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Tuesday, September 29, 2020
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Nick Wood: We ruled a quarter of the world and our football team was magic. What was wrong with the 1930s?

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Labour has opened its election campaign with a spectacular canard – that “The Tories want to cut spending on the public services back to the levels of the 1930s, when there was no NHS.”

The justification is that the Office of Budget Responsibility said of the Autumn Statement that by 2020 public spending as a percentage of national output (35.2 per cent) would probably be at its lowest level in 80 years.

Cue soup kitchens, hunger marches, The Road to Wigan Pier – and a Labour election poster.

Of course, this is all nonsense. As Tim Montgomerie has pointed out in The Times, even if the Conservatives make their planned reductions, public spending in real terms will be nine or ten times bigger than it was in the 1930s. And at 35 per cent of GDP it will be on a par with levels recorded at various points in the not so distant past, including 10 years ago under the previous Labour government.

But, hey, let’s take Labour at its word. Were things really so bad back in the 1930s?

The decade opened with the Great Depression of 1930-31, pushing unemployment to an horrific 23 per cent. But by 1936 it was down to 14 per cent and by 1938 10 per cent. In the Labour recession of 2008/9 unemployment rose to over 8 per cent and is now under 6 per cent.

The Labour recession was longer and deeper than the one in the 1930s, with the economy shrinking by an all-time record of 5.8 per cent in the first quarter of 2009. By contrast, the economy was growing at a healthy 3.3 per cent in 1933 and averaged 4 per cent between 1933 and 1936. In 1934 it reached a spectacular 6.2 per cent. UK growth since the most recent slump has been nothing like as much.

Public spending in 1935 was £1.35 billion or 35 per cent of GDP. But since, as Labour helpfully remind us “there was no NHS”, what were they spending their money on?

A look at the pie charts is intriguing. The biggest item, by far, was debt interest, soaking up 25 per cent of GDP (to pay for WW1). That compares to 7 per cent today – a warning of what can happen if a country borrows too much.

Other big items back in 1935 were welfare (12 per cent; 15 per cent today), education (12 per cent; the same today), transport (11 per cent; 3 per cent today), defence (9 per cent; 6 per cent today). Health care and pensions (9 per cent combined) were far lower than today’s numbers (38 per cent).

Broadly speaking, the big change in the bills since the mid-1930s has been far less money on debt interest and transport and far more money on health care and pensions. Welfare and education are not hugely different.

Nor were the 1930s so bad in other respects.  Britain built nearly 300,000 new houses in 1935/36, compared with a measly 130,000 a year today. BBC TV was born in 1936 – but the jury is still out on that one.

The Conservatives scored spectacular election victories in 1931 and 1935; the England football team was virtually invincible, beating Hungary 6-2 in 1936, Norway 6-0 in 1937, Finland 8-0 in 1937, Germany 6-3 in 1938 and – just to drive home the point – the Rest of Europe were whacked 3-0 at Highbury in 1938, a precursor of more serious battles to come.

Fred Perry became the last Englishman to win Wimbledon in 1936 and Sir Len Hutton set a world record cricket score of 364 in 1938 (admittedly Australia won most of the time in the 1930s because of Don Bradman).

There was also the not so small matter of the British empire, at its peak in the 1930s when it ruled over 460 million people and a quarter of the earth’s land area. But I don’t imagine Ed has that in mind when he accuses Dave of wanting to roll back the clock 80 years.

 

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Nick Wood
Nick Woodhttp://www.mippr.co.uk
Chief Executive of Media Intelligence Partners

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