June 23, 2015

Money

The irresponsible lending of the banks around the world caused the financial crisis, not Labour running a slight deficit. 

On average the deficit during Labour's time in power was 1.3%. 
 
Under the Tories in the 18 years from 1979 to 1997 it was 3% of GDP. 
 
Last year it was 5.7%. 
 
That’s without even mentioning the increase in the national debt since Osborne became chancellor and since he promised and failed to eradicate the deficit within one parliament. 
 
Labour did not cause a recession in 68 countries by investing in schools and hospitals. 
 
We should say so and continue to say so, albeit five years later than we should have started to do so. In 2007, David Cameron and George Osborne said that they would back Labour's public spending plans. 
 
When Andy Burnham became Chief Secretary to the Treasury in 2007, he started to reduce the deficit. 
 
It is reasonable to say that Labour could have taken this action sooner as the prudent approach is to run a balanced budget over the economic cycle.
But even if we had done so, the crisis would still have hit and hit hard, not least because of the importance of financial services in our economy. 
 
We should also remember that the cuts in spending that Andy Burnham was planning in 2007 were criticised by Cameron and Osborne for being harsh. 
 
And if Osborne is planning a return to pre-Keynsian days, perhaps we also need to remind people that in the 1920s and 30s such policies saw not only a lack of decent public services but also led to depression and war.

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