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Oberon Houston: A journey through the looking glass

CountdowntobrownAt the 2005 Labour Party spring conference, Gordon Brown delivered an impressive speech to Labour activists. It combined, in equal measures, self congratulation and scathing attacks on the Conservatives. Not much wrong in that, it’s a politician’s lot to do this, but senior Labour politicians have taken these tricks of the trade to new and uncharted territory for British politics. To demonstrate, I have extracted key quotes from his speech and analysed what he said against reality. So let us go on a journey through the looking glass into Brown’s world, and begin with one subject that we may prefer to avoid, the ERM. Gordon Brown said in his speech:

“Today Labour is now the only party trusted with the economy. I give you this promise: With Labour, Britain will never return to the mistakes of the ERM.”

The ERM debacle was an episode that rocked public trust in the economic competence of the Conservative Party. Yet, amidst all the tears and recrimination, one man would emerge from the fallout a political giant, Gordon Brown. Ever since that fateful day, he has doggedly reminded the electorate again and again of the economic incompetence of the Conservatives, and contrasted this to his shining record in office.

As promised however, the truth is very different to the version Gordon Brown invented for himself, and here it is:

April 1992 saw the fourth Conservative General Election victory in a row, but by the end of the summer, John Major’s Government was in trouble. Despite a pledge to reduce taxes, they were actually going up, and spending cuts were about to be implemented, furthermore, unemployment was rising and property prices were falling. This was then turned into a looming crisis, as sterling was hard-linked to the ERM, which restricted the Government’s ability to deal with the situation. Devaluation was the cure so Norman Lamont sought the required assistance from the German central bank, but was snubbed, leaving him to the mercy of speculators in the city. Politically however, this was an unusual situation. Norman Lamont’s crisis was also the crisis of the Shadow Chancellor, Gordon Brown. Brown had enthusiastically supported ERM entry, and even baffled everyone in his own party by refusing to entertain the notion that devaluation was the solution to the crisis.

Sunday 6 September 1992

“There are those, like Lady Thatcher, who believe that Britain should devalue and turn its back on Europe and the ERM, with all the harsh consequences that would ensue.”

- Gordon Brown, Sunday Express.

Tom Bower’s biography of Gordon Brown tells us what really happened on Black Wednesday, 16 September 1992:

“Late in the afternoon, Brown was in his office in 1 Parliament Street, overlooking the Treasury building. That morning he had still been convinced that the government would remain in the ERM, helped by Germany’s revaluation of its own currency. He would be vindicated he reassured John Smith, despite his critics including Ken Livingstone, who again had advocated devaluation. Around Brown were his advisers Neal Lawson, Michael Wills, Lord Eatwell and Geoff Mulgan. The tension was high. The constantly updated television news bulletins reporting Norman Lamont’s battle to save sterling were unnerving: If Labour had won the election in April; Brown would have been the focus of the TV cameras outside the Treasury, and the target of baying Tory MPs inside the commons. His plight was better than Lamont’s, but the politician whose talent was to ridicule his opponents knew that he was vulnerable to mockery. He had allied himself to a policy which, to his amazement, was collapsing - and worse, he did not understand the reason.”

Many in Brown’s shoes would be daunted by this serious turn of events, but not he, and you have to admire the sheer temerity of what he did next. Cancelling his Newsnight appearance, where he would be forced to defend his support for Government policy over the ERM, he instead called a press conference, where he doggedly attacked the Tories for ‘this current mess’ and claimed that Labour had never endorsed the policy. In spite of everything, Brown managed to turn the ERM debacle from disaster into a political coup. The truth, as it usually is, was left behind in the ditch, as the public rightly vented their spleen on the Major Government. However, many in the Labour Party knew the truth, and furthermore, thought it strange when they heard that Gordon Brown was telling Paul Routledge in 1997 that he had actually foreseen the ERM crisis.

