Did Labour crash the economy?

[Triggaaar]

Up to 2008 then exactly where were they overspending? In the first two terms they had already paid down the national debt to a level lower than it had been any time since 1993 (as a % of GDP which is the best way to measure it).

They didn't pay the debt down at all. It makes sense to pay off some debt while your economy is booming. Obviously if your economy is booming, the debt is automatically lower as a % GDP, so for short term comparison that's the worst way to measure it, otherwise no one would ever feel the need to actually reduce it when times are good. Choosing to only pay off debt when it's rising as a percentage of GDP would mean you only pay off your debt when you're least able to do so - when your GDP is falling (ie, you're in recession). That would mean suicidal levels of service cutting. I don't think you've thought this through, you just tool the 'debt went down as a % of GDP' spin and ran with it.

Of course a labour government are going to spend more on public services than a tory one but the spending was far from out of control. It was only when the government then had to support failing banks and pump money into the economy that the debt rocketed up.

Regardelss who is in government, they need to manage our spending and debt, even Labour. The simple fact is that we were having a boom and Labour did nothing to reduce our debt, they just increased our spending again and again.

 

[cunning fergus]

HH

But the Tories had no credible alternative in the noughties.

Look at this speech from 2005

http://www.theguardian.com/politics..., but another economic miracle built on sand.

 

[JCL666]

Of course Labour didn't crash the economy.

They were in government when it happened and could have done more to protect it, but they didn't cause the crash.

I'll never understand why people advocate the concept of responsibility and accountability for an individuals actions, but then blame a government....

Brown did this, Osborne did that..... maybe people should look at their own actions regarding spend/save/risk.

The banker regulation argument is pathetic. "Oh they relaxed the regulations, so I decided to do more stupid stuff".

 

[maltaseagull]

 

[drew]

They didn't pay the debt down at all. It makes sense to pay off some debt while your economy is booming. Obviously if your economy is booming, the debt is automatically lower as a % GDP, so for short term comparison that's the worst way to measure it, otherwise no one would ever feel the need to actually reduce it when times are good. Choosing to only pay off debt when it's rising as a percentage of GDP would mean you only pay off your debt when you're least able to do so - when your GDP is falling (ie, you're in recession). That would mean suicidal levels of service cutting. I don't think you've thought this through, you just tool the 'debt went down as a % of GDP' spin and ran with it.

Regardelss who is in government, they need to manage our spending and debt, even Labour. The simple fact is that we were having a boom and Labour did nothing to reduce our debt, they just increased our spending again and again.

But you measure debt against earnings. If earnings are going up then Labour could have maintained the national debt at the same level as when they came to power which would have meant more spending (maybe spending on schools and hospitals rather than using PFI). They didn't, they allowed the percentage to drop. Furthermore, there have only been 7 years out of the last 54 (as at Sept 13) when a surplus has been achieved, according to the attached.

As you can see from the attached, even the Tory God Thatcher only had a budget surplus in two years and that when all the silverware had been sold and it was the decade when we first really benefited from North Sea Oil.



This was taken from 2011 so I would suggest the forecast figures for post that date turned out to be optimistic.

HH

Whether the Tories did or not is irrelevant. It's like you are saying Hyppia's management was bad but at that time Chris Hughton would have made the same decisions? Hyppia was in charge, he is to blame.

Brown's macro economic decisions were catastrophic, and we should not be in any doubt about it. The man was deluded, as were those around him. The voices saying "this is too good to be true" we're drowned out by those saying "it's not broke don't fix it".

The current lot are making similar decisions, the current recovery is on the back of consumer spending, PPI refunds have put in approx 100bn into the economy alone.

In April we are going to see an increase in spending etc. on the back of people getting access to the Pensions, and this should give a nice economic kick to the Tories as we get into May.

Clever political move, but another economic miracle built on sand.

That's a cop out to dismiss what the Tories may or may not have done. They were the opposition and they have a duty to hold the government to account. If they see problems then they should be advocating a change of course. The system fell down because the banks took the piss because there was too little regulation and those responsible for regulating them, ie the Bank of England, FSA and the Treasury took their eye of the ball and didn't communicate with each other. The Tories were for far less regulation so exactly how would that have helped. I suspect that if the Tory mantra at the time had been that there should be more regulation and that they identified the toxic debt being created in the US then I doubt you would be so dismissive of their opinions at the time!

 

[seagullsovergrimsby]

I'm in Bratislava at the moment as well mate, some seriously high quality clunge here as well !!

Prague isn't that too far away

 

[seagullsovergrimsby]

Perhaps we should be looking at the additional debt this coalition has landed us with when they promised to cut it over their 5 years in power.

