And so Lord Young is forced to apologise for his “offensive” and “tactless” remarks. And fair enough, the Lord has a certain way about him that winds people up. But for all that, he was right – or at least, kind of right.

Lord Young was there right at the beginning of the Thatcher experiment. He was adviser to Keith Joseph (do you remember him?). Before Mrs T became leader of the Tories, Sir Keith was the bookies’ favourite. And it was he who particularly promoted the idea of controlling the money supply as a way to fight inflation – it was one of the big experiments of the early Thatcher years. And Lord Young was there, behind the scenes. He went on to become employment secretary, and then trade and industry secretary.

Alas, despite spending an amusing hour or so on YouTube, we could find no sign of his Spitting Image puppet. But it seems a tad odd to see one of Mrs Thatcher’s favourite lords in the public glare again.

He said: “For the vast majority of people in the country today they have never had it so good ever since this recession – this so-called recession.”

But actually, patronising though he sometime seems, Lord Young was technically right. The UK’s very own official compiler of stats has said the very same thing. Back in the summer it said: “Household disposable incomes, like those of corporations, have been subject to a number of opposing forces. Increasing unemployment and moderation in wage growth has constrained labour income. But because the household sector is an overall net debtor in interest bearing assets, due mainly to the large increase in secured mortgage debt built up in the last decade, the major reduction in interest rates has, in the aggregate, supported income available for consumption and investment. The taxes and benefits system has also behaved as an automatic stabilizer, protecting household incomes from some of the consequences of the weakening labour market through lower taxes and higher benefit payments.”

So, you see, Lord Young may have put an unfortunate inflection on the way he said it, but he was right. See: What kind of recession was that? – households were no worse off

The snag is, he misses the point. First of all, while it is true to say that the average household became no worse off during the course of the recession, during the boom years they did become worse off. According to a report from Ernst & Young a couple of years ago, discretionary disposable income actually fell for average households between 2003 and 2007. During this period, households did not enjoy growth in disposable income which matched growth in GDP. During this period, the new wealth that was generated did not trickle down to households, and neither was it invested. So, as a result, we should have had recession. But what did happen in this period is that the money that was neither spent nor invested did end up boosting house prices, which encouraged households to go out and borrow to fund their spending. So actually, it may be that the recession was not caused by too much debt, but rather the way new wealth was distributed. See: You have never had it so good – well, actually, you have

As for 2011, it seems that as the economy recovers, average households will become worse off again.

When Super Mac said we had never had it so good, he was actually trying to warn us that the good times might not continue. Harold Macmillan, that’s Britain’s prime minister during the early 1960s, was worried that boom would turn to bust, and tried to warn us that we might be getting to that point when things were as good as they were going to get. It is just that history recalls his words differently. Unfortunately, Lord Young was not being so subtle. Alas, if he truly had been aiming to mirror the sentiments Harold Macmillan was trying to express, he would have been spot on.

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