The Militant(logo) 
    Vol.61/No.28           August 25, 1997 
New UK Budget Continues Cuts In Social Gains  

LONDON - The first budget by a Labour government in almost two decades was presented in Parliament July 2. While claiming to address major concerns voiced by working people - long term unemployment, falling education standards, and a declining level of health care - Anthony Blair's government has maintained the thrust of previous Conservative budgets to cut the social wage won by working people through struggle, and make them carry more of the burden demanded by the capitalist economic crisis.

Chancellor of the Exchequer Gordon Brown described the package as a "people's budget for Britain's future." He presented as its centerpiece a 5.2 billion "windfall" tax. (1=US$1.63) This is a onetime levy on public utilities that were nationalized after World War II and sold back to private capitalists under the previous Conservative government.

The new owners of the water, telecommunications, electricity, railway, and other services reaped massive profits, and the top bosses took huge salary hikes. Along with the "windfall" tax, the budget drew 2.2 billion from the government's contingency fund, which exists to cover unexpected shortfalls.

At the same time, the budget cuts the corporate tax rate from 33 percent to 31 percent, and increases taxes on petrol, tobacco, and alcohol. These consumer levies have a disproportionate impact on working people. An article in the July 3 issue of the Financial Times pointed out, "As a proportion of their income, it is the poorest who have fared worst - they have lost around 1 percent of their disposable income" under the new budget. The 6 million people who have individual pension plans will have to pay more to maintain the same level of benefits on their retirement.

The budget allocates an additional 1.2 billion for the National Health Service (NHS) next year. Health Secretary Frank Dobson declared that the funding will not take away the need for "greater efficiency and financial discipline, or avoid the hard choices that people in the NHS have to make." The 1.2 billion represents a 2.25 percent increase in health spending - more than last year but less than the 3 percent average over the last 18 years of Conservative governments.

Brown announced July 2 an education program of 2.3 billion. Some 1.3 billion of that - an average of 150 per pupil - is supposed to go toward the 3.2 billion backlog of repairs required to Britain's crumbling schools, over the next five years. Douglas McAvoy, general secretary of the National Union of Teachers, the biggest teachers union, welcomed the promise of extra funding. He declared, "The chancellor [Brown], having seen the books and listened to advice, knows that the government's passion for education would seem hollow if it did not release extra funding."

Meanwhile, the government is moving to make it easier to ax teachers declared to be "incompetent." The schools standards minister, Stephen Byer, warned that instructors must either get the required number of students passing their exams, or be fired. A new fast track procedure is being introduced that will allow the government to fire teachers for incompetence within four weeks, instead of the current 18 months.

Expanded `welfare-to-work' scheme
Under provisions outlined in the budget 3.15 billion will be allocated to fund the Government's "Welfare-to-Work" scheme. All youth between the ages of 18 and 25 who have been out of work for more than six months will be required to accept a job with a private employer, work with a voluntary organization, work at improving the environment, or be enrolled in full-time education or training. Failure without "good cause" to cooperate with the program will be grounds for losing benefit payments. Pregnant women, the disabled, and unemployed single mothers will have their benefits cut 40 percent if they don't comply.

Employers who participate in this arrangement will be paid a 60-per-week subsidy for the first six months of employment.

The Blair government has launched a "new deal" it says will help single mothers get work. The budget projects cutting between 300 million and 400 million from benefits for these workers by continuing measures initiated by the Conservatives to cut housing benefits, child allowances, disability living allowances, and other social benefits. Some 200 million will be used to provide job search interviews for lone parents, and 10 million to reduce child- care costs.

Colette Kelleher, director of the Daycare Trust, called this a good move but said, "there is still a long way to go. With only one child-care place for every nine children under eight in the UK and with many families unable to afford quality child care, hundreds of thousands of parents and children are losing out."

Most ruling-class politicians and big-business leaders, while critical to one degree or another of the windfall tax, reacted favorably to the budget overall. Top bosses in British Telecom for example, which will pay an estimated 500 million as its share of the levy, considered the sum to be "very satisfactory." In fact, the figure is "considerably lower than earlier speculation might have suggested," said BT chairman Iain Vallance. Railtrack, one of the denationalized rail companies, will pay 160 million. Railtrack announced pre-tax profits of 346 million in the year ended March 1997.

In the days following the budget announcement, some left Labour Members of Parliament (MPs) moved to distance themselves from aspects of their government's proposals. Kenneth Livingstone, writing in the Sunday Telegraph, claimed, "The discipline of Labour's left in the run-up to the election was absolute, but we cannot be expected to remain silent as we watch the Government sow the seeds of a future Labour general election defeat."

Labour MP Jeremy Corbyn complained there was no mention in the budget of a minimum wage. The landslide victory of the Labour Party in the May 1 election was the product of workers' resistance to more austerity of the kind dished out by the previous Conservative administration.

In the wake of the budget proposals the pound edged up from what was already its highest value against other currencies for five years, leading to speculation that exports would be hit, causing unemployment to rise. The London-based business magazine the Economist complained the budget didn't do enough to curtail the threat of inflation. "To do that individuals need to be taxed more heavily... Alas, Mr. `Tough Guy' Brown did not have the bottle," it commented.

However, in noting the impact the budget would have on working-class households, the Financial Times pointed out that many of the measures in the recent budget "are policies initiated by the last two Conservative chancellors and now continued by Mr. Brown. The cumulative effects have been considerable."  
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