HISTORY has a habit of coming back to haunt our politicians.
Fifty years after Denis Healey’s policies plunged Britain into economic turmoil, the nation’s finances now lie in the hands of another Chancellor called Healey.
Why John Healey must avoid becoming the second Healey to send Britain’s finances off the rails
John Healey faces strikingly similar challenges — stagnant growth, high inflation and rocketing oil prices – to former Chancellor Denis Healey Credit: Alamy
Like his bushy-browed predecessor, John Healey faces strikingly similar challenges — stagnant growth, high inflation and rocketing oil prices.
But his mission could not be simpler: Don’t repeat the catastrophic mistakes that pushed Britain to the brink of bankruptcy half a century ago.
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In 86 days’ time, he will give us the clearest indication of whether he has learned the lessons of history when he delivers the first Budget for Andy Burnham’s new government.
The Yorkshireman must utilise his blunt honesty and frugality to confront the harsh economic realities facing us.
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His first tasks will be to force big-spending ministers to tighten their belts, tame the out-of-control welfare bill and rebuild our worn-out defences.
With an extra £13billion a year required to meet our Nato commitments, he will have to convince Labour MPs of the need to divert cash from benefits to bombs.
There is only one piece of advice from his former office-holder that John Healey should heed.
It’s a well-known phrase coined by Denis which goes: “The first rule of holes — when you are in one, stop digging.”
Unfortunately, Denis Healey didn’t follow his own advice. He was a “Silly Billy”, as TV mimic Mike Yarwood would say.
Inflation was at 15 per cent when Denis was appointed Chancellor in 1974.
Within a year, it hit 27 per cent — one of the highest rates in the developed world.
The excessive wage demands of militant trade unions, coupled with relentless pandering to Labour’s hard Left only made matters worse.
But it was his tax and spend instincts which turned crisis into catastrophe.
Vowing to squeeze the rich “until the pips squeak”, Denis Healey increased income tax to a historic peak of 83 per cent, with tax on investment income hitting 98 per cent.
It scared off investors and led to the brain drain of senior doctors and scientists, while cultural icons such as the Rolling Stones and Sir Rod Stewart became tax exiles.
Despite soaking the rich, he was still spending billions more than he received in taxes, and 50 years ago next month the chickens came home to roost.
Denis Healey’s policies plunged Britain into economic turmoil fifty years ago Credit: Getty
Rubbish piled high in the streets during the Winter of Discontent of 1978-79 Credit: Alamy
On September 28, 1976, Denis Healey was sipping a G&T in the VIP lounge at Heathrow on his way to the annual meeting of the International Monetary Fund, in Manila, when he received an urgent message from the Treasury.
Officials told him financial investors were selling the Pound because they feared its value would drop even further.
He abandoned the flight and rushed back to the office. Days later, he went cap in hand to the IMF for a £2.2billion bailout — about £20.5billion in today’s money.
It was the largest request it had received at that time.
The severe restrictions attached to the loan infuriated the unions and the Labour Left and set the stage for the Winter of Discontent of 1978-79, when widespread strike action led to fuel and food shortages, the dead left unburied and rubbish piled high in the streets.
It took two years of free market economics under Margaret Thatcher to restore Britain’s economic balance.
That’s why, after two weeks in the job, John Healey should take a break from Treasury spreadsheets and glance at the history books. He shares the same name, the same party and a similar massive headache to Denis.
But he can’t afford to make the same mistakes as his namesake fellow Yorkshire MP.
His first duty will be to lay down the law to Cabinet colleagues, backed by Burnham, that there is no new money for any spending pledges. This means reining in the people-pleasing Prime Minister and his unfunded giveaways, too.
Our new PM’s 86p-a-week cut on household energy bills, £2 cap on bus fares and help for pub and music venues has already landed the Chancellor with a combined bill of £1.5billion.
Some estimates put the cost of Mr Burnham’s policy proposals at £96billion — equivalent to £4,300 in extra tax for every family.
Mr Healey has to break the Labour cycle of promise, borrow and spend.
Our new PM’s 86p-a-week cut on household energy bills, £2 cap on bus fares and help for pub and music venues has already landed the Chancellor with a combined bill of £1.5billion Credit: AFP
Mr Healey has to break the Labour cycle of promise, borrow and spend (stock image) Credit: Getty
He must show a clear path to stop £3trillion of government debt rising and for it eventually to fall, control inflation and turbocharge economic growth.
That means getting a grip on the bloated welfare budget and banning large, unfunded spending increases.
The simple truth is one that politicians hate to hear.
You can’t keep spending money you haven’t earned.
You can’t tax businesses into creating jobs.
And you can’t borrow your way to prosperity.
The wealth has to come first.
If John Healey bears that in mind, he might avoid becoming the second Healey remembered for sending Britain’s finances off the rails.
Andy Burnham welcomes President Zelensky to the UK Credit: Getty
ANDY BURNHAM showed solidarity with President Zelensky by wearing a black T-shirt and jacket for his meeting with the Ukrainian leader.
I wonder whether he’ll have the nerve to dress down when he finally gets an audience with Donald Trump.
TONY BLAIR famously announced that his three priorities for government were “education, education and education”.
But it seems the job of running our schools is less of a prize and more like the ministerial equivalent of detention.
After removing Bridget Phillipson from the post of Education Secretary, Andy Burnham offered the job to Ed Miliband’s brother, David, along with a seat in the Lords.
He politely declined.
Burnham then turned to Rachel Reeves, suggesting she might take it as a consolation prize after being axed as Chancellor. She passed, too.
Only at the third attempt did Labour’s deputy leader Lucy Powell agree to take on the brief.
But even then she wasn’t punching the air, as she had been hoping to land something bigger – Deputy PM, perhaps.
That’s four noses put out of joint over what was once a plum Cabinet job.
Or, as Pink Floyd almost put it: We don’t need no Education Secretary.
