Socialist Worker

Here’s how Labour could offer a real alternative to the crisis

Socialist Worker looks at the detail of the pre-budget report and what Gordon Brown and Alistair Darling could have done.

Issue No. 2129


The pre-budget report announced an increase in the top rate of income tax to 45 percent on those earning more than £150,000 – the top 1 percent of earners – to much fanfare.

This will only increase after the next election. It means that someone on £200,000 a year will pay an extra £2,500 in tax. This is a start, but when Margaret Thatcher came to office in 1979 Labour had set the top income tax rate at 83 percent.

Government ministers were quick to point out that tax allowances for the low paid have been raised. But these rises only cover the money people lost when Brown abolished the 10p tax rate.

And some people will still be worse off than before the changes.

Importantly, national insurance will go up for everyone after the election – not just the highest paid.

The 2.5 percent cut in VAT will have little effect on most of our lives.

One estimate shows the new rate would knock just 53p off a typical £50 shopping basket, because most food items do not attract VAT.

Even if you could afford a flat screen TV at £550 it would only cost £11.62 less.

UK personal debt already exceeds £1.4 trillion. Most people need money to pay bills and can’t spend their way out of recession. Income tax should be punitive on the rich.

VAT should be abolished. Even a simple 10 percent increase in personal allowances would put about £120 into the pocket of every worker each year. But instead Brown is interested in stimulating business.


Pensioners will find themselves little better off than usual. There is an extra £4.55 a week from next April and pensioners will receive an extra one-off payment of £60 in January – although it will be subject to income tax.

The UK state pension is one of the lowest in Europe. Gordon Brown promised repeatedly to link pensions to earnings yet he has still not done so.

The planned child benefit increase of £1.20 a week will start in January rather than in April as planned. As will the increase in tax credits.

Yet up to a third of people who are eligible for tax credits don’t claim them. Jobseekers Allowance remains a miserly £60.50 at most and the attacks on incapacity benefit remain.

All the attacks on people living on benefits should be withdrawn. Benefits and pensions should be linked to earnings. If pensions were linked to earnings that would be a £35 a week increase.


The government announced it would bring forward £3 billion of capital spending from 2010-11. While this was all previously announced, the detail is worth examining.

Some £800 million will be brought forward in the schools building programmes.

This will be in association with the private sector and in particular will be, as the budget outlines, “providing opportunities for small businesses locally”.

The government had claimed previously that every secondary school would be rebuilt or refurbished.

The £49 billion scheme has now become a promise for “energy-saving measures in around 140 secondary schools”, with the entire programme to be “reconsidered” on a “value for money basis”.

Some £100 million for 600 GP surgeries will also be “creating opportunities for small firms”.

The profit seeking privateers should be removed from the public sector. The rail network should be renationalised and funded instead of expanding motorways.

There should be direct investment in schools and hospitals and an end to city academies and the encroachment of the private sector in the NHS.


As part of the public spending brought forward, some £775 million is to be spent on housing. This includes £200 million on Decent Homes programmes to fund improvements in 24,000 council homes.

Unfortunately, the improvements in the Decent Homes initative are required to be under the auspices of arms length management organisations (Almos). This means more privatisation for council tenants.

Some £150 million will be given to other social housing landlords and an extra £100 million to support housing projects – all run by the private sector. The government also wants the banks to wait three months before seeking house repossession.

The government is a major shareholder in some of the big banks. There should be an immediate halt to repossessions. There should be an emergency programme of council house building to provide homes and jobs.

All half-way house privatisation schemes such as Almos should be scrapped.

Click here to subscribe to our daily morning email newsletter 'Breakfast in red'

Article information

Tue 25 Nov 2008, 18:29 GMT
Issue No. 2129
Share this article

Mobile users! Don't forget to add Socialist Worker to your home screen.