Show me the salary!

That's not strictly true, but in the UK employers are normally required to deduct the main income taxes before paying the employee's salary and they are responsible for remitting those taxes to the government. To do this, they need to know how much total salary a new starter has earned so far in the current tax year, in order to make the correct determinations about tax rates and therefore deduct the correct withholdings before paying salary.

So, when you leave an employment mid-year you get an official record of how much you've been paid so far that year in that employment, along with how much was deducted for taxes etc. A new employer will normally want to see these records for any previous employment within the same tax year.

That doesn't mean they can actually see your previous salary. If you started on 6 April (edit: This is the first day of the new tax year in the UK) and therefore hadn't had any previous employment in the same tax year, or if you had previously worked multiple jobs, or had a pay rise, or anything else irregular, then they can't do the arithmetic to reverse engineer the salary from what they've been told for tax calculation purposes. But if you've had one regular job since the start of the year and no significant changes in salary or bonuses, this does mean a quick division will tell them exactly what you were on before.

If employee talks first, the number can only go down.

If the employer talks first, the number can only go up.

It's unfortunately wide spread. I wish we lived in a world where people saw a fair offer and accepted it without automatically asking for more (employee) less (employer). If something's not fair then fine negotiate, but I think people negotiate even if an offer is fair to "win" or "its expected" or "everyone else would". So employers come in below budget and employees are hesitant to give salary numbers.

Heres a good post on it:

http://workplace.stackexchange.com/questions/183/does-the-fi...

This does away with all the upside where you could have achieved something higher, but the only other downside is if you run into an employer whose policy requires their staff to get an initial number from a candidate and then agree on a reduced level, and you know what to tell them when you discover that is the kind of employer they are.

This is true only if you also have nothing put away from the good times to cover your essential living costs for a while and give you a safety margin.

Assuming you do -- and you need a very, very good reason not to in this business -- then taking the first offer that comes along just because you're currently unemployed is very much not the optimal strategy. You voluntarily reduce your negotiating power to nothing, and if that were really necessary, no professional contractor/freelancer would ever survive in business for long.