BBC BLOGS - Nick Robinson's Newslog
« Previous | Main | Next »

Miliband: There was no money left

Nick Robinson | 16:51 UK time, Monday, 10 January 2011

It's official. There was no money left when Labour left office* but that had absolutely nothing to do with the party spending too much. That, at least, is the clear, unambiguous, unequivocal view of their leader.

Reading Ed Miliband's recent speeches I had assumed that that was the case but I wanted to be sure. So at his news conference this morning I asked Mr Miliband whether the deficit had anything whatsoever to do with the Labour government spending too much. His answer is not a news story as such but it is of huge long-term significance. (Incidentally, I posted earlier on what he had to say about bankers' bonuses.)

Labour's Blairite wing - led by the former PM himself and ably supported by commentators like John Rentoul of the Independent and Phil Collins of the Times - have argued that Labour needs to admit that it did too little to keep spending under control. In his book, A Journey, Blair recalled that he had "an interesting debate, not quite a contretemps" with Gordon Brown during the 2005 election over spending.

"My view was that we had reached the limit of spending. Even with the economy still growing I could sense that enough was enough."

He went on to criticise the way Brown had failed to tackle the deficit:

"If governments don't tackle deficits, the bill is footed by taxpayers, who fear big deficits now mean big taxes in the future, the prospect of which reduces confidence, investment and purchasing power. This then increases the risk of a prolonged slump. In my view, we should have taken a New Labour way out of the economic crisis: kept direct tax rates competitive, had a gradual rise in VAT and other indirect taxes to close the deficit, and used the crisis to push further and faster on reform."

Douglas Alexander has said recently that the party under Gordon Brown appeared to be in denial about the need for cuts - a criticism, admittedly, of presentation rather than policy. However, what links him and the Blairite critics is a political doubt about whether Labour can re-establish its economic credibility without admitting there was a spending problem.

Today Ed Miliband gave his answer. The last government was borrowing at acceptable levels - about 2% of national income - until the financial crisis hit, he said. That crisis and it alone caused the problem. He also pointed out - perfectly fairly - that at that time the Tories said they wanted to match Labour's spending and not cut it.

Labour's leader says the coalition are deceiving people about the past in order to justify mistaken policies for the future. He has taken one very important decision about the future. The party, under his leadership, will not argue that they could offer what Blair called in his book "smaller, more strategic government".

* to quote Liam Byrne, the former chief secretary to the Treasury's letter to his successor.

Update 22:02: Ed Miliband will make clear in the next few days that he agrees with those who say that Gordon Brown appeared to be in denial about the deficit. He will insist, though, that this was a presentational and not a policy failure. He will make clear that this does not justify what he calls the coalition's "deceit" that the deficit was caused by too much government spending.

Comments

Page 1 of 2

  • Comment number 1.

    Did Blair and Brown become addicted to the tax revenue generated by the City in the boom times - yes. Did they assume those revenues would go on for ever - yes.

    It is also true to say that prior to the financial crisis the Conservatives:

    - supported Labour's policy of light touch regulation of the City; and

    - supported Labour's spending plans up to the point in time when the financial crisis hit.

    BTW does anyone have the figure for the total amount spent on the Iraq and Afghan wars. How much of the deficit can be attributed to those wars?

  • Comment number 2.

    It is verging on the incredible that Labour distance themselves from the excessive spending that has cost Britain so dear!
    Like Ms Nicolson, the mantra was spend, spend, spend. And didn't they do that. It would be sensible in good times to stash a bit of cash rather than blow it in the inefficient ways they did.
    I just hope that the people don't forget what they have done!

  • Comment number 3.

    On the previous thread John Constable posted this breakdown of the deficit. I am not sure I understand it but I thought it was interesting. It seems to suggest that both sides of politics contributed to our current fiscal position. Can that really be right?

    "That tallies with my understanding of the current situation re: the National Debt i.e. Tories (£300Bn) + Labour (£400Bn) + Banks (£120Bn) + interest (£175Bn) = total £995Bn.

    The National Debt will now zoom past the £1000Bn (one trillion) pound mark very shortly.

    Source : http://www.debtbombshell.com/"




  • Comment number 4.

    I think you have got it wrong Nick, Ed was never part of Gordon Brown's team, so bares no responsibility at all for anything that happened.
    Ed is as White as the driven snow.
    Ed even thinks Alan Johnson is a great shadow chancellor.
    Just saw Ed walking across the Thames.

  • Comment number 5.

    For once, we can congratulate Nick on eliciting some important information. Now we know for sure that Miliband Junior is an economic pigmy. Hindsight is, of course, a wonderful thing but only an fool (or a liar) could deny that with the benefit of hindsight it is clear Labour should have been reducing the deficit during the boom years, not adding to it.
    Excusing your mistakes on the grounds that others were wrong too is what naughty schoolboys do when they are found out. "But Miss, Cameron Minor and Osborne did it too Miss!"
    Pathetic.

  • Comment number 6.

    What commenters have to tell us what they said about policy though 2006 leading up to the Autumn Statement. How many like me were telling people who asked that a moderate retrenchment was required through fiscal 2007-8. How many more saw the credit crisis beginning to happen just after in the sping of 2007 with the accompanying collapse of confidence. How many people knew about Northern Rock's deal with Leman and HBOS reckless investments in the commercial property market.

    If you did then you are in a position to critically evaluate what happened. I think most informed people new about the RBS mistakes by then.


  • Comment number 7.

    Blair consistently talks as if he was a spectator of events when he was prime minister - what a wash out!

  • Comment number 8.

    Just because Miliband opines that Labour had things under control doesn't make it true. What did the IMF have to say about it? If Labour's policies were currently being pursued, the IMF would have taken over or we'd be going to Greece or Eire for a hand-out! Completely agree with 2 about people remembering what a mess they made.

  • Comment number 9.

    Public sector net borrowing went UP to a record £22.7bn in November 2010 under the tories - labour has never borrowed that amount.

    So much for the tories saving us from labour folly.

    Also UP are unemployment, inflation, and taxes. Petrol/diesel prices massively UP due mainly to tax hikes are starting cause real problems.

    Of course house prices are DOWN and growth is DOWN, so not everything is going up under the tories.

    As the tories trash the recovery by deliberately putting one million people out of work - I have little interest in the failed policies of a rejected ex-government.

  • Comment number 10.

    Tosh.

    In what way was there "no money left"?

    We were never in the same position as Greece, not even close. Our precious AAA rating was never under threat. It is impossible for a country that has it's own currency to go bankrupt...

    I am not saying for one minute that we do not have a serious deficit/debt problem, but so do many western economies. However, to then say we were on the verge of bankruptcy or the money had run out is not only plain wrong but stupid.

    (note: The note was a joke...get over it.)

  • Comment number 11.

    Nice bit of work Nick, this is what i've wanted to know for a while and I think it will come to define Ed's leadership.

    The thing that us ex-New Labour voters wanted to know was whether the party knew where it went wrong. He's answered that question for me, that he hasn't got a clue. I fear another generation of opposition for Labour. Good job we have the Lib Dems to play leftist opposition to the Tories.

  • Comment number 12.

    Well that's it then. Zero economic credibility. Zero chance of government.

    As a matter of interest, how does Ed M expain the fact that we have the biggest budget deficit in the G20?

  • Comment number 13.

    If only Blair had had the courage to sack Gordon Brown, things could have turned out much better, at least with regard to the economy.

    It is not what any of the experts believe on economic matters that counts, it only matters what the public believe. It seems therefore, judging by the good support the Labour Party still have amongst the public, that they still believe Labour spin. This does not give confidence for the future of Britain as the combination of a potential PM, as Miliband is supposed to be, living in denial, about overspend by the last Labour Government and the public who believe him, is toxic.

    It would have been interesting to see, had Labour won the Election, exactly what measures they would have taken to deal with the deficit. If they followed the policies they now have in opposition, a total mess would have been the result.

