DCSIMG

In May 1997, things could only get better, so why do they seem to have got worse?

After every party comes a hangover.

Given the extent of the celebrations on the night of May 1, 1997 as Conservative rule was swept away in a wave of public optimism, it should have come as no surprise that the good times couldn't last. Except it did – and, according to Eamonn Butler who has spent the last 12 years researching the minutiae of New Labour policy, the hangover which is now just starting to hit is worse than anyone could have ever expected.

"Like a lot of people, I thought Britain was in such a poor state that what we needed was a government with new ideas and a fresh outlook," says Butler, head

of the Adam Smith Institute think- tank. "New Labour promised a new open kind of government. They seemed purposeful, businesslike and in tune with what the ordinary people of Britain wanted.

"Throughout the election, the Blair's family campaign car had been a Ford people carrier. That in itself summed up what the party was about, so maybe when the Blairs arrived at Number 10 in a Jaguar we should have suspected there was trouble ahead."

After the years of Tory sleaze, New Labour seemed like a fresh chapter. Under the leadership of its new Prime Minister, Britain was set to rediscover its social conscience, the economy would be regenerated and public finances would be reined in.

"The early signs were promising," says Butler. "New Labour declared it wouldn't raise income tax, and interest rate decisions were to be handed over to the Bank of England. Prudence was the name of the game."

However, just two years after the election night party at the Royal Festival Hall, doubts were beginning to creep in. For Butler, at least, the optimism was already beginning to seem misplaced, and the shine had begun to wear off the new PM, now surrounded by the likes of Peter Mandelson and Alastair Campbell.

"Maybe we were all guilty of too much optimism," he says. "It wasn't long before the new ministers looked and sounded

like the old ones.

"We were promised Cool Britannia and a People's Government. Instead we got boom and bust, injustice, surveillance, regulation, stealth taxes, sleaze, lies and binge-drinking ladettes."

Today, with the country struggling to cope with the worst recession for 70 years, those early pledges to end the cycle of boom and bust seem more than a little hollow. Britain is not alone, but according to Butler, whose book The Rotten State of Britain has never looked more timely, blaming a global downturn is an abdication of responsibility.

"Government borrowing is higher than at any point since the Second World War," he says. "The current crisis may well have originated in America, but in reality, Britain's position was already weak. There was nothing saved to tide us through the bad times and our only hope is to borrow more.

"Gordon Brown's talk of prudent fiscal policy was a sham. As Chancellor, he allowed borrowing to soar and somehow it always turned out to be higher than his Budget predictions. It's too simple to blame our plight on what is happening on the other side of the Atlantic or on other forces beyond our control.

"The true rate of inflation is not easy to measure. However, the decision to scrap the Retail Price Index, which included property prices, in favour of the Consumer Price Index, which didn't, was absolute madness. House prices soared, but the Bank of England was focused on other things and it meant borrowing spiralled out of control.

"Brown's other big mistake was to pass the responsibility of regulating the banking sector from the Bank of England to the Financial Services Authority. The Bank of England had a much better grasp of what was actually happening in the financial markets and could quietly tell overstretched banks to mend

their ways.

"In October 2006, long before Northern Rock went bust, the Bank told the FSA it suspected problems. For whatever reason the situation was allowed to continue.

"Nature took its course and a devastating domino effect began. With the Government feeling forced to bail out Northern Rock, it put itself in the position where it would have to do the same for other troubled institutions."

As businesses, small and large, feel the effects of the banking crisis, redundancies have become inevitable. Some predict in the coming months unemployment will top the three million mark. If proved right, it will be a grim landmark, but according to Butler the jobs timebomb started ticking a long time ago.

"The truth is there has been no discernible change in Britain's productivity," he says. "In fact, economic growth was slightly lower in the Blair years than during John Major's time as PM. While there has been an explosion of public sector jobs, it's the private sector which creates the wealth."

It's not just economic policy which has contributed to the current crisis. According to Butler, New Labour's reliance on spin doctors, its promotion of the "nanny state" and its inability to tackle crime and antisocial behaviour have eroded the country's once solid foundations.

"Our police and justice system is the most expensive in the world, but what do we get for it? " he says.

"The Government claims that crime is falling, but it depends what figures you believe. Four years ago an international crime survey saw Britain top the EU charts for car theft, assaults and burglaries.

"Meanwhile the British Crime Survey finds people's real experience of crime is that street robberies, violence, gun crime and knife incidents have soared.

"In response, the Home Office says the number of offences brought to justice has risen. Maybe. But nearly half are minor incidents dealt with by on-the-spot fines. We are not catching gangs who wield guns and knives, we are catching street traders who sell apples by the pound and their customers who drop the core in the gutter."

It's depressing stuff, but after spending more than a decade wading through all that's wrong with Britain in the 21st century, Butler has not ruled out the possibility of recovery. If he has managed to retain even the merest glimmer of optimism there may yet be hope for the rest of us.

"Hope springs eternal," he says. "Our broken democracy may be looking more autocratic than it has ever been, but a few simple changes would help re-establish the divide between what is party and what is state. Party appointees in Downing Street should not have power over civil servants. The appointment of judges, diplomats and quango members should be a job for Parliament, not for the Prime Minister behind the closed doors of Downing Street. And it should be Parliament that decides whether Britain goes to war.

"Power needs to be taken from the top and devolved to local decision-making. What's rotten in Britain is certainly not its people. They are as proud, inventive, fair-minded, tolerant and enterprising as they have ever been. While those virtues have been stifled by central Government, it is possible to unravel this mess, but it's going to be painful."

ROTTEN BRITAIN: THE NUMBERS

In real terms, taxes have risen by 52 per cent since 1997.

In the last 12 years, the cost of Whitehall spin doctors has trebled to 5.9m.

Only 28 per cent of British workers are qualified up to apprentice or equivalent level, compared to more than half in France and 65 per cent in Germany.

Today, more than three million people pay the highest rate of income tax – 50 per cent more than in 1997.

Between 2006 and 2007, the number of frontline police constables fell by 1,460.

Each year the Government approves around 3,500 new regulations, amounting to 75,000 pages of rules, with another 25,000 pages of explanation.

The Rotten State of Britain – Who is Causing the Crisis and How to Solve It, by Eamonn Butler, is published by Gibson Square, priced 11.99. Copies can be ordered through the Yorkshire Post Bookshop by calling on

0800 0153232 or online at www.yorkshirepostbookshop.

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