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It is right that vigorous debates are going on about what Labour's economic policy should be going forward towards the next election. These debates have two dimensions: on the one hand, what is right from an economic point of view; and on the other, what has any chance of working electorally. Ideally the two come together - but life is not always like that.
Naturally, in looking at these issues, commentators end up basing their approach on what they think happened in the New Labour years. Therefore it is crucial that in thinking about the future, we establish what actually happened during those years, so that the right policies for the future can be formulated. At present there is a danger that the way the economy has evolved since the financial crisis in 2008 has deeply and erroneously coloured the view of what actually happened, what did and did not work, and where we go from here. In this article we look beyond the hype and the heat to focus on the numbers and analyse the economic facts.
What did happen under Labour?
A common view is that the performance of the UK economy between 1997 and 2010 under Labour was weak and based on an artificial bubble. According to this view, the UK's current economic problems are a consequence of poor policies in this period. The question is whether the data back this up or not.
We focus on measures of business performance, especially productivity growth. This is a key economic indicator as, in the long run, productivity determines material wellbeing - wages and consumption. Productivity determines the size of the 'economic pie' available to the citizens of a country. Of course it is by no means everything, and we are leaving out key issues like equality and environmental sustainability, as well as jobs and long term unemployment. The relationship between economic growth and concepts of happiness or wellbeing are much debated, but productivity is still crucial for understanding what was happening in the Labour years. We remain strongly of the view that the growth of national output per person is, all else equal, a desirable thing.
The big picture
There is an argument for focusing our analysis of the Labour period only up...