    The Coalition is not cutting enough and relying more on tax rises rather than cuts to cure the deficit, so goodness knows what Labour policies would have produced.

    It seems Britain is yet again doomed to the cycle of ever increasing tax rises, which kills growth and in the end sees the spiral down.

  • Comment number 14.

    The are many ways of cutting spending. One way is to cut spending in order to save up to buy something. Another way, is when you have spent too much and the Banks cut up your credit cards. Most people, realise that under Labour too much money was spent and ,therefore, our credit cards have been taken off us. When there is no money left, it is wrong to call it a spending cut, as you can only have a cut when there is actually something to cut. As Labor said, " There is nothing left".

  • Comment number 15.

    8. At 5:53pm on 10 Jan 2011, grumpyspindoctor wrote:
    If Labour's policies were currently being pursued, the IMF would have taken over or we'd be going to Greece or Eire for a hand-out!
    ===============================

    Reality is that we are not needed to go to anyone for a handout.

    Equally at the time labour left office unemployment was less than 8% despite the worst global recession since the great depression. Under Major unemployment reached over 10% and under Thatcher it topped 11%.

    Unemployment is now RISING again under the tories - despite a global up-turn.

    If rising inflation forces an increase in interest rates, whilst falling house prices make it impossible for banks to recover their lunatic loans, the tories may need the IMF yet.

  • Comment number 16.

    What Miliband fails to acknowledge (whether out of ignorance, or mendacity, or both, I do not know) is that the UK's borrowing requirement for financial year 2007-2008 came after an unprecedented asset boom. One can't look at a headline budget figure without understanding its point on the economic cycle.

    A 2% deficit (if that figure is indeed correct) is perfectly acceptable coming out of a recession (and indeed it would probably be too low). However, after a bubble, and just before the credit crunch, the UK current budget should have been in surplus.

    This is the source of the structural deficit bequeated to the coalition, the 3rd largest structural deficit amongst the 26 OECD countries.

    It is correct to point out Conservative economic failures in earlier economic cycles. However, and with the benefit of hindsight, it seems incredible that Labour should maintain that its economic policies were not a significant contributory factor to the current debt situation.

    I conclude that Labour have learnt nothing. They will borrow in times of boom (because "we can afford it") and they will borrow in times of bust (dusting down Keynes from the library). Interest payments will rise year on year and the cost of servicing the UK's debt will rise. If unchecked the UK's interest payments will exceed the cost of the NHS and schools budget combined.

    Until they acknowledge their own poisoned legacy Labour are not only unfit for government, but unfit for opposition.

  • Comment number 17.

    #9 jon112uk wrote:
    "Public sector net borrowing went UP to a record £22.7bn in November 2010 under the tories"

    Yes, and net debt will be much higher (400-500 billion more, if I remember correctly) in 2015 than in 2010.

    This is Labour's legacy. If you think that the coalition government should have cut more in its first financial year I would tend to agree with you, but no political party was arguing for this. It's almost impossible to prevent debt rising over the short-term; first the deficit has to be brought into structural balance over the next 5 years, a policy that Labour implacably oppose.

  • Comment number 18.

    If you say it often enough people will believe it so you can ignore the truth.

  • Comment number 19.

    9. At 5:53pm on 10 Jan 2011, jon112dk wrote:
    Public sector net borrowing went UP to a record £22.7bn in November 2010 under the tories - labour has never borrowed that amount.

    So much for the tories saving us from labour folly.

    ================================================

    Quite. It would appear that the next government will have to pick up the tab whichever colour they are.

  • Comment number 20.

    3. At 5:35pm on 10 Jan 2011, Cassandra wrote:

    On the previous thread John Constable posted this breakdown of the deficit. I am not sure I understand it but I thought it was interesting. It seems to suggest that both sides of politics contributed to our current fiscal position. Can that really be right?

    "That tallies with my understanding of the current situation re: the National Debt i.e. Tories (£300Bn) + Labour (£400Bn) + Banks (£120Bn) + interest (£175Bn) = total £995Bn.

    The National Debt will now zoom past the £1000Bn (one trillion) pound mark very shortly.
    =============================================================

    It may well be true, but the real problem is not so much how big the national debt is now, but how much the deficit each year - about £150 billion per year - will add to it on the current level of borrowing. The current spend was unsustainable, and the true extent of the horror has yet to emerge - and there's only one party responsible for that ......

    I'm not much interested in Ed Milibands rose tinted airbrushing of events either. His only idea is a blank sheet of paper and there's no evidence that he has any idea what he is going to be write in it in the two years he's set. I'm actually starting to feel embarassed for him.

  • Comment number 21.

    I do wish people would read what you say rather than spin it themselves to suit their prejudices. Response it has it right. There was cross-party (at least at Front Bench level) agreement on spending & the regime to control the City UNTIL the financial crisis struck. Similarly, I've seen no Conservative front-bencher seriously question Gordon Brown's management of the financial crisis. Yes, the Labour Government did make mistakes - and assuming that they'd broken the cycle of boom & bust was one of them. But equally their Conservative opponents (now Ministers) didn't challenge their basic economic stance. Labour needs to admit that it should have been more cautious because of the downside risks, but equally the Coalition should not be attempting to demonise Labour for policies with which they agreed at the time. The main cause of the crisis was the catastrophic decline in tax revenues caused by an international financial/economic crisis - which would have hit whatever Government was in power & it was foreseen by no Governments or the Conservative opposition. Let's stick to facts not prejudice please

  • Comment number 22.

    Nick, why do you think that this defence of the record "is of huge long-term significance"?

    The Tory-led govt has suggested that its cuts are necessary because of chronic Labour over-spending. This is at best contentious and at worst demonstrably untrue, as you more or less concede.

    All Ed Miliband is doing is pointing out the deceptive nature of claims about the last Labour regime.

    He is suggesting that Labour were, in fact, fiscally responsible.

    How does this in any way prevent him presiding over a "smaller, more strategic" Labour government in the future?

    I don't think redressing the balance of a Tory script which has gone largely unchallenged for the best part of a year carries any long-term significance, or forces Miliband to decide now whether he would run a leaner (or indeed a fatter) state.

    Please can you say more about why you extrapolate future policy from this?

  • Comment number 23.

    The shame is that Nick is more ambiguous than he states for Milliband. Just take the title of the piece which claims for Milliband the statement: There was no money left. Not only did Ed not say that, the person who did left it on a post-it note as a joke.

    The truth is that the country was never close to entering a debt crisis and if Labour hadn't increased the size of the deficit in the last two years of their government, we'd be in a worse situation now than we were at the start of the 1980s.

  • Comment number 24.

    At 5:53pm on 10 Jan 2011, jon112dk wrote:

    Public sector net borrowing went UP to a record £22.7bn in November 2010 under the tories - labour has never borrowed that amount.

    Jon it would seem from ONS site this rise was due to extra money having to be paid to EU, as well as increased Health and Defence spending already agreed by previous Government, not a lot Coalition or for that matter Labour if still in power could have done.

  • Comment number 25.

    Ed - repeat after me: the bankers did it, the bankers did it, the bankers did it.

    Labour are rewriting history - trouble is, people will believe it.

  • Comment number 26.

    Dear JohnHarris66,

    I am looking at the nation's accounts 1960s onwards and the Labour period 1997-2008 reads very well. (2008 onwards requires a separate debate, I think.)

    In the decade from 1997, Labour did indeed run surpluses, actually paying down debt (a VERY rare thing) or running well-controlled deficits, always under the Maastricht deal's 3% wire.

    The average deficit for that decade under Labour is significantly lower than the average deficit for the Tories in the preceding decade.

    You could argue that Labour had an easier run than other governments. You could argue that the outgoing Tory government had left the economy in good shape for Labour. But after a decade, surely, you have to start giving people the benefit of the doubt, don't you?

    Looking at the figures, it's hard to justify claims of chronic overspending and it is unfair, even extraordinary, to describe Labour's run as "poisonous".



  • Comment number 27.

    Comment no 21 - thank you for sensible balance.

