Debunking the myth that Tories are superior to Labour using the economy

Boris Johnson told the Confederation of British Industry that, unlike Labour, the Tories “believe emphatically in fiscal prudence”. Mainstream media have a tendency to agree. Channel 4, for instance, includes a fact-checking page for the claims of both sides. The outcomes lean towards economic Conservatism. The general public seems to agree, too, having a majority of voters “trusting” the Tories more than Labour with their money.

But this unnuanced picture is mostly
establishment propaganda. With the general election underway and also the Tories
going big on their supposedly superior economic record, it's worth seeing how
the facts contradict the perception.

Recessions and coffins

Referencing worker-strikes during Labour's Winter of Discontent (1978-79), Dominic Raab warned voters when Labour gets into power there will again be coffins within the streets and rubbish piled high.

Recessions really are a measure of
overall economic performance and viability. The fact is that since 1955, when they
were first measured, there have been 14
recessions and contractions (by year or quarter) and 10 of them
occurred under Tory governments. Let that sink in. So, if Labour are extremely bad
with the economy, why convey more recessions occurred under Tory governments–and
in proportion to their number of years in office?

Far from Labour setting a
trend of reckless borrowing, it was the Tory PM Harold Macmillan who first
attempted to borrow in the International Monetary Fund (IMF) in order to save the economy
from pound-to-dollar inflation caused
through the Suez crisis (1956). The IMF said “no” and the economy
contracted. Fast-forward to 1976, to the aftermath from the oil crisis. The best
wing from the Labour party convinced
PM Harold Wilson to complete what the Tories had attempted: to borrow from the IMF. The
aim ended up being to reduce the UK's deficit. This time, the IMF agreed, but imposed
harsh public cuts, which contributed to the widespread strikes and PM Jim
Callaghan's Winter of Discontent.

So, Labour gets the blame for doing
exactly what the Tories had attempted two decades earlier.

The global crash

Despite the truth that there
were four recessions and contractions
(by year) during Margaret Thatcher's term alone (1979-90), and three during
Major's (1990-97, including Q4 of 1990), Labour continues to take the blame for
the global economic crisis in 2008,
even though Labour was at the time pursuing the very “light touch” financial
regulation favoured by Tories. The “light touch” is one thing that Chancellor
and later PM Gordon Brown said was a mistake.

Another propaganda weapon used
against Labour may be the post-crash memo written by Treasury Secretary Liam Byrne to
his successor, saying: “I'm afraid there isn't any money.” This put into the
perception of Labour's economic incompetence. Both the Tories and also the Liberal Democrats
used the memo being an election prop along with a reminder that the economy isn't safe with
Labour. But Byrne's memo was at reality an operating joke and then a resource of private
regret, given its political power.

Debts and deficits

Consider other economic measures,
like Labour's record on real wages and deficit reductions.

In contrast to myths about Labour widening the deficit (i.e., when spending exceeds revenue), data implies that the deficit stabilised under both post-WWII Labour and Tory governments. By 1970, Labour's Wilson had brought the deficit down to nearly minus 2 percent of GDP. But within four years, the Tories under Edward Heath had increased the deficit. It peaked under Wilson (1974-76) and also the oil crisis at nearly 8 percent, before slowly declining. Thatcher brought the deficit down to Wilson's late-60s-early-'70s levels. But under Thatcher and Major, the deficit shot up again simply to be gradually reduced by New Labour.

Consider public sector net debt. By 1955 underneath the Tories, public sector net debt was 140 per cent (relative to GDP). It continued to fall under Wilson's Labour government (1964-70) and was at 50 per cent by 1979, when Thatcher came to power. But Thatcher's successor John Major increased it and it continued to climb under New Labour. Under the Tories, it is now over 80 per cent–which excludes what is owed to public sector banks.

Unemployment and wages

The Tories boast of “record employment.”
Leaving aside the fact that lots of people have dropped out of the labour market
and those that remain in many cases are in insecure work, today's employment levels are
just a few percentage points greater than when they peaked under Harold Wilson
within the 1960s. Consider the longer-term trends.

Data show post-WWII employment figures were relatively stable underneath the Tories. But before the financial crisis, employment actually peaked at 74 percent under Wilson's 1966 Labour government. In 1979, following Callaghan's Labour government, more than seven in 10 working-age people were employed. But as soon as Thatcher took office later that year, employment fell off a cliff. It had declined to 65.9 per cent within her first 4 years in office. It took seven years for employment to reach a higher well over 70 per cent again, simply to decline under Major in 1993. The steadiest period of employment was during the pre-financial crisis years of New Labour. Even throughout the crisis, employment never fell below 70 percent, a number still better than both records of Thatcher and Major.

Finally, let's look at wages. A
big GDP is perfectly, however it does not help if real wages and salaries
stagnate.

The worth of wages and salaries (VWS) increased during the Wilson-Callaghan years. Like employment rates, however, it fell off a cliff in 1980 under Thatcher, reaching a minimal of 2.5 percent in 1993. The brand new Labour years saw fluctuations, having a a lot of 8.2 per cent in 1998 along with a low of 2.9 per cent in 2002. The truly amazing Recession brought VWS down to just 0.2 per cent, but Tory austerity meant that it took six long years to creep the measure up to 3.9 per cent by 2021, that is still lower than New Labour's peak.

Disinvesting the actual economy in favour of financial markets

By several measures–public sector debt, public sector borrowing, macro-economic stability, and also the value of wages and salaries–successive Tory governments haven't only failed to perform much better than their Labour counterparts, they've often performed worse. The straightforward reason is they disinvest in the real economy towards financial markets and provide proportional tax breaks towards the richest. Yet, regardless of the facts, Labour's critics still peddle the line that economic Conservatism may be the only viable choice. Check the facts before swallowing the dogma.