A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Tuesday, June 15, 2010

Labour's economic legacy

I am grateful to Tory journalist Fraser Nelson (http://www.telegraph.co.uk/news/newstopics/politics/7827761/This-Budget-is-George-Osbornes-moment-to-be-radical.html) for summarising yesterday's Budd report:

  • "Sir Alan said yesterday that Alistair Darling was being too pessimistic: on almost every measure, the public finances look like being in better shape. Unemployment, he said, will be almost 200,000 lower than had been feared. Economic growth will not be quite as strong but the tax revenues – which are far more important – will come in much more strongly than Mr Darling gloomily forecast. Something is going badly right."
  • "In many areas that were not included in Sir Alan's report, the British economy is doing remarkably well. Manufacturing is bouncing back – helped, of course, by the weak pound. The Bank of England is no longer buying British government debt, but demand remains strong – keeping bond yields low. Banks are lending, and money supply is increasing. Just as the economy sprang a volley of nasty surprises as we entered the crash, it's yielding pleasant surprises now."
  • " The so-called structural deficit (the amount of overspend that will not be eliminated by an economic recovery) is a little bigger than had been estimated. But crucially, Mr Osborne's election goal – to abolish "the bulk" of the structural deficit by 2014 – would have been easily achieved had Mr Darling remained in place. No more taxes need to be raised, or budgets cut, to honour this Tory manifesto pledge."
  • "British house prices, which have recovered faster than anywhere in the world and should grow by 10 per cent both this year and next."

So Mr Nelson concludes that as he doesn't need to make savage cuts to sort out the deficit, George Osborne should instead have to make "the moral case for cuts".

I would be interested to hear what the "moral case" is for lower spending on benefits, schools, hospitals, social services, transport, police, defence or indeed any other service provided by national or local government. I can see a "moral case" for better or wiser spending - eliminating waste and diverting the money released to frontline services. I can see a "moral case" for seeking to reduce the tax burden on the least well-off. But an approach whose starting point is that smaller government is intrinsically morally better is just the same old Thatcherite prejudice that Cameron claims to have abandoned and the Lib Dems are supposed to oppose.

The UK actually has an economic model which thanks to the previous dose of Thatcherism means that compared to most of the rest of Western Europe we already have low taxes, a small state, a weak welfare system, low redistribution, low industrial intervention, and high inequality. Labour managed in 13 years to ratchet that back a bit and start to re-humanise and re-social democratise British society so that it might work for all citizens, not just the rich few. Nelson and Tories who share his prejudices want to redeploy the economics and morality of the jungle where the market rules and the state does the bare minimum. After the Budd report they no longer have an economic excuse and are reliant on dogma to justify trashing all the services and structures that create a society worth living in.

9 Comments:

Anonymous oldpolitics said...

"British house prices, which have recovered faster than anywhere in the world and should grow by 10 per cent both this year and next"

Is that supposed to be good news? A 3-bed terrace in Stoke Newington goes up from £400k to £485k.

Perfectly affordable for a working family, eh?

10:19 am, June 15, 2010

 
Anonymous Morning Spar said...

The UK actually has an economic model which thanks to the previous dose of Thatcherism means that compared to most of the rest of Western Europe we already have low taxes, a small state, a weak welfare system, low redistribution, low industrial intervention, and high inequality. Labour managed in 13 years to ratchet that back a bit and start to re-humanise and re-social democratise British society so that it might work for all citizens, not just the rich few.

Some of us pointed out during the 13 years of Labour government that not enough was being done to roll back the Thatcherite attacks on the welfare state, increased inequality, etc. You spent most of the time slagging us off as trots and lefty lunatics.

Finally come round to realising the damage caused by New Labour's timidity, Luke?

10:23 am, June 15, 2010

 
Blogger Hughes Views said...

"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little." -- Frankin D. Roosevelt

10:24 am, June 15, 2010

 
Anonymous Julian Ware-Lane said...

Excellent post, Luke. I hope George Osborne apologies for nthe election scaremongering.

As to @oldpolitics and house prices - Con-Dem plans to scrap housing targets will make the situation far worse.

9:17 pm, June 15, 2010

 
Blogger Miller 2.0 said...

Luke, that's all true, but will you now accept that we should have spent 13 years doing the reverse of what the Tories are planning: embedding a genuine modern social-democratic model?

6:04 pm, June 16, 2010

 
Anonymous Rich said...

Miller, I agree completely. Labour did too little and now the Tories will use the debt as an excuse to take an axe to the state.

They are almost rushing to get the job done. Cuts, removal of health and safety laws. There will be nothing left by next year and done without a clear majority.

Next will be the unions. The Tories are going to wage war on the trade unions making it almost impossible to strike. They plan to redraw constituency lines before the next election and this Is where the lib dems get there deal.

8:03 am, June 17, 2010

 
Anonymous Anonymous said...

"British house prices, which have recovered faster than anywhere in the world and should grow by 10 per cent both this year and next"

Is that supposed to be good news? A 3-bed terrace in Stoke Newington goes up from £400k to £485k.

Perfectly affordable for a working family, eh?


Exactly. The massive real increase in house prices has caused terrible problems to ordinary people, driving them to take on enormous debts and leaving them perilously at the mercy of interest rate changes (hint: they're only going up). House price rises benefit only a small minority of downsizing retirees and unproductive buy-to-let landlords. Suggesting otherwise betrays horribly muddied thinking on your part.

4:16 pm, June 17, 2010

 
Anonymous Anonymous said...

So you laud the fact that Darling was pesimistic on the deficit. You miss out the fact it was still 155 billion rather than 176billion. 155 is a huge number and as a % of GDP much bigger than Germany, France, Spain etc.

Brown always underestimated the deficit in the 2002-2007 period, so one budget estimate being correct hardly salvages Labour's poor economic record.

4:58 pm, June 22, 2010

 
Anonymous Anonymous said...

Rich - what is wrong with redrawing the boundaries so they are FAIR.

Equal numbers of electors in every seat, instead of 100000 in the Isle of White and 25,000 in some Scottish seats. Is this FAIR?

4:59 pm, June 22, 2010

 

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