  • Comment number 28.

    A lot of posters seem to have a remarkably short and selective memory.

    The moment most sensible people realised it was all going wrong was when the household debt level went through the £1 trillion mark in 2004.

  • Comment number 29.

    Dominic Minghella

    Indeed. I believe 1993/94 were particularly grim under the Tories...no we're bankrupt nonsense then.

  • Comment number 30.

    26. Dominic Minghella.
    excellent post.
    i would add that new labour also facilitated the building of over 100 new hospitals and generally spent much needed money on public services in general. They had to, the state of much of our public services was v poor when they came into power.

  • Comment number 31.

    Stop press...

    Lord snooty announces that his private sector chums will be creating 45,000 'new' jobs.

    This will obviously completely off set the 1,000,000 jobs he is deliberately intending to scrap.

    The bosses also come out smiling: their average 55% a year pay rises will be further swollen next year by not having to pay out sick pay to workers too ill to work.

  • Comment number 32.

    Wow... so many tories defending increased government borrowing ... so long as it is being done by the tories.

    Borrowing up, taxes up, unemployment up, inflation up, growth down, house prices down, consumer spending down.

    They have been lording over us for EIGHT MONTHS now and things are worse, not better.

    At what point does the 'its all labours fault' line start wearing a bit thin?

  • Comment number 33.

    Looks like the Elephant in the Room, PFI, is being totally ignored.

    Labour, in their inimicable way have lumbered the country with billions of PFI debt that does not even appear on the balance sheet.

    It was certainly a wonderful way to build infrastructure without the bother of having to properly budget for it. But in many ways it was the ultimate deceit.

    The banking crisis was exacerbated by Browns deliberate relaxing of borrowing rules. These rules had to be watered down because banks would not have been able to lend the vast sums of money to the PFI conglomerates in order to built 'Labours' monuments to their fiscal expertise.
    So instead of government debt being expanded to finance all the new roads, hospitals, railways etc, the banks max'd out on their borrowing limits. Result - when the proverbial happened, the debt returned to where it should have been in the first place (as government debt) via the banking bail-out.,

    But the nub is, all those PFI contracts still need servicing.

    And thats the true cost of having Labour in power.

  • Comment number 34.

    #26 Dominic Minghella

    My post #16 acknowledged previous Conservative errors. I also acknowledge that much of the deficit after 2008 was due to falls in tax revenues and increases in non-discretionary spending. The positive and negative consequences of the discretionary fiscal stimulus (the point of party political disagreement at the time) can be debated separately.

    The argument is that Labour ran a structural budget deficit (and in some years an actual deficit) during a global boom. So in 2007 the UK had a structural budget deficit of 3.1% when it should have been in surplus. As half of OECD countries went into the recession with structural budget surpluses the UK's position deteriorated by international standards. As I'm sure you are aware, I am using the structural deficit in my argument as it largely ignores the ups and downs of the economic cycle.

    At the very least, and with the benefit of hindsight, I think Labour should acknowledge that spending was too high (or taxation too low) in the years after, approximately, 2001. Especially given the UK's reliance on the financial sector. I haven't read what Miliband has said in full, but it seems that even with the benefit of hindsight he still maintains that Labour's tax and spend policies were correct. So he has learnt nothing.

    This is not just a point about the past as Labour seem to wish to repeat the mistakes of 2001-2008, and will presumably seek election on this platform.

  • Comment number 35.

    #30 Lefty11

    Labour did not spend money on hospitals. They used PFI which defers payment over decades and does not appear on the balance sheet. The hospital where Brown launched his GE manifesto will be clear of payment when his son is 43.

  • Comment number 36.

    30 Lefty 11. The building of new hospitals and many other public sector spending on schools was done off balance sheet via extortionately expensive pfi deals under Labour which will be costing us five times more than they would have if they had been negotiated properly or bought in the correct manner through capital spending. As Blair did not want Brown to borrow any more money he thought he would take advantage of this loophole and lumber our local councils and the nhs with buy now, pay later deals to build these new hospitals. Pay later time has now come and much of the nhs and local government and central government budgets is now spent on servicing these pfi deals.

  • Comment number 37.

    #32 jon112uk asked:
    "At what point does the 'its all labours fault' line start wearing a bit thin?"

    Well, 5 years to remove the budget deficit and then another 15-20 years to reduce the national debt to a sustainable 40% of GDP (as per Brown/Balls fiscal rules). So let's say 2035. How does that sound?

    (actually I'n not saying it's all Labour's fault, but it is their legacy)

  • Comment number 38.

    I agree with Cassandra. Too much do we hear from one side of the story. Politics is 'apolitical' if that makes sense! And yes, how much are we paying for these wars; they must be responsible for funding being withdrawn from various initiatives, projects etc many years back let alone now as a result of the 'banking crisis'. But the cost of these wars can't just be measured in finance alone. There's a 'hidden' cost of the damage done to social frameworks. I can't recall muslims being pilloried as much as they are now than before 9/11. That's another story..

  • Comment number 39.

    Lacplesis 37;

    An accurate summary of the events leading up the recession,the question now is where do we go from here?

    However favourable to Labour the intepretation Mr.Milliband put on Labour policy prior to and during the crisis,he made one excellent point which no-one has picked up.Accurate diagnosis of the crisis determines the effectiveness of the measures used to fight it.

    Labour believes that a banking collapse was responsible,reinforced by too easy credit and lapses in regulation.The conservatives and Mr.Clegg went into the election claiming that government spending was the main source."They didn`t fix the roof when the sun was shining" as Mr.Osborne frequently repeated.

    As a consequence they think the crisis will be resolved when government spending is reduced and there is a smaller state with gaps in public services taken up by private firms.

    My own view is more orthodox,less radical.Until GDP and employment surpasses its pre-crisis peak, we are still in recession.Using tax revenues as a guide,I would proceed cautiously,prepared to make selective cuts, but using fiscal and monetary measures where required until tax revenues are on an upwards path and growth accelerates beyond it pre-recession peak.

    I would describe this policy as conservative,proceeding by trial and error,prepared to alter course where necessary and without ideological preconception.Mr.Osborne and Mr.Clegg are embarked on a more radical course,slashing public services and protecting private capital which they hope will become the engine of growth.

    Maybe,but a course once embarked on is difficult to change in an uncertain global environment.If it fails we can`t look to U.S.or EU to redeem our failure,their problems are similar and in many cases worse than ours.

  • Comment number 40.

    Can't argue against PFI...but the whole wheeze was started by Major's lot..

  • Comment number 41.

    35 Episteme 36 Juliet50
    Yep, many problems with pfi especially with the benefit of hindsight.

    Although a lot of money was needed quickly to address the poor and neglected public services left by the conservatives when labour came into power.
    At least some of our public services are for now up to european standards or thereabouts.

    Im curious though, when you criticise pfi is it labours use of it or the original architects/introduction and use of it by John major and the conservative govt in 1992 and the projects they used pfi for?

  • Comment number 42.

    PFI is an example of why this blogger views politics as a rather low-brow activity.

    The 'attractions' of PFI to policians is obvious, they get schools 'n hospitals built without having to lay out much money up front, like a agreement on the never-never aka 'the drip' for old hands.

    Now there are at least several hundred PFI agreements in existence but I will never forget speaking to an international businessman at a party several years ago and he casually mentioned that his business was investing these PFI deals.

    I naively asked why and he just looked at me as if I was the village idiot and replied "Where else do you think we can get a guaranteed 25-30% return per annum for the next 25 years?".

    Only from the biggest-mug-of-all-time, the English PAYE taxpayer.

  • Comment number 43.

    Perhaps I'm being unfair but I can't shake off the feeling that Gordon Brown allowed the housing boom and the personal debt explosion so that he could keep New Labour going in order to be prime minister one day. We know this was his dream right from the start.

    I recall in about 2003 wondering about house prices and whether the situation was sustainable. I seem to remember the broadsheets running story after story about it. Things really didn't look right in 2005. Then there was the 1 trillion personal debt headline.

