From Labour First Chancellor in 1924 to Rachel Reeves. Labour & Fiscal Rules
Labour’s first Chancellor was Philip Snowden who presented Labour’s first ever budget in April 1924
Snowden was the son of John Snowden who had been a Halifax Chartist in the late 1850s and became a Liberal. Philip himself started as a Liberal but during a period of ill health he joined the ILP and became a leading figure in it.
He was a temperance man and his socialism did not depart from the Liberal economics of his youth. He was said to be philosophically in love with the Governor of the Bank of England and worked closely with the Treasury rather than Labour Ministers on his Budget.
Snowden’s view was that little could be done without a robust market economy and that meant prudent financial management not public spending commitments.
Fast forward 100 years and it sounds very much like the fiscal rules of Labour Chancellor Rachel Reeves who has a Bank of England background. Reeves shares with Snowden what the socialist economist James Meadway calls ‘Treasury Brain’
The argument is that the Tories have wrecked the economy and with 49 day Truss that is largely correct although the problems of the British economy are more complex than that. Hence there is no money for spending commitments.
Indeed Rachel Reeves explained to the Telegraph before the Election her approach to the national economy. In a presumably conscious echo of Margaret Thatcher she noted that her mother showed her to balance the books at the kitchen table. Thatcher knew and I’m sure Reeves does too that this is a specious analogy even if it works ideologically. The householder may struggle to get a loan or incur debt to cover a financial problem, certainly at reasonable costs. National Governments rarely have such issues
After 1945 when Britain was effectively bankrupt the Attlee Government took a rather different view. It took a loan from the US (Marshall Aid) and with it came the NHS and a Council House building programme.
It might be agreed that Tory plans to open more hospitals and reopen rail lines were built on sand. That doesnt mean that such projects, reassessed, would have considerable economic and social benefit. That is not happening because of Treasury economic dogma which Reeves is fully bought into.
However Philip Snowden was not the only model out there and neither a century on is Rachel Reeves
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