill is that Rachel is considering introducing National Insurance on rental income. How ironic! For as long as I can remember, the government and HMRC stance is that rental income is not earned income and therefore it has consequences in how it is taxed and treated. For example you can't use rental income to make pension contributions (that can only be from earned income).   Also unearned income bubbles to the top of the tax stack (order of taxation) so is most likely to treated at the highest level of income tax.  By making rental income (hopefully profits rather than income) subject to national insurance it will almost certainly have unintended consequences.  Firstly if you are past State Pension age you dont pay National Insurance. it would therefore open up the government to litigation if they make rental income subject to National Insurance for OAPs.  I can just see the negative headlines ! It is estimated that there are 1 Million Buy to Le...
Read more