Keir Starmer has to be honest about the legacy of Margaret Thatcher

PM Gordon Brown famously had his photograph taken on the steps of Number 10 with a somewhat frail Mrs T. And a fat lot of good it did him: David Cameron won the subsequent 2010 election. Reminding Tories of their halcyon days has a way of backfiring on Labour politicians.

But let’s pursue Sir Keir’s wonky logic a bit further. Anyone old enough to have voted for Thatcher is now well into their fifties. But at the 2019 General Election, Corbynista Labour beat the Tories among those aged 18 to 24 by an unprecedented 43 points. Starmer will struggle to do anything like as well, especially as his shadow chancellor, Rachel “cut-and-paste” Reeves, has been busy reneging on the party’s green commitments. For Labour, appealing to the ghost of Thatcher is likely to lose votes among younger folk even faster than it gains (very theoretically) votes among the middle aged.

Yet it is Starmer’s raison d’etre for praising Margaret Thatcher that takes the proverbial biscuit. Writing in Sunday’s Telegraph (where else?), Sir Keir suggests that Mrs T set loose Britain’s “natural entrepreneurialism” and thus brought about “meaningful” economic change. Hint, hint: Sir Keir and Rachel will do the same. The good times are about to return if only you elderly Thatcher fans vote for us. And pigs might fly, of course.

Let’s get this clear: the British tax-cutting, entrepreneurial miracle supposedly unleashed by Margaret Thatcher was entirely bogus. True, there was privatisation, but this was a fire sale of the “national silver”, to quote a genuinely radical Tory PM, Harold Macmillan.

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The cash raised (largely by selling shares below value) was used to cut income tax. In other words, public assets were liquidated for short-term political gain so the Tories could buy elections. Far from creating a share-owning democracy, the privatised companies ultimately ended up in foreign ownership or in the hands of speculators. This was not the rebirth of British entrepreneurship but the creation of a casino economy.

Take the car industry. We all remember how Thatcher closed down the coal industry so she could destroy the National Union of Mineworkers. But she did the same to the British car industry so she could liquidate the power of the shop stewards in motor manufacturing.

Those stewards had steadily bumped up industry wages. But this acted as an incentive to raise wages across the economy. Despite the explosive energy inflation that followed the 1973 Arab-Israel war (shades of today), union militancy led by the car workers ensured that real wages in Britain outstripped prices throughout the Seventies. Once Thatcher destroyed the British car industry, real wages stagnated.

Didn’t Thatcher bring Nissan to the UK and turn British car manufacturing into an international success story? Beware Tory hype. Ostensibly car production went up in Britain after Mrs T. But the new foreign owners of the British car industry were only taking advantage of tax breaks and non-unionised labour to use the UK as an assembly base.

Keir Starmer praised Margaret Thatcher for bringing meaningful change to Britain

The engines, transmission systems and (later) electronics – the value added and profitable bits – were manufactured in Europe and Asia and bolted together here. As a result of Thatcher, Britain became a net importer of motor vehicles by value. How is that “encouraging entrepreneurship”, Sir Keith?

The piece de la resistance was Thatcher’s handling of the banking system. Under Thatcher, the banks and the stock exchange were deregulated in what became known – only too accurately – as the “Big Bang”. Except that the bang was the sound of the British and global economies exploding in 2007-8.

Deregulation changed bank lending from a mechanism to facilitate real investment in manufacturing and infrastructure into a form of complex gambling on paper assets. So complex that even the bankers had no idea what anything was worth – as we found out when RBS and HBOS effectively went bust and had to be nationalised at taxpayers’ expense.

Again, that is hardly an advert for British entrepreneurialism post-Maggie. It is proof positive that Thatcherism was a front for a new spiv economy, not for promoting genuine economic reforms. I worry that Keir Starmer can’t see the difference.

Neither did Gordon Brown, of course. Mr Brown continued Thatcher’s “light touch” approach to bank regulation while handing out knighthoods galore to bankers, including Fred “the Shred” Goodwin who wrecked RBS. Expect much of the same from Sir Keith and Rachel Reeves.

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But didn’t Maggie cut taxes? She did lower some taxes – for the rich. The top rate of income tax fell from 83% to 60%, then 40%. But this was offset by a rise in VAT from 8% to 15% – a rise that fell heaviest on the poor. Total tax take as a percentage of GDP was actually higher at the end of Thatcher’s reign than at the beginning: 35% rather than 33.7%.

Today, under Rishi Sunak, the tax take is the highest in British peacetime. Contrary to myth, it is the Conservatives who are the high tax party. They need to tax the poor so they can give to the rich.

Yet in the end didn’t Thatcher create economic growth? You’re joking. Even at the peak of the Thatcher era, Britain’s economic growth was poor by international or UK historical standards. It only topped 2% – and only for three months – during the Thatcher years. For the 1970s, the decade before Thatcher, economic growth in Britain averaged around 2.6%. Remember that Mrs T presided over two deep recessions – both deliberately engineered.

Thatcherism was a political creed dedicated to destroying UK manufacturing (and so the power of the trades unions) while turning the City of London into an offshore tax haven. Under Maggie, manufacturing output in Britain fell from 25% of the economy in 1980 to 23% in 1990. Under Gordon Brown, it plummeted to a mere 11%. It is now 8%. In Germany it is 18%, in Japan 20% and in China 28%. Where is the entrepreneurial revolution in Britain?

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And boy do we need one! In America, Biden has pumped billions of dollars into reviving domestic manufacturing. In August, the German cabinet agreed to earmark €58 billion (£49bn) for green investments next year, up 60% on its 2023 target. Meanwhile, Labour’s Rachel Reeves has cut her pledge to spend £28bn on green public investments to a pathetic promise to “match” every £3bn raised from the private sector with £1bn in state funding.

Keir Starmer got a lot of publicity with his praise of Margaret Thatcher, which I presume was the point. But like her or hate her, Thatcher was a conviction politician. Sir Keir Starmer can’t be accused of that.

He served in Jeremy Corbyn’s shadow cabinet then kicked Corbyn out of the Parliamentary Labour Party when it suited him. He has abandoned policy pledge after policy pledge shamelessly. On this showing, Sir Keir Starmer’s chances of affecting an entrepreneurial revolution in Britain are a big, fat zero.