Why socialism is evil #4, financial ineptitude

The worst Chancellor in British history?

It is the defining feature of every Labour government that they leave office having destroyed the finances of the country. As Margaret Thatcher famously said: “Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them.” And that was said before the financial disaster that was Gordon Brown did his worst to Great Britain.

The  calamities started with the first post war Labour government, they received from America more Marshall Aid than Germany did and whilst the Germans spent theirs on reconstructing their industry we frittered ours away on socialist dogma. Although most German cities had been carpet bombed to near oblivion it did not take them very long to overtake Britain in their post war recovery.

Lord Dalton was their first Chancellor. He believed that all individual incomes should be equal, he spent a massive loan from America in just a year and was forced, in 1947, to make the pound non convertible, just at the same time that rationing was tightened. Later that year he was forced to resign after telling a journalist details of his budget before it was delivered.

Next came Stafford Cripps, a firm believer in austerity, something he imposed on the long suffering British public. He gave the Soviets jet engine technology that they were then to use against us in the Korean War and at home he was an arch nationaliser. He increased taxes (goes with the territory of being a Labour chancellor) and he worked to reduce consumption, so the public had even less. In those days exchange rates were fixed between countries is it is a measure of his ineptitude that he was forced to devalue the pound by 30.5% in 1949. He resigned due to failing health in 1950.

Hardly surprisingly the British public voted Labour out of office in 1951 and it took us 13 years to forget just how much we had suffered under the socialist and to vote them back in.

The 1964 to 1970 Harold Wilson Labour government did massive damage to Britain with the unions gaining control of industry and inflation spiralling out of control. In 1967 Chancellor James Callaghan was forced to devalue the pound (a familiar Labour story) by 14.3% and British tourists were limited to taking just £50 out of the country.

Between 1970 and 1974 Ted Heath’s Conservative government was concerned mainly with trying to wrest power back from the destructive unions to the democratically elected government, something he ultimately failed in, losing 9 million working days to strike action. This opened the doors for another disastrous Labour government.

The 1974 to 1979 Labour government was an unmitigated disaster for the British people firstly under Harold Wilson and then under James Callaghan. Public spending was allowed to spiral totally out of control and taxes were ramped up in order to try and reduce the amount that the government needed to borrow. Inflation ran out of control till it was 27% and in 1976 the IMF imposed huge restrictions on government policy as part of the price for bailing us out. You would think that it couldn’t get much worse, but it did. The unions exerted their power to the point of anarchy, mass industrial action led to the winter of discontent, in 1979 over 29 million working days were lost in industrial disputes.

Then came Margaret Thatcher who did wrest control of the country back from the unions, who did get inflation back under control, who did denationalise our major industries getting them working again, who did get rid of exchange controls, who did bring growth back into the economy and who did reduce the burden of personal taxation. A triumph of political leadership.

Labour, meantime were unelectable and became the party of opposition until, after 18 years and a re-branding, they were sufficiently detoxified for the British public to be duped into voting them in again in 1997.

This time they had (for a while) learned their lesson and their new Chancellor, Gordon Brown, said openly that he would continue with the policies laid down by his Conservative predecessor, Kenneth Clark and thus he became known as the “prudent chancellor”, something that is totally derisible now. However in order to win the 2001 election they were forced to throw money at the NHS and all semblance of sound economic management went out of the window.

For their second term the world economy was booming so the fact that they had gotten back to the bad old Labour habits of greatly outspending their income went largely unnoticed. Taxes went steadily higher (as always with a Labour government) but this was not enough to pay for the profligate spend, so they were forced to borrow at the top of the economic cycle. Thus breaking Brown’s “golden rule”.

Then in 2008 it all caught up with him. The world had an economic downturn as part of the economic cycle, but the mismanagement of the British economy had been so great that this was leveraged into the worst British recession since WW2, we lost 6.39% of GDP in the 6 quarters it lasted for (France lost 3.88% in the 4 quarters their recession lasted). So desperate were we that we were forced into £200 billion of quantitative easing, a process that devalues the money in circulation and that will lead to inflation. And two government terms of profligate borrow and spend have left the country saddled with almost unbelievably immense debt (£1.1 trillion) that we have to pay punitive interest on (£43 billion a year, about the same as our national education budget) and eventually pay back.

To an outside observer it is incredibly brave of David Cameron and George Osborne to take this burden on. To undo the damage done by Gordon Brown will be immensely painful and many people will blame the current government for the pain when it is no fault of theirs. It is Gordon Brown who should be carrying the blame.

It is difficult to know who was the worst Labour Chancellor, they were all incredibly bad and they all did immense harm to the country. I have heard people say that Cripps was the worst Chancellor that Britain has ever had, but I am sure that many Labour holders of the office deserve to be right there alongside him.

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3 Comments


  1. Bruce, the worst Chancellor in British history, by a country mile, was Gordoom. He single-handedly took away the BoE’s strict inspection regime for Bank liquidity and handed it over to a bunch of his lawyer mates at the FSA. Then he had the chutzpah to blame the “global” financial crash on the bankers to whom he allowed free rein to do as they pleased.

    He and his mate Tone introduced the barking mad off-the-balance sheet PFI – which was why he was so against the introduction of Sarbanes-Oxley accounting regulation, fire-hosed cash at all and sundry in the name of investing in public services, and signed the cheques for Tone’s illegal war in Iraq.

    I’m going to have to stop reading this blog, it doesn’t do for my blood pressure.

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  2. A very good watch indeed. Every voter should see this:

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