Labour governments typically devalue the currency, run out of money, and preside over industrial chaos. Welcome to the spring of discontent.
The 1945-51 government devalued the pound from $4 to $2.80. The 1960s Labour government devalued it from $2.80 to $2.40. The 1970s let a floating currency float down. This government has recently allowed a 25% devaluation in a free float, taking us down to $1.50.
Each Labour government greatly increases borrowing. The 1960s Labour government introduced an austerity budget just before it lost office to start to correct its own mistakes. The 1970s Labour government was forced into spending cuts by the IMF when they needed an international loan to keep them going. This government has announced major spending cuts for after the next election, recognising that its deficit is way too high.
The 1960s and the 1970s Labour governments both tried to reform Trade Union Law to limit industrial action, but both failed and gave up reform. It was left to the 1980s Thatcher government to push through what they had not managed to do. The 1970s government ended in the winter of discontent, when public sector unions went too far and left public services in chaos. This spring we face a travellers nightmare, with industrial action threatened on the railways and at BA.
Management needs to be fair, clear and realistic in what it expects and what it offers. Unions need to understand in the private sector that it is highly competitive out there, and that higher pay and bonuses need to reflect higher revenues and higher productivity. In the public sector we need to spread the word that all must do more with less – or less with less where the service is marginal or not needed.
Some time ago I predicted a squeeze on living standards as a result of this government’s economic policy. Labour tried briefly to spin that I wanted a fall in general living standards, or was recommending it be Conservative policy to have such a fall. Because they have clung to office they are inflicting the fall that was made inevitable on people whilst they are still Ministers. Last year the private sector saw pay rise by a mere 1% with prices now shooting up by several times that rate. Now it is the turn of Labour’s public sector, offered similarly poor fare for the year beginning this April. They have run out of money. They are not bluffing. It was inevitable given their poor management that it would come to this. You end up with bigger public spending cuts with Labour, because they lose control of the money.