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A Lost Iguana
The situation is annoying. It is a particularly obnoxious bit of spin by the Conservative party.
Basically, if you look at the deficit numbers the country was running a surplus until 2001-2002. At this point we begin to have a deficit so I suspect that the foray into the Middle East was costing us a fair bit of money that was previously not budgeted for. Yet I presume we did not cut back on domestic spending so the deficit remained and slowly grows.
Basically, if you look at the deficit numbers the country was running a surplus until 2001-2002. At this point we begin to have a deficit so I suspect that the foray into the Middle East was costing us a fair bit of money that was previously not budgeted for. Yet I presume we did not cut back on domestic spending so the deficit remained and slowly grows.
The spending on the Middle East wars was negligible compared to the overall Government spending levels. In essence, whilst Brown followed Ken Clarke's spending plans (as he widely trumpeted in the run-up to the 1997 election that he would do), the deficit fell and the books balanced. From 2003 onwards - when we were developing into the biggest credit boom that the country has ever experienced - Brown failed to ever balance the books. Public spending rose from ~£450bn to ~£700bn over that period and booming tax receipts from the whirl of activity caused by people deliberately taking on more and more debt failed to keep growth. Former spin doctor Lance Price reported that Brown deliberately chose to run a deficit in order to try to screw the Tories - they couldn't offer tax cuts without facing howls of "so what are you going to cut?". I personally know of an airbase in Lincolnshire which resurfaced its main carpark every year up to 2007 just to spend money.
To run a deficit of about 12% of public spending in the middle of a boom (3% of GDP) is downright stupid - the world is unpredictable, economies are chaotic systems, and the positive feedback tendencies cause them to follow cyclical behaviours (rising economies cause lower public spending and higher tax receipts until they saturate; the same on the way down). If not the deregulated bankers, then something would cause the economy to turn down and receipts to fall (and spending to have to rise).
Our deficit was amongst the highest in the developed world (here).France, Germany, Australia, Switzerland ... all have deficits well below where ours will be even after the cuts have taken place!
Brown was warned repeatedly from 2005 that the deficit was becoming a problem - had he run a surplus of 3% of GDP in the boom times rather than a deficit, we'd be in great shape. Instead, we were hit more severely than any other G7 economy, with a recession deeper and longer than any since WWII, and we're borrowing about 25% of Government spending today.
I do blame Brown - Darling wanted to rein in spending but was overruled. Before the elections, Darling promised that he'd bring in "Bigger cuts than Thatcher". Clegg and Cable warned that there would be huge cuts. So did Osborne and Cameron, of course
A Lost Iguana
I remember the Conservative party saying that they would match the Labour party for spending. This was during the "Hug a hoodie" and Green Conservatives period where David Cameron is trying to take the edge of Tory history.
That was an error - Cameron and Osborne decided that the Tories had to do what Labour had done in the run-up to 1997. They did claim that they'd decrease the rate of rise of spending ("Sharing the proceeds of growth"). Would have worked as well to rein in the boom-time deficit if there hadn't been a crash (the proportion of GDP on public spending would have gradually declined, so the deficit would have cleared). However, the pile of matches fell over just after they made the pledge.
A Lost Iguana
Things are fine until the liquidity crisis and the world wide recession begins. Tax revenue falls and the government needs to loan money to the banking sector to keep it afloat. That basically starts a horrible cycle where we have to borrow a crap load to prop up the banks and then borrow more to pay the interest on the debt we have outstanding. So while you can take out the bank bailout from the deficit numbers, the effect of having to borrow even more money remains.
And hurt us more than almost anyone else. Why, if (according to Brown), we were "best placed to weather the downturn"? Turns out we were worst-placed. (BTW, the bank bailout isn't included in the deficit numbers and is usually excluded from the debt numbers as well).
A Lost Iguana
The really scandalous part of all of this are what would have happened had the Conservative party been in government. Firstly, they voted for the war so that spending is still there. They claimed to match Labour's spending so that is still there. Then you can hardly expect them to have regulated the banking sector more closely to protect it from the sub-prime asset collapse (force them to hold back more capital).
The Iraq and Afghan war spending is tiny in comparison the the numbers shown. The undertaking to match Labour spending was from only three years back (out of the 13-year Labour reign) - all previous undertakings were to spend significantly less than Labour. The regulation changes involved with setting up the FSA in 1997 were resisted by the Tories:
"With the removal of banking control to the Financial Services Authority--the "super-SIB"--it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse. "
(Hansard 11 November 1997, reply by Shadow Chancellor).
I totally disagree that the deficit would have been as out-of-control as it was if virtually anyone other than Brown had been Chancellor (from Conservatives, Labour and Lib Dems). Well, with the exception of Ed Balls, I guess.
A Lost Iguana
Labour's biggest ******** were to be too authoritarian and warlike. The current deficit is because the tax revenues have collapsed, not that we were previously spending too much.
I'd say that two of Labour's biggest ******** were to be too authoritarian and warlike. These destroyed any chance of the Lib Dems from supporting them. The deficit isn't just from collapse of revenues - if it were, then the structural deficit would be zero, rather than somewhere between £80bn and £100bn.
And on the larger picture, I for one am delighted that the party of Damian MacBride, Derek Draper, Alastair Campbell, Gordon Brown and Ed Balls lost. The party of control orders, 90-day detention, Iraq, uncontrolled obnoxious spin, fiscal incontinence and hatred. I am actively ashamed for having voted for them during their reign. They have good people yet - they can regain their soul still. I like Tom Harris, John Hutton, Alistair Darling, Frank Field - all decent people.
