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Welfare Reform on the Web (June 1999): Welfare Spending - UK

BROWN DULLS THE PAIN OF SOCIAL ENGINEERING

R. Shrimsley
Daily Telegraph, March 11th 1999, p. 5

Argues that Gordon Brown is basically a tax-and-spend Chancellor whose skill has been to hide the tax while emphasising the spend. Those on middle and upper incomes have been deprived of mortgage tax relief and married couples tax allowances; their pensions have been raided and their cars further taxed. The money has been redirected from couples to parents and from motorists to pensioners in accordance with Brown's sense of social justice. Taxes levied on motorists will be given to pensioners; upper rate taxpayers will pay more in national insurance contributions to help finance family tax credits fro the less well-off.

BUDGET 1999

Key points of the budget from a welfare reform viewpoint are:

  • a new 10p starting rate of income tax and basic rate tax cut to 22p.;
  • married couples tax allowance scrapped and replaced by children's tax credit worth up to £416 per year;
  • child benefit raised to £15 per week for the first child and £10 for the second;
  • Winter allowance for pensioners up from £20 to £100;
  • minimum income guarantee for pensioners giving couples £120 per week and single people £78;
  • no national insurance contribution on first £87 of weekly earnings from 2001, and no contribution over £575 a week.

Guardian, March 10th 1999, p. 13-20; Independent Budget Review, 10th March 1999, 24 p; Times, March 10th 1999, p. 9-20; Financial Times, 10th March 1999, p. 1-29; Daily Telegraph Budget 99, 8 p.

THE CHANCELLOR WHO PRETENDS TO LOVE LOW TAX

R. Preston
Financial Times, March 10th 1999, p. 4.

Characterises Gordon Brown as a chancellor who pretended to love low taxes while in fact preserving Labours traditional values. Help in the budget is targeted on the poor at the expense of the rich through the reconstruction of employees national insurance contributions and the replacement of the married couples tax allowance with the children's tax credit.

THE COMPREHENSIVE SPENDING REVIEW

A. Britton
Crucible, Jan-Mar 1999, p. 31-39.

Presents a critique, from a Christian viewpoint, of the rhetoric of the Comprehensive Spending Review, covering the level of spending and its affordability, the selection of priorities within the total, welfare and social security and the management of spending.

FRIEND TO WORKING RICH AND POOR

P. Stephens
Financial Times, March 10th 1999, p. 13.

Judges the budget to be redistributive, shifting a modest amount of money from the higher paid to those at the bottom of the scale. Thus the new family tax credit is paid for by increased National Insurance contributions for those near the top of the income scale. The main beneficiaries, however, are those able and willing to work. The toughened conditions attached to the New Deal provide the stick while a plethora of tax incentives and credits provide the carrot. The poor are to be given opportunity and decent income, but they must be willing to work for it.

MIDDLE CLASSES AVOID THE PAIN OF REDISTRIBUTION

N. Timmins
Financial Times, March 10th 1999, p. 6.

Gains for those in low paid work, much more money for families with children, and help for the least well-off are key features of a distinctly redistributive budget. But while the poor will gain at the expense of the better off, the chancellor's decision to boost purchasing power by £6 bn over the next three years means it is being done with relatively little pain for the middle classes.

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