Alistair Darling

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 10^th). 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 anatomy.

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.”