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Wealthy are the winners

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Issue 1723

Gordon brown’s pre-budget statement

Wealthy are the winners

Analysis by Paul Mcgarr

NEW LABOUR spin doctors and much of the press hailed Gordon Brown’s pre-budget statement as helping pensioners, protecting the environment, and doing something for motorists and small-scale hauliers. The truth is that multinational corporations and the big haulage firms were the real winners.

And Brown’s “green” claims are a lie. His package is anti-environment and risks boosting traffic. It will fuel more global warming and floods like those of recent weeks. “Business found much to welcome,” said a cheery Kate Barker after Brown’s speech. Barker is the chief economist of the bosses’ CBI organisation. The oil companies were also feeling smug. They will not have to pay a penny of their record profits in extra tax.

Shell will keep its 1 million a hour flow of wealth and BP its 1.3 million an hour. The oil companies will also keep their exemption from paying tax on North Sea oilfields developed after 1993. Brown boasted in his speech he wanted to make “Britain the best place in the world for multinational companies”.

He backed this up by unveiling what the bosses’ Financial Times dubbed “a wide range of tax breaks for companies”. These include:

  • Scrapping a “withholding tax” on investments and profits. This will hand billions to multinationals.
  • Slashing the tax paid when companies sell large numbers of shares they own in other companies. This makes it easier for multinationals to move investments around.
  • Brown plans major tax relief on “intellectual property and goodwill”. This means, for example, tax relief on patents on genetically modified crops. It also means that a company buying up another can say that most of what it has paid is for the “brand name” and claim massive tax relief. This is in line with what the world’s multinationals are pressing for through the World Trade Organisation.

The bankers are happy with Brown. He handed them 28 billion in repaying “the national debt”.

Brown’s hot air

GORDON Brown claimed his budget was good for the environment as he was slashing the duty on “green” ultra-low sulphur petrol and diesel. Low sulphur fuel will do nothing at all to cut carbon dioxide emissions from cars and trucks-a key cause of global warming.

Brown’s measure is a con in other ways too. Already ALL the diesel sold in Britain is low sulphur, so Brown’s cut on the diesel duty is simply a further handout to haulage firms.

“Low sulphur fuels are not green fuels,” argues Stephen Tindale of Greenpeace. “They do nothing to combat climate change.” If Brown really wanted to protect the environment he could have taxed the oil firms and used the money to massively boost public transport.

He would also have renationalised the rail and poured money into developing new lines to move freight off the roads. The chancellor’s petrol tax cuts help the rich, not the poor. The Institute for Fiscal Studies calculates that the impact of the petrol duty cuts will mostly help the rural rich with their gas-guzzling Range Rovers.

Not enough for pensions

PENSIONERS were supposed to be grateful for the increases Brown felt forced to give in his statement. Brown pledged a 5 a week rise in the state pension and 8 for married pensioner couples from next April.

The basic state pension will still just be a miserable 72.50 a week after Brown’s increase (115.90 for married couples). That’s still less than the 90 a week charities for the elderly say is needed for a pensioner to have a basic living standard. Brown claims he has given more than pensioners would have if their own demand to “restore the link with earnings” was granted.

Brown is relying on just this year’s modest average rise in earnings to make his claim. But pensioners want the link restored and the money they have lost since it was broken in 1980 restored too. That would immediately give all pensioners a minimum 100 a week. Brown claims that on top of the basic pension he is putting up his so called Minimum Income Guarantee (MIG) for pensioners to 92.45 a week from next April, and 100 a week from April 2003.

The MIG is simply a renamed means tested income support. Pensioners have to undergo the humiliation of means testing. Brown says that giving everyone a big rise would hand money to the minority of well off pensioners. The answer to that is the same as it is for all wealthy people-tax the rich properly.

Even with the MIG pensioners will have to wait three years and be means tested to get the 100 a week they would get as of right if the earnings link was restored and backdated. The final part of Brown’s pensions package is the planned new pensioner tax credit, due in 2003.

This is simply a device to push people to save for a second or private pension instead of getting the decent state pension they are entitled to. At the moment anyone who saves for a small second pension can find they are cut off from income support and may pay tax as a result, leaving them no better off than if they hadn’t got the second pension.

Brown’s new pensioner credit simply means allowing people to have up to 135 a week in total, state pension and any second pension, before they will pay tax (200 a week for couples). The aim is to say to people that if you want any decent life when you are old you had better save for a private or second pension.

Road haulage kings get royal handouts

GORDON BROWN boasted that there would be a cheque in the post this week bringing pensioners an extra 50 in winter fuel allowance on top of what was already pledged. But some people will be getting far bigger cheques from Brown. A haulage boss with 30 lorries will get a Christmas cheque in the post for around 60,000 from Gordon Brown-300 times more than any pensioner. And the supermarkets and big haulage firms will get even bigger cheques worth millions of pounds.

The handouts come from Brown’s plans to slash the vehicle excise duty paid on lorries. He is giving them a 50 percent refund on what they have already paid this year, and says the cheques will be in the post by Christmas. Brown also plans to slash the tax haulage firms will pay in future years. That will see an average 715 cut for every lorry.

The biggest firms will get the biggest handouts. And the biggest lorries get the biggest tax cuts too. New Labour is already encouraging haulage firms to run ever heavier giant lorries.

The biggest winners of all will be the huge haulage firms which dominate the Freight Transport Association-the supermarkets and firms like Christian Salvesen.

Medium sized haulage firms will get huge handouts too. John Bridge, chair of the Road Haulage Association, which represents such firms, runs a fleet of 30 lorries.

He could be getting a cheque from Gordon Brown of up to 60,000 in his Christmas post and could see his tax bill slashed by up to 117,000 next year. The Road Haulage Association purred, “The reduction in Vehicle Excise Duty will be welcome, and hauliers will be looking forward to their cheques.”

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