Tag Archives: profligate

The ‘Labour overspent’ lie debunked – again

It’s astonishing. Right-wing politicians, journalists and members of the public are still – still – pushing the myth that the financial crisis and recession of 2008 onwards was caused by the last Labour government overspending, being “profligate”, “not fixing the roof while the sun was shining”.

This Writer heard it twice on Thursday evening alone – from the Tory candidate at a local hustings event (although, bearing in mind that Brecon and Radnorshire’s Conservative candidate Chris Davies has all the intelligence of a farm animal, this is not surprising) and on the BBC’s Question Time, from William Hague (who was probably one of the Tories who invented this particular tall story in the first place).

Professor Simon Wren-Lewis wrote illuminatingly on the subject in his Mainly Macro blog, saying that the Coalition government wanted people to believe a myth that it rescued the economy from an impending financial crisis, but this could not be squared with the fact that the very large government budget deficit in 2010 was largely the result of the recession.

Therefore, he stated, it was important for the Conservatives and Liberal Democrats “to push another explanation for the large deficit: that it reflected the profligacy of the previous government.

“Economic journalists know full well this is a myth. Yet it is a myth repeated on countless occasions by the coalition parties, and by journalists working for the partisan press. On one occasion one of these journalists tried to rubbish a post where I wrote it was a myth, and I hope learnt to regret the experience.”

As ever, with a big lie (and here on Vox Political we have seen this very often in regard to the SNP’s claims) there is a nugget of truth. Here, it is the criticism that Gordon Brown was not as prudent as he might have been in his pre-recession budgets. Professor Wren-Lewis writes: “That memory is both correct (both the IFS and NIESR made that criticism) and the criticism is valid… This is the half-truth that sustains the myth.

UK public sector net debt

“But mild imprudence is not profligacy. We can see that by looking at another chart, for the debt to GDP ratio. Profligacy would imply a rapidly rising ratio, but this ratio before the recession (37% in 2008) was below the level Labour inherited (42% in 1997), and below its fiscal rule figure of 40%. No profligacy there.”

More prudence would not have helped because, “as Vicky Pryce, Andy Ross and Peter Unwin state in their book ‘Its the Economy Stupid: Economics for Voters’ (which I happily recommend, and which in its initial chapters covers much of the ground of this series): ‘The elimination of the UK’s structural deficit [under Labour before the recession] would not have been even a sticking plaster in the face of the haemorrhaging of the finance sector’s jugular’.”

The professor also adds that the Tories argued for less financial regulation before the collapse, and opposed Labour’s measures to moderate the recession in 2009.

In addition, this blog can add a recent response to a commenter, which ran thus: Labour didn’t ‘recklessly spend money we don’t have’ [as the commenter had claimed]. Labour ran the economy very well – as reports from such leftie strongholds as Oxford University have shown.

The global economic crisis that started in the US subprime housing market affected the UK deeply, and the Labour government of the time was forced to take action to prevent a run on the banks that would have deprived most people in the UK of their bank account savings – including people criticising Labour now.

The narrative about Labour profligacy is a fairy tale made up by the Conservative Party … in order to fool voters into supporting that party so it could win the 2010 election. Even then, it didn’t work and the Tories had to go into a coalition with the Liberal Democrats. They anticipated this, and hedged their bets by making a deal with the Lib Dems in March 2010, two months BEFORE the election (this information is from Five Days To Power, a book on the subject by Rob Wilson, Conservative MP for Reading East).”

The issue is not Labour profligacy; it is Conservative (and Liberal Democrat) dishonesty.

Follow me on Twitter: @MidWalesMike

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Prepare to sift the substance from the sewage in the Chance(llo)r’s Autumn Statement


[Picture: Vox Political reader Al Reading]

How long has it been since Labour was deemed the party with no policies and no direction? Now it seems the Conservatives have taken up this undesirable label and applied it to themselves (excuse the choice of words) liberally.

