Editorial 2
Their Budget and ours
GORDON BROWN’s Budget is to be unveiled the day after this issue of Socialist Outlook goes to press. We are not privy to the details of Brown’s political and economic calculations, but the pressures on the Iron Chancellor as he tots up the figures have been increasingly obvious.
There are four key factors that will be weighing especially heavily on his mind:
1. Brown has been so tight with public spending that the Exchequer is running an unspent surplus variously estimated at £18 billion to as high as £40 billion. It seems this second figure also includes the proceeds of Brown’s ‘windfall’ auction of mobile phone franchises — money which, to the intense annoyance of public sector workers and pensioners, he has already insisted will not be spent but used to reduce the national debt
2. But the same fanatical prudence with public spending, which left Labour clinging ludicrously to Tory cash limits for health, education and other public services for its first three years in office, has had a long-term impact. Brown’s belated conversion last summer to the injection of record increases in health spending may well have come too late to revive the flagging NHS.
The authoritative Public Finance magazine has echoed the views expressed in the recent letter from teaching hospital finance chiefs to NHS chief executive Nigel Crisp — leaked to Channel 4 News—warning that they still do not have enough money to meet government targets. Other hospitals and health authorities share the same view. Education, too, is under the cosh, and the shortage of skilled nursing and other professional staff in the NHS is mirrored by the growing shortages of school teachers. There are huge financial strains in further and higher education as the inconsistencies of government policy — urging expansion while squeezing resources — take their toll.
And local authorities up and down the country are once again looking for cuts and savings to balance the books, as New Labour’s spending limits make it almost two decades of uninterrupted cuts in jobs and services.
3. While Brown would normally be happy to tough out pressure from public sector workers and turn a deaf ear to Labour’s core support, he faces an extra pressure of the looming election. Expectations have been raised that he would pull at least a few goodies from the famous red briefcase to placate hard-suffering workers.
The advance announcement of an. increase in the minimum wage from a pathetic £3.75 and hour to a feeble £4.10 is scarcely going to set the inner cities abuzz with celebration.
4. But Brown also faces an unusual problem for a Labour Chancellor at this stage in government. He knows that barring a cosmic catastrophe Labour will still be in office after the coming election, and that he will again have to manage the affairs of British capitalism to the satisfaction not only of British employers but also of global capital. Only a week ago, the International Monetary Fund, the body that press-ganged Harold Wilson’s government into hugely unpopular cuts in public services in 1976, published a highly critical report challenging even the limited increases in public spending Brown announced last year.
We can only guess how far each of these factors will influence the eventual shape of the budget: but for socialists it is clear that very different criteria would apply. The Socialist Alliance has published an alternative budget for working people, which calls on Brown to spend the full £18 billion surplus on boosting public services.
The Alliance calls for a complete shake-up of the taxation system — including a 15% levy on oil company revenues — so that direct taxes on businesses and the rich become the predominant source of revenue, while regressive taxes on ordinary working class families are scrapped altogether. It calls for the end to the "cap" on National Insurance contributions, which would raise an extra £5 billion a year, and for employers
National Insurance contributions to be raised from just 12% to the European average of 28%. Corporation Tax should be put back up from the present 30% level to the 52% level it was at under Thatcher.
The Alliance budget proposes to spend this extra revenue on pubic services, pensions and benefits.
It argues for a 25% increase in spending on education and training, with the scrapping of university tuition fees and restoration of the student grant; and a further big increase in NHS spending, with the abolition of the Private Finance Initiative as a means to finance new hospitals. The basic difference in approach is between a Labour government seeking to do only what big business will allow, and a socialist government seeking above all to meet the needs of working people .
Four years after Labour romped to power with a massive majority, Britain is if anything further away from socialist policies: the Alliance challenge in the coming election will for the first time give voters in 100 seats a chance to opt for something better