The very fact that he makes the statement that he has ‘banished economic instability’ from macro-economics is in itself ludicrous. If it were true, Gordon Brown would be the first man in history to single-handedly control a liberalised market. A tall order for any mortal, but especially tall for someone that studied history at university, spent the whole of his working life in the Labour Party promoting socialism and has never once worked in a private business. The truth? Well, when Gordon Brown took office, Treasury officials compiled a state of the nations finances, one added, “these are fantastically good figures”, Brown's reply? “What am I supposed do with this, write a thank-you letter?”

“And let us tell people - British inflation with New Labour policies is far less than half what it was under the Tories. British interest rates today with New Labour policies less than half the average under the Tories. British mortgage rates with New Labour policies less than half the average under the Tories. A British economic record - a Labour economic record.”

And continues with;

“And in contrast to the Conservatives who cost us three million manufacturing jobs and destroyed one million businesses, we will, as we review support for manufacturing, leave no stone unturned to build for Britain modern manufacturing strength.”

This is a classic Brown statement. Boast, whilst simultaneously taking a blunt instrument to the Conservatives. However, with Brown, you need to remember his recipe has only one part truth to it. In this case, it is that manufacturing jobs did go down under the Conservatives, but this was as a result of market forces, where developing countries were manufacturing low-end goods cheaper. What the Conservatives did in response was to build up the services sector and high-end manufacturing, and this was so successful that Britain soon became a world leader in these areas. What Brown fails to mention is that under his leadership, manufacturing have lost a further million jobs, but now they are not the low-end jobs, but increasingly the high-end technology jobs that are disappearing overseas. Britain still has huge potential in manufacturing. The leading edge of the world car industry, Formula 1, is completely dominated by British technology. The leading edge of world aircraft technology is again dominated by British technology; the most complex sections of Airbus are designed and built in Britain. In Bio-technology, Britain again leads the world. Yet, Brown has placed British innovation on the downward slope, here is what Sir Digby Jones, Director General of the CBI, has to say about Labour’s achievements:

“The UK has lower levels of investment in machines and R&D than most of our close competitors, and we also have lower capital stock. The EU is China’s biggest trading partner, but it is a market that others are exploiting much more effectively than the UK, Germany exports seven times as much to China than we do and France twice as much”

“How can an enterprise economy break through when the government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk averse by the day?”

Willetts_5Under Labour, Britain has slipped ten places in the world competitiveness league, and this can be traced right back to No.11 Downing Street and Gordon Brown. When I discussed this with David Willetts (via email), he had the following to say:

“Despite the Government’s upbeat rhetoric there are a number of worrying indicators. The OECD figures on productivity per hour worked show that we are well behind our competitors in the G7. Moreover, business investment is at a record low.

We must:

1. Invest in human capital
Education and training are vital if we are to hold our own as a major economy. We need to introduce more school choice and make the National Vocational Qualification system more genuinely vocational.

2. Increase productivity
The working environment must be one in which people are used as productively as possible. The public sector’s record in this regard is particularly dispiriting.

3. Provide a better framework for investment
The regulatory framework must be neutral and able to treat all providers of capital fairly.

4. Extend the European markets for services
We must push forward the EU services directive. The services sector makes up two thirds of the EU economy and it is still constrained by national borders. This means that, despite our international-level expertise in the area we have a services deficit with the EU. Opening up these markets would provide valuable room for expansion. It is a disgrace that the Government has not managed to make any real progress on this during the British presidency.

5. Fight for real free trade
The European Union has maintained an absurdly protectionist stance in the face of growing competition from Asia. It is the poorer European consumers who suffer most from this approach as it deprives them of the ability to buy cheaper products from countries such as China.

6. Exploit new internet markets
The internet could become the best forum for the exchange of goods and services. One only has to look at the success of eBay and of the online poker exchange to see the potential for growth in this area.

These are a selection of the steps that we should be taking to ensure we are positioned correctly for the future. Trying to stand in the way of changing markets by resolutely clinging to companies that we can no longer afford is only a remedy for delaying disaster. We need to follow innovative thinking and look to where we will need to be in the future not where we needed to be in the past.”