    How much growth was there in the private sector too? It seems to me that Gordon did what the Tories did for a while: grow the public sector massively to lower the unemployment figures.

    There's also PFI. Off balance sheet debt like that seemed to grow under New Labour. Aren't we at least several hundred billion in debt for these 'mortgages' now?

    It seemed like Gordon Brown was courting the City to provide the tax revenues to fund his schemes too. Of course, the Tories create the Big Bang back in the 1980s but that doesn't mean that future governments shouldn't introduce tighter regulation if things are running away too much.

    Or have I misremembered all this?

  • Comment number 44.

    I think the argument about Labour and the debt is fundamentally bogus.

    Blair and Brown in creating "New Labour" were not creating anything new. The new part of it was accepting Conservative economic theory from the 1980s as an orthodox position. They believed they had to do that to win elections.

    The fundamentals were;

    1. Is inflation is all that matters.
    2. Britain does not need to make anything as wealth is created by services and in particular finance plus large multi-nationals
    3. Direct taxes are all the public care about and the best thing to do is raise tax indirectly. (even though this hits the poor but they dont matter as they dont vote)
    4, Technocrats and consultants know how to run the economy.
    5. Public spending can be disguised by privatisation and PFI
    6. Public ownership is wrong.
    7. The private sector can do everything better than the public sector.
    8. Political parties can exist solely on the funding of private sector backers who benefit from parties that believe in points 1 to 7.

    Borrowing was moderate under Labour. The first two years they followed Conservative plans that Ken Clarke later admitted were a fantasy to put Brown under pressure in the 1997 election.

    Much of the capital borrowing was done under the PFI scheme which will have major effects on public sector revenue spending for the next 25 to 30 years. The NHS had it's funding increased to the European average of GDP. It just looks huge because the Conservatives had not been funding it in their last few years of office.

    I guess someone can check the figures but before the banking crisis borrowing was about 41% of GDP. Pretty much what Thatcher tolerated. Labour had inherited approximately 39% of GDP as borrowing.

    New Labour was dining at the table provided by bankers and accountants. The idea they were engaged in some left wing borrowing binge is used by the Conservatives to promote their agenda that the state is too big. Cameron gave it way when asked would he return spending to normal levels when the economy recovered and he said no.

    The problem was Brown helped the banks. He stuck the country with the debt that private sector banks had created. No one wanted to tell the story that the major banks were bankrupt. To do so would mean the potential collapse of the economy. So the banks debt was guaranteed by the taxpayer and as the Bank of England pumped liquidity into the banks those billions were borrowing. Our money as taxpayers was transferred to the banks to keep them solvent and this austerity is paying for the debt.

    What Brown should have done is let the banks go bust and guarantee the deposits of ordinary people. What has happened is ordinary people are now paying for the lifestyles of the bankers, speculators and tax avoiders. If having all your money paid to the Caymen Islands is good enough for FTSE 100 companies then it should be allowed for ordinary people too.

    The fact is there is plenty of money. It has just been transferred from the hard working average man and woman to the richest 5% of society. The additional "New Labour" borrowing hasn't financed any hospitals, schools or public sector workers but has just been given to the financial sector because it can't be allowed to fail. In other words the reality is that while you can cut local councils by 30% you can't cut the banks.

    At some point we will hear the argument that the banks can't be in the public sector but must be privatised. This will put even more cash into the back pockets of the rich. Yet any business that can't fail cannot be in the private sector where, it is said by the political right, that failure is a market discipline that the public sector lacks. In fact the whole privatisation argument is based on the premise that because the public sector cant fail, workers cant be sacked, and there is no risk only privatisation brings in market discipline. However if a bank cannot fail then there is no risk. The taxpayer implicitly underwrites these private businesses so logic dictates that banks should not be in the private sector at all.

    New Labour did not mis-manage the economy. It followed Thatcherite principles. As the heirs to Thatcher the Blair/Brown pair used every opportunity to turn taxes into private sector profit. The idea that Cameron and Osborne have changed is silly. They are engaged in a further drive to help the private sector. By far most public sector jobs are in the Labour voting areas of the country. Mrs Thatcher closed down the traditional industries 30 years ago during the last period of Conservative Government. New Labour did expand the public sector in those areas. A small bit of Kaynesian expansion that was beginning to create new private sector jobs.It's not that the north and west of the country needs a subsidy it is rather that the south east is overheated and attracts all the investment. With modern communications there is no need to have everything located in London with workers commuting for hours each day but that is where we are. This is a major problem for the south east as well as the rest of country.

    So when we say lets expand the private sector what the private sector want is to create jobs and wealth in the south east. That's where profit is.

    So as we contemplate austerity we are not all in this together. A small percentage are getting rich while the rest of us pay the bills and the country will become more divided.

  • Comment number 45.

    43 Dan 10

    Did Mr.Brown allow the housing boom and rise in personal debt to occur in the hope of becoming prime minister as you claim? The answer is we will never know unless he tells us, which is unlikely.

    A good principle of political analysis is to concentrate on what people do rather than what they think.An unsustainable rise in credit is subject to intepretation,how much harder to discern the personal motivation behind it.

  • Comment number 46.

    #45. bryhers wrote:

    "Did Mr.Brown allow the housing boom and rise in personal debt to occur?"

    It really depends on your view of whether Gordon Brown knew what he was doing doesn't it?

    I know Mervyn King and Eddie George knew because I had written correspondence with both as I also had with HM Treasury - under Gus O'Donnell as Permanent Secretary, but just because a professional paid regulator from the permanent government knew does not tell us that Gordon Brown knew. But, I suspect he did because all his chief his advisers knew the risks so I think we can rightly assume that he did know. But at the time Tony Blair was running things wasn't he and his economic philosophy was to follow Thatcher without question wasn't it!!!!!

  • Comment number 47.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 48.

    "Today Ed Miliband gave his answer. The last government was borrowing at acceptable levels - about 2% of national income - until the financial crisis hit, he said. That crisis and it alone caused the problem. He also pointed out - perfectly fairly - that at that time the Tories said they wanted to match Labour's spending and not cut it."

    OK Nick, please confirm or correct (or add): how accurate a view is this of Mr Miliband's? And apart from the bailouts and associated crisis-management spending, and borrowing, how much if any extra spending/borrowing WAS (or was not) added between the start of the "crisis" and the election nearly 2 years later...

  • Comment number 49.

    @ DavetheBrickie

    Borrowing during the boom-time is not "perfectly acceptable"; it was the highest borrowing of developed nations, and if you're not even taxing enough to pay off the debts in the boom, then you will be in poor shape during the bust.

    This is what they mean by "structural deficit"; the deficit running even excluding the effects of the recession.

    But this is not a change of tune by Labour; they maintained that it was out of their control during the recession, as much as they claimed the 1993-2008 boom as a result of their policies.

  • Comment number 50.

    Stephen Townsley:

    "However if a bank cannot fail then there is no risk. The taxpayer implicitly underwrites these private businesses so logic dictates that banks should not be in the private sector at all."

    That's not true. A catastrophic failure is not the only risk for a bank. Any bank which gambles on the markets or loans to businesses and individuals incurs risk. Those lesser risks affect the bank balance sheet and influence how the bank is perceived by shareholders in comparison with other banks. Moreover, if we underwrite the risk of a catastrophic failure then we have a right to assess that risk and expect it to be mitigated. Hence, good external regulation is needed. But banks can still be private.

  • Comment number 51.

    #41 Lefty11

    The wholesale use of PFI by any government should be actively discouraged due to its inherent nature of not delivering value for money.
    The sheer cost of any remedial or additional works on a PFI project are astronomical due to contract inflexibility

    I believe Mussolini was a great fan.

  • Comment number 52.

    Plenty of the usual left-wing/tory hating myopia, I see. None so blind as them that will not see, because their vision is clouded by hate.

    Anyway, Nicholas:

    "a criticism, admittedly, of presentation rather than policy.'

