Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time. Some fall under both categories.
Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time.
Some things fall under both categories.
It is testament to a failure in communication on the left that in the years immediately after the financial crisis the consensus was allowed to form that under Labour spending got out of control. The hangover from this communication failure persists in the public’s continued reluctance to trust Labour on the economy.
It is seemingly forgotten now, but the Tories promised to match Labour’s spending plans right up until 2008; in the aftermath of the 2010 election, however, a drawn-out Labour leadership contest allowed David Cameron to define the post-crisis landscape as the hangover of a spendthrift Labour Party.
The country was in a mess and the only ones who could clear that mess up were the Conservatives, who would reign in the excesses of the Blair and Brown years and bring some temperance to proceedings.
It is worth repeating, then, something pointed out by Martin Wolf in today’s Financial Times (£): in the years leading up to the 2007/08 financial crisis – the supposedly out of control, spendthrift years – UK net public debt was close to its lowest ratio to GDP in the past 300 years.
As the graph below shows, government debt as a percentage of GDP was well below average under Labour and rose, predictably, as a response to the collapse in GDP – as it would. And why does this matter? Because the relevance of the amount of money spent by government is related to how big a proportion of GDP it is, not how much is spent in total.
{
}
While debt is now higher than it has been for a considerable period of time, the blatant dishonesty in the claim that spending was out of control under Labour has more to do with finding a rationale for stripping back the state than it does with dealing with any perceived ‘debt crisis’.
60 Responses to “Once again on Labour’s ‘out of control’ spending”
blarg1987
Didn’t the report you keep referencing say it came down to 4.700? If not could you re add the link to the report and explain where the 4.7 figure comes from.
OldLb
http://www.ons.gov.uk/ons/dcp171766_263808.pdf
Go look.
4.7 is net of assets. What assets are they? Gilts. Hmm. how can you create an asset by writing yourself an IOU?
The debt however was 5,010 bn. That’s two years old.
Since then it has risen by a minimum of 2.5% because of the triple lock. That makes 5,300 bn.
Even that is going to be an underestimate. The reason is what the government calls a surplus in the NI fund. It’s not a surplus of assets over liabilities. They picked that word in order to deceive.
No their meaning of surplus is profit. They are taxing people more than they are paying out.
The corrolory of this, is that the debt is escalating. Way more that just the increase in payouts. It’s demographics. So the debt is going up far quicker than 2.5%
You can get a hint of by how much a year, by looking at the report. Between 2005 and 2010, the pensions debt went up by 736 billion A YEAR. Emphasis deliberate.
blarg1987
“In summary, the estimates in the new supplementary table indicate a total Government pension
obligation, at the end of December 2010, of
£5.01 trillion
, or
342 per cent of GDP,
of which around
£4.7 trillion relates to unfunded obligations.” – As it says in black and white and you keep preaching the unfunded obligations are 4.7 so the iother assets are funded such as local authority pensions, teaching pensions etc.
LB
And.
What’s the date now? What’s 5,010 billion compounded at 2.5% over the intervening period?
Ah yes, 5,300 trillion.
What are these assets?
Gilts.
How does an IOU to yourself reduce your debts?
These are unfunded pensions. The funded pensions, or more accurately should be funded pensions, are not included in the figures.
I say should be funded, because they have huge deficits there. Assets less than liabilties.
So which part of the above is wrong.
Why USe GDP? Why not taxes? Why not use taxes less core spending such as the NHS? Pensions coming out of the rest of taxes?
It’s because when presented in an accurate way, its blatently obvious that you can’t pay 7,000 billion plus of debts, on taxes of 550 bn, with spending of 700 bn
So what’s your motivation? You’re slowly taking on board the extent of the debts. One more small step, and you will realise they can’t be paid.
Now consider the conseqences for most people in the UK. That 26K a year worker isn’t going to have much of a pension from other sources. Robbed of over 450,000 pounds, they are reliant on a state that can’t pay, not won’t pay.
It’s dire. So why would you want to hide that from people?
LB
It’s not a debt is it.
It’s off the books.
Looks like, waddles like, and quacks like a debt, its a debt [see duck test]