The Daily Mail shrieks at us today: “Tories claim Labour wants to drop a spending bomb of unfunded promises worth £45 BILLION that would wreck the economy and hit national security”. The story is of course complete rubbish - but aims to deflect attention from the Conservatives's own stunning record of fiscal failure.
We in PRIME have long argued that the huge reductions in public services and the social wage represent a much greater threat to our country’s civilisation and security than do budget deficits when the economy is under-performing, and all the more so at a time when governments are able to borrow at historically low interest rates. There is absolutely no economic reason not to borrow reasonable sums for investment purposes – taking investment in a broad sense to cover spending which inures for the economic and social benefit of future generations (therefore including much education and health spending as well as infrastructure).
But this is General Election time so we have to endure the crudest propaganda – and we can be sure that the Conservatives will once again try to depict any commitment to social spending by other parties, and especially Labour, as evidence of dangerous fiscal irresponsibility.
So let us once more take up the challenge in its own terms (which wrongly assumes all deficits = bad), and look at the respective deficit-related records of the Conservatives (including the Con-led coalition) and Labour respectively. We have ploughed this field before – see my post “Labour governments: more fiscally “conservative” than Conservative ones?” from 28 October 2015.
This time we take the last 26 fiscal years – 13 of them with Conservative or Con-led governments, and 13 with Labour governments. A level playing field!
We must warn readers at the outset in case they wish to look away – the Conservative record is not a pretty one to behold.
We have taken all figures from the databank of the Office for Budget Responsibility, with expenditure shown at 2015/16 prices, and starting with 1991/2. This gives 6 years of Conservative government prior to 1997, followed by 13 years of Labour, and then by 7 years of Conservative(-led) governments.
We have first calculated the total amount (in billions of pounds) of the overall annual deficits (which includes borrowing for investment) incurred under Conservative governments during this 26 year period, and ditto for the years of Labour governments. (These are taken from the public sector net borrowing column).
We have then calculated the total amount, also in billions of pounds, of the current budget deficits for each, i.e. excluding borrowing for investment. We believe this is a more sensible way of looking at the data, but the overall deficit is the one used in most public debate.
So here are the facts.
- Conservative 1991/92 to 1996/97 (6 years): £348 billion (average £58 billion per year)
- Conservative 2010/11 to 2016/17 (7 years): £ 720.1 billion (average £102.9 billion per year)
- Total Conservative overall deficits for the 13 years: £ 1068.1 billion (average £82.2 billion per year) - yes, over one trillion pounds in 13 years!
- Total Labour 1997/98 to 2009/10 overall deficits for the 13 years: £496.4 billion (average £38.2 billion per year).
Current budget deficits:
- Conservative 1991/92 to 1996/97 (6 years): £222.5 billion (average £37.1 billion per year)
- Conservative 2010/11 to 2016/17 (7 years): £457.2 billion (average £65.3 billion per year)
- Total Conservative current budget deficits for the 13 years: £679.7 billion (average £52.3 billion per year)
- Total Labour current budget deficits for the 13 years: £171.8 billion (average £13.2 billion per year).*
The average annual overall deficit under Labour during this 26 year period is less than half that of Conservative governments, taken separately and together.
The average annual current budget deficit under Conservative governments during this 26 year period is around four times as large as that of the Labour governments. The Major government's average current deficit was nearly 3 times the average of the Labour government.
Moreover, the average Conservative Government annual deficit is almost double the size of today’s alleged Labour ‘bombshell’ - and the average Tory current budget deficit is also larger than the spurious 'bombshell'!
In short, the Conservatives since 1991/92 have a track record of huge budget deficits that is unique in our non-wartime history. It’s time the spotlight was put on their record, not least because of the remarkable hypocrisy of their claims.
Annex - the OBR data
* this includes the single peak year of impact of the global financial crisis of 2009/10, when the deficit was £109.2 billion. Apart from this year, the average current budget deficit under Labour was well under 0.5% of GDP.