The Mythical Gordon Brown Big Debt
To clear up the mythical Gordon Brown big debt:
Below: Note that Brown in 2008 was spending about the same as Major in 1992 and far less than Thatcher in 1983.
Below: It's not the level of spending that's important it is the deficit - the difference between spending and revenue. As long as the chancellor raises enough in taxes to cover his spending over the cycle there's not a problem. Also the deficit gives you the full picture of the effect of the recession where quite naturally both spending rises and tax revenues fall. This is a graph of the deficit also to 2010.
The deficit went up in both the early 80s and the early 90s, due to two recessions. As we came out of them the deficit fell and turned to surplus. Then the deficit rose in the early part of the last decade. The UK was in the 'longest period of sustained growth since the Industrial Revolution. The borrowing was to fund infrastructure totally neglected by the Tories. Record hospital and school building went on. When the deficit rose again due to the recession it rose to dangerous levels, forcing us to make painful cuts to avoid the fate of other countries like Ireland. From the Guardian:
"10 facts which George Osborne doesn’t want us to know because they expose the fiction that Labour spent all the money":
[INDENT][B]Fact 1:[/B] In 2008, the first year of the UK recession, seven of the eight European economies with a higher GDP per capita than the UK (Austria, Finland, Holland, Denmark, France, Germany and Sweden) also spent more as a % of GDP. The single exception was Ireland, which not so long ago Osborne held up as an example to the UK, and which has since suffered economic collapse.
[B]Fact 2:[/B] Average annual public spending as a % of GDP [U]was lower[/U] in the years 1998-2010 (38%) than in the years 1980-1997 (40%) whereas average annual taxation was the same at 36% of GDP.
[B]Fact 3:[/B] Public spending fell from 38% of GDP in 1997 to 35% in 2000. From 2000 onwards, [U]the Labour government began to spend money on Tory neglected run-down schools, roads, hospitals, etc.[/U] Thus public spending increased to 39% of GDP in 2007 – and then to 45% in 2010, as the effects of the financial crisis took hold and the government rightly followed the Keynesian rule that spending increases should be counter-cyclical.
[B]Fact 4:[/B] Margaret Thatcher described Blair as “my greatest legacy” because he had rejected what she saw as Labour’s core principle of “tax and spend”. Accordingly, Gordon Brown kept to the previous Conservative government’s spending plans for the first 3 years. [U]But they had been elected to improve neglected public services[/U] and so were committed to increase spending. Much of New Labour’s electoral success was due to its appeal to voters who wanted it both ways – better schools and hospitals but no tax increases. Likewise, much of the vitriol now directed at Gordon Brown comes from those same fools.
[B]Fact 5:[/B] As for the structural deficit, this was only 3.5% of GDP when Brown left the Treasury in 2007, compared to 4% in 1997 and an annual average of 5.5% in the years 1992-1996. According to IFS data, the UK has run a structural deficit for all but five of the last forty years. In fact, the last 3 Labour governments managed to earn enough to cover their spending for 3 of their 13 years in office, whereas [U]Thatcher and Major only managed balance the books for 2 out of 17 years[/U]. Sure, austerity drones can blather on about economic cycles, but the fact remains that New Labour’s fiscal policies were little different from those of the Thatcher and Major governments.
[B]Fact 6:[/B] Brown is often criticised for failing to reduce debt during an economic upturn. Yet [U]Labour reduced the national debt from 42% of GDP in 1997 to 35% in 2008[/U] – when it was lower than in 11 of the 18 years between 1979 and 1997 and lower than corporate debt (250% of GDP) and private debt (70% of GDP). [U]The national debt has been higher in 200 of the last 250 years than it was in 2010[/U], when it was 52% of GDP. In 1945 it was 237% of GDP and yet Attlee's post-war Labour government was able to bear the costs of introducing the welfare state and nationalising the railways, the public utilities and the coal and steel industries. Maybe that was because in 1945 we really were "all in it together".
[B]Fact 8:[/B] In 2010, the UK's national debt was the second lowest of the G7 countries and, at less than 60% of GDP net of bank assets, was within Maastricht Treaty limits. It is expected to peak at around 73%. Germany is already above that level and is expected to exceed 80% in 2013. The debt levels of Japan and Italy exceed 100% of GDP.
[B]Fact 9:[/B] In 2007, Cameron promised to stick to Labour’s spending plans. Then came the financial crisis, the damaging effects of which he now chooses to deny – unlike Mervyn King, Governor of the Bank of England, who told the Treasury select committee that public spending cuts were the fault of the financial sector (March 1st 2011). But it isn’t surprising that Cameron is reluctant to blame the banks, since he had previously [U]criticised Gordon Brown for regulating them too tightly[/U] – and [U]more than half of the Tory Party’s funding comes from the City[/U].
[B]Fact 10:[/B] Budget deficits are due to either excessive spending or an inadequate tax take. Since it is clear that the problem is not the former (Facts 1-9), then it must be the latter – which is around 36% of GDP compared to an EU average of 40%, and is likely to be further aggravated when taxes are cut later during this parliament to the benefit of high earners, corporations and banks. [/INDENT]
Yes, Gordon Brown did not fully succeed in rebalancing the economy, re-regulating the financial sector, controlling consumer debt, reversing widening inequality and preventing asset inflation. [B]But that he didn’t overspend is indisputable[/B]. He did create the longest period of economic growth since the Industrial Revolution. Remember his nickname “Prudence” and the praise lavished on him by the Tory press? New Labour’s obsession with market liberalisation put it somewhere in the middle on the scale of (in)competence, but on the same scale, the present Tory rabble lie on the far side of disastrous.
The Tory press has managed to convince the nation Brown was responsible for the Credit Crunch as well.
To the policies of the current rabble. If, by cutting hard, you cripple growth by a roughly concommittant amount, then the cuts achieve little except the redistribution of wealth from poor to rich - since public funds are disproportionately spent on the poor.
There is data in the current financial figures to show this is indeed happening.