Labour’s stand on energy prices sent the Tories scurrying away to find an answer, after they finally realised that baldly claiming nothing could be done was not going to cut any ice.

When they finally came up with something, their answer was to “Cut the green crap” and reduce the environmental levy on energy firms – a u-turn within a u-turn for the party that once proclaimed to the nation, “Vote Blue – Go Green”.

This week they have also u-turned on cigarette packaging – for a second time within a matter of months. Before the summer, the Conservative vision was to safeguard children from smoking by removing packaging for cigarette packets. Then – after coincidentally hiring fag-company lobbyist Lynton Crosby to run their campaigns for them – they decided that the packaging could stay. Now – in the face of a possibly Lords rebellion – they are reversing their position yet again.

This is the context in which Boy Chancellor George Osborne will make his Autumn Statement – and he has already put himself on a sticky wicket before going in to bat.

Remember David Cameron’s massive error of judgement at the Lord Mayor’s banquet a few weeks ago, when he stood behind a gold-plated lectern that could easily be sold off or melted down to help pay of the interest on his government’s ever-increasing borrowing burden, and said austerity was here to stay?

It seems Gideon was eager to follow in his master’s footsteps, stumping up £10.2 MILLION (including VAT at the 20 per cent level that he imposed on us all in 2010) on new furnishings for his Whitehall HQ, from exclusive designers Panik, Ferrious and Senator. One Treasury insider, according to the Daily Mirror, wondered “why we couldn’t have just bought new furniture from Ikea”.

Good question! It is also one that is especially pertinent after it was revealed that Osborne has been calling for last-minute spending cuts from the Home Office and the departments of Justice, Defence, Business and Work and Pensions (yet again), because he will not be able to fund the £2 billion of giveaways announced during the conference season without them.

These include scrapping a rise in petrol duty of almost 2p per litre, free school meals for pupils aged five-to-seven and rewarding marriage in the tax system.

It seems clear that these measures were all unfunded when they were announced, putting the lie to Conservative claims that they have any kind of plan – and ruining their claim that Osborne’s schoolboy-economist austerity idiocy has done anything to improve the UK economy.

Like him or loathe him, Will Hutton in The Guardian had it right when he wrote: “The recovery is the result of the upward swing of the economic cycle finally asserting itself, aided by policies informed by the opposite of what Osborne purports to believe.”

Hutton went on to state that Osborne decided to “borrow from the Keynesian economic locker… never admitting the scale of the philosophic shift, and then claimed victory”. In other words, Osborne is the biggest hypocrite in Westminster (and that’s a huge achievement, considering the state of them all)!

Result: “The public is misinformed – told that austerity worked and, as importantly, the philosophy behind it works too… Thus the Conservative party can be protected from the awful truth that Thatcherism fails.”

Labour MP Michael Meacher is much more scathing (if such a thing is possible). In a Parliamentary debate, quoted in his blog, he told us: “We do have a recovery of sorts, but one that has been generated in exactly the wrong way. It has been generated by consumer borrowing and an incipient bubble, and it is not — I repeat, not — a real, sustainable recovery.”

In other words, the – as Hutton describes it – “eclectic and spatchcocked Keynesianism” employed by Osborne, while superficially useful in the short-term, will cause immense damage over a longer period because he doesn’t understand it and only used it in desperation.

Both Hutton and Meacher agree that a sustainable recovery can only come from what Meacher describes as “rising investment, increasing productivity, growing wages and healthy exports”, none of which are supported by Osborne’s current behaviour.

And yet, according to the Daily Telegraph, Osborne will fulfil another of this blog’s long-standing prophecies on Thursday by telling us all that “Britain can no longer afford the welfare state”.

From a member of the most profligate snout-in-trough overspenders ever to worm their way into public office and then inflict a harm-the-defenceless agenda on the nation, that will be the biggest lie of all.

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