 

[sten_super]

They didn't pay the debt down at all. It makes sense to pay off some debt while your economy is booming. Obviously if your economy is booming, the debt is automatically lower as a % GDP, so for short term comparison that's the worst way to measure it, otherwise no one would ever feel the need to actually reduce it when times are good. Choosing to only pay off debt when it's rising as a percentage of GDP would mean you only pay off your debt when you're least able to do so - when your GDP is falling (ie, you're in recession). That would mean suicidal levels of service cutting. I don't think you've thought this through, you just tool the 'debt went down as a % of GDP' spin and ran with it.

There was a belief (and there largely still is) that recessions are temporary downturns in an ever-rising tide. In this context sharp increases in borrowing during a recession weren't seen as a major problem, as when the economy recovered the debt would come down and GDP would increase fast enough to erode the 'debt to GDP' value of the debt. It was this that lead to the running of deficits even during the good times.

It seems to me that any debt reduction would really have been fiddling around the edges. Debt-to-GDP ratio was 43.6% in 2007, while it's now pretty much double that (87.3% in 2013) - caused by the bank bailouts, extended slowdown and poor performance of tax receipts. A prolonged (more or less unprecedented) period of debt repayment in the early 2000s might have reduced debt-to-GDP by 10 percentage points (assuming no impact on GDP as a result, which seems very unlikely); so we'd still be looking at a ratio currently of 70%+.

 

[cunning fergus]

That's a cop out to dismiss what the Tories may or may not have done. They were the opposition and they have a duty to hold the government to account. If they see problems then they should be advocating a change of course. The system fell down because the banks took the piss because there was too little regulation and those responsible for regulating them, ie the Bank of England, FSA and the Treasury took their eye of the ball and didn't communicate with each other. The Tories were for far less regulation so exactly how would that have helped. I suspect that if the Tory mantra at the time had been that there should be more regulation and that they identified the toxic debt being created in the US then I doubt you would be so dismissive of their opinions at the time![/QUOTE]


No it's not, I agree with the point that the Tories didn't advocate anything different, however, and this is the key point, (drum roll) they were in opposition.

Accordingly, we may scoff at their claims about doing things differently to change events and consequences, however they were not making and decisions, Labour were.

That is the seemingly unpallatable fact for some on here. To direct any meaningful blame to an opposition for any failure by a ruling party (of any colour) demonstrates just how deep rooted some people's political prejudice is.

When the liberal minded on here say some people should be excluded from voting I usually laugh to myself, you are doing a good job of changing my mind.

Either that or you are a bit mental.

 

[sten_super]

That is the seemingly unpallatable fact for some on here. To direct any meaningful blame to an opposition for any failure by a ruling party (of any colour) demonstrates just how deep rooted some people's political prejudice is.

Sorry to disappoint you but I don't have any major political prejudice and I think you are talking complete bollocks. We have a parliament that votes on issues put before them - and the government does on occasion lose these votes. Similarly, the opposition do not oppose every single motion put forward by the government for the purpose of petty point scoring. Instead MPs vote they way they (or their party, depending upon the use of whips) wish. Therefore we can judge MPs and political parties both in and out of power, and the records show the Tories acting exactly the same.

I think actually your argument is completely arse-about-face; it is a refusal to hold a party to account for their views (whether in government or opposition) that reflects prejudice. Our elected politician should always be held to account by us, the people that voted for him/her.

 

[solly]

Yes clearly ..... and we all have and still are suffering for it now........ tossers ..... I wouldnt trust them as far as I could throw my missus, and shes 36 stone

 

[Triggaaar]

But you measure debt against earnings.

No, that's a way of looking at it, it's not the only way. If that's all you look at, and you want to keep debt stable, then in the boom times (when GDP is high) you can borrow more, and in the bad times (when GDP is low) you have to borrow less. You realise how mental that would be don't you? One minute you'd be building a state of the art hospital, and the next minute you'd be closing it.

The reason we look at debt as a % of GDP is because we're looking at our ability to pay off the debt in the future. It's obviously the GDP in the future that's important, but since we don't have those figures we have to go with what we have now. We know that our economy expands and contracts, and so we should plan our borrowing on the long term trends, not borrow like crazy when we have a couple of good years, and to hell with the consequences. That's Greece, that's Spain, and that's Labour.

As you can see from the attached, even the Tory God Thatcher only had a budget surplus in two years and that when all the silverware had been sold and it was the decade when we first really benefited from North Sea Oil.

You do know the country was in a mess when she first took office don't you? It's a pattern.

Debt-to-GDP ratio was 43.6% in 2007, while it's now pretty much double that (87.3% in 2013) - caused by the bank bailouts, extended slowdown and poor performance of tax receipts. A prolonged (more or less unprecedented) period of debt repayment in the early 2000s might have reduced debt-to-GDP by 10 percentage points (assuming no impact on GDP as a result, which seems very unlikely); so we'd still be looking at a ratio currently of 70%+.

