The quiet equaliser

Britain's leading team of independent tax experts yesterday added weight to Gordon Brown's reputation
as a believer in quiet wealth redistribution when it said that the poorest people in Britain were the biggest
winners from Tuesday's Budget .

The Institute for Fiscal Studies said that the new tax and benefit alterations announced in the Budget
reinforced the impact of the three previous packages by targeting most of the government's help on
those on low incomes while top earners had been left relatively unscathed.

Although Gordon Brown said in his Budget speech that Labour's actions had helped to take 1.2m
children out of poverty, the chancellor was reluctant to concede yesterday that he had embarked on a
redistribution of wealth and rejected claims that his Budget was a return to the old Labour values of 20
years ago.

`We are New Labour and we are pursuing New Labour policies, as everybody knows,' he told BBC
Radio 2's Jimmy Young programme.

However, the detailed breakdown of the Budget by the IFS showed that there has been no evidence of
the Blair government's pandering to the rich, with the top 40% of earners left untouched by changes.

The impact of higher stamp duty to be imposed on the purchase of luxury homes was not taken into
account by the IFS in its analysis, but with the levy on a pounds 500,000 house sale due to rise by
pounds 2,500 to pounds 20,000, those planning to put their properties on the market will feel the pinch.

According to the IFS figures, the most important changes in the Budget were the increased support for
children, worth pounds 4.35 for each child under 16 the increased generosity of the yet to be introduced
children's tax credit help for people making the transition from welfare to work - including a pounds 100
jobs grant and an extension of the New Deal options to all adults support for pensioners via a 50%
increase in the winter fuel allowance and the decision to increase the rate only on cigarette duties by
more than the rate of inflation.

The overall impact of these measures meant that the poorest tenth of the population saw their weekly
income rise by 3% - worth around pounds 3 per week.

The next poorest decile was the second most favoured group, seeing a gain of some 2.5% a week. The
IFS said this was worth slightly more than the increase to the poorest group in cash terms.

By family type, the IFS said that the biggest beneficiaries of the Budget had been a non-earning couple
with no children, who would see their weekly income rise by around 4% as a result of the changes.

Single parents were the next most generously treated group, with a single earner couple with children
and both single pensioners and pensioner couples modest gainers.

While the cut in the top rate of income tax from 83% to 40% and the reduction in the basic rate of
income tax from 33% to 23% meant that high earners gained most from Conservative tax policies, the
IFS said that the cumulative effect of the four Labour budgets since 1997 had been to help the poorest
groups.

The two deciles at the bottom of the income scale have seen by far the biggest increases in their weekly
incomes with rises of more than 8%. The next two poorest groups have seen smaller increases, while
the fifth, sixth and seventh income deciles have enjoyed only negligible increases as a result of Budget
changes. The richest decile has seen its weekly income reduced slightly as a result of fiscal measures
which have in cluded the abolition of mortgage interest relief and the married couples' allowance - as well
as the introduction of new means-tested tax credits aimed at the working poor and their families.

By family type, non-earning families with children have seen their weekly incomes rise by 10% while
single parents have had an increase of 6%-plus. Single pensioners and single earning couples with
children are the next most favoured groups, gaining around 4-5% a week.

Further down the pipeline, the IFS said that there were more redistributive measures to come. These
included the possible tax credit for pensioners, which is just about to go out to consultation, the
integrated child credit - which replaces the child element in income support, the working families tax
credit, child tax credit and the disabled persons tax credit from 2003.

On top of all that, the chancellor is planning a new employment tax credit which is designed to extend
the principle of giving in-work support to families with children to all low-paid workers.

Mr Brown admitted the government was redistributing wealth through the Budget , saying: `We're
redistributing to entrepreneurs by the capital gains tax cut ... We're putting money into entrepreneurs,
we're putting money into tackling child poverty.

`We're giving a balance that is right, so that there is fairness and enterprise in our society,' Mr Brown
said.

Challenged on his acknowledgment of wealth redistribution - which he seldom mentions - Mr Brown
stressed that nobody was being harmed by the government's policies. `There is nobody suffering from
what we are doing because we have managed to make great advances on unemployment,' he told BBC
Radio 4's Today programme.