    I beg to differ. I would say that if you could have done something about it, but didnt because you were refusing to acknowledge the reality is a dereliction of duty and a failure to enact policy, rather than a failure of presentation. Maybe its just me.

    "However, what links him and the Blairite critics is a political doubt about whether Labour can re-establish its economic credibility without admitting there was a spending problem."

    Indeed. Just taking even simple things, like the amount paid in consultancy fees for the setting up of UKFI and over the weekend that the administration stepped in to prop up the failed banks. The bad decisions that were taken and the amount of money spent again and again were absolutely stupifying. And thats before we get onto things like the pfi deals - regardless of the political rights and wrongs of such an idea and who came up with it, not to mention the twenty year job creation schemes such as the BAe/Aircraft carrier deal. Sorry lefties, there was a spending problem. New Labour had financial diarrhoea. Yes, money needed to be spent on public services. But, No, not the way they did it. They did not get the taxpayer value for money.

    "Today Ed Miliband gave his answer. The last government was borrowing at acceptable levels - about 2% of national income - until the financial crisis hit, he said. That crisis and it alone caused the problem."

    Yes, well he would, wouldnt he. Wouldnt be the done thing in political circles to admit that you screwed up and that your regulatory model, that you used to replace a system that had worked perfectly adequately for decades was an abject failure, would it? And you, Mr R just parrot it back to us, hook, line and sinker, because to a portion of your audience, its what they want to hear and its the narrative story your employer wants you to tell. I mean, has anyone really put him on the spot and questioned him on it? Really hard questions, not the usual Paxo shadow boxing?

    "He also pointed out - perfectly fairly - that at that time the Tories said they wanted to match Labour's spending and not cut it."

    Yes and they'll never cease to troll this out one out will they? "If we said we were going to jump off a cliff, they were so devoid of leadership that they would have followed us, so that makes us right." No. No it doesnt. It makes you BOTH wrong and you in particular, because YOU were leading the way. They were wrong to follow you, but YOU were at the helm. No matter how much you might try and wash it off, mud sticks.

    "Labour's leader says the coalition are deceiving people about the past in order to justify mistaken policies for the future."

    Given the previous administration's record for deception and outright lying, to accuse anyone else of deception is breathtaking chutzpah. And, j'accuse yet again, you simply parrot it back to the adoring masses, fumbling on the floor for their scraps of red meat, because they think thats what they want, and the fools lap it up.

    "He has taken one very important decision about the future. The party, under his leadership, will not argue that they could offer what Blair called in his book "smaller, more strategic government"."

    So... as other posters have pointed out, then, nothing has been learned, nothing has been admitted, nothing has changed. More of the same from Buzz Lightweight. I'm so glad I emigrated if this man is the future.

  • Comment number 53.

    JFH:

    Once again you have elaborately grasped the wrong end of the stick.I was not making a factual point about Mr.Brown`s motivation except to say we don`t know.I was stating a methodological rule,-to examine people`s actual behaviour rather than speculate endlessly about who thought what and why.

    As a Marxisant collector of obscure tomes,you will appreciate the principle goes back to the man himself."Philosophers have only intepreted the world,our task is to change it."

  • Comment number 54.

    51. Episteme
    There was a quote from 1997 saying “pfi or bust”.
    Can you remember the NHS under the conservatives?
    And we are going back to those dark days. Its the same old tories.
    A bit of memory jogging perhaps
    http://www.independent.co.uk/news/latenight-talks-on-nhs-crisis-1350757.html

    and now in 2010.
    http://www.commonwealthcontractors.com/news.php?id=834

  • Comment number 55.

    For 13 years Ed Miliband was Gordon Brown's bag-carrier, SpAd, Junior Minister and Minister.

    He lashed himself to the mast of the SS Gordo.

    Now he is trying to distance himself..... What a Wallace.

  • Comment number 56.

    Latest YouGov/Sun results 10th Jan LAB 43% CON 40%,LD 8%
    UKIP figures unavailable.

  • Comment number 57.

    In my view Ed Miliband needs to make some sort of concession about Brown/Blair mistakes on the economy.

    Cameron is being dishonest in suggesting the debt and the deficit were all Labour's fault because:

    - the global financial crisis was a contributing factor;

    - up until that time the Cameron and Osbourne were promising to match Labour's spending.

    But until Miliband acknowledge some fault in economic policy he can not move forward. In my view he should make two key concessions:

    1. That Labour got carried away thinking the boom would go on forever. Lets face it they were not alone in that. We should not have ended the longest boom in post war history with a deficit. Miliband needs to say Labour was wrong to think we had eliminated boom and bust.

    2. They made a mistake in being spellbound by the financial sector. This meant it was not properly regulated and other industries were ignored. None of that is to deny it will continue to be an important industry for this country.

    BTW I thought Mr Barber was not very good on the Today show this morning - for me at least that is terribly disappointing.


  • Comment number 58.

    I see growth is DOWN again.

    The tories inherit record 1.2% growth (no credit to the failed labour regime, purely due to global upturn after recession) now it is DOWN to 0.4-0.5%

    That's quite an achievement, declining levels of growth as the world comes out of a recession.

  • Comment number 59.

    Clearly Miliband junior has leaned nothing from his bruising appearance on the Jeremy Vine show when he was confronted about exactly this issue; was labour overspending or not?

    Not if you assume an ever spiralling rise in taxes in the after burner adjusted world of Gordon Brown; definitely yes if you assume the workings of a normal business cycle.

    The numbers are out there for all to see, government spending doubled in thriteen years under newlabour or rose 50% in real terms. Is a 50% real terms increase in government spending sustainable? Definitely not unless you like receiving next to no income and have the government spend it all for you.

    The only deceit currently being perpertrated is by the labour party who would like to carry on spending, which would in itself require VAT to rise to Swedish and Danish (their heroes) levels of 25%. No amount of raising income tax or chasingtax dodgers would cover the governemtn spending the labour party has in mind.

    Labour has descended into an economic argument it cannot win because it did indeed cause the mess we are in with or without the bankers.

    It's great news for the coalition that such extremes of denial are still being exhibited by young Miliband. It will keep them ouit fo governemtn for a very long term as any economic alternative plan they come up with will, by definiton, be riddled with inconsistencies and financial black holes.

    Miliband junior really is revealing himself to be a purely political and economically illiterate individual.

    Three cheers for the coalition.

    It's a great time to be a tory...

  • Comment number 60.

    RockRobin7

    Three cheers for the coalition as well...you moving towards the centre ?

  • Comment number 61.

    Miliband needs to stop looking to the past and justifying Labour's previous ineptitude and start concentrating on what's to be done now: namely, what he is going to do about the economy, and what can be done about the current diastrous government.

  • Comment number 62.

    Well at least the coalition have set out:

    "detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector"
    (Coalition Agreement May 2010)

    Oh, hang on....

  • Comment number 63.

    I think the real picture probably lies somewhere between the two front benches positions. GB did get carried away with his public spending and had he been more sensible the deficit would have been less but we would still have had a fairly big figure to pay back.
    Had the Government done what DC and GO called for when they were in opposition and had a lighter regulative touch on the banks the deficit would be a lot higher because we would have spent more rescuing the banks.
    The PR tosh peddled by DC, GO and NC that Britain would be bankrupt makes me laugh -we were never in any danger of having to call the IMF in and the guff about Britian's economy being like a household budget is frankly pathetic. However, it is good PR and DC is the PR meister from Carlton TV after all. I'm really astonished that lot of people seem to buy it (see a lot of the posts above this one).
    I'm quite encouraged by the crowing that its a great time to be a Tory and all the criticism of EM etc. It shows that they are not really understanding the long term strategy here.
    The next General Election is 4 years away and before then the Government has to create more jobs than have ever been seen in Britians history, they will have to cope with the NHS reorganisation mess and the impact that European competition law will have on our NHS because of the Governments plans; the fact that NI will go up for everyone in April will come as a shock for most people as the distinction between employers and employees contribution has not really been spelt out yet just that the jobs tax has been removed.
    There is rampant inflation (well not as bad as under the last tory government but heading that way) that is going to last all of this year, unemployment will increase (my council is in the process of making 11 000 people redundant by next June - 3.5% of the Wirral population).
    People will feel less secure, with less local sports and library facilities, paying for a lot of local services that used to be free without a reduction in council tax. They won't be thinking its Labours fault in 2015 -GB will be a distant memory
    If Cameron couldn't win a majority against the most unpopular PM in history, in the depths of the worst recession in 100 years -how do you think he will fare when he makes the majority of families worse off than they were under hated GB.

