The Conservative Party Manifesto opens with the words:
Over the last five years, we have put our country back on the right track. Five years ago, Britain was on the brink... Since then, we have turned things around.
However, when you look at the figures for the growth in UK GDP they do not match this claim. For the three financial quarters before the election on 6th May 2010 the UK economy had been growing and the Conservative-LibDem Coalition inherited a Growth Rate of 1% of GDP, the highest in the past 5 years and higher than that achieved so far by George Osborne and Danny Alexander who managed to achieve a Growth Rate of 0.9% of GDP in the first quarter of 2014. This was not a “broken economy” and certainly not an economy “on the brink”.
The figures for the National Debt inherited by Mr Osborne and Mr Alexander as a percentage of GDP show that the UK had the lowest debt of the G7 countries at 78.46% of GDP. France was at 80.826%, Germany at 82.532% and the USA at 94.769%. These figures clearly show that the claim that “Britain was on the brink” is simply untrue.
However, under the coalition government the UK debt as a percentage of GDP has risen dramatically and in 2015 (according to IMF figures) it now has the fifth highest debt of the G7 countries at 93.114% of GDP. These figures do not support the claim that the coalition government “has turned things around.”
Only a couple of weeks ago on 9th April the Daily Telegraph reported that “according to the Office for National Statistics (ONS)” the UK had a trade “deficit of £10.3bn on goods” and “in the three months to February, Britain's goods deficit with the EU rose by £1.5bn to a record high of £21.1bn, representing the biggest gap since records began”. These figures do not support the claim in the Conservative Manifesto that “we have turned things around.”
On 22nd February 2013 the UK was stripped of its AAA-rated debt status for the first time ever despite George Osborne’s pledge to use his fiscal measures to protect the rating. This certainly is not turning things around!
During the last Labour Government between 1997 and 2010 the growth in GDP per capita of the G6 nations was the highest in the UK, which again does not seem to me to be the sort of economic failure being implied by the Conservative, LibDem and UKIP parties - in fact does it not look like economic competence?
Table from the IMF showing Government debts as % of GDP for the G7 countries:
Table showing that the UK economy under the Labour government had been growing steadily for almost a year when the Conservative-LibDem Coalition took office.
This table shows that over the last 5 years the highest GDP growth rate achieved in the UK was 1% under Labour whereas the best the coalition has achieved is 0.9% in the first quarter of 2014.
The debt under Labour between 1997 and 2007/8 was relatively modest, being in the region of 30%-38% of GDP until the financial crisis. It was this crisis, which was caused to a great extent by the Conservatives’ deregulation of the financial markets - the so-called Big Bang - under Margaret Thatcher in 1986 which cause the large rise in public debt as a function of GDP. It was not Labour profligacy nor Labour incompetence which caused the large increase in debt as a % of GDP, it was Conservative risk-taking. (See article in The Mail online at:- http://www.dailymail.co.uk/news/article-2891048/Thatcher-warned-Big-Bang-reform-City-create-bubble-pricked-unscrupulous-bankers.html)
The last Labour Government reduced the debt it had inherited from the previous Conservative administration from over 40% of GDP to about 30% GDP. At the time of the financial crisis it had risen to about 38% - still relatively low compared to many other developed countries. This is illustrated by the graph in the diagram below.
This graph shows that over the past 100 years or so the UK national debt as a % of GDP has been very much higher than at present and yet it was possible to run a growing economy with the standard of living rising and the debt slowly falling. The peak debt of about 236% of GDP circa 1947/48 arose from borrowing to finance Britain’s involvement in the second world war, mostly from the USA. There is also a peak in debt around 1920 caused by the first world war.
Other facts which give the lie to Conservative claims about Labour’s poor management of the economy is shown in the diagram below which shows that under Labour the growth in GDP per person was higher than every other G6 country (ie better than the USA, Germany, France, Italy & Japan).
Graph from the Centre for Economic Performance, London School of Economics.
Dan Corry: Visiting Fellow Southampton University; Anna Valero: Centre for Economic Performance, LSE, & John Van Reenen: Centre for Economic Performance, LSE. Tuesday 15th November 2011.
Although the Conservatives claim that people are finally becoming better off this graph shows that, in fact, almost everyone in the UK is still worse off than they were 7 years ago in 2008.
It must be remembered that the principal cause of the debt inherited by the Coalition was caused by the rescue of the big banks. The Labour government spent about £500 billion in rescuing profligate and incompetent banks and that is the root cause of the high level of the UK’s current debt - but you don’t hear the Conservatives mentioning that awkward fact.
The graph below shows that the recession suffered in 2008-09 during the Labour Government’s term of office was not as a result of Labour’s economic policies but was a recession which also affected the Euro Area (the UK’s major trading partner).
The Conservatives frequently say that Labour cannot be trusted to run the economy, but let us read what Paul Krugman, the Nobel Prize winner for Economics, wrote in the New York Times on 12th October 2008. He wrote
"Mr Brown and Alistair Darling, the Chancellor of the Exchequer ... have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up."
“the Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn’t been matched by any other Western government”
and he concluded
“Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.”
Clearly the Conservative’s claim is utter nonsense.
We ought also to remember that it was Gordon Brown who kept us out of the Eurozone, kept our own central bank, and saved us from the economic stresses have which affected our European neighbours so badly.
Tomas Picketty wrote in his widely praised book Capital in the Twenty-First Century, published in the UK last year, that there are three main methods for reducing public debt.
∙ taxes on capital
which can be used in varying combinations. He also wrote that the most just and efficient method is tax on private capital and that the worst solution in terms of both justice and efficiency is a prolonged dose of austerity.
The Coalition government chose the last two methods - inflation by means of so-called Quantitative Easing (ie printing money) and austerity which has had the greatest impact on the poorest section of society. This is not the way a compassionate and caring society should function. David Cameron and George Osborne say that “we are all in it together” which is palpably untrue.
Three examples of the impact of the Coalition’s programme of austerity is the shocking increase in food banks, zero-hour contracts and the rise in suicides. According to Jeremy Paxman in his televised interview with David Cameron on 25th March since the Coalition took over the economy in 2010 food banks have risen from 66 to 420 (an increase of over 6000%!); this is a shocking statistic which did not seem to be of much concern to Mr Cameron.
The graph below shows what has happened to suicide rates in the UK since the Coalition came to power. It was falling during the last two years of Labour government, but almost immediately the Conservatives and LibDem took over the rate began to rise.
The above graph shows that the number of suicides in the UK grew significantly following the introduction of the austerity policies of the Conservative-LibDem coalition. (Source ONS).
Do you want to live in a caring society, not a society in which people in which people like the diabetic ex-soldier David Clapson can die with just six tea bags, a tin of soup and out-of-date sardines in his cupboard after his benefits were stopped? Do you want people on the bread-line through no fault of their own to be treated with decency and respect, not like the young man with learning difficulties who wrote helplessly: "My money keeps getting stopped for some reason and I don't know why"; like the man who found a job but was sanctioned for not job-seeking while he waited for it to start so that he didn't have enough cash to get to his new job and was then sacked; or like the woman whose husband suffered a nervous breakdown and was sent two dates for the same appointment, but was sanctioned for 'not turning up' to the second one despite the benefits office telling him not to?
I believe that Labour’s economic beliefs are different from the Conservatives in that our approach is based on Judeo-Christian ethics which involve compassion and concern for the under-privileged and the common good.