The Budget proposal came as John Smith, the Labour leader, warned that unless the Government's Budget is 'overwhelmingly devoted to reducing both unemployment and the fear of unemployment, it will put back the prospect of recovery and fail not just the unemployed but all the people of Britain'.
Labour renewed its call for a one-off tax on utilities profits after shelving its election plans to raise tax and National Insurance. Tax increases now, Mr Smith said, would have 'a depressive effect on the economy'.
Labour said its 'Budget for Jobs' would provide both 'quality' training for the unemployed, environmental work including home insulation and removal of lead piping, and work on schools and hospitals.
Funds would come from retaining stamp duty on share transactions, which would raise pounds 1.6bn over two years, according to Gordon Brown, the shadow Chancellor, with another pounds 300m raised by closing tax loopholes, including the right of companies to cut their corporation tax by 'buying' others' capital losses.
Privatised utilities should be required to pay a 'one-off' dividend on the 'excess profits' they have made in the recession, Mr Brown said. He refused to specify the sum - put at between pounds 750m to pounds 2bn by some Labour sources - saying it was a matter for negotiation. Since 1989 the utilities' profits had risen by 70 per cent during the recession to total pounds 35bn - profits made possible 'by the generosity of the terms of privatisation', he said.
'Having paid for the excess profits, the country deserves something back,' he added, when there was a need both to reduce unemployment and the fear of it, which was holding back recovery.
Mr Brown declined to define 'excess' but said electricity profits had risen by 100 per cent and rates of return were in many cases double those in Europe and America. 'The Tories have refused to act because of their entrenched interests with Cabinet ministers on the boards and Tory MPs as advisers and consultants,' he said.
The utilities said the idea would hit investment, British Telecom maintaining that it had paid close to pounds 17bn in various taxes since privatisation in 1984, while pounds 19bn had been invested.
Mr Smith said 'the principle is very clear'. Companies and consumers were 'paying through the nose' as utility profits went steadily upward with 'the rest of the economy stuck in the middle of a recession', he said.
Leading article, page 18
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