In Opposition Gordon Brown came up with a sensible economic policy which was attractive to moderate conservatives and moderate socialists. He said:
1. Cut the costs of welfare by getting more people back to work. He called welfare expenditure the “costs of economic failure”
2. Cut the costs of interest charges by reducing government debt.
3. Spend more of the money on schools and hospitals
4. Freeze tax rates at Conservative levels.
I agreed with all of this. I would have added cut bureaucracy and undesirable government programmes (like embryo unelected regional government and related quangos) more so tax rates could also be reduced. I was always sceptical about whether Labour would do it as well as say it.
The Blair/Brown programme was attractive in 1997 and they got a good vote and large majority to carry it out. In the first Parliament they did repay some debt, in line with 2. They failed to reform welfare in line with 1. They did keep tax rates down, but started to introduce some Stealth taxes against the spirit of 4. They began to accelerate spending the Health and Education departments. In 2001 they were re-elected, but with many fewer votes. The public put them on probation, with many floating voters still wanting the original prospectus.
From 2001 onwards they ditched virtually the whole programme. They not only failed to reform welfare, but the bills shot up, with many more people being offered a range of new benefits instead of working. Over 5 million people of working age are now on benefits. They started to borrow again, and now are out to break the all countries borrowing record at huge future cost to taxpayers. They greatly increased spending on Health and Education, but too much of this was spent on central and regional management and interference, too little in the schools and hospitals themselves. They did spend on some new buildings and higher pay, but we have ended up very short of beds, short of certain specialities in hospitals, and short of places at high performing state schools. They accelerated the Stealth taxes, and finally propose a hike in the Income Tax rate on higher earners.
Labour’s vote plunged in the 2005 election to disastrous levels, polling less even than the Conservatives in England when the Conservatives had another very bad year. The public no longer believed the government would do what it promised in 1997.
Today we learn that Mr Brown now wants another go at Item 1. I welcome that. The Opposition is likely to support the changes. I will want reassurance that severely disabled people are not going to be put under pressure or treated meanly, and reassurance that the rest of the reform is serious and not just more spin and window dressing. It is not the best of times to launch such a project when many people in work are having to battle to keep their jobs and when new vacancies are plunging, but there is no need to delay. We do need to tackle it and need to take the state of the job market into account when evaluating early results.
If Mr Brown is a “serious” politician rather than just another spinner from the spin era, he would also take up his other three policies which made sense and were popular in 1997 and could make sense again today. Of course there will be some increase in borrowing owing to the recession, but there should be nothing like the irresponsible surge he is currently undertaking. He does need to have some discipline in the debt programme. He needs to redirect more of the large budgets into the schools and hospitals themselves and buy us more places at good schools and more beds and consultants in hospitals. He needs to reverse his proposed Income Tax rate hike, and end the VAT reduction. Any tax reductions this year should be Income Tax reductions helping the lower paid.
Meanwhile the Conservatives have put in place many of the ingredients for a good economic strategy. The Leader’s attack on excess borrowing, his wish to curb wasteful spending, his opposition to the VAT reduction, his wish to revisit the banking support package and his wish to concentrate more of the present public spending in the schools, hospitals and other local facilities all makes sense. Mr Brown needs to be careful. He could find at the next election the Conservatives adopting a lot of his late 1990s strategy, backed by the wish and the ability to see it through. The pity with the PM is either he did not mean it when he set it out more than a decade ago, or he was incapable of implementing it.