  • Comment number 64.

    The problem was the General Election. Thye all knew there was a problem, but none of them wanted to do in the case of Labour, or say what they would do in the case of the Tories as this would have lost them the election. When the inevitability of the crisis became apparent to the politicians none of them wanted to say, "This is wrong, but here is what we are going to do about it." All they said was, "This is wrong, but we are not going to do much about it until after you have elected us." We had to wait two years until something was done.

    I have written about our political parties, but I could have said most Western countries. Some were worse than others, but none actually acted when the first signs appeared and they still haven't. The reason is that you don't win elections by making unpopular decisions. It is the price you pay for democracy, so it is probably worth it.

  • Comment number 65.

    60 manningtreeimp..

    Moving towards the centre? I fear not. But the coalition is the most effective vehicle for the implementation of a centre right agenda that involves tackilng the deficit, confronting the labour lies on the deficit and reforming the NHS, welfare spending and education.

    I am merely making a virtue out of necessity.

    My real pleasure comes from the irritation of the left and their patent displeasure at having their work done for them. It is indeed 'Grim up North London' as a certain satirical magazine would have us believe.

    It's a great time to be a tory...

  • Comment number 66.

    RockRobin7

    Forgive me if I don't share your enthusiasm..

  • Comment number 67.

    No59 RockingRobin,
    Another piece of scintillating analysis from the Toytown School of Political Philosophy.He describes the Labour leader of being a 'political and economic illiterate'. It takes one to know one.

  • Comment number 68.

    The Tories are desperate to justify their economic policy by blaming the current deficit solely on over-spending by the previous Labour government - at no point do we ever hear the Tory party mention the global financial crisis that happened to occur on Labour's watch. As though this had no bearing on our nation's deficit whatsoever.

    That's like telling the kids that daddy has sold the TV, when in fact the house has been burgled.

    We're now meant to swallow the biggest public sector cuts since the dawn of the universe - and it turns out that said cuts won't make a dent on the deficit; in fact they might even push us further into debt.

    And THAT's meant to be economics we can trust??

    It makes no sense at all, but then this isn't really about economics, it's about the Tories attempting to force a smaller state and damn the consequences.

    Clever old Dave... he's an ex-PR man, you know?

  • Comment number 69.

    Ed Miliband was Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster from 28 June 2007. He was subsequently promoted to the post of Secretary of State for Energy and Climate Change, a position he held from 3 October 2008 to 12 May 2010.

    How can he distant himself from what Brown and the rest of the cabinet were doing. I never recall him saying anything other than that of support for the then PM St. Gordon, patron saints of the delusional...

  • Comment number 70.

    the 2% figure is based on the economics of the time which were based on the FALSE boom generated from the tax reciepts of the City and the abnormally high levels of public, private spending financed by debt to be paid back over 25-40 years. Take this out of the GDP figure and you will get a different picture ie massive overspending like we have know.

    There are many policy area NOT move of presetation actaully that have caused this overspend

    1)IR35
    2)The Family courts and CAFCASS
    3)Imigration and the minimum wage.
    4) there are many more

    All of these need putting right before we can move on

  • Comment number 71.

    58 jon112dk

    I see growth is DOWN again.

    >>>>>>>>>>>>>>>>>>

    No jon, you see an unofficial estimate that the rate of growth has slowed down. We will have to wait for ONS figures, let's hope that they are better, you do want them to be better don't you?

    The BCC survey also found that export orders and overall sales of manufacturing goods were at their highest level for 16 years, but you "forgot" to mention this.

  • Comment number 72.

    Too bad nobody from the BBC was pointing out these monstrous Labour deficits three years ago or, better still, six or eight years ago.

    Too bad they weren't spelling out the cuts that would inevitably result as a direct result of this scandalous, monstrous economic mis-management. Too bad they didn't point out (as Mervyn King) and even Alastair Darling belatedly did, that the cuts necessary by whoever got in, after an additional three years of squandering from 2007 - 2010 just to stumble over the election finish-line, would be deeper even than Thatcher's and whoever was forced to make them would be out of power for a generation.

    Even now this discussion is hidden on a tiny back-water of the BBC web-site so that when folk complain that the BBC is not making more about the fact that Labour blew all the cash they'll say that they do mention it 'across the range of their output'.

  • Comment number 73.

    15. At 6:19pm on 10 Jan 2011, jon112dk wrote:
    Unemployment is now RISING again under the tories - despite a global up-turn.
    =========================================================================
    And where is the global up-turn;
    EU - output down with a contraction in the economy even Germany now showing poor figures.
    US - Employment down and inflation showing signs of rising with the economy still at best flat lining.
    BRIC - China showing signs of creaking with balance of trade figures now at their lowest for more than a decade. Not down to increased imports but exports down. India's economy slowing with major issues with inflation. Brazil suffering from exchange issues and a lack of diversity in the economy with too much reliance on their natural resources and the same can be said for Russia.
    Australasian - Slowly slipping with the majority of economies showing decline even Australia and NZ.
    Middle East - Still reeling from the losses and issues raked up during the financial crash.

    Yes I see the global up-turn, what a ....... you are Rodney



  • Comment number 74.

    32. At 7:57pm on 10 Jan 2011, jon112dk wrote:
    At what point does the 'its all labours fault' line start wearing a bit thin?
    =========================================================================
    Strange as I only heard a Nu Old Labour spokesmen say last week that all our ills are down to Good Old Margret Thatcher.

  • Comment number 75.

    "The reason is that you don't win elections by making unpopular decisions. It is the price you pay for democracy, so it is probably worth it."

    First sentence I completely concur with. Second sentence, in my very humble opinion, is relative. The fact that turkeys will never vote for Christmas does not stop Christmas from coming. Ignorance is not always bliss.

    Depends what you want to win elections for. If you want to win elections to line your own pockets and, in the words of the only speaker to be deposed in centuries "to get what is due to me", then, yes, tell the plebs whatever you want. Strike a chord and you're quids in. If you go into politics for public service, to try and do something for the greater good and not for personal gain or ego, then you should not be afraid to tell the truth, however unpalatable that may be.

    Truth is a precious rare commodity in politics.

    Always has been always will be. Maybe thats why everyone keeps making the same mistakes.

    Lefty, saying UKIP figures not available isnt the whole truth. Put amongst the "others" category, they're (according to YouGov) pretty much shadowing the LibDems. But, hey, thats the public's choice. If they want five years more of Buzz Lightyear instead, then fine. They'll deserve everything they get. They may just live to regret it.

  • Comment number 76.

    #51 Episteme
    Perhaps PFI has acquired a poor reputation due to poor implementation. In essence, the idea of using the private sector to deliver services is not a bad one. Especially if we consider the terrible reputation that direct public sector projects had of being delivered late and over budget (indeed this still occurs today, especially in matters military).
    A big problem is that there seems to be no clear definition of what is meant by govt when it talks of "value for money". This tends to mean which bid has the lowest annual "service charge". This in turn leads bidders to strip out as much as possible in order to win the bid and then items such as supplying Christmas trees are an "extra" to be paid for separately and to give the winning bidder additional profit year after year.
    A further problem when comparing costs is that govt expects PFI projects to be maintained at a higher level than non-PFI ones so the costs are inevitably higher. Another is that one seldom sees the capital cost being compared on a like for like basis, typically PFI costs are shown over the lifetime, including interest and servicing costs, whereas non-PFI figures are for the initial capital cost only. Yet a non-PFI project would still need to use borrowed money and interest costs would arise and the project will also require service provision.
    So, whilst some have carefully stated that the previous govt "facilitated" new hospitals etc, surely they now have to be paid for over the next 30 years or so. The legacy needs to be looked at in both the future costs as well as the shiny (today) new buildings.

