The former Chair of BULS and my great personal friend John Ritchie, has published a post entitled ‘Lies, damned lies and Tory Rhetoric’. In a nut shell the post savages what he percieves as the Tory ‘rhetoric’ surrounding Labours handling of the economy. Therefore I believe it is time to set the record straight on the Tory view of New Labours economic record.
We are all aware that the seeds of change in the Labour party were sown in the early 1990’s. In all intents and purposes traditional Labour was terminally ill and Labour leaders made it their mission to rid themselves of their percieved economic incompetence. Therefore John Smith, Tony Blair and Gordon Brown embarked on their “prawn cocktail offensive” in the City with the intention of expunging Labour’s richly deserved reputation for fiscal ineptitude.
How did they do it? They ditched socialism forever and embraced Thatcherism, at least in economic terms. It is true by doing this the electorate were presented with a fresh and viable alternative to the unpopular Tories. The only strength the Tories were percieved to have at the time was in their economic reputation which itself was slowly crumbling away and by proposing to follow Conservative spending plans and adopt Conservative economic principles Labour had encroached on the last refuge of a desperate Tory: the economy.
Blair attributed Major’s humiliation in 1997 not to a failure of policy, but to the natural ending of a political cycle, to a leadership which had degenerated into sleaze and indiscipline rather than economic incompetence. It is to the great credit of the New Labour leadership that they had the strength of character to refuse to bow to the rank and file of their party who wanted to roll back the frontiers of the Thatcher revolution. They shrewedly recognised that Thatchers neo-liberal economic revolution could not, and more importantly, should not be undone because it had provided unprecedented economic strength and stability. The provided the condition for the economic growth under the Conservatives to continue. Therein lies their economic competence.
This is how Labour built its legacy as economically competent. They extended the Thatcher reforms in to areas that even she had dared not go. They had seemingly ditched forever the slap dash, tax and spend policies that had characterised all previous Labour governments and embraced the key tenants of Thatcherism. Private ownership became preferrable to state, profits were a good thing and the union legislation enforced by Thatcher would not be reversed, despite recieving almost all their funding from unions (gratitude for you!)
Despite all the rhetoric from Labour rank and file of inheriting a mess from the Conservatives, New Labour actually inherited a very strong economy with inflation and rates dropping steadily since the early 1990s. Yet despite this health and all indications that this was set to continue for a long time to come, 10 years later we now find ourselves in a very serious financial situation with every taxpayer now owning (whether we like it or not) a bank and billions in national debts on top of the normal national debt.
The facts are indisputable. Despite the current rumblings, the UK’s period of continuous economic growth, which started under the Conservatives in 1994, means that by 2009 we will have enjoyed 15 years of continuous, unbroken growth, the longest period since records began. Yet despite this prolonged economic growth by 2009, by the governments own estimates, we will also have a national debt amounting, to some £550 billion pounds. This tells us all we need to know about Labours economic competence, despite the presence of a Conservative led boom Labour still can’t balance their books.
If they can’t balance the books when the money is growing on trees then they’re never going to be able to do it. Gordon Brown and New Labour have lived off the Conservative economic legacy. Their ‘achievements’ have only been made possible by sticking to and advancing Conservative spending plans. In times of economic strength war chests should be made for the inevitable bust that follows, the same bust that Brown naievely pledged to have eliminiated. Iron Chancellor Brown failed to provide a war chest.
Now we, and he, face the consequences of his woeful inadequacies as Chancellor. Despite all their promises they taxed, they spent. Once Labour always Labour. Now I’m not saying Labour didn’t use that money to make good changes and investment in certain areas, they did. However I fail to see how this makes them economically competent when we now hit a bump in the road ansd there is almost nothing left to spend.
The pound in your pocket makes and breaks governments. In times of economic stability it is fair to say that incumbent governments are likely to be re-elected, however if the pound in your pocket feels that bit lighter a government is on very shakey ground. That is what is happening now and that is why Labour will lose the next election. Labour have been economically competent (at least by traditional Labour standards) in having the common sense to adopt Thatcherite economics. The problem is they don’t quite understand Thatcherite economics. Instead of saving they have squandered. Despite their pledge to have elimated the boom and bust cycle forever we are now heading for a bust and Labour will find itself out in the cold with the reputation it so richly deserves: economically incompetent.