Now, I’m no economist. Year after year, like many others, I sit and listen to the Budget and try to decode the jargon and figure out what it actually means for me. This year was no different.
Upon learning the gist of it, it was clear that an age old narrative put forward by politicians and the media alike was reinforced. This is the idea that Britain is locked in a battle between the workers and the benefits claimants. This narrative has been repeated for as long as I can remember, even though it really doesn’t hold up when put under the microscope.
The reality is that the line between workers and benefits users barely exists. Roughly a third of people on Universal Credit are in work. As much as the tabloids love to tell you that the country’s full of skivers, it’s clear that a large portion of the country is working yet still not able to afford to live. Things are far more pragmatic with the population drifting in and out of the system depending on a range of variables.
Workers and benefits claimants are often the same people at different points in the same month. And while not every benefits claimant is working, and not every worker relies on support, the overlap is significant enough that framing them as opposition misrepresents reality.
Labour is, or at least used to be, a party for the working people. Worryingly, the recent budget makes me think otherwise.
It seemed to be focused on taxing work more heavily than wealth. The workers in Britain are expected to be taxed more than those who earn through assets. A party founded to represent working people should not be designing a system where labour is taxed more harshly than capital.
The new divide in this country which needs to be resolved is now those who live off their labour and those who live off their wealth. The Budget should have recognised that.
The divide that does exist has almost nothing to do with work
If workers and benefits users overlap, who is actually living on the other side of the divide?
For me this is the people who live off asset wealth. That means anything from those with investment portfolios, landlords collecting rent, households with properties that climb in value faster than most wages, and families who inherit money or housing in a system that treats inherited wealth with extraordinary gentleness.
Obviously, these people are not “lazy,” nor should they not be entitled to this form of income. That’s not the point. The point is that their economic security doesn’t depend on wages and their comfort is built on owning things that grow in value and on a system designed to reward that.
For the major asset owners, their money works for them. Whereas for most of the population, they have to work for their money.
Work is taxed more harshly than wealth. Why do we pretend that’s normal?
It’s clear that Britain taxes labour far more aggressively than capital in many cases. If you earn money through work, you’re taxed immediately and predictably. But if you earn money through assets, the system treats that income far more softly.
This means a person working two jobs could pay a higher marginal rate than someone earning the same amount through investment income. A young worker renting a room might pay more tax proportionally than their landlord. While I’m sure there are exceptions at the very highest income brackets, this pattern is common enough to shape inequality.
We’ve normalised a world where wages, the hardest kind of income to earn, are punished more than wealth. Then we blame people claiming benefits for society’s problems, even when many of them are also working.
When you look closely at how the tax system works, the contrast between taxing work and taxing wealth becomes hard to ignore. Money you earn from a job is taxed straight away and at well-known rates. Every pound you earn through your labour is immediately reduced before you even see it.
Income that comes from owning things like shares, property, or other investments is treated much more gently. Dividends for example, although they represent profit paid out to people simply because they own shares, the tax charged on them is noticeably lower than what workers pay on their wages.
The government openly acknowledges this difference. The reasoning is that investment income isn’t considered “work,” so it’s exempt from the extra charges that salaries face. But in practice, this means people who earn their money through ownership often keep more of it than those who earn through effort.
As a result we live in a world where someone working two jobs could end up paying more tax than another person earning a similar amount from investments. It’s a system that punishes those who work over those whose income grows passively, and it explains why wealth accumulates faster for asset owners than for people living off wages alone.
Labour should challenge this structure, not reinforce the myth
The political class and media keeps pretending Britain’s core divide is workers vs. non-workers. It isn’t. The real split is between people who earn their living through work and those whose income comes from assets.
The Budget did include modest tweaks to savings and investment rules, and a handful of property-related adjustments. These were presented as signs that the government is finally recognising the imbalance. However, look past the headlines and nothing has really changed. Wages are still hit with both income tax and National Insurance, while much investment income continues to attract far lighter treatment. The system still rewards ownership more than effort.
Labour and other political groups like to frame the country as “hard-working families” versus “benefits claimants”. This distracts from the real advantage enjoyed by those living off accumulated wealth. Many people receiving benefits are working and many workers still can’t get by.
If Labour wants to be a party for working people, it should be leading the challenge to a system that consistently taxes labour more harshly than capital rather than reinforcing narratives that let wealth-based privilege go under the radar.
Workers and benefits claimants aren’t opponents
When you strip away the old stereotypes, the picture becomes clear. Workers and benefits users share the same economic challenges. From rent to rising bills, it’s not uncommon to fall back on the same support system when wages fail to cover the basics.
They are not different classes. They are the same class experiencing the same pressures in different ways.
The people who live in a fundamentally different economic world are those with significant assets. They are protected from shocks the rest of us feel instantly.
Imagine if political messaging finally admitted this and we stopped worrying about whether someone on benefits might be “getting a bit too much” and started asking why the tax system favours capital so heavily over labour. Imagine if we recognised that the people propping up the country such as care workers, educators, and NHS workers, are often the same people topping up their income with Universal Credit because wages no longer match living costs.
We need to stop punching down and start pointing upward. It’s time to stop blaming people on low incomes and start interrogating why wealth reproduces itself so easily.
Work doesn’t divide Britain, wealth does
The truth is that work is no longer the main dividing line in British society. Wealth is. Unless our politics starts telling that story, we will continue to misdiagnose the problem and offer the wrong solutions.
Workers and benefits users have far more in common with each other than either group does with the asset-rich minority shaping the system. The sooner we abandon the false moral battle between them, the sooner we can confront the real imbalance driving inequality in the UK.
Going back to the start, I’m no economic mastermind but it seems clear that some relatively simple steps could help relieve the pressure. People born between 1980 and 2000 are often described as the first generation to be worse off than their parents. So why not reduce the tax burden on younger generations and allow them to contribute more actively to the economy?
Across the UK, nightlife is declining because it has become too expensive, and the high street is struggling to survive. Giving younger people between 20-35 a lighter tax burden would allow them to spend more, support local businesses and reinvest directly into the economy. That is just one example of a policy worth getting behind.
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