ABSTRACT
The record of Labour Governments in the post-war period has been associated by their critics with economic stagnation, political paralysis and public disenchantment. Labour’s commitments to an expanded role for government and increases in public expenditure are perceived to have contributed to the deterioration of the UK economy. The history of Labour Governments has been associated with policy reversals— including having to increase taxation and reduce public expenditure— because, very often, the expenditure plans of Labour Governments on taking office were judged to be unsustainable. Furthermore, it has been argued that Labour Government policies contributed to the slow economic growth that often resulted in the UK being less competitive. UK employees have sought to compensate for their tax increases through higher pay settlements, which increased further the pressures on inflation and unemployment. In the 1980s and in the early 1990s the Labour Party was perceived as being unable to change or to produce policies that were relevant. The Labour Party had become the defenders of the principles of the post-war welfare state, with an open-ended approach to big government, state intervention and higher public spending. In the aftermath of Labour’s fourth successive defeat, David Willetts, once a Director of Conservative Policy Research but elected as MP during the April 1992 Election, commented that:
For Labour, the task of integration is above all, for the state. Even after all its policy reviews, it remained the party of high spending, high taxes and more regulation, that is big government. Big government does not bring the nation together, it divides it. Interest groups are engaged in a struggle for taxpayers’ money and special favours—with the state as the battlefield.
(D.Willetts, Financial Times, 13 April 1992)