Blame Politics and Blame Avoidance

The 'blame politics' and blame avoidance strategies adopted during the time of this fiscal squeeze episode were complex, and it is necessary to distinguish between the short-term assignment of blame and the longer-term 'narrative' surrounding this episode. As noted at the outset, some of the key figures from the period of the minority Labour Government blamed this episode on a 'bankers' ramp', in the form of deliberate pressure by the Bank of England and other financiers for the reversal of hard-won welfare measures. For example, echoing numerous other similar claims by Labour MPs in the September 1931 Economy Bill debate, the Labour MP Fenner Brockway asserted, 'it is not a National Government. It is in reality a bankers' Government and it is merely carrying out the interests of the financial classes.'11 Some Labour politicians blamed the other parties on which the Labour Government depended for survival for demanding unnecessary cuts, some blamed the civil service for proposing politically unpalatable spending cuts, and others blamed the King for his actions after MacDonald resigned in August 1931, in replacing the Labour Government with a National Government under the same prime minister without an election. As we have already noted, MacDonald and his 'National Labour' group were blamed by trade union leaders and the Labour ministers who did not join the National Government as 'class traitors' who had betrayed the Labour movement by siding with right-wing parties to cut working-class living standards. Others blamed those leaders for pursuing misguided policies of financial orthodoxy that were ineffective or even counterproductive in relation to the economic benefits they were intended to secure (not even succeeding in maintaining the gold standard).

On the other side, MacDonald and his National Government colleagues blamed the previous Labour Government for dithering in a crisis, failing to take the decisive measures needed to stabilize the public finances in an emergency, and then passing the buck for making unpopular choices to others. And as already noted, key blame issues also turned on precisely what had been decided by the Labour Government before it left office on 23 August 1931 and what was decided after that date by the National Government. A case in point was that of wage cuts for War Department industrial (blue-collar) civil servants, for which the May Committee had recommended the abolition of a preferential bonus scheme, on the grounds that the scheme gave more than the 'fair wages' principle demanded (that pay and conditions for such employees should not be inferior to those operating in the most comparable industry (Committee on National Expenditure (1931), para 91)). In 1934 a leading Labour politician associated with the National Union of General and Municipal Workers, John Richard Clynes (who had been Home Secretary in the minority Labour Government and who Ramsay MacDonald had defeated for the Labour leadership in 1921) claimed these pay cuts were an act of the National Government, while MacDonald asserted that the decision to withdraw the bonus had been approved by the Labour cabinet of which Clynes had himself been a member.[1]

In the short-run, the massive defeat of the bulk of the Labour Party in the 1931 general election suggests that at the time of the crisis many voters were more convinced by the second set of blame arguments than the first. But over time, as many commentators (such as Wrigley 2013) have observed, the first set of blame arguments became strongly entrenched in the Labour Party as a dominant narrative, and indeed in this case it could be said that the history was more written by the losers than by the winners of the struggles of August and September 1931.

Institutionally, the blame politics of this episode looks at first sight similar to that of the 1923-25 Geddes Axe period, in that the job of evaluating and proposing fiscal squeeze and other measures to deal with the crisis was passed out to a committee of 'experts', though in this case two such committees with overlapping briefs figured in the process. One was a committee composed mainly of economists (the Macmillan Committee), formed in 1929 when the financial crisis first broke, and commissioned to explore measures to deal with the economic depression. The other (the May Committee) was a Committee on National Expenditure formed by the Labour Government in early 1931, as already mentioned. But in contrast to the Geddes Committee, both of these committees split, the second seriously.

The May Committee, as noted earlier, was effectively forced on the minority Labour Government in February 1931 by motions put down in the House of Commons by Liberals and Conservatives calling on the government immediately to appoint a 'small and independent committee to make recommendations to the Chancellor of the Exchequer for effecting forthwith all practicable and legitimate reductions in the national expenditure consistent with the efficiency of the services.' The Committee was given a brief identical to that of the Geddes Committee ten years before,[2] and like the Geddes Committee it was an all-male group composed largely of individuals with a business background (accountants, bankers, actuaries) and experience of service in government (plus one trade union leader). But its political composition was very different. The three main party leaders agreed on who should be asked to chair the committee (Sir George May) and each party then nominated two people from outside the House of Commons to serve on the committee, making the Committee both larger and more overtly partisan than the Geddes Committee had been.[3]

The political outcome of the May Committee's work was also different from that of the Geddes Committee in at least two ways. While the Geddes Committee seems to have helped to prop up the Lloyd George coalition over some politically difficult months in 1921-22, the May Committee arguably hastened the demise of the Labour Government because its predictions of the scale of the budget deficit (said by its critics to have been exaggerated for dramatic effect to underpin its recommendations of cuts in social security spending, and thereby to deter the Labour cabinet from watering down its proposals) had the effect of alarming the financial markets to such an extent that the cabinet was forced to respond quickly to its proposals in the middle of a financial crisis. Second, while the Geddes Committee produced an agreed report, the May Committee split on party lines. The committee (perhaps surprisingly) agreed on its gloomy estimate of the size of the budget deficit; where it disagreed was on how to reduce that deficit. The Committee's majority report advocated widespread spending cuts, but a minority report largely reflecting the views of the TUC and written by the two Labour appointees on the Committee (Charles Latham, a London Labour councillor and Arthur Pugh, leader of the steelworkers' trade union) took a different tack. That minority report accepted the need for some spending cuts, but (arguably outside the committee's brief to recommend spending cuts) called for more emphasis on a revenue squeeze directed at the better off, particularly through higher taxes on holders of fixed-interest securities who had benefited from deflation.

As well as the way the politics of the national expenditure committee played out, there are other notable differences in the way blame for fiscal squeeze was handled in this episode as against the squeezes of the 1920s. First, as we have seen, after the collapse of the Labour Government in August 1931, the subsequent episode of mixed revenue and spending squeeze was carried through by a coalition formed explicitly for the purpose of dealing with the national finances, originally on an emergency basis to be followed by a swift general election. Second, the squeeze package that the National Government produced in its budget of September 1931 was presented as a temporary, time- limited emergency response, not a permanent policy shift.

Third, much more emphasis than in the 1920s was laid on a rhetorical theme of 'equal sacrifice' across the country, with all citizens represented as 'in it together' in facing tax rises and spending cuts. 'Equality of sacrifice' was the central theme in a parliamentary statement by Ramsay MacDonald in September 1931, and the term became a catchphrase in political debate. Even the Civil List (the allowance made to the monarch) and the costs of running the then Royal Yacht, Victoria and Albert, were pointedly cut to demonstrate 'equality of sacrifice'. This ponderous vessel had a crew of no less than 380 and cost some ?75,000 a year to run, despite the King's 'notorious dislike of going abroad', and it was agreed to cut the costs by ?5000 a year by taking six of the ship's eighteen boilers out of service (thus cutting its speed) and reducing the crew by roughly 10 per cent by not filling vacancies.[4]

  • [1] Memo '60/Factories/1553' dated 12.2.1934 in WO 32/3404 Factories: Royal Ordnance(Code 49 (A)): Wage cuts as the result of the recommendations of the Committee on NationalExpenditure 1931.
  • [2] T160/398 Committee on National Expenditure 1931.
  • [3] The seven members were Sir George May (Chairman), Ashley Cooper, Sir Mark WebsterJenkinson, Charles Latham, Lord Plender, Arthur Pugh, and Sir Thomas Royden.
  • [4] See T161 538 May Committee 1931.
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