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From: The Socialist issue 530, 22 April 2008: The rich get richer... and we foot the bill!

Search site for keywords: Tax - Labour - MPs - Gordon Brown - Banks - Mortgages - Nationalisation - Alistair Darling

Editorial: Brown's government lurching from pillar to post

Over £50 billion is being handed to fat cat bankers while five million low-paid workers are losing out from the abolition of the 10p tax band. Coming after the brutal offensive against public-sector pay, food and fuel price rises and the mortgage crisis, the end of the 10p tax band has hit millions of working class people like a bombshell. Tony Blair became so hated that he had to be rapidly removed, and now, after less than a year in power, Gordon Brown is becoming similarly unpopular.

Brown protested that the 2007 budget gave the poorest 30% of families a meagre £3 extra a week on average, but this does not make it easier for the 5.3 million people who have lost out from the abolition of the 10p tax band, including many low-paid workers with no children.

Their anger was increased by Gordon Brown's ludicrous insistence that no-one would be worse off.

It was enough to put Labour further behind the Tories in the polls just weeks before the May local elections. Terrified at the likely backlash from voters, many Labour MPs bleated that the 10p tax change undercuts their 'core beliefs'. But these same MPs applauded the 2007 budget when it was first announced, mainly because it cut 2p off income tax. Only six voted against it, and an overwhelming majority of Labour MPs made sure that the budget's architect - Gordon Brown - subsequently became Labour leader without even a contest.

Now many of these unscrupulous MPs, including some former ardent Brownites, are distancing themselves from their previous idol and are openly talking about removing him as leader. In addition, Brown's personally-chosen trade minister, former CBI leader Digby Jones, recently announced that he will resign his position before the next general election because he does not want to be asked by the media if he supports Gordon Brown! So with even his closest friends jumping ship, Brown's position is increasingly precarious.

Labour whips are trying to put massive pressure on Labour MPs to vote against an amendment in parliament next Monday that would give compensation to the millions who have lost out following the 10p tax change.

Soon after that vote, is one on the outrageous attack on civil liberties that seeks to extend the detention-without-charge period for 'terror suspects' from 28 to 42 days. This could see a greater rebellion - possibly of around 50 Labour MPs - than the one expected over the 10p tax change. Yet Brown has so far refused to back down on this extension - despite even facing opposition from the Director of Public Prosecutions. And Brown and his chancellor, Alistair Darling, have so far refused to offer any help to the losers from the 10p tax band abolition, prior to the autumn budget statement.

Few people believe that the government cannot act before then; it could launch an emergency help package immediately if it wanted to. It made concessions fast enough when subjected to howls of rage from the super rich over the tax threats to 'non-doms'.

£50 billion for the banks

Perhaps the only fortunate piece of timing for the government is that the furore over the 10p tax issue has taken some attention away from the plan to give an unprecedented massive bail-out of £50 billion, and probably much more, to the banks in the form of government bonds. Like the bail-out of Northern Rock, this is nationalisation of the losses while the profits are left in private hands, only this time with more public money at stake.

The government's claim that the bonds will definitely be repaid because the banks' mortgage assets will be held as collateral, is clearly flawed, as the bonds are worth much more than the mortgages. The bank chiefs will be swapping their damaged assets for clean ones.

Alistair Darling argued that this dramatic move "will begin the process of opening up the mortgage market, which will help householders". But it will help first and foremost the rich bankers, who are under no obligation to pass on any benefits to ordinary people.

Raising lending rates

Just hours after the news of the government's £50 billion offering, Abbey National bank raised lending rates on some of its mortgages rather than reducing them.

The bankers are absorbed in desperately trying to keep their banks afloat for the sake of themselves and other top shareholders, increasingly by taking colossal measures, as in the recent actions of the UK's second biggest bank, RBS. That bank has just written off £7 billion and made a £10 billion share rights issue to raise emergency funds from its shareholders - the largest ever fundraising of this type by a British company.

As The Socialist goes to press, government ministers have - as an after thought - been meeting banking chiefs to discuss measures to help people struggling to repay mortgages. But the government's class allegiance is already clear, so the outcome is unlikely to prevent all the 60,000 house repossessions that are expected this year. And there is much worse to come for ordinary people. The banking crisis is just an early symptom of the underlying problems in the economy.

While Brown is doing his best to serve the capitalists' interests, the terrible irony is that on the one hand the latter are turning on him for not serving their interests fast or competently enough (regarding privatisation, taxation etc), and on the other hand, Brown's most ardent supporters are the right wing trade union leaders. While verbally criticising the abolition of the 10p tax band, TUC leader Brendan Barber insisted he is not questioning Brown's leadership and even said that Brown is one of Labour's "strengths"!

The Socialist condemned the 2007 budget at all stages and strongly opposes the government's policy of detention without trial. We have always argued for permanent nationalisation of the banks (with compensation paid on the basis of proven need) so that they can act in the interests of the majority in society, for instance by providing low interest, secure mortgages and other loans. We also argue that these crucial positions, and many others in the interests of ordinary people, must be promoted by a new workers' party as soon as it can be built.

Any replacement Labour prime minister will be no better than Gordon Brown - but neither are the Tories or Lib Dems any solution. Working people have no choice, except to turn to creating their own alternative.






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