Tuesday, July 13, 2010

Richard Grayson and public spending under Thatcher

Richard Grayson has written a for Compass, a campaign group essentially concerned with returning the Labour Party to its pre=Blair values. You can find a shortened version in the New Statesman, and David Boyle has written a sympathetic critique of that article.

I was struck by the conclusion to the Compass pamphlet:
Meanwhile, the public are unlikely to be enthusiastic when faced with an overall record of running down the state to the levels that made voters so willing to embrace New Labour in 1997 after nearly two decades of slash and burn.
Was the state run down in the Thatcher and Major years? A briefing produced by the Institute for Fiscal Studies for the 2005 gives the true figures:
During Margaret Thatcher’s premiership public spending grew in real terms by an average of 1.1% a year, while during John Major’s premiership it grew by an average of 2.4% a year.
The fact that such increases feel like a policy of slash and burn to social liberals suggests that there is a problem with their views. As I have argued before, they need to think harder, not about their differences for the Conservatives, but about what differentiates social liberalism from socialism.


dreamingspire said...

Regular reports in 97 were that the country's financial position was excellent, giving Labour a huge financial cushion. Maybe comparing Brown and Major gives us a clue. Certainly my impression of Major was that he was weak, and the same for Brown.
Running a small technology business in 97, I certainly noticed the boost to business when NuLab took over, but it was short lived.

Unknown said...

From that earlier post you link to: "It is the people you are tempted to agree with that you should be wary of. And it is the ways you find you differ from them when you think hard about it that are really important."

A good and interesting point. The Swedish classical liberal writer Johan Norberg (www.johannorberg.net) says that he has spent much more time criticising the centre-right parties than the left, largely because he feels they claim to be liberal without really being liberal.

Unknown said...

And back to the subject at hand, it is worth repeating that George Osborne's aim to stabilise public spending at 40% of GDP would not strike any reasonable person as being an ideological state-shrinking exercise. Comparing with spending levels in 2006, that would leave us with a higher-spending state than the well-known libertarian stronghold of Spain (38.4%) and only slightly lower than Norway (40.5%). Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/data/main_tables

Frank Little said...

Her acolytes proposed extensive cuts to state contribution to NHS, but Thatcher recognised the electoral disadvantage and rejected them.

James Graham (Quaequam Blog!) said...

One of the things I have found most intriguing since we set up the SLF last year is that we are constantly referred to as a homogenous group by people accusing us of treating people like, um, a homogenous group.

You could say the same of Compass (or that matter, the Fabians). Compass has never been about rolling back the clock to before Blair; it has always defined itself as wanting to return to the values Labour espoused during the early Blair years. An awful lot of Labour people I know are perfectly comfortable with New Labour - it is the drift that happened next that they have issues with.

Nonetheless, you can't spend much time at a Compass conference without being very aware indeed that a great many of its members are indeed Old Labour, but I'm not sure it gets you anywhere by characterising them by their own extremists.

Regarding Thatcherism and investment, I do take your point. However, it is a little more complicated than that. A great many things such as incapacity benefit went up above inflation, while the NHS is more inflationary than the RPI because we are discovering new ways to diagnose disease and new treatments all the time. It certainly felt like cuts to a lot more than just social liberals.

I'm not sure where this gets us really, apart from that critiquing an oversimplification with another oversimplification is a little pointless.

Niles said...

Our Labour lot in the council chamber yesterday were of the view that public expenditure only went up under Thatcher because it was being "wasted" on the incap benefits spent on the people she put out of work.

Anonymous said...

I have to say it makes me giggle every time a lefty complains of the coalitions ‘ideological opposition to the state’, which will see them, over a 5-year period, reduce state spending as a proportion of GDP to the level it was at in 2004, at the back end of two terms of labour government.

As far as the difference between a social liberal and a socialist, I think it is useful to remember Marx's objection to 'liberal socialists' who supported the idea of a bourgeoisie, but a bourgeoisie for the purpose of benefiting the proletariat. I have to say I always found it a bit hard to see anything wrong with the idea of letting people make money, but ensuring that they use it for the good of society, nevertheless is we turn his concepts around and move them forward to the 21st century perhaps a social liberal is somebody who supports the idea of state dependency, but only for the purpose of liberating individuals from the state.

donpaskini said...

The feeling that public services were slashed and burned by the Tories is not confined to social liberals, though. It was a sufficiently widespread sentiment amongst people who use public services to give Labour two landslide election victories and force the Tories to promise to match Labour's spending plans when Cameron attempted to make them electable.

Jonathan Calder said...

It is worth bearing in mind that Labour won in 1997 by promising to keep to Tory spending plans, not by promising to spend more than the Tories.

And if a year-by-year increase of 1 or 2 per cent in real terms feels like "slash and burn", then either something is very wrong with the way public services are organised or a radical politics based solely on ever higher public spending is bound to turn out a disappointment.

donpaskini said...

Labour won in 1997 on a promise, inter alia, to save the NHS. I don't know what it was like where you were, but I remember at the time absolutely everyone thinking that Labour would spend more on improving public services which had been run down by the Tories. They also won a second landslide in 2001 (and a substantial victory in 2005) on the investment vs cuts theme. And, of course, throughout this time your party was keen to raise taxes further to spend more on public services.

And an analysis which simply averages growth in public spending across a decade is not actually very instructive.

For example, the early Thatcher years saw public spending increase because of massive rises in defence spending, rises in public sector pay in line with the Clegg pay awards, and weak economic growth. The later Thatcher years saw public spending cuts, and the Major years saw rises because of increased spending on unemployment and the NHS.

It is possible to increase the overall level of state spending through the costs of mass unemployment + extra spending on one or two government departments + slash and burn other public services (the Thatcher/Major/Osborne approach). But this is not the devastating rebuttal of social liberalism that you seem to think it is.

Jonathan Calder said...

I am not offering a rebuttal of social liberalism. I am a social liberal myself. What I am questioning is an account of social liberalism that does so little to differentiate it from Labourism.

Your detail about public spending under the Tories is taken from the IFS report that I link to in the original post.

donpaskini said...

Worth looking at the public sector net investment figures (table C16, page 105). These give a clear example of slash and burn in public services during the Thatcher/Major years:


So the fact that these policies felt like slash and burn to social liberals is not an example of a problem with their views, given that this impression was correct.