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Roberts, Michael  (2007) Brown's budget tax cuts for the rich . Socialist Appeal : -.

The UK's finance minister (still quaintly called the Chancellor of the Exchequer - as we are still part of a feudal monarchy) Gordon Brown presented his last budget yesterday.

Gordon is expected to take over from Tony Blair as Labour leader and prime minister some time this summer, so this was his swan song.

Gordon made a big song and dance about cutting income tax rates. That summed up "New Labour". All they have done in ten years is try to ape the Conservatives in privatisation, farming out public services to private contractors, deregulating transport and boosting big business. Now Gordon makes a big noise about cutting taxes to "steal the Tories' thunder".

After the dust settled, it soon became clear that the income tax cuts were being taken back by increased tax rates for some of the poorest households while the richest income earners would benefit the most. And anyway, it was not being introduced until 2008!

Less publicised, but very nice for big business, was the planned cut in corporation tax. The biggest and most profitable multinationals would pay less tax on their huge profits, while ironically, small businesses and self-employed (people who have set up businesses when losing their jobs in big business) received a tax rate hike!

Big business had been blackmailing the Chancellor by saying that companies would leave the UK for cheaper tax locations like Ireland or Switzerland unless corporate taxes were cut. And this was after years of corporate tax rate reductions under New Labour so that the UK has some of the lowest big business taxes in the world! Indeed, I worked out that in 1997 when Labour came into office, corporate tax revenues as a share of GDP were only 3.5% of GDP. Now under Labour it has fallen to just 3.2%, while the overall tax burden has risen from 35% to 38%!

One policy of New Labour of the last few years that should have benefited working people was the increases in real spending (after inflation) on the health service and education. Those increases have been faster than the rise in real economic growth.

The debate remains on whether much of this extra money has been wasted on private consultants, a huge overpaid management bureaucracy and big "private finance initiative" contracts on school and hospitals that will leave the public sector burdened with rising costs years down the road. Indeed, recently, nurses and other jobs have been cut back and wage increases restricted while many local "trusts" are now in deficit.

But the budget also revealed that this extra spending is now over. Health service spending growth is to be cut back from next year. Brown said education spending would still be increased, but real growth will actually be less than the expected overall economic growth.

So the legacy of New Labour under Blair and Brown will be one of dubious improvements in public services financed by higher taxes on the average household alongside increased inequality of income and wealth and the announcement that the UK, according to the UN, has the worst record on caring for children in the advanced capitalist world.

And all this is in a period where there has not been a major capitalist economic recession. God (or socialism) help us when the slump comes!

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