How The Labour Party Leader Ruined The UK Economy
The United Kingdoms Labour Party leader was elected to office in May 1997 with a 179 seat majority in the House of Commons. In turn, It transmitted a growing economy, falling borrowing, rising employment, a real golden legacy. Therefore after thirteen years of Labour rule, what’s their legacy? How should we tend to judge them? The landslide triumph of the then labour party leader Tony Blair, to the crushing defeat of Gordon Brown, thirteen Labour years saw an enormous shift in British policy that changed the face of Britain’s society.
Labour (as they normally do best) went on a vast spending binge and borrowed money, despite the fact that the economy was growing. It spent billions of pounds compared to what the opposition would have done had the Conservative Party won the 2005 election. It is, in fact, the will to borrow and spend that has sealed the fate of each Labour government in history with each Labour period ending in economic failure, delusion and of course high public borrowing.
Most of the expansion during the Labour years is derived back to a rise in public spending and a large increase in personal debt. Personal borrowing fuelled the housing boom and created an economic illusion that would of course not have lasted forever. Individuals felt richer and spent more. The economy grew to fuel a lot of consumption resulting in a lot of debt.
As David Cameron said in his Conservative Party conference speech on the 10th of October 2012, Labour is “the party of one notion, to borrow”. The Labour party leader has just one answer once in government and when in opposition, to borrow extra money.
The Labour Parties Economic Legacy
The Chancellor of the Exchequer (Gordon Brown) removed tax credits for pension funds on company dividends, effectively wiping out £75B of assets and destroying confidence for shareholders. Several corporations final wage pension schemes shut as a result. New accounting rules introduced by the government in 2001 hit the value of shares and inflamed the emerging pension crisis.
“It was the right decision for investment. it was the right investment for our pensions and the right call for our economy”
The Labour party leader had inherited a Golden Economic heritage of robust growth, growing exports, low inflation, falling borrowing, and falling unemployment. Labours first term in office was comparatively benign, however, seeds were sown and guarantees were made. Not least the National wage that hailed the tip of the narrowing deficit with the remainder of the globe and also the surge within the public sector to make up the deficit in economic activity and employment.
To that, his reply was: “What am I supposed to do about this? Write a thank-you letter?”
The Blair and Brown Delusion
GDP growth came from both increasing the general public sector and a debt-fuelled housing boom. Interest rates were kept too low, the government borrowed, despite the alleged boom, individuals borrowed within the naive belief that the Labour party labour had successfully abolished boom and bust, Brown’s phrase throughout his time as Chancellor of the exchequer. Personal debt hit record levels, individuals remortgaged their homes to shop for new cars, maintain their yearly or by yearly holidays and buy new kitchens. All consumption, the productive economy was, of course, unable to keep up.
The Labour party leader was hailed in 2003 as keeping the United Kingdom out of a recession which hit hard in Europe and the USA, but it was, the then spending spree on the back of the Conservative “golden economic legacy handed to the U.S. on a plate”. Buying themselves out of recession, with borrowed cash was one amongst Labours biggest crimes. It fuelled the idea that boom and bust were no more and created a dangerous notion that the money would never run out. It had been of course a self-serving act. Labour was passionate about maintaining its “economic credentials”. If it had been an alternate government there would have been natural paranoia regarding losing its recently found “economic competence” mantra that it might have allowed this to urge therefore out of hand? Uncertain, Labour required that money to pump up the economy as a result, it could not possibly administer over a recession four years into its office. It even cut the essential rate of income tax despite the fact that it had been borrowing which tax revenues were returning from unsustainable sources like stamp duty of house sales and the city of London.
All of Labours monetary growth was supported by building the general public sector and personal consumption. It couldn’t have enjoyed the tax revenues it did without personal consumption, and personal consumption was fuelled by personal debt as the productive part of the economy was obstructed by government borrowing, government regulations, and a growing government workforce.
The true annual average inflation figure for the 1997 to 2010 period was 6.8%, which includes house prices. Suppose you’re richer than you were in 1997? Then forget about it, as nearly impossible to shop for a house on one individual’s average wage. Britains growth was all engineered on debt, we could have consumed additionally, however it hasn’t been paid for yet. Britain’s households were expected to be no better off in 2015 than they were in 2003.
The Government borrowing was amongst the highest in the world in 2010, at 12.8% and only our debt profile (UK debt rolls over additionally slower than any other country) and therefore the undeniable fact that we are outside the European exchange have so saved the United States from another Labour evoked IMF bailout. The debt is £1TN and rising with the tax revenue that Labour relied on having dried up. As the pension crisis was never seriously tackled we’ve got many years of rapidly spiralling pension prices as the baby boomers begin to retire and draw their pensions.
Personal debt stands at around £1.5TN and therefore the overall total debt burden (public, personal, corporate, and financial) is the highest in the world at 950% of the gross domestic product.
The Dependency Culture
Its reduction policies destroyed the motivation to work and increased the notion of a dependency culture with even individuals earning up to £60,000 claiming benefits. Ministers saw nothing wrong in taxing individuals merely to convey them the money back as a tax credit, in fact, they experience embedding the “dependency culture” within the national mind.
It may also be argued that the billions of pounds overpaid in tax credits from 2003 to 2005 really gave enough of a lift to the economy to prevent the United Kingdom from getting into a recession. This meant that no brakes were ever applied to the economy for sixteen years reinforcing the false mantra that boom and bust had been abolished.
PFI (Private Finance Initiative), whereby the private sector is meant to produce public services and supply value for money to the taxpayer has in some cases cost the taxpayer twelve times as much with reports of hundreds of pounds to exchange lightweight bulbs and move beds in NHS hospitals. Poorly negotiated deals have left the taxpayer with a £60BN bill to pay.
Almost one million new public sector employees were taken on by the government throughout the period of the Labour party leaders rule, adding billions to future pension liabilities and massively increasing the scale and cost of the general publics payroll. Additionally to the current, public sector pay rises were considerably higher over the amount with some areas public sector pay is 30 minutes higher than the equivalent to local pay within the private sector. Of course, you’ll win a pay negotiation if you have got a sympathetic employer, in particular, the Labour Party!
Conclusion
We have just about recovered from the last Labour spending spree, and of course, it appears that the current Labour party leader is trying to repeat they’re proud past, with Jeremy Corbyn at the helm. Promising free tuition fees for universities, Pumping more money into the already failing NHS and of course the constant privatization of just about anything they can get their hands on. This has been just one page out of their disaster book. We’ll probably see the rest of their socialist crusade, in the near future.