A limited defence of Gordon Brown
Samuel Brittan Financial Times 06/06/08
"My understanding of an inclusive globalisation is that we must combine stability, free trade, open markets and flexibility with investment in equipping people for jobs in the future, principally through education. I hope in Britain we have prepared ourselves best for the global economic challenge, buttressing our policy for stability with a commitment to free trade, not protectionism; the most open competition policy in the world; flexible markets; and substantially increased investment in people through education and related measures."
These were the words in which Gordon Brown, when chancellor of the exchequer, described his beliefs in an e-mail to Alan Greenspan, former chairman of the US Federal Reserve, in 2007. There is no reason to doubt his sincerity. If communicating with a different audience he might have added a commitment to moderate redistribution. As he believed redistribution had become a dirty word, he preferred to talk about helping families with children and help to poorer countries. Whatever the words used, it is a more sensible form of redistribution than the traditional and often futile Labour attempts to soak the rich.
Faithful readers may remember that I would ultimately like to see an unconditional basic income - not a minimum wage - for all. But until this is affordable, credits related to family circumstances are surely a better use of resources than across-the-board benefit increases. And surely one should approve of in-work benefits for the lower-paid so that they are always better off than on the dole. The conditionality may have become too extreme and the system too complicated, but the ideas were pioneered by none other than Sir Keith Joseph, a Thatcherite before Baroness Thatcher.
The very rich may have got richer under New Labour. We shall know more when the Department of Work and Pensions publishes its latest income distribution report on Tuesday and the Institute for Fiscal Studies comments the next day. But these documents are unlikely to overturn an earlier IFS finding that, over the whole period since 1997, Labour's tax and benefit changes have increased the incomes of the poorest tenth, with the largest increases going to pensioners and families with children.
We can all carp over the details of Mr Brown's e-mail to Mr Greenspan. Education so easily becomes credentialism and I have yet to be persuaded of the value of most government-to-government aid. But, by and large, the beliefs just cited are - discounting a few superlatives - my beliefs and I would guess those of many Financial Times readers. I see no reason to turn against the prime minister because he has struck a bad patch in opinion polls, by-elections and relations with the media. I have always advised politicians who run in terror muttering about the Daily Mail to treat the media like a fierce dog that will not harm you if you show you are not afraid of it.
Given a broadly appropriate policy framework, why all the discontent? It has little to do with rumours about relations within the cabinet or the grumbles of senior civil servants. They are served up by the press and television for the entertainment of citizens whose real concerns are with more mundane matters such as increases in energy and food prices and rising council tax. Where the prime minister errs is in not emphasising how many of the pressures come from abroad. He can no more fix the price of oil or of imported agricultural produce than King Knut could control the waves. And those who would like a stronger energy or environmental policy should stop complaining about petrol duty.
Sceptics should look at the final statement of the recent International Monetary Fund mission to the UK, which talks of "strong policy frameworks which provide a strong foundation to weather global shocks". It maintains, however, that activity needs to slow down to help rebalance the economy - in other words to shift resources to net exports. It adds that the real depreciation of sterling should make the shift less painful. It is too diplomatic to say that this has been possible only because Mr Brown has kept Britain out of the euro. In any case it sees no scope for further bank rate reductions in current conditions and can even envisage increases. Its main suggestion is that medium-term spending limits should take priority over the so-called golden rule of budget balance - to borrow only for capital investment over the economic cycle - whose interpretation has become so confused.
Mr Brown's main economic mistakes have arisen when he has succumbed to populist temptations. The whole fuss about the withdrawal of the 10p starting rate for income tax took place only because he was desperately looking for revenue to finance a 2 percentage point reduction in the headline basic rate of income tax, a rate that matters much less than politicians and journalists suppose. But, far more important, he has followed Tony Blair in gesture politics, such as the proposed 42 days' detention for terrorist suspects, designed to steal Tory clothes over law and order.
None of this means that I shall be canvassing for New Labour at the next election. Both Mr Blair and Mr Brown have too much liking for control-freak policies in everything from schools, obesity and smoking to business policy details. Neither has had any feeling for what John Maynard Keynes once called the "non-agenda" in which governments should not interfere. But one can maintain this philosophical distance without silly carping about areas where almost any government would have to do the same.
|Published on www.samuelbrittan.co.uk
Contact - samuel dot brittan at ft dot com