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Running to stand still

So Gordon Brown’s plans to cut and run before the storm of the economic crisis turns into a hurricane have fallen victim to New Labour’s own arrogance and grubby desire for perpetual political power. The self-appointed Leader of The Party of All People (PAP) thought he just had to think the word election and the voters would be overwhelmed with joy. In fact, they were so under whelmed by the prospect of a Brown government that they deserted the PAP in droves.

It’s not difficult to see why. Today, a report reveals that disposable income is at its lowest level in 10 years. While tax on corporate profits (those that are not held offshore) is now at just 28% thanks to Brown’s continuous reductions, wage earners have been hit hard. Taxes, housing costs, phone bills and travel expenses have eaten into salaries, researchers says. In 1997, when New Labour came to power, people were left with 34.5% of their gross income once they had paid taxes, national insurance, mortgage or rent. Now they are left with 32.6%, says a report by uSwitch, a price comparison website. Earlier this year, Ernst & Young, the accountants, calculated this year that the average family had £838 left to spend each month, compared to £899 four years ago.

In the past 10 years, petrol — often the biggest cost for a family after their housing — has increased by 55% and phone and internet bills have risen 77%. The cost of getting on to the housing ladder has more than tripled. Council tax rose from an average of £688 a year to £1,321 — an increase of 92%, or three times the rate of inflation. The cost of food — which for the past decade has risen slower than inflation — is on the increase again and an estimated two million households are about to be hit by increased mortgage payments as they come off fixed-rate deals taken out two years ago. Mike Naylor, at uSwitch, said: "We are working harder, but we are not getting any wealthier — we are just running to stand still."

Under New Labour, inequality has soared while exploitation at work has intensified dramatically. These are the joys of the market economy so enthusiastically championed by Brown. Problems are then reinforced by more market-led “solutions”. House prices are out of the reach of most new households. So what does the government propose? State help to take on a mortgage that would otherwise be beyond people’s means! What lunacy.

While Brown dithered and lost his nerve about calling an election, the economic news goes from bad to worse. Rodrigo Rato, outgoing managing director of the International Monetary Fund has warned that the seizure in world financial markets will make substantial inroads into forecasts for economic growth. In an interview in today’s Financial Times he says: “Policymakers should not think that the problems will stay at the desk of the bankers. Problems are going to come to the real sector, come to the budgets – that is something we keep telling people.” The credit crisis was “not a storm in a teacup,” he added. Its impact would be felt “more quickly” in the US and to some extent in Europe and Japan rather than in the rest of the world. No wonder Brown wanted an election sooner rather than later. Now his wounded regime will have to face the music.

Paul Feldman
AWTW communications editor
October 8, 2007

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