Blair endorses Cameron’s economic policy

Says he would have raised VAT and reduced the Budget deficit faster than Brown.

When David Cameron declared, at a 2005 dinner with newspaper executives, that he was “the heir to Blair” he was more right than he could have known.

In his memoir A Journey, Blair offers the coalition’s economic policy his unequivocal endorsement and dismisses Gordon Brown as a retrograde Keynesian. He laments that Brown “bought completely the Keynesian ‘state is back in fashion’ thesis”.

Had Blair led Labour into the election, he would have supported a “gradual rise in VAT”, he says, a faster pace of deficit reduction and smaller increases in direct taxation.

Here’s the key passage:

We should have taken a New Labour way out of the economic crisis: kept direct taxes competitive, had a gradual rise in VAT and other indirect taxes to close the deficit, and used the crisis to push further and faster on reform.

We’ve long known that while Blair reluctantly supported the new 45p top tax rate, he was opposed to the introduction of the 50p rate — one of Labour’s most popular policies.

On the deficit, he strikes a remarkably Cameron-sounding note:

If governments don’t tackle deficits, the bill is footed by taxpayers, who fear that big deficits mean big taxes, both of which reduce confidence, investment and purchasing power.

To my mind, Labour is fortunate that Blair was not in power at the time of the financial crisis. Unlike Brown, he may not have supported the fiscal stimulus that prevented the economy from going into a death spiral.

Writing about the 2010 election, Blair also claims that the public elected “the government they wanted”. In fact, most people voted for parties (Labour and the Lib Dems) that opposed immediate cuts in public spending and argued for a slower pace of deficit reduction. What they got was a government committed to economically reckless cuts and to a savage and regressive deficit reduction programme.

But, reading Blair’s book, I’m inclined to ask: is there any policy of the coalition’s that he disagrees with? The uncomfortable answer for his Labour admirers is: perhaps not.