I interviewed Shadow Chancellor Ed Balls on the Daily Politics Conference Special on Monday, live from Liverpool, the moment he'd finished speaking to the Labour conference.
In the course of our usual robust exchange, which we both enjoy, he made a couple of claims that I knew I would have to investigate more thoroughly. And I have!
I asked Mr Balls to clarify that, among his various apologies, he was NOT apologising for spending too much in good years, instead of running up surpluses which could have been used in the bad years. He made it clear he was not apologising for that because he didn't think Labour had spent too much.
1. He claimed that the National Debt was lower on the brink of the banking crisis in 2008 than it had been in 1997, when they took over from the Tories. That is true in terms of national debt as a proportion of GDP. Public Sector Net Debt was 40.6% in 1997-8 and 36.5% in 2007-8. It shot up to 43% in 2008-9 (and has been rising ever since) but by then the banking crisis was underway. However in absolute terms, debt grew strongly under Labour, from £482bn in 1997 to £567bn in 2007-8, despite 10 years of solid growth when Keynsian economics suggest you should run surpluses. Mr Balls claimed in his speech that "we went into the [financial crisis] with lower national debt than we inherited in 1997." That is true as a percentage of GDP. But not in terms of total debt, which rose £85bn during the decade after Labour came to power. Mr Balls claims Labour was not "profligate with public money". Critics say he should have used more of the revenues to put away for the bad times instead of adding to debt even in boom. You decide.
2. I pointed out that even as a share of GDP debt would have been higher in 2007 than 1997 if he include such off budget items as the Private Finance Initiative, which provides public goods like schools and hospitals but whose obligations do not show up on the public accounts. Mr Balls replied that PFI was on the public balance sheet by 2008. That is untrue. PFI was not on the balance sheet then, something which the Tories criticised. PFI is still not on the balance sheet in 2011, 18 months into a Tory-led Coalition. In 2008 the Institute for Fiscal Studies estimated PFI liabilities at £110bn. Include that in the calculations and even as a percentage of GDP, Labour was borrowing a lot more in 2007 than in 1997 (when PFI liabilities were small).
3. Mr Balls also claimed that Labour had run surpluses in some good years. That is true, but only for one year, 2000-1, when revenues were £18.3bn. In every other year of growth, Labour ran a deficit. I suspect, though I've still to check, Labour ran a surplus in 2000-1 thanks to the sale of 3G licences, which raised £22bn and Gordon Brown used to reduced national debt.
PS Mr Balls is now promising to use any net proceeds from the sale of the banks back to the private sector to pay down the national debt.
But the Office of Budget Responsibility calculates that the net gain from such a sale is likely to be only around £3.5bn. By 2015 (the earliest Labour is likely to see power again) the national debt will be around £1.4 TRILLION. A reduction of circa £3.5bn would be de minimus.