The budget will exacerbate inequality
Below is an article on the Budget I've written for the New Statesman website.
Ten years in power affords any Government the opportunity of laying the foundations of the society it aspires to create. Ten Brown budgets have produced a society which is more unequal today than when New Labour was elected in 1997. Just look at the facts. In 1997 the richest 1% owned 25% of marketable wealth. By this year that had risen to 34%. Meanwhile the poorest 50% had gone from holding 6% of the nation's wealth in 1997 to just 1% today.
Today's budget will exacerbate the problem of inequality.
The Chancellor's announcement to cut Corporation Taxes will fuel even more obscene City bonuses and will be paid for by the cuts announced in the wages and jobs of public sector workers over the next two years. As part of this attack on public sector wages, the Government has quietly started the process of introducing local pay rates for public sector workers based upon an assessment of the local labour market. Public sector workers undertaking the same work will be paid less in vast areas across the country if local pay rates are low.
Vying with the Tories on tax cuts as an electioneering stunt may appear as a morale boost in the short term but in the longer term will undermine any strategy to create a society capable and willing to fund the public services our community needs and tackle the inequality and poverty which so disfigures our society. In practice this budget is at best neutral in terms of wealth redistribution but I fear that cutting the basic rate of tax to 20p by abolishing the 10p rate will hit the poorest earners as many are unable to find their way through the complexities and inadequacies of the tax credit system.
The failure to restore the link between pensions and earnings, to increase the basic state pension and to increase child benefit sufficiently means that Britain will still have two million of its children and three million of its pensioners living in poverty. How can we find it acceptable that 25,000 of our pensioners died last winter from cold related conditions after 10 years of a Labour government?
Where the Chancellor has announced continued increases in public spending on health and education the scale of the public expenditure growth is significantly less than needed to maintain the pace of investment to meet growing demand and expectations. In comparison with other European countries which have had long periods of Social Democratic government public expenditure in the UK is still amongst the lowest: 45.4% in the UK in comparison with 57.1% in Sweden, and 53.85% in Denmark.
In addition on Monday Gordon Brown and Tony Blair published the New Labour's policy documents committing the Government to more and extensive privatisation. Many fear therefore that any additional public investment will be laundered into private profits.
Where there has been a growing consensus on the key issue of climate change the Chancellor has taken a few small steps towards encouraging change in our polluting behaviour but these appear to many as mere tinkering at the edges. Much more radical change is needed in promoting a large scale programme of developing alternative energy sources and changing our polluting economy and lifestyles. How can we claim to be serious about tackling climate change when the Government is sanctioning the greatest expansion of airports in our history?
The budget is designed to raise the Chancellor's electoral standing. In the short term there may be an immediate lift but within days as the detail is unpicked it is likely that there will be a reaction to what will be seen as electioneering spin. I worry that this will undermine our longer term project of convincing our community that creating decent public services and a fairer society requires a progressive redistribution of wealth.
Ten years in power affords any Government the opportunity of laying the foundations of the society it aspires to create. Ten Brown budgets have produced a society which is more unequal today than when New Labour was elected in 1997. Just look at the facts. In 1997 the richest 1% owned 25% of marketable wealth. By this year that had risen to 34%. Meanwhile the poorest 50% had gone from holding 6% of the nation's wealth in 1997 to just 1% today.
Today's budget will exacerbate the problem of inequality.
The Chancellor's announcement to cut Corporation Taxes will fuel even more obscene City bonuses and will be paid for by the cuts announced in the wages and jobs of public sector workers over the next two years. As part of this attack on public sector wages, the Government has quietly started the process of introducing local pay rates for public sector workers based upon an assessment of the local labour market. Public sector workers undertaking the same work will be paid less in vast areas across the country if local pay rates are low.
Vying with the Tories on tax cuts as an electioneering stunt may appear as a morale boost in the short term but in the longer term will undermine any strategy to create a society capable and willing to fund the public services our community needs and tackle the inequality and poverty which so disfigures our society. In practice this budget is at best neutral in terms of wealth redistribution but I fear that cutting the basic rate of tax to 20p by abolishing the 10p rate will hit the poorest earners as many are unable to find their way through the complexities and inadequacies of the tax credit system.
The failure to restore the link between pensions and earnings, to increase the basic state pension and to increase child benefit sufficiently means that Britain will still have two million of its children and three million of its pensioners living in poverty. How can we find it acceptable that 25,000 of our pensioners died last winter from cold related conditions after 10 years of a Labour government?
