Gordon Brown became Chancellor after the Labour landslide of 1997. His aspiration was to end childhood poverty and no one would ever have a better opportunity. The Conservative party was in utter disarray and both he and Tony Blair commanded wide public support. Britain was begging for a new leadership. He fluffed it. Unlike the radical Thatcher government of 1979, Brown was timid. Brown is an economist who has embraced mid-20th century economic theory. That is shorthand for saying he’s a Thatcherite. Consequently the bold egalitarian policies which were necessary to fulfil his aspirations weren’t contemplated.
When Labour entered government in 1997, one in three children were living in families whose incomes were less than 60 per cent of the national median, meaning they were officially in poverty and brought up in families unable to pay for even basic necessities… tax credits reduced the number of children living in poverty in the UK from three million in 1998 to 1.6 million in 2010.**
Brown’s extended period in office nearly halved child poverty. Brown’s aspiration demanded increased direct taxation and a shift away from regressive indirect taxes. Brown lacked Thatcher’s political courage. Geoffrey Howe’s budget in 1979 re-balanced taxation.*** Income tax was reduced by 11%, VAT was increased by 187%, with prescription charges increased by 225%.+ Thatcher’s government acted decisively and courageously with a ground breaking budget, that attracted a lot of hostility which she faced down.
Brown hated the budget, which exacerbated working-class poverty. Thatcher knew her voters wouldn’t be harmed. In an extraordinary twist, the incoming Labour government of 1997 stuck to Conservative budget plans inherited from Major’s government. During Labour’s first four years in office, the public finances strengthened further, as the new government stuck to the tight public spending plans laid out by the Conservatives.++ Brown’s political abdication was servile. Labour’s in-coming government enacted the Conservative budget, denying voters the change they’d voted for.
Brown’s intellectual debt to Thatcherite economics is further underlined by his reduction of income tax to 20% by 2010.+++ This endorsed Thatcherite economics. Brown’s aspiration to end childhood poverty was scuppered by surrendering to the Thatcherite narrative. Re-ordering society to eliminate childhood poverty demanded radical economic policies, policies which were going to be unpopular with New Labour’s constituency.
So was it shabby political calculation which crippled Brown? The gruesome events of 2007 provide evidence that he was a Thatcherite. He just didn’t do it very well. In 1999 he’d introduced a 10% tax rate for the lowest earners and in 2007 removed it using the money freed up to reduce general income tax rate to 20%. He sacrificed the poorest to reduce tax for the middle-classes. Betraying the poorest working-class was pure Thatcherism.
Brown was potentially a great Chancellor, aspiring to end childhood poverty, but intellectually he imploded. His moral compass disappeared into the ether. Reducing childhood poverty by nearly half demonstrates that his stupendous aspiration was doable, if and only if, he also accepted the necessity of egalitarian redistribution through the taxation system. He was paralysed by indecision and his moment, his golden moment, was gone. Unlike Geoffrey Howe in 1979, Brown didn’t have the courage of his convictions. Brown was a tragic failure.
Addendum British wars in Afghanistan and Iraq
British involvement in the illegal Iraq war and as coalition partner in Afghanistan cost about £29 billion. There was undoubtedly an impact on Brown’s domestic policy because of these wars. They don’t however detract from the principal discussion point that Brown was a Thatcherite and could have funded the necessary redistribution to end childhood poverty by 2010. https://www.telegraph.co.uk/news/uknews/defence/10859545/Wars-in-Iraq-and-Afghanistan-were-a-failure-costing-29bn.html
* Chancellor of the Exchequer, 1997-2007, Prime Minister 2007-10
*** 43 seats https://www.bing.com/search?q=thatchers+majority+in+1979&form=EDNTHT&mkt=en-gb&httpsmsn=1&msnews=1&plvar=0&refig=1bd00b89b4c046c4c5f3517c2d459c9d&PC=HCTS&sp=-1&pq=thatchers+majority+in+1&sc=0-23&qs=n&sk=&cvid=1bd00b89b4c046c4c5f3517c2d459c9d
+ http://www.bbc.co.uk/news/special/politics97/budget97/background/bud1979_92.shtml++ The period 1997-2001 was an extended period of Conservative economic planning, which Brown supplemented with stealth taxes and one-offs. https://www.ifs.org.uk/bns/bn93.pdf
+++ A 1% increase in income tax is worth about £5.5 billion. If Brown had returned to the 33% rate of income tax (1979) this could have produced £71.5 billion annually in 2010. https://www.ifs.org.uk/uploads/gb/gb2015/ch10_gb2015.pdf