Magazine article Public Finance

A Rock and a Hard Place

Magazine article Public Finance

A Rock and a Hard Place

Article excerpt

The N word is back No, not the race one - but nationalisation. The most obvious place it has reappeared is in the prolonged debate about what to do about Northern Rock. But it has cropped up in several other policy controversies as well - not least Prime Minister Gordon Brown's suggestion that we should nationalise corpses (which is effectively what the organ transplant proposals amount to).

In some ways, this is a quite weird resurgence of an old debate that many thought had been laid to rest in the 1990s. When the dust settled on the big Conservative privatisations of the 1980s and New Labour abandoned Clause Four (the section of the Labour Party constitution that committed it to widespread public ownership), it seemed we had reached a new national consensus about the role and scope of the state.

The old Left-Right debate about the state versus the market seemed almost irrelevant. There was talk of the new 'post-ideological age'. But old fault lines in politics never seem completely to go away.

There is, of course, a large dose of political theatre in the debate about Northern Rock. The Tories spotted an opportunity to hark back to the bad old days of Labour, when the Militant Tendency ran rampant and nationalised industries were almost a synonym for the 'British disease'. Just when we thought the French had taken on our old mantle, here we are back to debating public ownership, say the Cameroonies.

Most of the debate in the past decade has actually been the other way, ie, rows within the labour and trade union movement about the steady trickle of New Labour denationalisations. Most of these have been relatively easy for the government, reflecting the muchweakened position of the Labour Left and trade union activists. A few have proved rather embarrassing for other reasons-such as the appallingly badly handled Qinetiq sale. Here, it has been the auditors and Parliament that have caused the government pain rather than the Left.

The truth is, of course, that political rhetoric - from both Left and Right has never even remotely matched reality. Throughout the twentieth century, first Liberal and later Conservative governments were involved in both nationalisations and expanding state provision across a range of areas. The Thatcher government - committed to 'rolling back the frontiers of the state' presided over the highest level of public spending, as a proportion of national wealth, over the past 50 years, while Labour produced the lowest (in 1998). And Labour never got anywhere near nationalising the 'commanding heights' of the economy. …

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