Half a century ago, a Labour Chancellor called Healey announced that Britain would have to be bailed out by the IMF – John Phelan writes for CapX today about how Britain went bust, and the tough spending decisions that followed.
This afternoon, Andy Burnham tried to push aside such gloomy thoughts, with a speech to Labour conference that promised to set Britain on a new path – eventually.
The Prime Minister said that the triple lock on pensions would be scrapped from 2030, to help pay for the establishment of a National Care Service: ‘someone has to go through the pain barrier’. The ratcheting costs of the triple lock have been crying out for reform, ditto social care, so full marks for Burnham’s political courage. Not so much for his maths: the change won’t come close to covering the cost of a new care service. How exactly we’ll be paying for it remains to be seen.
And just as worrying as his shaky sums is Burnham’s theory of growth, which boils down to ‘more public control’. As Mani Basharzad and Bryan Cheang point out below, that’s not how growth works, whatever Mariana Mazzucato says.
But the real issue for Burnham is the ghost of 1976. Fifty years on, our fiscal situation is bleak once again, with borrowing costs at their highest in decades. He asked the country, and his party, for time. But time is what he doesn’t have. Britain needs answers now, not a ten-year plan to bring back an idealised version of the 1970s.
Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.
Marc Sidwell
Editor, CapX
Today’s Takes
Fresh thinking from CapX
How Britain went bust, 50 years ago today
John Phelan
‘Britain before 1979 was not a social democratic paradise – even if you wouldn’t know it from this week’s Labour conference.’
Fifty years ago today Chancellor Denis Healey applied for a huge IMF loan. It was needed as a result of profligate spending and economic mismanagement. James Callaghan gave a speech preparing the Labour Party conference for much needed spending cuts, demanded as a condition of the loan. At this year’s conference, Andy Burnham has ignored this sage advice as he pushes us to a state-directed future. Read More
Labour's favourite economist has growth backwards
Mani Basharzad and Bryan Cheang
‘Nothing could be worse for entrepreneurs than an entrepreneurial state.’
The economist Mariana Mazzucato is an inspiration to both Keir Starmer and Andy Burnham. Her writings promote a mission-driven government which attempts to create a partnership between the markets and government. Burnham’s business-friendly socialism is the latest iteration trying to spark ‘growth in every postcode’, but growth can’t be summoned by more state control. Read More
Stat of the Day
Best of the Web
Burnham calls time on the triple lock
Michael Simmons, The Spectator
‘Every man, woman and pigeon in Westminster knows this was a policy that had to go for the sake of the long term viability of our public finances. If Burnham can actually kill it, we should all be grateful.’
Andy Burnham has announced the end of the triple lock, or at least the beginning of the end. The triple lock has done its job, as levels of pensioner poverty has fallen. But today it is wildly unaffordable. It has ended up costing three times more than expected according to the OBR. It is time for it to go. Read More
A National Care Service would be a disaster
Kristian Niemietz, City AM
‘Who would look at British politics right now, thinking, “I really want these guys to have even greater powers over my life”?’
Britain already spends quite a lot of money on social care, but a new state-funded system is not the way we should go. Without means testing, a service free at the point of use will see its demand flooded and it would be subject to political lobbying for higher wages. Read More
A higher personal allowance won’t boost growth
The Capitalist: the past was worse than you think
And if you want more...
– Let us drink at the football (The Critic)
– How will the new triple lock work? (IFS)
– How wine conquered the globe (Engelsberg Ideas)
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