David’s second point regarding public services brings us to another major area of influence for Brown. Many say that you cannot deny Browns good intentions regarding public services; however I suspect he is deliberately using them as a political football. Let us start, again, with what Brown said to his troops before the last General Election in his conference speech:

“And let the message go out. Every day of this campaign in every constituency every Tory candidate will be asked which nurses, which doctors, which teachers which carers, which home helps will be sacked? And which hospitals, schools and public services will be closed down?”

“This will be the central dividing line at the election between a Conservative Party taking Britain back and plans deep cuts of £35 billion in our services.”

Again, note here that there are no punches pulled with Brown, and one can grudgingly admire way he relentlessly attacks us, urging activists to scare the electorate witless over what will happen if a Conservative Government is elected. With Brown, reality is irrelevant, he creates an imaginary world where the sun shines on Labour and the Conservatives are more than just wrong, they are, at heart, evil. We ended up in a ridiculous situation where, at the last general election, public spending would grow under Conservative manifesto commitments, yet Brown ignores this and starts telling everyone that we will sack every doctor in the UK. Here it is in his speech:

“And for public services the central truth of this election is that the Tories want to find £35 billion pounds of cuts. £35 billion. Not our alleged figure, their admitted figure. Let me give you a sense of the scale. You could sack every civil servant in the land and to reach £35 billion still have another £20 billion cuts to make. £35 billion is so massive a figure that it is the equivalent of sacking every teacher in the country, then sacking every GP in the country and then sacking every nurse.”

He ignores the fact that the Conservative plans are fiscally responsible, do not involve any cuts, would not require increases in tax or borrowing, and coupled with reforms would result in better public services for all. The gulf between reality and Browns world does not diminish when he starts talking about his record in office either.

“And a Labour government taking Britain forward which on a platform of stability will reform and renew our hospitals, schools and public services and I am proud to say spend by 2008 £60 billion more.”

Despite the extra billions he has spent on public services, there has been no perceptible improvement and no reforms, in fact the exact opposite has occurred. Daily complaints are going into the Treasury from other departments that roads, railways, schools and hospitals are actually getting worse. As taxation soars to 42% of GDP, the Audit Commission finds that the number of managers in the NHS has increased by 46%, yet productivity levels are falling so fast that the number of patients being treated is actually going down. The situation is getting so obviously bad that Tony Blair has finally stepped in on Brown’s turf and blatantly advocated reform to the NHS and Schools that are based on - yes - established conservative policy. Despite his boasts, Brown has not reformed anything; a man with no previous experience of organisational management has grasped the responsibility of Britain’s public services and botched it up. Tom Bower’s biography of Brown sums up the reality of his ‘reforms’ thus:

“In the 1997 election campaign, Labour had warned the country that there were only ‘fourteen days to save the NHS’, and then ‘twenty-four hours to save the NHS’. Brown had blamed the Tories for wasting £1.5bn in ‘costly red tape’ and a ‘vast bureaucracy’. Within two years, he said, Labour would cut that waste. Two years later the opposite had occurred. Frank Dobson, the secretary of state for health was warning of a self-created crisis. In the name of ‘modernisation’, his principle reform had been the dismantling of the internal market the Conservatives had set up. Despite huge increases in funding, there was mounting evidence that the service was not improving. No one in the Treasury could accurately explain the NHS’s problems and offer ideas for improvement. Public pressure demanded a response, but the Tories’ solution – patients’ choice and independent hospitals – was unacceptable. Despite his assertion in ‘The Times’ that he had terminated the ‘Whitehall knows best’ syndrome, Brown could only imagine the NHS managed by central government.”

Brown’s speech continues with the ‘causes that brought him into politics’:

“The cause of full employment.
Renewing our public services.
Extending enterprise into places left behind.
Eradicating child and pensioner poverty.
Equipping every member of society to fulfil their potential.
Building and sustaining a progressive consensus making Britain fully a community again.”