  • Comment number 77.

    When will the Tories stand by their own decisions. The deficit is rising under them, could it be anything to do with the high unemployment and cuts? They're using the lies that labour created the deficit to deflect criticism from their savage, ideologically driven cuts and the consequences of those cuts. They were in favour of spending plans under labour, until the crisis hit and they changed route to serve their strategy and have used it ever since. They think they can just say it for it to be believed, as long as it's repeated by every Tory every chance they get in answer to every question.

    We have to get the story right so we can see the truth behind Coalition policy and the changes they're imposing on our country by using the false truths that labour got it all wrong and are to blame for everything pre and post election, so we can lay the finger of blame at their door if the economy doesn't pick up as they promise and hold them to book.

  • Comment number 78.

    Robin @ 65 wrote:
    My real pleasure comes from the irritation of the left and their patent displeasure at having their work done for them.


    >>

    Leaving aside what this says about your personality (!) I'm not sure why the left should resent having their work done for them, as you put it. Relief would be more appropriate. If painful and unpopular cuts need to be made for the sake of economy, what better for Labour than to have their opponents make them? Hence the current Labour lead in the polls, perhaps, which is most unusual for a party booted out of power less than nine months ago. Or do you have an alternative explanation for that?

    These cuts could be the best thing for Labour since Maggie broke the unions.

  • Comment number 79.

    72 jgm2 - come off it mate. You're talking nonsence. It's not the BBC's fault, or are you a Tory looking for another organisation to blame for your ideologically driven hard hearted cuts on. Take it on the cn the chin mate and stop blaming others.

    Or is it that you are just sucking up to the Murdochs by knocking our public service broadcaster.

    By the way, the Tories up until 2009 agreed with Gordon and Alastair's spending plans, that is until they devised another strategy when the crisis hit and they decided to turncoat, and they've been turncoating every since.

    Either way, NASTY.

  • Comment number 80.

    Skol303

    "The tories are desperate to justify their economic argument by blaming the current deficit solely on labour over-spending..."

    This appears to be standard labour party denial and obfustication.

    Here are the numbers, so as to avoid confusion:

    Newlabour public spending 2000 - £343bn
    Newlabour public spending 2010 - £669bn (before adding in the cost of the banking crisis

    How 'desperate' do you intend to continue to be to deny this doubling of public sector spending in ten years under newlabour?

    Had the figure grown in real terms it would be £450bn by 2010.

    All this happened when the economy was growing... newlabour doubled the welfare budget to allow the workshy to sit at home watching their satellite TVs claiming invalidity benefits. If this isn't crass economic mismanagement I don't know what is.

    All this spending is also before PFIs were added to the national debts and before local authorities doubled their own spending.

    Just how much government spending are the left happy with? Rather a lot by the looks of things.

    So call the right 'ideological' if you will but if it means stopping the gluttinous excesses of greedy left wing politicians you can call the right whatever you like.

    Do carry on with your attempts to rewrite history with respect to the newlabour spending track record; the numbers are terribly easy to gainsay.

    It's a great time to be a tory...

  • Comment number 81.

    It is probably more important that Government should always strive to live within its means, that is, not spending more than its receives in revenues, than individuals or businesses.

    Why?

    Because unlike individuals or businesses, Government has the power to eliminate its debts by simply printing money, which debases the currency.

  • Comment number 82.

    "Today Ed Miliband gave his answer. The last government was borrowing at acceptable levels - about 2% of national income - until the financial crisis hit, he said."

    --

    This quote just illustrates the problem with Labour.

    Before the economic crisis hit the economy was apparently experiencing the good times so if anything the government should have been reducing national debt or at worst not increasing it, certainly not borrowing 2% of GDP annually.

    Instead we see same old Labour, spending money the country doesn't have, making no provision for a 'rainy day'. Apparently boom and bust and economic cycles do not happen in the parallel LabourWorld.

    The UK is/was spending beyond its means, that's why we're seeing cuts. Not exactly rocket science is it?

  • Comment number 83.

    pdavies...

    I take it that'as an admission that labour are cowards?

    As for the opinion polls.. are you too young to remember the panic in newlabour ranks in 2000 when William Hague unexpectedly surged ahead of them due to the fuel price hikes? These things happen and the opinion polls should be of no worry to any coalition partner until at the earliest 2013 so I'd stop bothering us with them if I were you; it's water off a duck's back.

    What a great tome to be a tory...

  • Comment number 84.

    It's so last year the colours Brown and Red.
    Hattie only wears Red, for now at least.
    Red would not be seen dead in Brown.

  • Comment number 85.

    "Or do you have an alternative explanation for that?"

    Yep.

    The voting public are as thick as excrement with a selective memory span that would make Goldie The Goldfish look like Mastermind.

  • Comment number 86.

    This blogger is finding 'these cuts', as they begin to bite, absolutely infuriating.

    There is something grotesque and incredibly unfair about this when the English people are having basic services such as libraries, community centres and so on withdrawn because, at a fundamental level, Government has been so badly managed by the politicians over the past 20 years or so.

    We are where we are and for the time being we English can only hope that the current Lib-Con-Lab coalition Government will somehow ultimately prove successful in setting our England back on some sort of stable, sustainable path, which then results in important services being restored.

  • Comment number 87.

    "The underlying principle flows from the financial balance approach: the domestic private sector and the government sector cannot both deleverage at the same time unless a trade surplus can be achieved and sustained. Yet the whole world cannot run a trade surplus. More specific to the current predicament, we remain hard pressed to identify which nations or regions of the remainder of the world are prepared to become consistently larger net importers of Europe's tradable products. Countries currently running large trade surpluses view these as hard won and well deserved gains. They are unlikely to give up global market shares without a fight, especially since they are running export led growth strategies. Then again, it is also said that necessity is the mother of all invention (and desperation, its father?), so perhaps current account deficit nations will find the product innovations or the labor productivity gains that can lead to growing the market for thei r tradable products. In the meantime, for the sake of the citizens in the peripheral eurozone nations now facing fiscal retrenchment, pray there is life on Mars that exclusively consumes olives, red wine, and Guinness beer." - Rob Parenteau, CFA March 2010

    "First, the explanation for the sudden explosions in the share of public spending in GDP [UK] and the fiscal deficit is not that spending is out of control. It is, instead, that nominal GDP and tax revenue have fallen far below what was expected just two years ago. According to the 2010 Budget, public spending will be just 2.2 per cent higher this financial year than was expected two years earlier, despite the recession. But nominal GDP will be 9.3 per cent lower and tax revenues 18.1 per cent lower.
    The second qualification is that the country is not living beyond its means, to any significant degree; the government is. Not only is the current account deficit modest, but the UK's net liabilities were only 13 per cent of GDP at the end of 2009. On a consolidated basis, the chief creditor of the UK public sector is the UK private sector, not foreigners. Similarly, on a flow of funds basis, the dominant offset to the fiscal deficit is the UK's private surplus.
    The implication is that the single most effective way to bring the public finances back under control is greater demand and higher GDP. This needs higher investment and net exports and more dynamic supply. Measures that seek to close the fiscal deficit, but destroy demand in doing so, will not help: fiscal austerity is just not enough." - Martin Wolf, FT April 2010

    "Domestic Private Sector Financial Balance + Fiscal Balance - Current Account Balance = 0
    Again, keep in mind this is an accounting identity, not a theory. If it is wrong, then five centuries of double entry book keeping must also be wrong." - Rob Parenteau, CFA March 2010

    I have yet to see any party come with a thoroughly thought through proposal to address the inherent complexity of the situation which irrespective of political colour needs resolving. They all still seem intent on political blame, ideologies and fear of where they will stand should the coalition break, and an election be held.

