George Freeman is a co-founder of the 2020 Group, co-chair of its Innovation Economic Commission and MP for Mid-Norfolk.
Four years on, it’s easy to forget how many armchair critics there were of the Government’s plan for fiscal consolidation back in 2010. With the economy now growing strongly, where are they now?
Remember “too far, too fast”? Remember Ed Balls’ desperate boundary-style hand gestures at every PMQs? Remember Labour taking up the “triple-dip” recession in 2012/13. Labour’s incompetent and pessimistic insistence – so befitting their stewardship of our public finances – that the recovery really had been choked off.
Though countries around the world were being hounded into default by the bond vigilantes, Balls and the Keynesians urging us to tap up the bond market for another IOU as if that would somehow see us through.
Balls was the architect-in-chief of the banking crisis and economic crash of 2007-9 (the biggest recession, remember, since the 1930s – wiping off seven per cent of UK GDP) when he was Brown’s chief henchman in the Treasury. With characteristic stubbornness, it is clear that he has not lost his ability to get it wrong in Opposition.
Its true that he wasn’t alone. As Keynesians and third way socialists around the world joined in chorus against George Osborne’s cuts to public spending, we should remember some Conservatives were a bit quiet too. As someone who was on the barricades in 2010-11, it’s amusing to see how many people have conveniently forgotten the fashionable doubts they held then.
In time, the Chancellor’s “austerity” budgets of those years, and this year’s ground-breaking reforms to pensions, will come to be seen as historic as the early Thatcher/Howe Budgets of 1980-81.
Of course, everyone recognises there is still more to do. Such was the scale of the crisis we inherited, it will take many more years before we have got the public finances back on to a truly sustainable footing. We need to export more, invest more and save more. We need to build on the fantastic news that £14 billion of trade deals were signed recently between the UK and China, and fully embrace the opportunity of emerging markets. The job of pulling the UK out of the worst financial mess ever bequeathed to an incoming administration is not by any means over.
The task of this Parliament was to prevent that inheritance triggering a Greek style crisis of “stagflation” by setting a clear long term plan to clear up Labour’s mess. The task of the next will be tackling the structural weakness in the economy, public sector and welfare and education system which left so many caught in poverty and welfare traps whilst Brown and Blair”s New Labour elites prospered – captured for ever in Peter Mandelson’s hubristic pronouncement that Labour were “intensely relaxed about people getting filthy rich”. They should have been – like all good Tories – outraged by the extent to which failures of government were holding millions back.
Osborne’s landmark reforms to tax and pensions, and landmark “Northern Powerhouse” project to connect our northern cities; the Herculean efforts of Lord Heseltine in triggering a transformational renaissance of regeneration and infrastructure leadership in our great northern cities, and Davild Willetts’s leadership of twenty-first century Innovation, mean it is the Conservatives who are now showing how robust public finances help to build a long term recovery for all regions and income groups in the UK.
But let us never forget: on the crucial question of this Parliament – whether to take the difficult decision and tackle the structural deficit – it is Labour who now stand firmly on the wrong side of history.
As the Prime Minister has said, repairing the public finances was never just an obsession with gilt yields. It’s about transforming lives:
- Over two million more private sector jobs (five for every one lost in the public sector).
- Over 400,000 more businesses started.
- 600.000 new apprenticeships.
- 25 million people with more money in their pockets
- Three million taken out of tax altogether.
- The UK now the fastest growing economy in the G8.
But this is absolutely no time for triumphalism. We still carry £1 trillion of Labour debt and as, the Chancellor made clear in the Budget, we will only start paying it off after another five years of austerity. But as the election looms it is time for the truth: Labour called it wrong on every major economic decision of this Parliament.
As we go into the 2015 election campaign we must make sure we never let people forget it – and show why we need the mandate to build a resilient and enduring recovery.