The Credit Crunch? Labour’s fault, says Shadow Treasury Minister

Tax expertise runs thin in the Labour Party at the best of times. The Party almost coped under Ed Miliband. But the staffers he brought in have all moved on. And the relationships John Wrathmell (Miliband’s widely admired Head of Economic Policy) worked so hard to develop – have withered or died. Even Richard Murphy – who seemed to many likely to occupy a place at the heart of the Opposition – has no role and appears disenchanted with the project. To my knowledge there is now no one – at all – in the Shadow Team expert in the revenue raising side of Government finances.

So when I learned that Rob Marris, MP for Wolverhampton South West, was to take the tax brief as Shadow Financial Secretary to the Treasury, I was interested to see how he performed.

The Committee stage of the Summer Budget Finance Bill concluded on Thursday. During discussions David Gauke (Marris’ opposite number) pointed out that the position Marris was taking was different to that Ed Balls had previously taken. He then added gently:

I am not sure that Ed Balls is a particular hero of the hon. Member for Wolverhampton South West.

Not gently enough. Marris needed no further invitation:


Yep. You read that right. Labour was responsible for the credit crunch. To which Gauke responded – well, wouldn’t you have? – with:

Again, I think we can find some consensus.

I suppose it’s too much to expect that Marris might also have mentioned (of many examples) this Cameron speech from 2006:


which showed that Labour and Ed Balls was on the right side – not right enough, but even so – of the debate around appropriate levels of regulation.

But then, if the real enemy is Labour’s record in Government, why would you?

8 thoughts on “The Credit Crunch? Labour’s fault, says Shadow Treasury Minister

  1. Pingback: The Credit Crunch? Labour’s fault, says Shadow Treasury Minister | Waiting for Godot | sdbast

  2. Forget all of that left of centre vs right of centre nonsense.

    Of course the labour party must bear their share of the responsibility for the “credit crunch” as you label it.

    Traditional labour supporters would have expected the labour party to reign in the excesses of the financial sector rather than encourage them with debt fuelled growth.

    Some people gained from the “credit crunch” (Tony Blair, John Prescott etc…they are all doing pretty well) whereas Michelle Dorrell who spoke eloquantly about the cuts to her working families tax credits (although I believe the right of centre just call them ‘tax credits’ as the right of centre stand up for ‘working people’) is not doing so well. As she so eloquantly explained and was dismissed by the ‘right of centre’ panellist.

    Of course the financial sector needs to be regulated more closely. Sure with more regulation some players in the sector may move away from London but it would seem that whether these players are here or whether they are not Michelle Dorrell and other hard working people will suffer just the same. If the ‘centre right’ believe that it is fine for hard working people to carry the can for lack of regulation in the financial sector which allows the sorts of excesses that we have seen recently then so be it.

    Let us not be surprised that Jeremy Corbyn was elected, and let us hope that his taking on the labour leadership will force people to see a bit more sense. Unfortunately it is the ‘centre right’ who tend to be less disadvantaged by the excesses resulting from the lack of regulation than the poor/working poor so I wouldn’t hold your breath.

    There was a time when a poor person in the UK was better protected than a poor person in the US but I fear that we are rapidly winning a race to the bottom for the poorest.

    What we really need are Traditional British Values that tell poor people how to remain resolute in the face of poverty caused by lack of regulation and expansion of private credit. That should do it.

    (just kidding with the last paragrah)

  3. Pointing out that Cameron also said he was in favour of “light touch” regulation in 2006 is all very well, but the electorate remembers what politicians did, not what they said.

    Moreover since the Tories were – apparently – happy with the then system when they were booted out in 1997, the grounds for thinking they would have changed it are tenuous. And the grounds for thinking they would have changed it to something resembling the Labour model are non-existent.

    I’m not sure that 2008 can be attributed to Ed Ball’s “light touch” regime, but it certainly helped. Bankers are like children. If you don’t supervise them they misbehave.

    So they lent money they shouldn’t have to people who couldn’t afford to repay it for their own short-term benefit?

    I am shocked, shocked.

    The common narrative on the Left nowadays is, “The Tories have got away with this myth that 2008 was all Labour’s fault”. The trouble is that there is an element of truth in it.

    Labour ran a regulatory system which gave the financial services industry too much freedom. It ran counter-cyclical surpluses in defiance of Keynesian orthodoxy. It encouraged a debt-mentality which led to the UK having a truly stupendous level of private debt. It then lived high on the resulting tax revenues, pretty much doubling the level of public spending in ten years, this last being an act of hubris (“no more boom and bust”) which the present and last governments have been painfully unwinding.

    Not “all Labour’s fault” perhaps, but far from “nothing to do with Labour”.

  4. I think that statements like that are the equivalent of the Australian pass yesterday that gifted Scotland their last try. There might be room for disagreement on the regulatory framework, but why bring it up in that way?
    An own goal.

  5. There’s the conflation of two issues here – firstly whether or not Labour was responsible or partly responsible for the crash, and that for me is a hard sell. The crash was about lots of things – the US housing market, the long term decline in competitiveness of the EU, yes, the bankers. It’s hard to argue that the Tories would have done any better than Labour here. The second point though is about whether Labour’s economic policies made the resulting impact on the UK’s finances much worse than it would otherwise be – your points about running a deficit in an upturn, doubling public spending etc – and here it’s harder to say that this wasn’t Labour’s fault. Certainly it would not have happened under the Tories and we might (might) have been in a much stronger position if they had been in power.

  6. The banking sector prior to 2008 was not unregulated. Far from it. I remember seeing a slide when I worked at HSBC of the sheer number of regulators the bank was accountable to. They numbered in the dozens – and that was just for the UK arm. Meanwhile we spent perhaps a billion pounds a year implementing regulatory changes to our systems and products to ensure compliance.

    Yet the 2008 crisis still came. Not because there was a lack of rules, but because the regulators acted in silos, with nobody whose purview covered both the subprime lending market AND asset-backed securities AND credit risk AND balance sheet management etc. Since 2008 a whole new set of rules has been implemented, but there is still no-one manning the panopticon and looking for systemic trouble brewing. All that’s really been done is to ensure the next collapse will be better cushioned.

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