Socialist Worker

Budget attacks the poor and benefits the rich

by Simon Basketter
Issue No. 2092

New Labour Chancellor Alistair Darling’s first budget has been generally described as dull. The reality for working people is more of the same. But while the repetition of all that has gone before – tax cuts for the rich and attacks on the poor – may be familiar, it is still deeply unpleasant.

Continuing New Labour’s commitment to war, Darling announced £2 billion extra for defence, as the costs of war in Iraq and Afghanistan spiral.

The chancellor confirmed another huge boost for the bosses. Corporation tax – the tax that they pay on profits – will be cut from 30 percent to 28 percent.

Next month also sees the end of the lower 10 percent rate of income tax, which means the poorest workers will pay more tax.

Darling announced increases in the tax allowances that mean those on higher incomes will get far more in their wage packets. While increases in indirect taxes such as VAT will mean the poorest will pay more each month.

All the main personal tax allowances have been increased by 4 percent, in line with the retail price index of inflation – unlike wages, which the government insists must be tracked to the lower consumer price index.

One result of this is that it gives those who earn more an overall tax cut.

In among the hype over child poverty is the stark fact that the government is going to miss its target of lifting 1.7 million children out of poverty by 2010-11 by 500,000.

The budget gave an increase in child tax credit, but only 40 percent of those entitled to tax credits claim them.

And for low income single workers the take-up of working tax credits is just 25 percent.

Even then, they only benefit if they once they have navigated their way through the maze of forms that must be filled in if they are to claim what they’re entitled to.

The increase won’t cover the spiralling cost of housing and food.

And to emphasise the government’s commitment to children, Darling cut the education budget.

Total spending on education will be £91.5 billion in 2010-11 according to the 2008 Budget documents. This is £500 million less than last autumn’s claims by the government.

The chancellor also said ministers would “drive forward a faster expansion of our academies programme” – schools run by businesses and the rich.

He also announced that there will be changes in housing benefit to force people into work. And disgracefully he pushed ahead with the government plan to attack the disabled by promising to throw them off benefits. Long-term recipients of sickness benefits will be forced to attend “work capability assessments” from April 2010.

In contrast, the super rich who live here but don’t pay tax will have to pay a £30,000 annual charge – not much when you are a tax avoiding billionaire.

And after of two years of campaigning from the unions Gordon Brown’s government has refused to put private equity bosses on the same rate of tax as the people who clean their offices. Instead they pay only 10 percent capital gains tax on their profits from asset stripping companies.

Darling put off tackling a whole host of tax avoidance measures for 12 months, essentially giving accounting companies another year to find new loopholes so the wealthy can avoid paying tax.

The government sometimes seems to be in denial over the financial crisis. Darling said that Britain faced a “mild and short-lived” economic slowdown in his budget speech. He believes that it will all be OK if the market is left to its own devices and the rich are encouraged with low taxes.

Yet every indication is that the super rich gamblers in the financial markets are dragging down the real economy with them.

There is no reason for the poor to pay more for a crisis caused by the rich. But when the government does recognise the crisis, this is what it demands.

Attacks on ordinary people and benefits for the rich are all New Labour can offer – again.


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Thu 13 Mar 2008, 12:57 GMT
Issue No. 2092
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