Pre-Budget Report

It will not help the job market—[Interruption.] Unlike the Tory Front-Bench team, I am not living in a world of fantasy. It will not help the job market, but it is a better proposition than what we have heard from the Tories. There should be no question, in my opinion, of making cuts in public investment until the economy is well on the way to recovery and the joblessness rate is way down from what it is now. Apart from the cost of bailing out the bungling bankers, the main cost of the recession is the result of the reduction in economic activity. We are not producing all the goods and services that we are capable of producing. The economy is not fully operational and the best way to clear the deficit is to get the economy working at full capacity again. The only way to do that at this stage is to keep on pumping public money into the system until the private sector recovers. No doubt prompted by the recent disclosure of the official papers covering the first days of the Thatcher Government, the Tories, their media friends, the bankers and auditors and the infamously incompetent ratings agencies and their friends have started saying, "Well, yes, Mrs. Thatcher's policies may have been tough, but they worked. She transformed the economy." This myth—and it is a myth—is sadly subscribed to even by many people who should know better. The fact is—and it is a fact—that the average annual economic growth under the Wilson-Callaghan Governments who preceded Mrs. Thatcher was higher than the growth in the Thatcher years, so revered by the Tories and their City analysts. The Thatcher Government succeeded in creating a feel-good factor by spending the massive tax takings from North sea oil and gas and the huge capital receipts from the privatisation of electricity, gas, telecommunications and other industries. These one-off assets were squandered: they were not put into a sovereign wealth fund; they were not used for long-term investment in the country's future in new manufacturing industry, in science, in research or in education; and the money was certainly not invested in training, as apprenticeships were abolished. The Tory Government used it to fund tax cuts with massive tax benefits going mostly to the rich, which appears to be the Tory policy still. Contrary to free market economic theory, the Thatcher Government did not increase economic growth; they actually reduced it.