10.07.1997

Business welcomes Brown’s budget

Gordon Brown delivered his “people’s budget” last week. He claimed that all the measures proposed were aimed at creating “the new welfare state for the 21st century”. In reality, Brown’s “tour de force” budget - as The Guardian editorial gushingly described it the next day - was tailor-made to suit the interests of capitalism and big business.

A closer examination of Labour’s first budget for 18 years reveals not a full frontal assault on the working class but a ‘strategic’ plan which further reduces the working class to a slave class. There was hardly a whiff of old Labour to this budget, which bore the imprimatur of free market economic orthodoxy. Rory Bremner, the leftwing comedian and impressionist, captured the mood of many traditional Labour voters when he remarked, “For 18 years people have been waiting for a Labour budget. After Wednesday they still are”.

Of course. Rory Bremner’s comments did not entirely hit the nail on the head. Brown and the New Labour team are eager to prove their worth, and trustworthiness, to the ruling class. Now that the consensus has shifted dramatically to the right, with ‘socialist’ Keynesian economics in disgrace, Brown has delivered the perfect “Labour budget” - ie, a ‘left’ Tory one, to put it crudely.

Given the undeniably Tory feel to the budget, it is hardly surprising that the response from the opposition benches was extremely muted and desperate. After all, if things had been slightly different, it would have been Kenneth Clarke delivering - give or take this nuance - the Brown budget.

Indeed, Brown’s decision to cut corporation tax by two percent, taking it to the lowest ever recorded in the UK, stole the Tories’ thunder. Whipping up the appropriate level of righteous indignation at Labour ‘mismanagement’ of the economy proved to be a difficult task, though William Hague did endeavour to be outraged by a treasury leak. The leak dispute led to an intervention by the notorious old buffer Sir Peter Tapsell, who barked: “This alleged statement resulted in the largest rise on the Stock Exchange in five years”. Sir Tapsell’s condemnation summed up the Brown budget very nicely.

One defining feature of Gordon Brown’s budget was its naked Clintonism, both in content and presentation. Thus, Brown peppered his budget statement with talk of a “New Deal”, deliberately conjuring up the ghost of Roosevelt. He also raided the unpleasant “tough love” rhetoric of modern-day America. This could be seen in his treatment of single mothers and the unemployed - ‘No benefits without obligations’ was a major Brown theme. Single mothers will be offered ‘personalised counselling’ on benefits and - so Harriet Harman reassures - job hunting and training will be backed with extra money for childcare. Where this money will come from, though, is a bit of a mystery. Typically, the feminist Harman plans to press ahead with Peter Lilley’s plan to cut the five pound a week extra given to lone parents in their current benefits.

Brown’s much lauded welfare-to-work programme - The Guardian for one said it was “good to see it” (July 4) - represents a further crackdown on the working class and can only bring misery to many. It is even pathetic in its own terms. The £3 billion to be spent on welfare-to-work is to be spread over five years. The annual £80m for the long-term unemployed means only 40,000 can receive the £75-a-week subsidy at any time, and as ‘successful’ schemes - like those of the Wise Group in Glasgow - have cost six or seven times as much, the impact on long-term unemployment is destined to be minuscule. Not that helping the long-term unemployed is, of course, the primary function of Brown’s scheme.

The new scheme is also very punitive - the Tories must be envious. Dole claimants who refuse jobs or training options lose all their benefits, as opposed to the 40% benefit penalty previously suggested. Blunkett rejected claims that these measures were “draconian” - if so, I hate to think what a draconian measure would look like.

Brown’s major trick was to pretend he had increased spending on NHS and education, with his surprise announcement that he was going to allocate an ‘extra’ £2.2 billion for the NHS and education - from the government’s contingency fund, or reserves. In other words, Brown is going to rob Peter to pay Paul. Money from the contingency reserve merely rolls over funding problems in the public sector to another year. This ‘increase’, which was met by roars of approval on the Labour benches, is extremely disingenuous. It does not seem to worry Labour MPs and their supporters that the new 2.25% ‘rise’ in NHS spending next year is less than the four percent rise the Conservatives had implemented during the last four years. Brown’s 2.25% for the NHS is just a piece of flimsy sticking plaster. It will not raise the baseline figure for NHS spending, meaning that on the present plans the health service is looking at a 3 percent cut in its budget in 1999-2000.

Hillary Wainwright, editor of the dull left-leaning journal, Red Pepper, complained: “This Budget has nothing to do with socialism. Expectations have been lowered so much that we are grateful for crumbs”. But, Hillary, when has Labour ever produced a ‘socialist budget’? - if such a thing is possible in the first place.

Gordon Brown has nailed his colours clearly to the capitalist mast. Big business, the stock exchange and the media may be delighted with Gordon Brown, but for the working class it just means more of the same - at best.

Paul Greenaway