Save a thought for Gordon
The evaluation of Gordon Brown and his time in office will be long, full of rancour and riven with controversy. Already, very learned people are painting his time in office with the brush of incompetence and mismanagement.
This would not be an entirely fair assessment of the man.
At the risk of looking like his apologist it’s worth bearing in mind some the changes that Brown brought. Who would now argue for returning the setting of interest rates to politicians. Brown handed that work to the Bank of England shortly after being elected in 1997 in an effort to establish a ‘transparent, accountable and predictable monetary policy.
His other innovation was to set Budget rules, or the fiscal rules, which, for a time, while they were adhered to, served the UK well.
Brown also transformed the way Labour thought about the economy. In fact he embraced the markets convinced that they were a ‘powerful means of advancing the public interest’.
This was all part of Brown’s understanding of the economy being ‘political economy’. His scepticism of the euro contributed significantly to keeping Britain out of the single currency when it was introduced in 1999, and his work placed the Treasury and spending controls (or constrained discretion, as it became known) at the heart of directing long-term spending controls on government departments.
Things changed as Labour’s time in office wore on. At first Brown dramatically cut borrowing and even produced a Budget surplus. But, after a change in tack to spend more on public services, the borrowing increased steadily. In 2007-08 the deficit was expected to be £35bn, a large but otherwise manageable sum, if the country avoided disaster.
Experts also regarded his early Budgets as masterful. They paid off debt and yet made many people feel untouched by an increase in taxes.
1997, of course, became notorious for the windfall tax on utilities but more so for the removal of tax credits on pension funds an act which some have never forgiven. Brown also set about dropping the rate of corporation tax. Brown leaves the rate at 28% down from the 31% at which he found it. He also cut the basic rate of income tax. But the rise in national insurance that so much debate focused on in the recent election is not the first to come from Labour which announced increases in 2002.
What dogged Brown as chancellor was his failure to consult on key tax changes, a penchant for announcing the same measure more than once, his impulsive need to invent or change policy on whim, the increasingly complexity of the tax system, the uncertainty faced by business and Brown’s overarching control of public spending which seemed to leave many cabinet colleagues detached from their own Budgets. Overshadowing all of that was his ambition to be Prime Minister.
Once he did become PM his successor Alistair Darling was dogged by bad luck. The loss of data discs from HMRC marred the start of his time at the Treasury and then both he and Brown were wrong footed by the Tory intention to raise the inheritance tax threshold and the argument over non-domiciles.
So disturbed was Gordon Brown he called off his planned election.
The critical time came during the credit crunch and the bail out of the banks which resulted in vast public borrowing. By 2008-09 the deficit was at £95bn and then climbed again to the current level of £166bn as the true implications of the bank bail-outs became fully clear. The country also entered a painful recession.
It is of course arguable that without that action the crisis would have been much worse for the UK. We avoided a collapse in the banking system which could have caused untold damage to the economy and society.
The cost was huge however and the argument goes that the economy was ill prepared for such a shock and such an enormous increase in public spending.
Brown’s time in charge has been about much more than the crisis and the economic crisis we still find ourselves in.
But it’s on that issue that Brown will be forever judged by most commentators who find it difficult to cast their minds back further than the last Budget.