Question 3: Have Labour governments in the past been able to control the economy?


  • 19 historians answered either 'yes' or ticked the option which indicated that they had broadly controlled the economy. (15 broadly 'yes' and 4 definitely 'yes')
  • 15 historians answered 'no' or the option which suggested that that they had broadly failed (13 broadly 'no' and 2 simply 'no').


Clearly there was a difference in views about this although a majority of respondents argued that the taunt that Labour cannot be trusted to run the economy is not backed up by the evidence. The same would go for the Conservative claim that, sooner or later, all Labour governments run out of money. Nevertheless, as Glen O'Hara points out, most Labour governments have been undermined by financial crises: 1929, 1931, 1949, 1967, 1976, 2008. Crucially, these crises have shaped popular memory, not least because they are frequently recalled in the media.

A number of historians point out that the economy enjoyed growth under post-war Labour governments that was usually as good as the Conservatives and often better. Pat Thane (Birkbeck and author of Divided Kingdom) argues that Labour’s economic record has been massively under-estimated. The Attlee government created full employment in peacetime and this was sustained by subsequent governments through to the 1970s. Even the Callaghan government during the 1976 IMF Crisis managed to keep the economy steady. The memory of so-called economic failure in the 1960s and 1970s haunts the Labour Party although historians have shown how complex the economic history of that period was with a rise in living standards and a broad reduction of economic inequality (see below). Jeremy Nuttall (Kingston) argues that 'Labour is more fiscally prudent than it is given credit for'. For evidence he points to the decision not to devalue in 1964 and to Blair retaining the Conservatives' spending limits for the first two years of his administration. Christopher Massey (Teeeside and author of a study of Labour modernisation, 1979-97) noted that 'The financial crash of 2007/08 was largely outside of Labour's control – and Brown's early response to this likely saved the situation being far worse'.

Historians who answered ‘no’ to this question argued that attempts by Labour to directly control the economy have worked badly. The corporatist approaches and attempts at incomes policy in the 1960s and 1970s were never that effective. This period in any case saw the breakdown of the Keynesian consensus that had governed British policy. In the analysis of Malcolm Petrie (St Andrews and author of a study of post-war Scottish politics titled Politics and the People), 'the plans of Labour governments have always been predicated on economic growth, which removes the need for difficult decisions on fiscal and monetary policy – when that growth doesn't arrive, the problems are often insurmountable'.

On the other hand, Tony Taylor (Sheffield Hallam) observes that there is a form of amnesia about the economic positives of Labour’s periods in government and an over-emphasis on the negatives. This can damage the party. Taylor notes: 'the debate about who 'crashed' the economy in 2010-2015 forced Ed Miliband into a position of recognising Labour's apparent failings on the economy – not helping Labour's position on economic competence and apportioning blame where it wasn't needed'.

Respondents made the point that it may be wrong to assume that any government (of any party) can truly control the economy (one reason why some historians answered 'no'). The nature of the global economy means that no government is master of its own destiny. For that reason, some governments are simply lucky because of the benign economic environment (Tony Blair) and some are not (Gordon Brown). Colm Murphy (Queen Mary and author of Futures of Socialism) argues that even the Attlee governments were 'dependent on loans from America and [were] at the mercy of the balance of payments'.

Pippa Catterall (Westminster) prefers the term 'manage' to 'control' (of the economy). She points out that the Attlee government was rigorous in its approach to the economy but was nevertheless susceptible to inflationary pressures. In a similar spirit, Richard Johnson (Queen Mary) also argues that 'control is too strong a word' but 'Labour governments have made significant interventions in the economy which have shaped the patterns of ownership, prices, imports, exports, employment, regional development, and much else'.

We need, however, to put this in perspective. Keith Laybourn (Huddersfield) argues that 'Even under Attlee Labour never controlled more than 30 per cent of the economy'. In the 1970s Labour moved away from its ambition to direct large parts of the economy and this was maintained by Blair. Starmer has indicated that some utilities may be brought into public ownership in some form but Laybourn doubts that it will be a significant amount.