Who said this: “If governments don’t tackle deficits, the bill is footed by taxpayers, who fear big deficits now mean big taxes in the future, the prospect of which reduces confidence, investment and purchasing power.   This then increases the risk of a prolonged slump”?   No, it wasn’t Cameron or Osborne.   It could have been, but actually it was Tory Blair in his memoirs.   Every single clause in this pontification is wrong.

Of course governments should deal with deficits.   But who presided over a government that had public sector receipts and expenditure in balance in 2001, but then racked up a cumulative deficit in the public accounts of  £260bn over the next six years before the banking crash in 2007?   Nor can he claim this was Brown’s fault.   In his diaries Blair ostentatiously claims credit for the government’s economic record.   “As with the Bank of England independence, the broad framework on the economy, never mind anything else, was set by me”, he writes.   Really.

Next, why did the deficit arise in the first place anyway?   The main reasons were de-regulation of finance which Blair strongly promoted, a far too lax monetary policy after 2002 which allowed excessive leveraging for which Bank of England independence (for which he claimed the credit) paved the way, and the greed and recklessness of City directors who were blithely ignorant of what was going on in their own trading rooms, but on whom Blair naively pinned a blind faith.

Then there’s the question of how deficits are to be tackled.   Blair assumes it has to be tackled entirely by cuts, just like the Tories.   This is wrong and counter-productive.   If drastic cuts are imposed before the recovery is clearly under way (which at present it clearly isn’t), it simply leads to a deeper collapse (the double-dip) in government revenues and even bigger cuts.   Blair ignores (or is unaware of, since his knowledge of economic matters is fairly rudimentary) the alternative of a public spending-led promotion of jobs and growth particularly in infrastructure and affordable housing which would reduce the deficit far more quickly and far less destructively.

Then Blair writes: “We should have taken a New Labour way out of the economic crisis [which New Labour had itself largely created]: kept direct taxes competitive [i.e. not raised the top rate of income tax above 40%, even for the 3,000 people in the City who were each paid over £1m last year], had a gradual rise in VAT and other indirect taxes [i.e. the most regressive taxes which hurt the poor most], and used the crisis to push further and faster on reform [i.e. more privatisation of public services, but no reform of the banks where the problem really lies]“.

When economic shallowness of this kind is combined with obsessive anti-Labour dogma and paranoid zealotry, Blair may come to be judged by history as a greater obstacle to Labour’s advance even than Thatcher since she was the class war warrior one would expect from the Tories, but he betrayed Labour from the inside.

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