Now Gordon Brown has handed over the reins as Chancellor to
Alistair Darling it transpires that for the past ten years Gordon has been
displaying the fiscal prudence of a drunken sailor. The British government has
the biggest hole in their finances in Europe, a whopping £43bn – and it could
get up to £50bn. Where has it all gone? Larry Elliott was forced to accept that
the real problem with the Brown splurge “was that the money was being blown on
PFI projects, useless IT systems, management consultants and the rampant
increase in team leaders, strategy co-ordinators and change supremos…There
was the £2bn bailout for Metronet, the doubling of the NHS IT project to a
staggering £12bn, the loss of hospital beds to pay the shareholders of
companies that have built PFI hospitals, the £2bn a year Whitehall spends on external
management consultants” (Guardian March 10th). Quite a party for
some. Now it’s over.
So what are they going to do? They have to rein in public
spending. That will actually make the economic situation worse. One reason why
the budget deficit has gone up is because the economy is slowing down. That
means less people paying tax and more on benefits. So what has Darling done?
He’s put up tax on fags, booze and petrol. Not very imaginative, is it? And
it’s completely inadequate to get the country out of the pickle it’s in.
Public spending is to be cut. Consumer spending, based on
borrowing off the back of a house price bubble, will go into reverse as house
prices dip. And the City is starting to take a hit as the financial crisis
bites. All this is going to hit economic growth. Darling pretends in his speech
that there’s just going to be an economic slowdown in growth of ½% a year for
two years. Can’t he hear the sounds of panic from across the pond? Bush and Bernanke can see the US economy
dipping into recession. The world will follow. What is he going to do about it?
The main impression Darling gave in his budget was one of total inadequacy. He
is living in a fantasy world, sitting around scratching various parts of his
As for environmental issues, we were promised the greenest
budget for a generation. What did we get instead? Darling wagging his finger at
the supermarkets about plastic bags. Did it really take New Labour eleven years
to work up the courage to ask for this? That should save the planet!
For years New Labour
has got down on its knees to the ‘non-domiciles’ like Roman Abramovich who
tells the British tax people he pays tax in Russia, tells the Russians he pays
tax in Britain, and pays tax in neither country. New Labour were stung into
action against the ‘non-doms’ by the Tories, who were outflanking them from the
left! So they’re imposing a one-off charge of £30,000 on the non-doms. Do you
think Abramovich is bothered?
It’s true they’re closing a loophole that allows the rich to
work for 270 days in London and claim they’re domiciled in Monaco, home to
2,000 millionaires. Because the millionaires pretend they don’t live in Britain,
they don’t pay UK taxes. But the rich aren’t bothered about the crackdown. They
can just attend board meetings offshore instead of in Britain. As one loophole
closes, another opens up.
Corporation tax is still to be reduced from 30% to 28%, with
more cuts in the pipeline. Last autumn Labour climbed down on inheritance tax, raising
the threshold to steal the Tories’ clothes. And it’s a race to the bottom
between Tories and Labour as to who can offer the rich a lower rate of capital
gains tax. While the TUC finds it impossible to get justice for agency workers
from this government, the door is always open to CBI lobbyists. Brendan Barber
of the TUC comments, “the CBI might as well have a giant ‘tax is for little
people’ banner from their office windows.”
Somebody has to pay for all these tax breaks. It’s the poor.
New Labour’s motto seems to be – make the poor pay and let the rich get away. The government has a longstanding target of
halving child poverty by 2010. Darling
will increase child benefit at the end of the year. And he’s put up child tax
allowance to take 150,000 kids out of poverty. That will still leave about 3½
million poor children. The government are not going to hit their target. When
it comes to child poverty they follow the Congressman’s line in Eddie Cochran’s
‘Summertime blues’ – “I’d like to help you son, but you’re too young to vote.”
won’t hit their target of halving child poverty because they’re letting the rich
tax dodgers off the hook. So, with all the money they’ve given away to big
business, there’s nothing left for poor kids. Nice one, Alistair. Nice one, New