Civitas Blog

So fearful has Gordon Brown apparently become of having possibly to face Ken Clarke as Opposition Leader at the next general election, by which time he hopes to have taken over from Tony Blair as PM, that he has seemingly called on his friends to spoil Mr Clarke’s chances of becoming Opposition Leader by discrediting his economic judgement.

According to a report in today’s Daily Telegraph, Ed Balls, the Chancellor’s former economic advisor and now his possible successor at the Treasury, has sent an email to the Press Association documenting ways in which Ken Clarke’s judgement has proved misguided. ‘Time and time again’, the Labour MP is quoted as saying, ‘Ken Clarke has been proved wrong on the major economic decisions facing the country’.

Without wishing to enter into the vexed question of how suitable a Tory leader Ken Clarke might make, or how fallible his political judgement is, on several policy issues on which Mr Balls claims Mr Clarke’s judgement has erred, it appears not to have done. Thus, among the various alleged misjudgements of which Mr Balls accuses Mr Clarke is the latter's opposition to Labour’s New Deal and to its policy of tax credits to make work pay. On these two matters, however, Mr Clarke’s judgement appears to have been faultless.

In the same issue of the Daily Telegraph as the report about Mr Balls' email is a two-page centrepiece feature which delivers a searing indictment of New Labour’s record in office and strongly suggests it is Mr Ball's judgement that is unsound not Mr Clarke's.

Entitled ‘Why New Labour’s state machine isn’t working’, this special feature documents how ineffective the present government’s policy initiatives have been judged relative to their declared objectives. Among its initiatives argued to have had little positive benefit, but to have greatly added to costs, are its New Deal and tax credits.

Labour intended its New Deal to increase youth employment. Since it was introduced, youth unemployment has fallen, but, according to the Daily Telegraph feature, not because of it. A National Audit Office report of 2002 is cited which found that only 14% of under 25-year olds who found jobs under Labour gained employment because of the New Deal. Most who found jobs did so simply because the economy grew and would have done so anyway. Moreover, as the Telegraph points out, since New Labour took office the number of under 25’s in receipt of incapacity benefit has increased by 60% and now exceeds the number of this group on the New Deal. Even more damming is the ONS statistic showing there to be today more young people out of work not studying than there were when New Labour came to power. So much for Labour’s New Deal, which has cost the taxpayer between £5,000 and £8,000 for every job found under it.

The effect of New Labour’s tax credits has been even worse than useless. Supposedly designed to help less well-off working families, they have made the tax-benefit system so difficult to administer as to have caused numerous wrongful deductions and misallocations. The latter have been especially painful for the families who have been ordered to repay them after they have spent the credis they had wrongly received. Additionally, the Daily Telegraph feature reports that, as result of their introduction, it has been estmated that a full-time employee on the minimum wage faces a marginal rate of tax of almost 70% after deductions of the credits and national insurance are taken into account. This hardly amounts to a recipe for encouraging less advantaged family members take up employment opportunities to become independent of the state.

The Daily Telegraph feature documents several other areas in which New Labour’s track-record appears to have fallen woefully short of the mark judged against its stated objectives of reducing inequality and poverty, increasing employment, especially among the disabled, and reducing benefit-fraud. In none can New Labour be judged to have been remotely successful, given the statistics documneted cited in the Daily Telegraph feature.

Meanwhile, New Labour has kept piling up the cost of administering the welfare state and introducing more regulations and red-tape that reduce British competitiveness by adding to labour costs.

By the time of the next general election, whoever is PM will have an up-hill task on their hands whoever their opposite number in the Tory Party might be. But whoever the PM is, one fervently hopes that he or she will not allow, on the subject of their party's track-record whilst in office, any more speaking of Balls.