Accusations have been flying between Labour and the Tories about who would run the economy better. Both sides point to their track records, trying to show that only they can be trusted. So, FactCheck decided look back over the last few decades to see how each party has fared while in government.
There are lots of different ways to measure the health of the economy, but they should not be viewed in isolation. The performance of one measure will impact on the others. We’ve picked out a few indicators that help to paint the picture.
It is also important to remember that there is often a time lag before government policies affect the economy. For instance, boosting funding for education might positively impact employment rates and earnings – but not until the pupils concerned have finished school.
So, these figures are only a rough guide, rather than a definitive judgement on a government’s economic performance.
GDP growth
It’s fair to say that GDP was generally better under Labour, but only up until the financial crisis. Of course, the crisis was a global phenomenon that would have hit Britain no matter which party was in government. But critics say Labour could have done more to limit the impact.
Since then, growth has slowed significantly under the Conservatives. But whether this is because of government policy, or the continuing repercussions of the financial crash, is up for debate.
GDP is widely seen as one the most important ways to assess economic prosperity, attempting to measure the overall state of the country’s finances in a single number. It’s a good starting point but, by it’s nature, it doesn’t show us the nuances and details.
Earnings and income inequality
Again, this is heavily affected by the global financial crisis, so using this as a measure of a government’s success is tricky.
Statistically, the Conservatives have presided over a far slower growth in earnings than Labour, on average. Median gross annual earnings grew by an average of £638 in the six Labour years from 2005-2010 (inclusive). Then, under the Conservatives, they grew by an average of just £389 per year between 2011-2016.
But the worst year since the nineties was in 2010, when median gross earnings rose by just 0.3 per cent. This was a crossover year, when the the government switched from Labour to Conservative.
This next graph gives us a different perspective on people’s earnings. It maps the year-on-year changes to the distribution of gross weekly earnings, relative to the median. In other words, this is not the actual amount of money people are taking home, but the percentage increase they experience from the year before.
The red line shows the top ten percent of earners; the blue line is the bottom ten percent.
The influence of the financial crisis makes it very hard to read politics into this, but there are still a couple of conclusions we can draw.
Under the Conservatives, the stagnation in earnings growth continued for a long time following the financial crash. But, when the figures did start to pick up, the increase in earnings was very significant. Notably, the bottom ten percent have actually seen their wages increase by a higher percentage than the top ten percent. This is probably partly thanks to the influence of the Living Wage Foundation, rather than purely because of government policy.
Income inequality can be tracked using the Gini Coefficient, a measure between 0-100. The lower the value, the more equally household income is distributed. This graph shows how the picture has changed since 1979.
According to the Gini Coefficient, income inequality has not changed greatly since 1990s. For New Labour, it was a mixed picture with peaks and troughs. Since 2010, the Conservatives have overseen a slight improvement that began in the Labour years. But within the context of the rest of the graph, the Conservative’s record is marred by the large increases in inequality in previous years.
Gender pay gap
Here’s how the gender pay gap has improved over the years. The graph shows the percentage difference between men’s and women’s hourly earnings.
This one is a bit clearer. Tackling the gender pay gap has stalled under the Conservatives. They’re still making some progress, but it’s being reduced at a slower rate than under Labour.
The question is: are the Conservatives to blame, or is it down to other factors? Seeing as this is a multi-pronged problem, and not simply a matter of government policy, it’s likely to be a bit more nuanced.
Unemployment
Here’s the official unemployment rate for people aged 16+, from 1990 to 2016 (seasonally adjusted).
On face value, Labour have a better track record on keeping unemployment levels low. While in office, the party oversaw an average unemployment rate of 5.8 per cent. This is two percentage points lower than the Conservative’s average. Labour also had the single lowest annual unemployment rates during this whole period.
(To make this comparison, we are including election years in both the incoming and outgoing government’s record as the data does not tally exactly with these changes.)
Interestingly though, although the Conservative’s average is higher, the rate of unemployment fell faster while they were in office than under Labour. But these were during post-recession recovery periods, following big bumps in unemployment – rather than driving down the figures below what we would otherwise have expected. The financial crisis makes it difficult to judge each party’s record fairly.
What’s more, low unemployment rates does not necessarily mean more people are in good, stable and well-paid work. For instance, in recent years the rise in low paid zero-hours contracts is likely to have driven down the unemployment statistics.
So who has the better record? It’s a close call: both parties have a reasonable claim to be the strongest on this, it just depends which way you look at it.
However, if we look at the figures over a longer time period – back to when Thatcher became prime minister in 1979 – then Labour would undoubtedly have the best record. Under these parameters, the average unemployment rate under the Conservatives rises to more than 8.5 per cent. They oversaw the longest sustained rise in unemployment, and witnessed the single biggest annual increase.
Health and Education spending
Labour increased investment into healthcare (as a proportion of GDP) more than the Conservatives have.
However, the important thing to note here is that these are comparative figures, not absolute ones. So if health spending stays the same, the graph could still show a rise if the GDP falls. This explains the sharp peak shown around 2008-2008. It’s not necessarily that health spending shot up at this point, but merely that it was protected in the face of falling GDP.
On education, Labour also oversaw a huge increase in school funding per pupil. The Conservatives continued this for a few years, despite a blip shortly after the financial crisis. But projections based on current Conservative plans will see a dramatic drop in spending. Here’s the graph from the IFS.
As FactCheck previously pointed out, the overall school budget has been protected in real terms. But that doesn’t take into account the fact the number of pupils is increasing. So the amount being spent on each child will go down.
Industrial action
Official data shows us the number of days lost each year from strikes and industrial disputes. While this is not a financial measure, it gives us an insight into worker satisfaction and the government’s capability to manage an economy smoothly.
Let’s look at the data for the years covering the four prime ministers before Theresa May – that’s two Conservative and two Labour.
Based on this, the Conservatives have seen a higher number of days lost, on average. Overall, the figures are up 18 per cent under the Conservatives. However, this is only an average, pushed up by a few particularly bad years. In reality, both parties have a mixed record.