Labour’s record on employment is, again, rather dubious, with 2.7million people hidden from the employment statistics on incapacity benefit and recent research suggesting that half of them are available to work, 40% immediately. He also ignores the fact that unemployment levels have now risen for 11 months in a row. We have already discussed his ‘renewal of public services’, but let’s look at the next statement “Extending enterprise into places left behind'. Gordon Brown is ignoring reality when he says this, and here is the evidence: As he is making this claim, the CBI is saying that the exact opposite is occurring:

“While London has enjoyed a 16% rise in business set-ups since 1997, Wales has lagged behind with just 2%. The South East showed a 15% rise in small businesses, while Scotland only had 5% and Northern Ireland 6%. This is clearly unsustainable and the government must determine what is inhibiting entrepreneurs.”

"New businesses are the key to creating employment, wealth and long-term prosperity - but there is a growing divide between London, the South East and the rest of the UK. Years ago the number of businesses in Wales was equal to about a third of the businesses in London - that figure has now shrunk to a quarter. The government must realise that there is a huge problem and take steps to address it."

- Sir Digby Jones.

Eradicating poverty? Research from the Prudential found that 17% of pensioners are scraping by on less than £5,000 a year, while 27% are struggling on between £5,000 and £10,000 – that is nearly half of pensioners living in Britain today. I doubt the Labour rhetoric will wash with them, or those across the country that have the choice of selling their home because of soaring Council Tax bills, or going to jail over it. Or those that face poverty in the future because of his disgraceful handling of pensions policy whilst in office.

The children of families that have been plunged into poverty over the Tax Credit fiasco Brown presided over, may not recognise his statements as remotely relevant to them, and in the years to come, I doubt they will look back and thank him for the way he has used PFI to mortgage huge debts to them for his public building programmes. And possibly he hasn’t seen the latest research showing that the gap between rich and poor is widening in Britain under Gordon Brown, and that many more people under Gordon Brown’s Labour Party are finding that their lives consist of being trapped in a welfare state, which is a strange way to “equip every member of society to fulfil their potential”. I also find it hard to see that Labour and Brown are ‘strengthening communities’, by opposing localism in favour of centralised monolithic state controlled departments reminiscent of the Soviet Block.

Gordon Brown continues:

“Let us also tell the British people that even as we face the relentless challenge of competition from Asia which means all of us will have to adapt and change: as long as there is poverty, unemployment and deprivation; as long as one community, one family, one individual is unjustifiably denied opportunity, we will not rest or relax.”

Stirring stuff, but just as the rhetoric was delivered; a report on social mobility commissioned by the LSE was published, which said that in a study of eight European and North American countries, social mobility is lowest in – Britain, and furthermore, continues to decline faster than anywhere else. Sir Peter Lampl, chairman of the Sutton Trust, a charity dedicated to opportunity for all, commented that he found the findings ‘truly shocking’.

Undaunted, Brown goes on:

“And I can tell this Conference our third term promise to the British people, for the first time in Britain not just some but every teenager after 16 the right to education, training or work, in the next parliament no teenager should ever again be unemployed. For the first time in Britain every adult the guarantee of training for work, no adult ever again denied the chance of basic skills for work. “

Just at the Financial Times reports:

“Long-term youth unemployment has returned to about the level it was when the government's flagship New Deal was introduced in 1998, casting doubt over the value of the £5bn benefits-to-jobs programme. The sharp rise in long-term youth unemployment, which has increased by 60 per cent since its low point two-and-a-half years ago, was revealed by figures from the Office for National Statistics yesterday.”

Ignoring the seriousness of the situation Gordon Brown’s rhetoric reaches its climax and shoots off at a tangent to reality:

“Our promise - opportunity, prosperity, security not for some but for all.”

Tom Bower’s book on Gordon Brown ends with this:

“Even after he has spent eight years as Chancellor, the substance of a Brown government remains an enigma, reflecting the unresolved conflicts bedevilling the man himself.”

One wonders what he will do next? Incredibly, nobody knows what his intentions are, as what he says and actually does are not even remotely connected.


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