    Myself, I keep buying the shares of the inevitable winners.....

  • Comment number 88.

    76 7oaks

    In essence, the idea of using the private sector to deliver services is not a bad one. Especially if we consider the terrible reputation that direct public sector projects had of being delivered late and over budget (indeed this still occurs today, especially in matters military).

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    In most cases, the best solution is to bypass the public sector all together rather than creating a mess with things like PFI.

    Let taxpayers keep more of their own money and buy services directly from private companies. The state picking up the tab for the poorest.

    We all accept that people should be fed and clothed but we do not expect the state to run vast chains of nationalised restuarants or clothes shops or procure the services of such businesses.

    Why should the NHS be any different? Privatise it and let private companies build and run hospitals.

  • Comment number 89.

    At 80:

    "rockRobin7 wrote:

    This appears to be standard labour party denial and obfustication.

    Here are the numbers, so as to avoid confusion:

    Newlabour public spending 2000 - £343bn
    Newlabour public spending 2010 - £669bn (before adding in the cost of the banking crisis"

    ^ Typical Tory... throw some big numbers around and hope to god that us on the left can't be bothered to check them out.

    Maybe you should check the IFS election briefing note "Public Spending Under Labour"? Here are some tidbits for your delectation (see, we can use big words too!):

    "Spending on public services has increased by an average of 4.4% a year in real terms under Labour, significantly faster than the 0.7% a year average seen under the Conservatives from 1979 to 1997. This is largely due to increases in spending on the NHS, education and transport..." NOT ON "allow[ing] the workshy to sit at home watching their satellite TVs claiming invalidity benefits" AS YOU SO BEAUTIFULLY PUT IT.

    In fact... "Despite large increases in the generosity of benefits for lower income families with children and lower income pensioners social security spending has grown less quickly than it did under the Conservatives". SO LABOUR ACTUALLY SPENT LESS ON SOCIAL BENEFITS THAN THE TORIES DID BEFORE THEM.

    So Labour haven't overspent on the undeserving poor - quite the opposite.

    Please, get your facts straight before you try to impress people with them.

  • Comment number 90.

    @Diane

    So your position is that Labour were great stewards of the economy from 2001 - 2010 (prior to that they were following Tory spending plans). Your position is that despite even hindsight proving otherwise it was the 'right thing to do' to run up monstrous annual deficits on the back of a consumer boom perched on nothing more than a great ocean of public and private borrowed money?

    And you're ignoring Alistair Darling's pre-election comments that, if re-elected, Labour cuts would be deeper than Thatchers?

    I believe the phrase is 'deficit-denier'.

    Isn't it funny how now that Labour is no longer in power the BBC is finally pointing out that Labour did, as Liam Byrne admitted, spent all the money. Only a week or so ago Robert Peston admitted that RBS and HBOS were destroyed not, as Labour tried to kid on, by nebulous three-letter acronyms that started in America and therefore could not be foreseen by Labour, Brown or his comedy FSA but over-paying for ABN (in RBS's case) and bad loans to UK property companies (in HBOS's) case.

    The truth is slowly coming out now that the BBC is no longer Labour's plaything. Albeit in this backwater of their 'range of output'.

  • Comment number 91.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 92.


    The bottom line is this.
    We have already been through a recession where many many people have suffered, lost their homes, been made redundant and gone through the financial mire. Destruction of families, depression, alcoholism, drugs, divorce and general every day stress.
    Now its going to continue to happen as a direct result of the choices made by conservative millionaires and conservative led ideological policy.
    As a result of the austerity drive and devastating cuts to public services.
    There will be more redundancies. Houses being repossessed. More depression, more drug taking, alcoholism, break up of families and severe stress. Vat up.
    Those on low paid work will be hit hardest. And it will affect disposable income throughout most of the population.
    But there will be some that it wont affect. None of the coalition cabinet. None of the millionaire bankers. None of the big businesses and corporations. There life is “as you were”. They are coining it in, protected, financing and associated to the conservatives. But the choice was made to allow billions to be paid to the bankers and billions of tax let offs for big business.Of course there is enough money for the majority (especially the poorest) not to have to suffer this.
    But they will suffer it, because of greed, apathy and the choices made by this conservative led coalition.
    And David Cameron, George Osborne, the lib dems and all the tory posters on here cannot hide away from these facts. And they wont be able to hide from the public anger either.
    Its immoral, unethical, inexcusable and the most revolting state of affairs.
    Same old tories.

  • Comment number 93.

    "Now we know for sure that Miliband Junior is an economic pigmy."

    Seems awfully unfair on any genuine economic pygmy. I'm sure pygmy tribes have a reasonable grasp of economics.

  • Comment number 94.

    89. At 11:58am on 11 Jan 2011, Skol303 wrote:
    At 80:

    In fact... "Despite large increases in the generosity of benefits for lower income families with children and lower income pensioners social security spending has grown less quickly than it did under the Conservatives". SO LABOUR ACTUALLY SPENT LESS ON SOCIAL BENEFITS THAN THE TORIES DID BEFORE THEM.

    So Labour haven't overspent on the undeserving poor - quite the opposite.

    Please, get your facts straight before you try to impress people with them.

    ======================

    Ummm, afraid you are guilty of what you accuse

    Labour spending GREW less - that doesn't lead to your conclusion that they SPENT less - in fact they clearly spent more. and it still allows the possibility that they overspent.

  • Comment number 95.

    read an interesting article on Santander Bank the other day.

    Seems that when Brown loosened the reins of regulation, both Abbey National (as was) and Santander took a decision not to relax their own internal lending and debt provision criteria.

    Santander was almost completely unaffected by the banking crisis.

    Rather blows a hole in any claim that there was nothing Brown could have done about the banking crisis, doesn't it, if a bank which carried on with the boundaries and limits that existed before Brown relaxed them was unaffected.

  • Comment number 96.

    "So Labour haven't overspent on the undeserving poor - quite the opposite."

    Indeed. And they didnt spend it on any of the poor, which is probably why they are still poor.

    So, what did they blow it on then? Apart from aircraft carrier contracts, pet projects that failed, tax breaks for venture capitalists, illegal wars....?

  • Comment number 97.

    92#

    Dragged that old sandwich board out again have you mate? Its only been sitting in the shed since Christmas.... "the end of the world is nigh, run away, run for your lives....!"

  • Comment number 98.

    "56. At 09:13am on 11 Jan 2011, lefty11 wrote:
    Latest YouGov/Sun results 10th Jan LAB 43% CON 40%,LD 8%"

    Date of next election, May 2015

    Relevance of latest opinion poll 0%.

  • Comment number 99.

    "85. At 11:32am on 11 Jan 2011, Fubar_Saunders wrote:

    The voting public are as thick as excrement with a selective memory span that would make Goldie The Goldfish look like Mastermind."

    Never forget that Labour can always promise to rob Peter to pay Paul before trotting out platitudes about 'making the rich pay their share'.

    Their basic tactic is to promise everything to everyone and that whatever it costs it won't be YOU that's asked to pay for it.

    Ok, it's completely unsustainable and inevitbly leads to a financial crisis but that's where your bit about the short-term memory comes in.

    Perhaps Alan Johnson's plans on employers' NIC are the answer?

  • Comment number 100.

    RockRobin7 @80

    Oh good facts and figures...

    Total public spending 1979 85.17billion, 1996 318.35billion...blimey !

    If you look at public spending as a % GDP then average for 1979-1997 40.3%...1997-2009 37.9%

    Highest figure under NewLab 2009 44.54%.In 2008 before the recession 39.75%.

    Under the Tories an amazing 10 years were above Labours 2008 figure:
    1979 42.75%
    1980 44.54%
    1981 45.29%
    1982 45.56%
    1983 43.20%
    1984 42.59%
    1985 41.71%
    1986 40.76%
    1994 39.90%
    1995 40.76%

    Aren't facts and figures wonderful ?

 

Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.