New Labour redistributes wealth - to the rich. posted by Richard Seymour

Via Stumbling and Mumbling, a new report for the centre-right Centre for Policy Studies suggests that:

1) "[S]ince 1996-97 the share of benefits recieved by the poorest quintile has fallen from 28.1% to 27.1% of the total".

2) "The share of taxes they pay has risen from 6.8% to 6.9% of all taxes."

I don't accept the interpretation of Stumbling and Mumbling that "There's a trade-off between big government and redistribution. If the government is spending two-fifths of national income, it will have to tax the poor, and this limits the scope for redistribution." First of all, government spending in itself is redistribution: it's a question of how they spend the money. If they blow it on rip-off companies and preposterous PFI schemes, then the money will be transferred to the wealthy. If they spend it on social services, training, housing etc it will transfer to the poor. Secondly, it's a question of how they structure taxation: if they cut corporation tax, small business tax and inheritance tax, while raising indirect taxation on consumption that is known to disproportionately affect the poor then - as if by magic - the poor will pay more tax. Similarly, if New Labour cuts benefits and introduces means-testing, a well-known means of deterring claimants, then clearly the benefits going to the poor will be reduced.

This is not about anything so abstract as Big Government. It is about the extent to which the government is big because it is reacting to working class pressure, and the extent to which it is big because the system is in crisis and the capitalist class needs support. It is about class, in other words. Since New Labour has openly declared itself the party of wealth-creators and entrepreneurs, it is hardly surprising that this class has been the principal beneficiary of New Labour policies.