I’ve already drawn attention to the Labour election manifesto of 1945 which introduced the full Welfare State that set this country apart. In spite of austerity and massive national debt forced by WW2, the Labour government that followed built the NHS and nationalised hospitals, built 800,000 homes, universalised and reformed secondary schooling, created a child welfare system, modernised industry with development investment, brought the Bank of England into public control. Clement Attlee’s government created social security and disability allowances, finally abolished the pernicious (Elizabethan) ‘Poor Law’ and gave people rights to State support through a National Insurance (NI) scheme, built a network of New Towns, and raised pensions. The public utilities (gas, water) were brought under public control to guarantee service for all, and the great industries which had only barely served the war effort were nationalised, too – steel, coal, railways, energy.
Anyhow, I’ve pointed to the language of that manifesto – direct, bold, aggressive, even. It talked of Tory sponsors as “plundering” the country, as being hard-hearted and pro-the rich. Here’s another taste. Look at this poster from 1945:
Well…March 2023 and the Tories are still plundering the country. Removing the upper limit of tax on pension saving and raising the amount the wealthy can pay into their pension from £40k a year to £60k is not just a massive bung to the wealthy, it also provides a vehicle by which massive pension sums can be passed on to children, thereby avoiding inheritance tax. For example, if a parent dies before the age of 75 the pension passes to a child or spouse at zero tax. (After 75 the inheritor pays whatever income tax they are normally liable for.)
But the rest of the budget carries benefits for the wealthy and big (not small) business and none for the public sector. Of course, much of the wealth of the working and middle classes comes in the form of public sector benefits and services. Cutting public services – as this budget continues to do in real terms – is cutting the assets of poor people. But it goes further – way further. The health of our economy and our continued growth depends, not simply on there being more money in the system (that’s potentially inflationary) but in intensifying economic activity and dynamism.
This is why the immediate post-WW2 period became widely known across Europe as the “economic miracle” – massive growth, modernisation and reform based on grants/loans/debt (including the US Marshall Plan). In the post-war years this (and other European countries) experienced average growth rates of 4.8% with low rates (2-5%) of unemployment. Robert Skidelsky calculates that the collapse of favourable economic conditions (the collapse of the Bretton Woods Agreement) and the introduction of right-wing monetary policies brought on by Ronald Reagan and Margaret Thatcher (in the Americas, known as The Washington Consensus) saw average growth rates fall to 3.2% and unemployment rise to between 7% and 10%. The Washington Consensus saw the death of Keynesian economic policy and a return to ‘the policies of plunder’ – low growth rates, low taxes for the wealthy, erosion of the Welfare State, a massive shift of wealth from cities to shires and the old enemy of the poor, deregulation.
This is where we are now.