The death of New Labour?
Posted by Matt Walker on October 31, 2009
“The reports of my death are greatly exaggerated,” said Mark Twain after reading his own obituary in the New York Journal. Wisely, I am reluctant to exaggerate the death of New Labour. However, following the credit crunch and subsequent recession, several of the major policy positions New Labour based itself upon have been severely challenged.
Free markets – much of the domestic banking system, including Northern Rock, has been nationalised. Furthermore, Gordon Brown’s light touch regulation of the banking and financial sectors is going into reverse.
Public spending – for the first time in 13 years, the Labour leadership have been forced into discussing public spending cuts.
Taxation – after promising for years not to have a higher rate of tax on top earners, so as to not “penalise success”, a top tax rate of 50% will be in place next April.
Borrowing – Brown’s golden rule of public finance was to not borrow money across an economic cycle, except for investment in public infrastructure. The recession has blown this out of the water.
Admittedly, these policy positions have been forced upon the Labour Government. They haven’t, for example, nationalised much of the banking system out of choice. Nevertheless, Labour are unable to occupy the policy positions they have done for over a decade. The New Labour electoral coalition was based upon middle class acceptance of higher public spending and help for those less well off, in return for rising house prices, lower taxation, and rising living standards. That is no longer possible.
The New Labour narrative served them well 1994-2008. Now a new narrative is needed for the coming decade.