Child Poverty and the Low Tax Elite
There has been a great deal of hand-wringing about the Government’s failure to meet its child poverty reduction target, i.e. to cut child poverty by half by 2010. It is likely to do little better than get halfway there. But that misses the real point.
If you let markets rip, if you give priority to Big Business and the City for whatever tax cuts they want, if you keep the trade unions on a short leash and insist on hire and fire flexible labour markets which stunt trade union power, if redistribution is a No-go area, then of course you’ll get a situation where one-fifth of the population have to subsist on less than £220 a week, while at the same time the top 1% get income of £220,000 a year plus £35,000 in investment income, which means they take home £4,900 a week.
And when Mandelson says “we’re utterly relaxed about people getting filthy rich” and when John Hutton says that we should “celebrate” people being enormously rich at the top, then of course you’ll get the new super-class that New Labour has so enthusiastically cultivated where the top 0.1% (just 30,000 persons) each get an average annual income of £760,000 plus another £150,000 from investments, making it £17,300 a week. And within that group you’ll find the chief executives of the FTSE top 100 companies taking home £71,000 a week, right up to the top of the pile, Bob Diamond of the private equity outfit Barclays Capital trousering £520,000 a week.
But it’s not just unfettered markets which have wreaked this extravaganza of inequality, it’s also New Labour’s supine genuflecting to the corporate interests that control those markets that has equally done the damage – aping the Tories over their huge inheritance tax concessions which benefit only the top 1.4 million, rejecting any proper taxation of the non-dom billionaires, backing down over capital gains tax on private equity extortion, and blocking any EU withholding tax on assets squirreled away into tax havens.
So don’t be surprised. Nothing much is going to happen on the child poverty front until these economic fundamentals are altered. And on that score, not all is lost.
The sub-prime market fiasco, colossal securitisation of assets for short-term greed, and the international credit crunch are transforming the financial and economic markets (as the Japanese Emperor Hirohito said at the end of the war) not necessarily to their advantage. In addition, at home the traction of the New Labour neo-liberal agenda has collapsed, as the polls, the local government and London mayoral elections, and the Crewe by-election clearly attest. Even at Westminster the old factions that held up the Blairite project have frayed and are breaking up. For the first time for 15 years the way is now open to a new politics. In place of the Tory-New Labour one-party-state stranglehold of the past 3 decades, a progressive modern Left now has a historic role to re-enfranchise the half or more of the population who have for so long been disenfranchised.
That new agenda should address poverty with real solutions, not merely offering the crumbs that fall from the rich man’s table. On fuel poverty, why when the oil and gas companies are reaping a colossal uncovenanted gain from growing oil and gas scarcity relative to demand, do we not impose a permanent annual levy on these companies to tap their windfall gain, and use all the proceeds to help the fuel poor and to fast-track the spread of renewables technology?
Why not re-introduce the 10p tax rate band when Alistair Darling’s one-year-only compensation runs out in April 2009, and fund the £6.6bn cost by excluding higher-rate taxpayers from the benefit, taxing undeclared share-dealings on the Stock Exchange, charging capital gains tax on foreign owners (now exempt) when they sell their UK commercial property, and charging income tax on short-term (less than one year) share-trading rather than capital gains tax which is lower?
On the housing collapse, why when private house-builders will build next year only a third of the Government’s target, don’t we allow local authorities to borrow against the collateral of their own housing stock and build houses themselves, since the Council waiting lists now exceed 2 million (12,000 in my constituency alone)?
And to stop the obscenity of gigantic bonuses and rich-to-rich back-scratching, why don’t we set up a Fair Pay Commission to lay down guidelines on what is fair and reasonable remuneration, with the powers where necessary to enforce them?
Then we might see real progress on dealing with poverty.