Wednesday 22 April 2009

The first New Labour budget: not 1997, but 1924

Many have commented on the centenary of Lloyd George's People's Budget, particularly in the hope that the Alastair Darling will ensure the budget addresses child poverty and protects lower earners in a recession.

The very first budget of a Labour Chancellor of the Exchequer, that of Phllip Snowden in 1924, captures how differences in political approach and instincts between New and Old Labour can often be vastly exaggerated. There is a very good essay on Snowden in Roy Jenkins' book of essays on 'The Chancellors'.

Snowden had a good financial position, so the budget was able to cut indirect taxes. As Jenkins writes, "the changes were very deliberately slung against regression", with reductions on duties on sugar, tea, coffee, cocoa and dried fruits allowing Snowden to announce his were "the greatest step ever taken towards the realisation of the cherished Radical ideal of a free breakfast-table". He halved the returns from the entertainments duty, concentrating heavily on the cheaper seats, with abolition up to sixpence, heavy reductions up to 1s 3d and no reduction. Direct taxation was left largely untouched.

Jenkins writes:

The detail of the budget was highly palatable to Labour and radical listeners. The psychological relief to the prosperous and the even more wealthy was even greater. ... What it did benefitted the 'have nots'. What it did not do relieved the 'haves'. Many of them had worked themselves up into expecting the first socialist budget to mean the end of civilised life, or at any rate of aristocratic and high bourgeious life, and when it did not they could scarce forbear to cheer. Snowden's claim that 'the budget is vindictive against no class and no interest' was well founded. He followed this with a high statement of fiscal principle which ... had a ring more of Gladstone than of Dalton or Cripps about it: "Though I have always held and declared that the State has the right to call upon the whole of the available resources of its citizens in case of national need, I have equally held and declared that the State has no right to tax anyone, unless it can show that the taxation is likely to be used more beneficially and more economically".

Jenkins notes the fluttering of order papers came from the Labour and Liberal benches, with Asquith endorsing the budget as "proceeding on a throughly sound financial basis", and that the sighs of relief from Lombard Street were audible at Westminster.

Even Beatrice Webb, a Snowden critic, wrote in her diary that "Philip has had a great triumph ... we were wrong about him ... he has turned out to be the best available Chancellor".

That was 1924. Jenkins notes too that the 1924 budget was an "untramelled internal Treasury production".

Later in the 1929-31 Labour minority government, Snowden's clinging to Treasury orthodoxy, against the radical proposals of Lloyd George and the emerging Keynesian agenda, did not end well.


Zio Bastone said...

Does 1924 capture ‘how differences in political approach and instincts between New and Old Labour can often be vastly exaggerated’?

You do not in any way make the case for what you declare. Dipping a toe in the water (1924) is not at all the same as starting (1997) to climb out of the water altogether. (Ken Livingstone’s departure and return is quite symbolic in a way: a two faced heraldic newt.)

And should one in fact be making that case at all? Frankly, I don’t see the point.

Even discounting the possibility that in the dark all cats might indeed be grey, that in the long run we’re all dead and similar inanities, isn’t the point of any useful discussion to perceive significant difference (not to blur it away) and to deal with what Adorno called ‘the ontology of the wrong state of things’ not to fudge it out of sight?

Rather than historicising complacency, I would start (though you will not agree) with at least the following premises:

that New Labour has broken virtually all connection with the movement politics from which it once drew its strength (you call this ‘command and control’. I think it’s far worse than that, with shades of Gentile’s corporatism);

that it has continued the conversion of competing and/or divergent centres of power into a recursive bureaucratic autarchy, emptying out the wider polity of any sort of dialogue or dialectic, shades of Gentile again, and

that socially and fiscally it has been profoundly regressive, continuing the marketisation of the severely wounded NHS and of education, also badly bleeding, treating school and university students as ‘product’, not as people; adopting a broadly Powellite attitude to migrants (useful economic fodder, mustn’t change the culture, ‘British jobs for British people’); devising the catastrophe of PFI/PPP within a broader neo-liberal agenda, and so on.

James Goldstone said...

I like the cliff-hanger ending.

Sunder Katwala said...

James, v.good.


Thanks for the response. Really my post was rather more in the way of a slightly off piste historical curiosity than any attempt at a sustained political argument on my part.

I came across the Jenkins/Snowden piece again some time around Christmas, and was struck by that but didn't post on it at the time, and the budget was an obvious moment to mention it.

I do think both the media and the government itself can easily caricature 'Old Labour' (the idea was to create a caricature) as if ideas of gradual change, appealing to broad coalitions had not been thought of pre-1945, in 1945, in the 1960s, etc. And it does annoy me when eg the BBC implies that 'real Labour' was the 1983 manifesto. There is a better case for regarding that as somewhat outside the mainstream history of Labour and the centre-left, though I accept this may seem a rather Fabian perspective on Labour history.

But, of course, one can draw many political conclusions from all of this. For example, the left of the party would be as and more critical of Snowden and MacDonald as of New Labour, and 1931 is where a lot of the power of 'betrayal' theses come from of course. One irony is just how suspicious MacDonald and Snowden were of each other prior to 1931.

To the extent that the comparison can sensibly be made across such different contexts, today's budget seems to have been rather more redistributive, particularly at the top end (eg pension relief as well as income tax changes) and on some of the spending commitments than that of 1924, though Snowden was clearly moderately progressive on the indirect taxes side.