Once again on the myth of Labour’s ‘out of control’ spending

The Labour party got it wrong. Just not in the way you think

Alistair Darling ncr


The Labour party got it wrong. Not, as is commonly supposed, by spending too much in government, but by allowing that charge to stick in opposition. After losing the election back in 2010, rather than effectively setting out the real causes of the financial crash Labour got itself embroiled in a lengthy leadership contest – it wasn’t until September, four months after the election was lost, that Labour had a new leader in place.

Similarly, despite backing Labour spending plans right up until 2008, George Osborne and the Conservatives were allowed to position themselves as the only prudent choice at the 2010 General election.

The hangover from Labour’s error persists today in the public’s continued reluctance to trust the party on the economy. YouGov’s tracker currently gives the Tories a 17-point lead on economic trust – 40 per cent to 23 per cent.

The argument was lost five years ago, and thus it might plausibly be argued that getting embroiled in the argument again is a fruitless task.

However it’s important to (repeatedly) set the historical record straight, especially when another egregious claim is also doing the rounds – George Osborne recently claimed that the “economy was contracting when we came to power” (it wasn’t).

And so here are two graphs which, while not exactly game-changing at this stage, are nevertheless worth looking at as a reminder of some of the nonsense emitted by the Conservatives over the course of this parliament.

Firstly, on the myth of ‘out of control spending’. As the graph below demonstrates, government debt as a percentage of GDP was well below average under Labour and rose, predictably, as aresult of the collapse in tax receipts when the economic crisis hit – as it would. In the years leading up to the 2007/08 crisis – the supposedly spendthrift years – UK net public debt was close to its lowest ratio to GDP in 300 years.

Nor was this ‘Labour’s crash’ – unless you think Labour was in power in the United States when the sub-prime housing bubble burst and Lehman Brothers collapsed. I’m sure you’re not that silly.

Debt graph


As for the spurious claim that the economy was contracting when the coalition came to office in 2010, in reality it was growing when Labour left office – and nosedived only after George Osborne’s ’emergency budget’ in October of that year, when he set out big cuts to public spending.

The country had to wait another two-and-a-half years before the economy started to grow again at the rate it had been growing in May 2010. In the intervening period we saw wage stagnation, ‘flatlining’ GDP and the loss of the triple-A credit rating.

GDP Labour

So yes, the Labour party got it wrong. Just not in the way you probably think.

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

21 Responses to “Once again on the myth of Labour’s ‘out of control’ spending”

  1. Gary Scott

    The crash was the fault of successive governments both here and in the United States. Going back to HOW this happened, SEVEN YEARS AGO, adds nothing to the debate.

    Unfortunately this hijacking of the debate avoids discussion of issues voters might be interested in like jobs, housing and, the BIGGEST elephant in the room, TTIP.

    I predict most voters will reach election day none the wiser and thoroughly hacked off by politicians again.

  2. James Chilton

    If anyone understands that the world is run on appearances, it’s the Tory politician. It’s very difficult to contradict a myth once it’s taken root as an established ‘truth’ in the public mind.

    There’s no immediate advantage in correcting the Tory version of Labour’s “crash”. Miliband and Balls should concentrate on what can be done to repair the economic and social damage of the Cameron years.

  3. littleoddsandpieces

    Labour did not lose in 2010.

    The voter turnout in 2010 was the same low turnout, after the carnage of the first world war, in 1918, which was only the beginning of universal suffrage for working class men and women.

    The Tories also did not win in 2010.

    Most people did not come out to vote in 2010.

    Today more people are not registered to vote, as there were in 2010.

    Between being unregistered to vote and not voting when people are on the electoral roll, over 75 per cent of the population are not bothering with voting and elections, even now the lost poor grey vote.

    Most people do not watch TV news nor read it in newspapers, nor will they watch party political broadcasts.

    The bulk of people are not aware of the massive state pension reform that has happened, and the worse to come with the
    flat rate state pension next year,
    that is NOT MORE but LESS and
    for huge numbers of men and women
    when that is their sole pension provision
    due to low wages throughout life.

    See why, at end of my petition, in my WHY IS THIS IMPORTANT section, at:


  4. David Davies

    No one in their right mind believes that the global economic crash was caused by anyone other than the tax dodging fraudsters of financial casinos. The disgrace is that not ONE of these criminals have been held to account, whilst brutal sanctions can be meted out to the victims.

  5. Richard Honey

    I generally agree with what you are saying, but out on the doorstep I’m finding that people who throw the ‘Labour wrecked the economy’ line at you are at least having step back a bit from their certainty when I quote a few facts at them. I had one guy who aggressively tore up my leaflet when I handed it to him initially, but at the end of a 10 min interesting chat he shook my hand. Maybe not a game changer but certainly dented his easy conviction.

  6. Norfolk29

    Only one in seven people believe that Labour was not reonsible for the 2008 crash. Gordon Brown and Alistair Darling were not involved in the leadership contest and failed to rebut the Tory claim that Labour had crashed the economy. Cameron and Osborne attached no blame to the banks, despite the banks apologising for their part in the crash. This was a failure that took place before the 2010 election where Gordon Brown failed to persuade the public that the crash was caused by a lack of regulation of the financial system.

