Redistribution does not mean more tax rises, insists Blair

Tony Blair was forced to deny that the Government was planning further tax rises yesterday after he pledged to redistribute wealth from the better-off to the poor.

In a speech marking the publication of the Government's annual "poverty audit", the Prime Minister said he wanted to "redistribute power, wealth and opportunity" to meet Labour's promise to eradicate child poverty in a generation.

Labour MPs and the Opposition interpreted Mr Blair's use of the word "redistribution", a phrase he has avoided until now, as a pointer to increases in income tax.

When asked directly if he was signalling further tax rises, Mr Blair replied: "No. It is a restatement of what I have always said before. To create the right kind of society we must be able to provide opportunity for everyone." Downing Street added that the Prime Minister was simply pointing to the rises in national insurance announced in the April Budget to fund the NHS and to the wider redistribution through benefits and tax credits to those on low incomes.

But Michael Howard, the shadow Chancellor, said hard-working families would be "appalled" that the Prime Minister wanted tax increases in "a clear breach of the promises he has made". He said: "Everybody knows that taxes are going up, public services are getting worse and children are still being left behind."

Clive Soley, former chairman of the Parliamentary Labour Party and MP for Ealing, Acton and Shepherd's Bush, said Mr Blair's words offered encouragement to Labour backbenchers. "You can do so much by creating new wealth, but you can't do it all. You have to talk about redistribution. I think that the days when we refused to consider income tax at all should be put behind us," he said.

According to the latest figures in the report, Labour is making little or no progress tackling 19 symptoms of poverty while achieving an improvement in 11 areas. Two other measures – the number of suicides and children being excluded from school – are rising despite efforts to reduce them.

The areas in which there has been "no significant movement" include infant mortality rates; the number of children and people of working age living in households with no one in work; the number of 16-year-olds gaining at least one GCSE; smoking by children aged 11 to 15; the employ-ment rate among the ethnic minorities and older workers and the number of rough sleepers.

Andrew Smith, the Secretary of State for Work and Pensions, said the Government was on track to hit its target of cutting the number of children living in low-income households by a quarter by 2004-05.

Mr Smith highlighted progress in raising the proportion of lone parents and disabled people in work; rising employment in deprived areas; a 6 per cent fall in teenage pregnancies since 1998 and a doubling to 33 per cent of the number of teenage mothers in education, work or training.

Steve Webb, the Liberal Democrats' spokesman on work and pensions, said: "Labour is still only scratching the surface. Nearly four million children remain in poverty."