Taxed To The Limit

GORDON Brown must stop his crippling tax rises or face an election hammering, Cabinet ministers have warned him.

They told the beleaguered Prime Minister that millions of decent, hard-working families have been stretched to breaking point by Labour’s punishing policies.

Warning that the country will revolt against any further drain on dwindling family finances, they used an extraordinary Cabinet meeting to tell the Prime Minister that voters have “reached the limit” of their endurance for his relentless hikes in income tax, fuel duty and council tax.

Businesses have warned of a flood of companies leaving Britain because of high taxes. They said one in five companies was actively considering abandoning the UK and setting up abroad.

The CPS research shows that the disposable income for an average household - the amount left after income tax and national insurance has been deducted - has only risen from £491 a week in 2001-02 to £500 last year, an annual increase of just 0.35 per cent a year.

The small increase contrasts with the situation during Labour's first four-year term, when disposable income rose from £408 to £491 a week. This is equivalent to an annual increase of 4.7 per cent.

The average pensioner couple has seen its weekly disposable income increase by only £2 over the past four years - from £382 to £384.

Charlie Elphicke, the report's author, said the paltry rises partly reflected the impact of the Government's decision to increase National Insurance contributions four years ago.

n 1996-97, the poorest fifth of households had disposable income of £84 a week, equivalent to 26 per cent of the average household income.

In contrast, the richest fifth of households had a disposable income of £709 a week 10 years ago - or 218 per cent of average household income. The latest figures show their income is now £1,103 or 221 per cent of the average.

Mr Elphicke said: "I fear there is a real worry that we are creating a permanent and disaffected underclass. Social mobility seems to have broken down and people in the poorest households have little chance of escape."

A Treasury spokesman said: "As one of the most stable economies in the world with low burdens on business, the UK is a highly attractive location for businesses.