How long has Brown been in office?
Last Tuesday, Gordon Brown completed 2,601 days as Chancellor of the Exchequer, making him the longest continuous occupier of the office for 180 years. Since 1997, Brown has seen off five Conservative shadow chancellors and now hopes that he can emulate his hero, Lloyd George, by going on to become Prime Minister.
What has been his greatest achievement?
Everyone agrees that it was his decision, four days into the job, to give control over interest rates to the Bank of England. This signalled his determination to avoid the fate of previous Labour chancellors who all faced crises after the markets lost faith in their policies. Brown added to his reputation for prudence with the ‘golden’ rule, which stated that the Government should only borrow to invest over an economic cycle, and the sustainable investment rule, which held that public borrowing should not exceed 40% of GDP at any time.
How well has the UK economy performed as a result?
It is enjoying the longest period of uninterrupted growth in history. It has now grown for ten years without a single quarter of negative growth. No other country in the world can boast such a record. The UK economy managed to emerge from the dotcom bust unscathed. Unemployment is below a million and still falling, inflation has remained low, and house prices have soared. Most Britons have never felt so rich. But critics say that much of the hard work transforming the UK economy was done by Brown’s Conservative predecessors, who cut taxes and red-tape. Some say that he has put these achievements at risk.
What has he done wrong?
Critics accuse Brown of trying to micro-manage the economy with endless meddling with the tax and benefits systems. His means-tested tax credits, such as Child Tax Credit, are so complex that many of those eligible fail to claim them and the Red Book, the main budget document, has expanded from 127 pages in 1997 to 296 pages this year. “He has clearly made the tax system more complicated because he’s used it to influence the behaviour of individuals and to achieve his social objectives,” says Robert Chote of the Institute of Fiscal Studies.
How much have taxes gone up?
Brown has introduced no fewer than 66 tax rises since 1997. Business has had to bear much of the burden. The CBI calculates that business is paying some £50bn a year more than in 1997. But individuals have also suffered. In 2002, Brown skilfully sidestepped a commitment not to raise income tax by hiking national insurance contributions instead. Yet critics say that all this tax and spend has so far yielded little and that Brown will be forced to raise taxes again. Others argue that Brown’s fiscal policies have left the UK dangerously exposed and warn that the gloss may be about to come off the Brown economic miracle.
What might go wrong?
The risk is that a housing crash could destroy Brown’s record for economic management. His problem is that growth on his watch has been driven not so much by any renaissance in British industry, but rather by rising house prices, which have fuelled a spending boom. If the housing bubble bursts, consumers might rein in their spending, throwing the economy into recession. Worse, the Government’s own finances would deteriorate as stamp duty and VAT receipts would be hit. The UK may yet avoid a housing crash, but Brown knows the risk is high enough that he needs to move soon if he is to be the next prime minister.
Will he ever make it to Number 10?
The bookies still make him odds-on favourite to succeed Blair, but if history is anything to go by, his odds are only about one in four. Of the 33 chancellors in the last century, only nine made it to the top job. On the other hand, those who have performed best in the job, such as Lloyd George, Churchill and MacMillan, have gone on to become successful prime ministers.