William Keegan writes:
While the Conservatives and many members of the media go on and on about the putative need for Labour to apologise for the deficit that was caused not by Gordon Brown but by the banking crisis, an apology has come from an unexpected quarter.
In a recent interview with Margaret Thatcher’s biographer, Charles Moore, for the Policy Institute at King’s College, London, the man who ran Thatcher’s press office for 11 years, my old friend Sir Bernard Ingham, said about Thatcherism: “I’m sorry, desperately sorry, that so many people had to suffer the consequences.”
Now, it is true that this admission was made in the context of Ingham’s claim that those years he worked for her “produced very substantial improvement in the country” – a debatable point – but it is interesting that he made the apology.
He also had the good grace to add: “I wish some privatisation had been carried out better [sic].” I’ll say!
Now, if there was one economic concept that successive Thatcher administrations were proud of it was privatisation. Rather more so than of monetarism.
It was Peter Jay who once joked that instructing Thatcher about monetarism was like showing Genghis Khan a map of the world.
But it was privatisation that those Thatcher governments fumbled their way into exporting to the rest of the world.
It is therefore a remarkable turn of events that we now have a Conservative chancellor of the exchequer, a veritable son of Thatcher, who has recently gone kowtowing to a communist Chinese government, pleading with them to provide finance for the construction in Britain of a nuclear power station by a French nationalised industry.
I am not making this up.
Quite apart from the controversy stirred up over Osborne’s cloying approach to a regime notorious for its abuse of human rights; quite apart from the fact that experts with far greater knowledge of the energy industry than most of us have raised serious doubts about the financial basis of the project, Osborne’s cavalier attitude lands him on weak ground when it comes to opposing Jeremy Corbyn’s approach to the railways.
Osborne, unlike many Chinese, has been democratically elected and has every human right to believe what he likes.
But it was good to hear Labour’s new shadow chancellor, John McDonnell, pick up this point in his speech to the Labour conference in Brighton last week.
Because there were so many other interesting aspects of McDonnell’s speech, the following passage did not receive wide coverage.
It is therefore worth repeating: “I found the Conservatives’ rant against Jeremy’s proposal to bring rail back into public ownership ironic when George Osborne was touring China selling off to the Chinese state bank any British asset he could lay his hands on.”
It was a Conservative MP and railway enthusiast Robert Adley who observed that rail privatisation would be “the poll tax on wheels”, and so it proved to be.
Moreover, not many people realise that the “privatised” system has actually had to be partly renationalised and is costing the taxpayer £4bn a year in subsidies.
George Osborne is what is known in the trade as a “chancer”. Chancers often get found out. William Hill has made the chancellor hot favourite to succeed David Cameron. We shall see.
The wider implications of his unnecessary policy of austerity are gradually being brought home to the middle classes and all those middle-England voters whom the new leaders of the Labour party are accused of ignoring.
The “cuts” are affecting surgeons, GP surgeries, local authority social services for the old and the infirm, and reaching into many other corners of everyday life.
McDonnell is right to oppose the policy of austerity for austerity’s sake.
His predecessor, Ed Balls, recently said to me that this must be the first shadow chancellor who is to the left of your correspondent. I wonder.
McDonnell has emphasised that he would “not tackle the deficit on the backs of middle- and low-earners, and especially by attacking the poorest in our society”, but as an acquaintance observed when I said I thought McDonnell’s conference speech was a breath of fresh air: “But he still goes on about the deficit, and you told me the deficit was not the problem!”
Quite right. It was not the problem. It was the solution.
The deficit was the consequence of the banking crisis, not of Brown’s policies. When the banking crisis led to the collapse of demand in the economy in 2008-2009, the deficit was necessary to prevent the fall from becoming even steeper.
There are those who say that recent revisions to the statistics mean that the crisis was not as bad as some made out.
To them I offer the words last week of Joe Grice, the chief economist at the Office for National Statistics, who commented that it “remains the sharpest downturn and slowest recovery on record”.
When recoveries are slow, deficits come down slowly.
I suspect that McDonnell feels that, because there is such widespread misunderstanding of this, he has to pay heed to popular opinion and sound more “orthodox” than he really believes is necessary.
But at least he is putting the emphasis on attacking what “austerity” actually means in practice.
Whether or not the Corbyn team wins the confidence of the electorate it promises to be a very strong opposition on the economic front.