Where the Chancellor has announced continued increases in public spending on health and education the scale of the public expenditure growth is significantly less than needed to maintain the pace of investment to meet growing demand and expectations. In comparison with other European countries which have had long periods of Social Democratic government public expenditure in the UK is still amongst the lowest: 45.4% in the UK in comparison with 57.1% in Sweden, and 53.85% in Denmark.
In addition on Monday Gordon Brown and Tony Blair published the New Labour's policy documents committing the Government to more and extensive privatisation. Many fear therefore that any additional public investment will be laundered into private profits.
Where there has been a growing consensus on the key issue of climate change the Chancellor has taken a few small steps towards encouraging change in our polluting behaviour but these appear to many as mere tinkering at the edges. Much more radical change is needed in promoting a large scale programme of developing alternative energy sources and changing our polluting economy and lifestyles. How can we claim to be serious about tackling climate change when the Government is sanctioning the greatest expansion of airports in our history?
The budget is designed to raise the Chancellor's electoral standing. In the short term there may be an immediate lift but within days as the detail is unpicked it is likely that there will be a reaction to what will be seen as electioneering spin. I worry that this will undermine our longer term project of convincing our community that creating decent public services and a fairer society requires a progressive redistribution of wealth.
posted by John at 12:37 PM
12 Comments:
quite right John.
Park man slams Brown over Budget
News that duty on beer will rise by 1p a pint from midnight Sunday and cider by 1p a litre has angered Londoner Sol Isaacs. Speaking this afternoon.....
http://ollysonions.blogspot.com/2007/03/park-man-slams-brown-over-budget.html
this budget will be tough on those on lower incomes who are in and out of work as it's complex for them to claim the JSA and tax credits etc they are entitled to just for odd weeks and yet they have abolished the 10p rate so they will be worse off when in work. The budget also should have taxed earners over £42,000 odd or more of if they have no dependants though if they do it's actually not that high a threshold when you look at the proportion people have to pay for housing costs etc (though the reason for this is that there's not enough social housing so people are forced to pay extortionate prices just to get a house bigger than a rabbit hutch such as a semi though many are stuck in overcrowded council accomodation still with children of different sexes having to share rooms when one of them is over ten; let alone those stuck in temporary hostels and B and Bs whihc can also disrupt children's education and mean that young children have unstable people as neighbours making it a dangerous for them to stay there. And of course the beneficiaries of all these mortgages we are so encouraged to get are the banks; instead of the local councils being able to re-invest some of the rent monies in new homes and repairs. Even if you've paid off your mortgage in old age you may well have to sell the house to pay for care anyway or your relatives may have to once you are gone. Also social housing which even students can still get in Germany is better for the environment in that you have to put in bus routes etc if they are not already there to go with it instead of people having to drive all over between their large executive home and London polluting the environment as they go! When I worked at Heathrow in the public sector people came from as far away as Aldershot and Chicester to work there; and one man even lived in Wales but just went home when he could get four days off! People also got taxis on early shifts from as far away as Ilford! Single people could only afford teeny flats and training police officers in in-house accomodation ahd to pay a large proportion in rent so it was very difficult for them to get on the housing ladder so to speak and these shift workers were in fact amongst the better paid of the public sector (due to big shift allowances for the sometimes crazy hours, not so much due to large basic salaries more the reverse)so what it must be like for the others... if you are a two worker family earning less than £42,000 combined it's going ot be very tough as all your income will be taxed at 20% and the promised compensation via tax credits will not cover the shortfall the experts tell us so if I was in this situation, perhaps in a family with two public sector workers I full time I would be very angry as I was working so hard and I think I'd feelk guilty that at least one parent couldn't eb at hoem at least part-time but to have a halfway decent standard of living many people ar having to do this now wheras back in the seventies it was rarer so I don't think the Thatcher/Blair regimes have brought us equality at all; quite the reverse as John says; especially to women.Even with tax credits many people can still only manage if they have a family member or neighbour to provide free or cheaper-than the-going rate childcare; I see the evidence of this at the school gate every day. If you compared people'sd disposable incomes i.e. what they've got left after travel, housing, food etc you would see the inequalities that persist; especially if you work out the percentage that people have to pay out on each thing, that's really the way to tell. Certainly many people can not save the ideal ten per cent of their income as Brown would like as it's all going on debt repayments in many families now and many have very little pension. So we need more affordable housing closer to people's work which New Labour say they are doing but tehn try to press gang council tenants into votion gto opt out of council control which will affect the supply We also need better tax credits etc though in many cases if the wages weren't kept so low by the excesses of globalisation we wouldn't need so much subsidy anyway. One bit of good news I read in Woman magazine: if you are on a low income and have been stung by high bank charges i.e. over £30 even up to £100 a time by the big banks sending you even deeper into debt you can claim it back now as the Office of Fair Trading has ruled that the charges for going over overdraft limits for small amount should be in the region of £2.50-4.50. There are money websites which can tell you how; apparently all claims which can be for the past six years worth of charges have so far been setlled.(If not you can take the bank to court).It was said on R4 news by today that the Brownites et all have 'failed to grasp the negatvie excesses of globalisation' while they have embraced it so strongly - we need to make them pull back from this before it's too late.
