HM Treasury series 1, 2012-2013
The 1981 Budget
16 May 2013
Sir Adam Ridley, Special Adviser to Sir Geoffrey Howe in 1981
Dr Anthony Hotson, economist at the Bank of England in 1981, Research Fellow at the Winton Institute for Monetary History, University of Oxford
Duncan Needham, Research Associate at the Centre for Financial History, University of Cambridge
The 1981 Budget was the most controversial in post-war British history. Margaret Thatcher’s Government overturned the Keynesian orthodoxy that had guided economic management since the Second World War by raising taxes in the depths of the worst recession since the 1920s. This prompted 364 leading economists, including five former government Chief Economic Advisers, to write: ‘There is no basis in economic theory or supporting evidence for the Government’s belief that by deflating demand they will bring inflation permanently under control and thereby induce an automatic recovery in output and employment.’
Despite this dire warning, the 1981 Budget coincided with the start of an unprecedented period of growth for the British economy. The Budget’s contribution to that growth has been contested ever since and even today influences the debate over the Coalition Government’s austerity measures.
Switching resources and the defence of sterling 1967-70
8 May 2013
Scott Newton, Professor of Modern British and International History at Cardiff University
Professor Newton reflected on policy in the aftermath of the 1967 devaluation, which was characterised by what the then Labour government called 'the Switch of Resources strategy'. This entailed the suppression of domestic demand via cuts to public spending projections (including postponement of raising the school leaving age to 16 and acceleration of the retreat from East of Suez) and sharp tax rises (mostly indirect), in order to encourage resources of capital and labour to move to production for exports. The aim was to generate a large and sustained balance of payments surplus which would free the economy from the impact of speculative shocks to the pound in the foreign exchange markets and allow the government to pursue a growth-oriented expansionary macroeconomic strategy. The strategy did work, but the cost in terms of growth and living standards from the second half of 1968 until the spring of 1970 was high and may well have contributed to Labour's election defeat in the latter year even though by then the balance of payments was enjoying a healthy surplus and speculation against sterling had ceased.
The state and the market: an evaluation of competitive health insurance in interwar Britain
17 January 2013
Noel Whiteside, Professor in Comparative Public Policy at Warwick University
Professor Whiteside examined the performance of private agency administration of the National Health Insurance Scheme (the forerunner of the NHS) in Britain between the two world wars. Unlike its German counterpart (the inspiration for Lloyd George’s National Insurance Act that introduced compulsory health insurance in 1911), the British scheme operated on a competitive basis. Registered ‘approved’ societies, largely friendly societies and industrial insurance companies, competed for members by using accrued profits to fund benefits over and above the statutory minimum. The scheme was overseen by the Government Actuary, the cat’s paw of Treasury control, in an era of strong public expenditure constraint. This central regulation was successful; by the start of the Second World War, health insurance was costing the taxpayer very little, even though, the Treasury ostensibly funded one third of its costs.
In some respects, interwar health insurance presents an interesting parallel to the type of social protection scheme currently being promoted for pensions (for example). It appears to exemplify the efficiency gains promised by market provision. Yet, unlike its continental counterparts, health insurance never thrived in the UK: William Beveridge dedicated part of his famous 1942 Report to criticising the scheme as ultimately inefficient. This talk will thus examine what savings are made by using market agencies for public service delivery.
Image and reality: the 1976 economic crisis
12 December 2012
Professor Christopher Hood, Gladstone Professor of Government at All Souls College, University of Oxford
Duncan Needham, PhD candidate, University of Cambridge
Dr Glen O'Hara, Reader in the History of Public Policy, Oxford Brookes University
Public sector borrowing was more than 11% of GDP. Inflation was 25%. Sterling fell below $2. Britain applied to the IMF for its biggest ever loan. This panel panel considered the nature of the IMF 'cuts' and the Treasury's strategy, how spending reductions were made and with what effects, as well as longer term changes wrought by the crisis in the politics of economic policy.
The Geddes Axe, 1922: fiscal consolidation by independent commission
18 October 2012
Richard Roberts, Professor of Contemporary History, Institute for Contemporary British History, King's College London
The Geddes Report of 1922, the most comprehensive and rigorous independent review of public expenditure in Britain, proposed spending cuts and economies in public services that were highly controversial at the time. As well as opposition from trade unions and much liberal opinion, dissent was expressed within the Cabinet, with Winston Churchill, the Colonial Secretary, questioning an elected government abdicating responsibility to unelected businessmen. Sir Eric Geddes, a business manager, chaired the detailed review that identified £100 million in potential cuts. The term ‘Geddes Axe’ symbolised retrenchment on a grand scale and, for some, became a by-word for ‘callous meanness’.