Brown and Blair Commons Square

Some inheritance – 24 years on, decline is everywhere

WE ALL SUFFER selective amnesia, ‘rose tinted glasses’ if you like. For instance, the past may be a foreign land and I recall it sort of worked. Britain was a genuine envy of the world.

If we go back to the year 2000 most would say things broadly were OK. Public services functioned, taxes were moderate, the policy debate was largely contained around the introduction of student tuition fees, economic policy and the state of public services, although quietly – through a new legal settlement, a growing unelected quangocracy and changed cultural debate – the building blocks were being put in place to undermine the edifice. Nevertheless, in 2000, only three years into Tony Blair’s first term as prime minister, the UK was fairly content. Britain was not an agitated, depressed place.  Blair was subsequently re-elected in 2001.

Today, 24 years on, our country has declined in almost every respect.

Opinion poll after opinion poll suggests a total lack of confidence in the services provided, be it the NHS, policing, local authority services or the like, tax is proportionately at the highest level since 1948 and politics has spilled from merelyeconomics and services to almost every aspect of life in ways that would have seemed impossible just a few years ago. There were no 20 mph speed limits, no cancel culture and a general degree of respect to get on with one’s life as how one saw fit.

Today, outside a few increasingly rarefied gated communities,  signs of decay are everywhere but as a small cameo of degeneration I had occasion to drive through the east end of London on a journey back from Stansted. I was shocked and saddened. Mile after mile of mindless graffiti defaced much of the route. And it was mindless. ‘Banksy’ may be a vandal but at least there is an attempt at wrongheaded satire and artistic merit. This was an urban scrawl of nothingness.

It’s tragic. It destroys pride, it undermines self-worth and is a symptom of a bad place. It’s not clever, uplifting, or satisfactory. Do the authorities do anything about it? No, if anything it is tacitly encouraged as some odd form of self-expression, a rouge individualism and a mirror of a warped view of civil society.

Graffiti is a symptom but let’s look at the big picture. What has this Government and Blair/Brown before it bequeathed the nation?

Twenty-five years ago Britain was the genuine global success story. Our public finances were in good shape, taxes were one of the lowest in Europe, growth was decent, the rule of law was broadly accepted and while of course there were problems – there always will be, it’s the human condition – things worked and people were broadly content.

So let’s contrast this with today looking purely one dimensionally at economic picture using Office of Budget Responsibility (OBR) data adjusted for inflation.

In 2000 spending was £636bn in real terms, or £22,000 per family. Today it has virtually doubled after adjusting for inflation to £1216bn, or almost £44,0000 per family. But the narrative is there has been austerity. It’s not enough and that’s the problem.  But what does your family get for the extraordinary figure of £44,000? Worth it?

We have experienced a spending explosion many call austerity (!!) yet the national debt too has exploded. In 2000 the national debt was £564bn. Today it is £2770bn, a five-fold increase in just one short generation. This is glossed over as if it is normal and it’s nothing to worry about. It’s under control. But it is not. Never, outside war has this occurred before on a scale remotely of this magnitude.

The scale of the spending increase, for no obvious benefit, is extraordinary. Public spending accounted for 32% of economic output in 2000. Today it is 46%. This too is seen as inevitable and not a problem. But simple maths shows almost all the growth over the last 20-odd years has been through state spending at the expense of the private wealth creating sectors. We have swapped a relatively dynamic enterprise society for a largely statist, highly regulated and failing public one. It’s not either or; the wealth creating sector has been crowded out.

Since Johnson and subsequent prime ministers came to power in 2019 580,000 additional public sector workers have been ‘employed’ while the private sector has shed 370,000 jobs. Another manifestation of the decline of private enterprise.

Taxes in 2000 averaged 32.5% of GDP. Today they are 36.5% – a proportionate rise of 13% and a greater increase than any other European nation, save Greece, and still the Government manifestly fails to balance its budget.

In 2000 the population was broadly stable. Since Johnson was elected gross migration has exceeded six million. This is seen by some as a blessing, but if it is it has undermined wages as growth-per-head has declined over the last five years at the most precipitous level in more than a century.

And despite the increase in public debt, taxation and the growth of the state, if that was not enough for Government over the last 20 years, currency has been devalued by printing over £900 billion (or £32,000 per family) via Quantitative Easing (QE) with effectively near-zero interest rates for a decade, distorting the real economy. Has the magic money tree resulted in Arcadian utopia and prosperity for all? I leave that for you to judge.

The narrative is we’re recovering. Growth has returned and the policy is working. Well we have become used to their narrative; but all is not well. Far from it.

The political debate is dire. Labour says almost nothing and wrap itself in banners of the Union Flag in an attempt to conflate its leadership as patriots while the Tories say ‘trust us, we’ll cut this tax, offer motherhood and apple pie’ – despite doing the exact opposite while in power. It’s delusional.

On every matrix this country is being strangled, be it by tax, preposterous and unaccountable spending, increasing work-lessness (over nine million of working age do not work), a sick society with an exponential increase in mental health claims and a vindictive regulatory morass where effectively Government says we do not trust you.

The almost certain winners of this election, Labour, has no answers. While it would be hard to imagine Starmer’s crew could be more incompetent than the current lot don’t bet on it. They seek, in what seems their flagship policy, to tax one of the few remaining genuine centres of excellence in this land – private education – in a policy which is not only vindictive and against natural justice (parents already pay twice, once for state schools they don’t use, and then privately for independent schools) – but will surely be counter-productive for all pupils too.

And what else might Labour tax? There will be no wealth tax, we’re told, but we’ll see. There’s an ominous silence on Capital Gains Tax, property taxes and green taxes.  It will be counter-productive. In each case all that will be achieved is to crush growth and enterprise while encouraging further decline.

I wish it were not so but the groupthink in the corridors of power from those in the OBR to the Bank of England, from the Treasury to much of the academic and think tank establishment cannot look past their noses. They have missed the big picture, focusing instead on the short term and micro management (which they are not very good at). They are like, from John Bunyan’s The Pilgrim’s Progress, ‘the man with the muck rake’ – only looking down, missing the celestial crown offered above.

We are in for tough times. It is entirely self-inflicted by a foolish political class. But whether they like it or not they cannot defy the basic laws of economics indefinitely. Indeed we are already in the early squalls of the storm.

Despite the narrative parroted in the media, Britain is getting manifestly poorer. Standing still means falling behind, and we are barely moving at all. Only measuring the economic effect the scale of the failure is massive. If we compound that with the social and moral failure it is catastrophic.

To put the scale of this failure in context, from 1955 to 2010 GDP growth per capita (per head) averaged a very consistent 2.3%. Today, according to the ONS, GDP per capita stands at £33,271. If the long term trend growth had continued since 2010 current per capita GDP would be some 35% higher at £45,062. That is a staggering underperformance. In an age of extraordinary technological advance it is breath-taking in its failure.

I should love to report all is well. It is not. 25 years of the delusion of a quaint belief that the centre knows best and of socialising risk, spending and culture has resulted in a monumental failure.

Politicians talk of the existential threat to this land and the West in general from external foes. May be, but the greatest foe and risk to our freedom and prosperity is our own delusional policy choices, economic, cultural and moral. The die may be cast for this election but the challenge is only just beginning. Gang warily.

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Photo courtesy of BBC  ‘Blair & Brown: The New Labour Revolution’ Series 1 Episode 3

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