  7. sparky

    You don’t understand the cause of the Crash. What happened was this.

    Far more people defaulted on paying mortgages in the US than institutions expected. Institutions had built standard deviation bands into the models of mortgage defaults based upon what had happened in the past. Unfortunately these models were inaccurate, but there was no way of knowing this at the time since they had been used historically perfectly successfully.

    When very large numbers of mortgage holders defaulted, assets that been secured on those mortgages were written down, in some cases by 100%. Some institutions with very heavy exposure to these went bust. Others had to bailed out by the state.

    No criminal acts were commited by people working in banks, they merely used erroneous models. It happens in the financial markets, because what has happened in the past is not nevessarily what will happen in the future.

    However, modelling is essential to all financial products. It’s what lies behind your home and car insurance, your bank overdraft facilty, and your present mortgage.

    The Crash was also nothing to do with tax dodging, fat cats, the Wolf of Wall Street or any other populist imagery of evil, greedy bankers. It was a failure of economic modelling.

  8. Ali

    What delusional rubbish!! Who agreed those mortgages in the first place?? The ‘economical modelling’ to which you refer is necessary only for banks to maximise their profits.
    The sooner control of money (and debt) creation is removed from the banks the better……..

  9. Leon Wolfeson

    It’s useful to counter the Tories outright lying on this.

    TTIP is an issue which won’t be decided in the UK. It’ll be decided on an EU level, and that’s where the lobbying for opposing it is worthwhile.

  10. Leon Wolfeson

    Quite. But instead, at conference, they chose to lead with a child benefit freeze and refusal to allow borrowing for council housing. They’re still stuck in a Austerity mindset, committed to a benefit cap which is going to severely slash benefits.


    (Meanwhile, Reeves…)

  11. Phil

    Disagree with your last point, Brown didn’t fail to persuade people – he reduced regulation on the banks leading to this mess!

  12. Norfolk29

    Brown was like a wounded bull elephant crashing through the jungle for the last two years of his time as PM. What was needed could not be provided (a piece of lead inserted into his ear, using a high calibre rifle). And he still wanted to lead a coalition for two years after leading Labour to its worst post-war defeat.

  13. Leon Wolfeson

    Ah,so because he wasn’t murdered…

  14. Norfolk29

    “For three years, Downing Street under Brown had been a sleepless bunker,
    powered by the tyrannical rages of a mortally wounded prime minister
    and the tribal loyalty of his ministers and advisers.”
    This is a quote from today’s Guardian on “The making of Ed Miliband” by Rafael Baer. I don’t know where you were during 2007 -10 but those of us who were members of the Labour Party were suffering from Browns bunker mentality. Just as Anthony Eden proved Churchill’s prediction right that “Anthony is not up to it” which caused Churchill to hang on until 1955 (when he was 81), so most of Blair’s circle knew that Brown was “not up to it”. At these times, in days of yore, and officer fell on his sword. Not now.

  15. Leon Wolfeson

    Oh right, you’re mad he didn’t commit suicide. *yawn*

  16. Norfolk29

    He technically could have resigned. That would have been the honourable way. Like Harold Wilson in 1976 or Eden in 1957. He was unfit for office and someone should have been brave enough to tell him.

  17. Leon Carter

    but the Global crash would still have happened as by then and before it was too late as we cannot control the dollar however much regulation there is

  18. doolols

    And the fixing of the ratings for the derivative products, which were sold and re-sold, bankers collecting fees and commissions each time?
    ““We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction. The three credit rating agencies were key enablers of the financial meltdown. ”
    No, it was just a bad financial model. Nothing to see here. Move along.

  19. Pernickety

    We’re seven years on and people are still saying “it was X’s fault! Bloody X!”. Has anyone stopped to think that maybe there was (and still is) a systemic fault with the whole picture? Might it be a combination of politicians mucking around for power, banks being stupid with risks, business owners trying to maximise their own profits, members of the public spending tons of money they didn’t have, credit firms offering money to those they shouldn’t have – the list goes on. There wasn’t one cause to this. There’s no single person, class, entity or otherwise to blame; it was the definition of omni-shambles.

  20. robertcp

    I agree with nearly all of this article. The problem was, however, that the Labour government should have known that something was very wrong with the economy and tried to mitigate the inevitable crash. Instead, there were ridiculous comments about ending boom and bust, as well as giving Fred Goodwin a knighthood!

  21. Kevin McCoy

    +James. Nothing can be done to repair the socio economic damage done by the Tories. The money’s gone. Our money stolen (as you know ) by finance traders,and then that money loaned back to us for which we are going to be repaying for decades.

    The top tier of society own 90% of the wealth in Britain, and there is no obligation on them to hand it back. They’ve worked it out no doubt; we’re set on a socio economic course on a parallel with Brazil.

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