Did Labour overspend?

Labour’s leadership contenders have been tripping over themselves to say that Labour overspent in government

 

Labour’s leadership contenders have, depressingly, been tripping over themselves to tell a waiting media that Labour overspent in government. This seems as damaging for the future of the party as remaining silent about Labour’s public spending performance in the months after the 2010 general election defeat.

Tom Watson, on the BBC’s Sunday Politics programme, dismissed overspending concessions to the media in an interview with Andrew Neil. Not only an honest answer but one supported by the facts. So well done, Tom, for not falling into a bear trap that is potentially as damaging to Labour as the Tories’ constant reminders of the ‘Winter of Discontent’ from 1979 to 1997.

The reality, or course, is that Labour’s public spending between 1997 and 2007, when the international financial crisis hit, was not only affordable but vital to rebuild the public realm after eighteen years of Tory disinvestment.

As the chart shows, the UK’s net public debt to gross domestic product ratio, after one of the most cataclysmic financial crashes in history, remains historically low. And, I assume, no-one would argue that the UK wasn’t an economic success and a trade superpower for most of the 18th, 19th and 20th centuries.

Public debt Labour

Coming closer to the present, it is interesting to compare the debt record of the governments of Blair and Brown with those of Thatcher and Major. The very lowest debt to GDP ratio in the Tory years was recorded in 1991 at 25 per cent. But when the Tories left office in 1997, it had grown again to 42 per cent. Labour brought the ratio down to 36 per cent in 2007 before the onset of the credit crunch. But if Labour had achieved the very best of the Tory years, debt to gdp would still be 69 per cent today, equating to about £1.2tr in debt.

This underscores that ‘overspending’ by Labour in government was not a cause of today’s debt problem.

A second line of attack is that Labour should have ‘fixed the roof’ while the ‘sun was shining’. This won’t do either. What do commentators who raise this issue think Labour was doing from 1997 to 2007 when it raised NHS spending to the EU average, rebuilt local government services, invested heavily in education, partly rebuilt the public transport system, upgraded international development, created Sure Start centres across the country, kick-started the decent homes programme in social housing, invested in community regeneration schemes, introduced policies to tackle child and pensioner poverty, and created the Child Trust Fund?

It’s often forgotten that public services and infrastructure had fallen into disrepair by 1997 and that satisfaction with public services had plumbed the depths in the 1980s. The power of public investment to drive satisfaction is shown in the NHS where satisfaction doubled from 35 to 70 per cent between 1987 and 2007. It should also be remembered that Labour’s investment was supported by David Cameron and George Osborne as a means of getting into government; although forgotten soon afterwards.

Austerity is now dismantling much of what was achieved in the name of reducing the UK’s public debt, which is, after all, only average for the G20. That the UK was comparable to Greece in 2010 and ‘on the brink’ was a case of successful Tory spin and is not borne out by the facts. So keep correcting those interviewers Tom.

Kevin Gulliver is a contributing editor to Left Foot Forward and a director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research. He writes in a personal capacity

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