While the Conservatives and many members of the media go on and on about the putative need for Labour to apologise for the deficit that was caused not by Gordon Brown but by the banking crisis, an apology has come from an unexpected quarter.
In a recent interview with Margaret Thatcher’s biographer, Charles Moore, for the Policy Institute at King’s College, London, the man who ran Thatcher’s press office for 11 years, my old friend Sir Bernard Ingham, said about Thatcherism: “I’m sorry, desperately sorry, that so many people had to suffer the consequences.”
Now, it is true that this admission was made in the context of Ingham’s claim that those years he worked for her “produced very substantial improvement in the country” – a debatable point – but it is interesting that he made the apology.
He also had the good grace to add: “I wish some privatisation had been carried out better [sic].” I’ll say!
Now, if there was one economic concept that successive Thatcher administrations were proud of it was privatisation. Rather more so than of monetarism.
It was Peter Jay who once joked that instructing Thatcher about monetarism was like showing Genghis Khan a map of the world.
But it was privatisation that those Thatcher governments fumbled their way into exporting to the rest of the world.
It is therefore a remarkable turn of events that we now have a Conservative chancellor of the exchequer, a veritable son of Thatcher, who has recently gone kowtowing to a communist Chinese government, pleading with them to provide finance for the construction in Britain of a nuclear power station by a French nationalised industry.
I am not making this up.
Quite apart from the controversy stirred up over Osborne’s cloying approach to a regime notorious for its abuse of human rights; quite apart from the fact that experts with far greater knowledge of the energy industry than most of us have raised serious doubts about the financial basis of the project, Osborne’s cavalier attitude lands him on weak ground when it comes to opposing Jeremy Corbyn’s approach to the railways.
Osborne, unlike many Chinese, has been democratically elected and has every human right to believe what he likes.
But it was good to hear Labour’s new shadow chancellor, John McDonnell, pick up this point in his speech to the Labour conference in Brighton last week.
Because there were so many other interesting aspects of McDonnell’s speech, the following passage did not receive wide coverage.
It is therefore worth repeating: “I found the Conservatives’ rant against Jeremy’s proposal to bring rail back into public ownership ironic when George Osborne was touring China selling off to the Chinese state bank any British asset he could lay his hands on.”
It was a Conservative MP and railway enthusiast Robert Adley who observed that rail privatisation would be “the poll tax on wheels”, and so it proved to be.
Moreover, not many people realise that the “privatised” system has actually had to be partly renationalised and is costing the taxpayer £4bn a year in subsidies.
George Osborne is what is known in the trade as a “chancer”. Chancers often get found out. William Hill has made the chancellor hot favourite to succeed David Cameron. We shall see.
The wider implications of his unnecessary policy of austerity are gradually being brought home to the middle classes and all those middle-England voters whom the new leaders of the Labour party are accused of ignoring.
The “cuts” are affecting surgeons, GP surgeries, local authority social services for the old and the infirm, and reaching into many other corners of everyday life.
McDonnell is right to oppose the policy of austerity for austerity’s sake.
His predecessor, Ed Balls, recently said to me that this must be the first shadow chancellor who is to the left of your correspondent. I wonder.
McDonnell has emphasised that he would “not tackle the deficit on the backs of middle- and low-earners, and especially by attacking the poorest in our society”, but as an acquaintance observed when I said I thought McDonnell’s conference speech was a breath of fresh air: “But he still goes on about the deficit, and you told me the deficit was not the problem!”
Quite right. It was not the problem. It was the solution.
The deficit was the consequence of the banking crisis, not of Brown’s policies. When the banking crisis led to the collapse of demand in the economy in 2008-2009, the deficit was necessary to prevent the fall from becoming even steeper.
There are those who say that recent revisions to the statistics mean that the crisis was not as bad as some made out.
To them I offer the words last week of Joe Grice, the chief economist at the Office for National Statistics, who commented that it “remains the sharpest downturn and slowest recovery on record”.
When recoveries are slow, deficits come down slowly.
I suspect that McDonnell feels that, because there is such widespread misunderstanding of this, he has to pay heed to popular opinion and sound more “orthodox” than he really believes is necessary.
But at least he is putting the emphasis on attacking what “austerity” actually means in practice.
Whether or not the Corbyn team wins the confidence of the electorate it promises to be a very strong opposition on the economic front.
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