Gordon Brown’s repeated refusal to say sorry for his part in the current economic meltdown isn’t obstinacy or even political evasiveness, as the Tories like to suggest. It’s just that he genuinely doesn’t believe he has anything to apologise for – that if the sub-prime fiasco and worldwide securitisation of toxic assets had not started in the US, global growth would have continued largely unimpeded. But that view is a travesty of the truth. Even if the sub-prime mis-selling had not occurred first in the US, similar trends were already apparent in other Western countries, including the UK, and an economic collapse was inevitable. The breakdown is fundamentally due, not to US sub-prime which finally triggered it, but to the increasing excesses of a deregulated market fundamentalism spinning out of control. That is the real charge against Brown and New Labour, who for over a decade so sedulously promoted precisely such a system. But that is not a charge which the Tories can make because that is their system which they originated and consistently supported.

Sub-prime selling was rife by 2007, when the current crisis broke, throughout the Western economies, not least in the City of London. In the UK, by 2004, the number of mortgages provided at a price to income ratio in excess of 6 to 1 was over 209,000. The number in excess of 8 to 1 was over 134,000, and the number in excess of 10 to 1 was a staggering 62,931 (Hansard November 2007). In 1997, the number in excess of 10 to 1 was only 9,963. This 6-fold increase in just 7 years clearly shows that sub-prime marketing had got out of hand equally in the UK as much as in the US. And Gordon Brown presided over that because letting the market rip was key to the neo-liberalism to which New Labour tied its ideology.
But it is not just a matter of the sub-prime housing phenomenon. It is ironic to hear the Prime Minister committing himself to ushering out the current system of deregulated capitalism, to capping bankers’ bonuses, to cracking down on tax havens, to supervising more closely private equity and hedge funds,and to tightening light-touch City regulation when he himself so strenuously and so persistently championed all these characteristics of the neo-liberal system. At the annual Lord Mayor’s dinners each year up to 2007 he hosed down the assembled bankers with adulation and gratitude. It was on his watch that the City and financial markets doubled their share of GDP, generating the huge imbalance within the economy to the disadvantage of manufacturing which now lies at the heart of Britain’s weakness.
All these policies and more – the housing and credit card bubbles and the creation of a new regulatory authority in 1997 which exerted the weakest regulatory supervision in the Western economies on the instructions of Brown’s Treasury – are central parts of the neo-liberal flagship. They originated with Thatcher, but were advanced much further by New Labour. The moral today is not just saying a vacuous Sorry, but fundamentally altering the system that created this crisis.

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