Many Labour people will be fooled by the hype so we have to explain the tax "cut" is at the expense of the least well-off. Middle England and those earning over £20,000 do OK and the rich are positively boosted with a raise in inheritance tax thresholds and corporation tax cuts. At the other end of the scale, Child benefit goes up £2.00 - in three years' time. So don't spend it all at once.
What really angers me is how Brown's (incredibly clever) conjuring tricks and tinkering at the edges is spun as a "Labour" Budget.The truth is he won't tax those who should be taxed, but has no hesitation in taxing the most vulnerable. yes, there are family tax credits .But a) not everyone knows or wants to claim them and b) benefits should be universal. If we taxed those who could afford it, we would not need to tax by stealth or means-test . Even the health spending is way below the rest of Europe. The Telegraph said today that Shadow Chancellor George Osborne would have been proud of Brown's Budget. Good to see the New Statesman giving the campaogn house-room.
That's news to me about the local pay rates, John. So we can expect in a couple of years the move of some public sector departments to the lower paid regions.
Who knows, perhaps GB will move some departments off-shore.
I think we should should call a search party immediately! Lets find where the Labour party is - certainly don't bother looking in Downing Street.
People have always said that Brown has been doing a bit of wealth re-distribution by stealth.
Now he's come out - and passed the wealth from the rich to the poor.
It's our campaign message.
Let's beat the man who openly makes the poor poorer.
It speaks volumes about New Labour that they wave their order papers with glee as Brown tries to out tory the tories. Lowering the basic rate to 20p and increasing the tax credits, whilst scrapping the lower rate with an flacid £1 increase in child credit for the next three years. Net result for working people: somewhere between a pittance and bugger all. Mr. "Prudence, golden rule, fiscal stratedgy, iron balls"
Brown then duly flatters his real buddies with cut in corporation tax to "competitive" levels. I bet that had the heartlands enthused.
This is a Brownite vision of Labour in years beyond, and should be ammunition enough to cast this joker and all his kind behind in the leadership election.
Mark, Worcester.
To the comrade who mentioned offshoring - just ask PCS members working for National Savings (formerly under HM Treasury of one Gordon Brown) what happened when they were first privatised to Siemens in the late 90s and have now had 20% of their jobs offshored to India by Siemens to save money on the contract and make more profit.
Unsurprisingly this saving has not been handed back to Government or passed on to savers - although I hear the Siemens Chief Exec got a nice bonus last year.
Well done for highlighting this nonsense John. And also for highlighting the struggle of Barnet Unison and GMB care home workers.
See Trade unionists 4 John for more info
Yes it is pretty sad how some of the papers have reported this budget. The Mirror said it showed Brown should be the next PM - why i have no idea.
Here's my take on it -
http://www.duncanmcfarlane.org/Budget_Response_Mar07/
or http://inplaceoffear.blogspot.com/
Just saw on BBC News 24 the Iranians have captured 14 British sailors.The British say they were in Iraqi waters - the Iranians say they were in Iranian. Dont know which is lying. Could be the British govt as excuse for Bush to go to war before Blair retires - or it could be Ahmadenijad to distract from the Iranian teachers' and bus drivers' unions strikes. Either way Bush will probably use it to try for war.
Even Polly Toynbee has turned on Gordon! Looks like the Budget has been well and truly rumbled. Excellent.
The issue goes beyond this - there are other impacts on the poor - the Budget proposals are seriously complacent on the environment. Brown may have commissioned the Stern report but there is little evidence that he has actually read it. His failure to heed the warning that we must tackle climate change now is staggering.
The Chancellor should have adopted a new golden rule - that of carbon cutting. He promises to save just 16 million tonnes of carbon through a package. One single measure - restoration of the fuel duty escalator - would save more.
In contrast bringing back the fuel duty escalator, doubling the climate change levy, giving a £500 million boost for renewable energy grants, would save 55 million tonnes in 2007/8 alone.
The average Somali is about 100 times more likely to die from events caused by climate change than the average American, despite emitting roughly 16,000 times less carbon.
As Michael Meacher writes: "What we, and the government, need to get our minds around is that we are at war: at war against climate catastrophe, presenting us a far greater threat towards our survival than 1939."
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