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9 October 2007

Pre-Budget report reaction

Mixed reactions to Alistair Darling's first Pre-Budget Report from John McDonn

By Staff Blogger

We asked UK politicians with a variety of perspectives to react to Alistair Darling’s first Pre-Budget Report

John McDonnell, former Labour leadership hopeful and MP for Hayes and Harlington

Electioneering for an election that never happened dominated both the Chancellor’s pre-budget statement and the Tories’ response. The knockabout farce that comprised the debate had less to do with real needs of our community and more to do with political positioning by the Government in response to the Tories’ party conference policy announcements.

The good news is that after the vigorous campaign by trade unions and tax justice groups for the past two years to end the tax loopholes being exploited by private equity companies, the Government has at long last taken action. The bad news is that the Government has bottled it when it comes to addressing similar tax avoidance by mega rich non-domiciles. Instead of action after four years of a Treasury review the best the Chancellor can offer is yet another consultation with proposals to let the rich off the hook yet again..

Inequality is still the elephant in the room, and there was nothing in these statements which will effectively tackle poverty or reduce inequality.

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Martin Salter, Labour vice chairman and MP for Reading West

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Alistair Darling revealed that the Tories proposed increase in the Inheritance Tax threshold to £1million would hand an eye watering tax windfall of £1billion to just one per cent of all estates – owned by some of the richest people in Britain.

What he should have done was to check out the Register of MP’s Interests to see how many of these lucky people would be members or former members of the Conservative Front Bench.

Instead of investing tax revenues in schools and hospitals and other public services it is now clear that the Tories are doing what they’ve always done best – simply feathering their own nests!”

Jo Swinson is Lib Dem spokesman for women and equality and MP for East Dunbartonshire

As Chancellor, Gordon Brown created an economy of uncertainty and instability. Personal debt now stands at £1.3 trillion and disposable income has fallen to its lowest level for 10 years.

I welcome the new Chancellor’s announcements that he will implement key Lib Dem policies on aviation and inheritance tax. However his plans for inflation-busting Council Tax rises of 5% per year will hit those on middle and lower incomes hard, and will be especially tough on pensioners. Instead, he should have scrapped this unfair tax and replaced it with a fair alternative based on ability to pay.

By failing to scrap costly, unpopular and unnecessary programmes such as the ID card scheme, Alistair Darling has missed a chance to relieve the burden on taxpayers and done little to inspire public confidence in the Government or the economy.

Green Party co-principal speaker Derek Wall

On inheritance tax, Darling’s decision to raise the threshold is a wrong move. Less than 6 per cent of people in the UK have to pay this tax at the moment, today’s plans will further reduce that number. This means more money will stay circling within rich families than ever before – a regressive move.

With 1 in 3 children in the UK growing up in poverty, this is grossly unjust. The Green Party wants to see inheritance tax levied in a fairer, more progressive way – on beneficiaries rather than the estates themselves.

On aviation, the Chancellor’s plans to tax flights and scrap air passenger duty will not go nearly as far in curbing our emissions as actually taxing aviation fuel would. The Green Party believes in the polluter pays principle and would work towards ending the £9 billion pound subsidy currently enjoyed by the UK’s fastest growing source of our emissions – the aviation industry.

On transport more generally, today’s pre-budget report will pour yet more money into road building – widening the M1 is already costing £21 million per mile, spending more seems like madness.
In short, today’s PRB did a lot for the rich and the road builders of this country and not much for the climate.

Frank Field is former minister for welfare reform and MP for Birkenhead

To begin the process of taxing the non-doms is long overdue. Why should this group be more privileged than the monarch who now pays tax? Of course the Government must be careful in not killing the goose that lays the golden eggs; the British economy now is over-dependent on financial services. But introducing a tax is long overdue and it should have an escalator built into it on the fuel duty model.

But not only did Labour’s election team’s actions drag the Tory party kicking and screaming to a tax cutting strategy, but the Tories also, perhaps unknowingly, began what will become the new politics of tax contracts. Increasingly voters will demand that any new taxes are linked to specific expenditure projects that they support. We see this with the Tory proposal for the non-dom tax to pay for the million pound exemption for inheritance taxation.

The statement was pretty muted on ensuring that the huge sums of tax payers money is spent more and more effectively. We need to establish a procedure by which money already committed is put under review to see whether it is being spent most effectively. There are huge gains to be made for taxpayers on this front.