‘Philip Snowden: How Reeves resembles Labour’s under-valued first chancellor’

In her October 2023 Labour conference speech, Rachel Reeves claimed she would be an iron chancellor who would achieve change “on the basis of iron discipline”. Her commitment to strict fiscal rules and her own brand of securonomics is well-known, and yesterday Keir Starmer paved the way for her autumn budget with the grim promise of “short-term pain for long-term good”.

This month has also seen the timely publication of a new edition of the autobiography of Philip Snowden, Labour’s first chancellor, who took office a century ago. But it is not only Snowden’s memoir that is back in print; it appears the ideology of the party’s first ‘Iron Chancellor’ has made a comeback on the Labour benches too.

Philip Snowden was an extraordinary figure who defied expectations in practically every aspect of his life. Snowden emerged from the grinding poverty of an isolated Yorkshire weaving village without a formal education, yet rose to the top of British politics. He was paralysed in the prime of his life but taught himself to walk again, overcoming crippling disability his entire life.

For years he was regarded as one of the country’s most implacable socialist demagogues, yet he and the Treasury embraced with “the fervour of two long-separated kindred lizards” to borrow Churchill’s memorable phrase. Having been a pacifist in the First World War, Snowden was celebrated as a steadfast patriot in tenaciously fighting for Britain to get its fair share of German reparations.

Labour’s first government

Snowden’s reputation was forever tarnished by his treacherous actions in the great financial crisis of 1931. The chancellor backed prime minister Ramsay MacDonald in forming the National Government with Liberals and Tories and implemented swingeing spending cuts and tax rises.

During the subsequent election campaign, Snowden denounced Labour’s admittedly nonsensical programme (which promised to simultaneously underdo Snowden’s cuts, nationalise the commanding heights of the economy and maintain a balanced budget) as “bolshevism run mad”.

While oft-criticised for his austerity approach, in light of the Truss-Kwarteng debacle, Snowden’s actions appear considerably more prudent.

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The opinion of international markets about the solvency of a government really does matter for ordinary people’s lives and borrowing-funded stimulus would have frightened rather than satiated the financiers of 1931, exacerbating the confidence crisis with untold consequences.

The peak of Snowden’s parliamentary career came with his emergency budget speech that year. With patriotic rhetoric of an almost Churchillian-calibre and facing a global run on the pound, Snowden closed by quoting Swinburne: “Bear us witness: Come the world against her, England yet shall stand.” He received a rapturous five-minute ovation. Rachel Reeves will hold out little hope of receiving a similar reception for her autumn budget.

There was a vindictive streak in Snowden’s character, which he would have defended as the no-nonsense straight-talking of a Yorkshireman. While Ramsay MacDonald’s diary reveals the intense pain and years of grief he suffered after his expulsion from the Labour Party, Snowden positively revelled in settling old scores with former colleagues.

He took great pleasure in dismantling Labour’s economic arguments, and, responding to heckling from the Labour benches that it was Snowden who had taught them, he replied, “I tried to teach you, but I am terribly disappointed that my teaching has been neither understood, nor appreciated.”

Balancing the budget

At first glance it might appear Snowden was ensnared by the establishment and abandoned his socialist beliefs. In fact, he stuck to certain principles with an iron will that was completely unbending. Snowden never wavered from his faith in balanced budgets, temperance, gradualist socialism and the early progressive rallying cry of free trade.

While free trade and abstinence from alcohol are no longer staples of left-wing thought, Snowden’s version of socialism and the role he envisaged for the Labour Party in achieving it are perhaps more current. The brand of ethical socialism subscribed to by Labour’s founders such as Keir Hardie, Snowden and MacDonald envisaged the gradual evolution of a prosperous capitalist society into a socialist one; put simply, the tax revenues generated by economic growth would pay for social reform.

Meanwhile, Snowden was adamant that it would be impossible to achieve great reforms, such as universal healthcare, without the firm fiscal foundations of a balanced budget. After all, reliance on borrowing would mean huge interest payments on government debts that would eat into the spending budget in the future.

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The resonances with Reeves’s rhetoric are clear to see, indeed the whole foundation of Labour’s current economic policy – the focus on growth to pay for public services and balanced budgets to secure future prosperity – are nothing short of Snowden-esque. In a letter to voters in target constituencies distributed during the 2024 election campaign, Rachel Reeves promised to “never play fast and loose with your money.” In the same letter, Reeves pledged not to increase income tax, National Insurance or VAT.

Similarly, in his first budget of 1924, Snowden took immense pride in creating a budget surplus and cutting the indirect taxes that most hurt the working class. His great achievement, as he saw it, was proving Labour could be trusted with the nation’s finances. A century on, Labour – traditionally the party of tax and spend – appears to have come full circle, now aspiring to balance the budget and, eventually, lower the tax burden on working people.

Labour has a strange relationship with its founding fathers. Keir Hardie aside, most Labour politicians and activists have either conveniently forgotten or openly scorn the likes of MacDonald and Snowden. While Rachel Reeves might not publicly champion the party’s first chancellor, her rhetoric and policy appears to inadvertently echo Labour’s long-forgotten trailblazer. It is surely time for the party to reengage with Snowden and his legacy.

Philip Snowden’s autobiography is available to buy online.

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