It's impossible to know exactly how much difference it would have made, but we know it would have made a difference. The debt is real, it's not a joke, and we need to pay it off. The easiest time to make a dent in it is when we're doing well. To continue to borrow more money even when we're doing well is negligent, and is ruining our country. And once a government introduces spending, it's not easy to cancel it when the shit hits the fan.

 

[Triggaaar]

Sorry to disappoint you but I don't have any major political prejudice and I think you are talking complete bollocks.

I don't think he was replying to you.

 

[sten_super]

It's impossible to know exactly how much difference it would have made, but we know it would have made a difference. The debt is real, it's not a joke, and we need to pay it off. The easiest time to make a dent in it is when we're doing well. To continue to borrow more money even when we're doing well is negligent, and is ruining our country. And once a government introduces spending, it's not easy to cancel it when the shit hits the fan.

This is I think where we fundamentally differ. Does the debt need to be paid off at some point? Yes. Does it need to be paid off today, or tomorrow? No.

In December the government paid off the last of its WW1 debt. 98 years after issuing the bonds. The bonds were worth £1.9bn - or 0.12% of GDP in 2014. They were 0.59% of GDP in 1948 (the first year of data form the ONS) and a damn sight more in 1917.

The key question is how sustainable is the current level of debt? And at the moment the answer is very.

 

[soistes]

Some interesting posts on this thread, and the expected polarised positions from some of the usual suspects.
It's unfortunate that the notion that it was all Labour's fault has become so entrenched in public and political opinion, because the hard economic evidence does not confirm this at all
This blog post by a respected Oxford macroeconomist, who really knows his onions, in my opinion, pretty much summarises my take on the matter (and he writes it much more elegantly than I could).
http://mainlymacro.blogspot.co.uk/2015/01/to-all-uk-journalists.html

 

[Triggaaar]

Does the debt need to be paid off at some point? Yes. Does it need to be paid off today, or tomorrow? No.

But no one is suggesting we pay it all off today or tomorrow. What I'm suggesting, is that when times are good, we try and pay off a bit, rather than borrowing more.

In December the government paid off the last of its WW1 debt. 98 years after issuing the bonds.

Well we created a new debt to pay off an old debt, simply because we can borrow more cheaply now than the rate of the existing debt.

The key question is how sustainable is the current level of debt? And at the moment the answer is very.

Where the hell did you get that piece of optimism from? The one thing all parties agree on is that our debt is too high.

 

[Triggaaar]

This blog post by a respected Oxford macroeconomist, who really knows his onions, in my opinion, pretty much summarises my take on the matter (and he writes it much more elegantly than I could).
http://mainlymacro.blogspot.co.uk/2015/01/to-all-uk-journalists.html

Are you kidding?

"who plan to talk about the economy over the next 100 days. Here is a very simple fact. [3] GDP per head (a much better guide to average prosperity than GDP itself) grew at an average rate of less than 1% in the four years from 2010 to 2014. [1] In the previous 13 years (1997 to 2010), growth averaged over 1.5%. So growth in GDP per head was more than 50% higher under Labour than under the Conservatives, even though the biggest recession since the 1930s is included in the Labour period!"

Of course GDP was growing more slowly from 2010 (compared to 1997), because the country had been left in a complete mess. To say that the recession is included in the Labour period is laughable. It's not really worth reading more of a blog that's clearly biased bollocks.

 

[Bold Seagull]

Some interesting posts on this thread, and the expected polarised positions from some of the usual suspects.
It's unfortunate that the notion that it was all Labour's fault has become so entrenched in public and political opinion, because the hard economic evidence does not confirm this at all
This blog post by a respected Oxford macroeconomist, who really knows his onions, in my opinion, pretty much summarises my take on the matter (and he writes it much more elegantly than I could).
http://mainlymacro.blogspot.co.uk/2015/01/to-all-uk-journalists.html

Not sure it is entrenched. Might be to those that hate Labour, but I'm sure plenty of people understand what happened.

 

[Bold Seagull]

Are you kidding?

"who plan to talk about the economy over the next 100 days. Here is a very simple fact. [3] GDP per head (a much better guide to average prosperity than GDP itself) grew at an average rate of less than 1% in the four years from 2010 to 2014. [1] In the previous 13 years (1997 to 2010), growth averaged over 1.5%. So growth in GDP per head was more than 50% higher under Labour than under the Conservatives, even though the biggest recession since the 1930s is included in the Labour period!"

Of course GDP was growing more slowly from 2010 (compared to 1997), because the country had been left in a complete mess. To say that the recession is included in the Labour period is laughable. It's not really worth reading more of a blog that's clearly biased bollocks.

The worse part of the recession was 2008 to 2010 wasn't it? We were recovering when the coalition came to power? The country was in a global financial mess along with the rest of the world. Perhaps you're not quite as open minded as you'd like to think?

 

[cunning fergus]

Sorry to disappoint you but I don't have any major political prejudice and I think you are talking complete bollocks. We have a parliament that votes on issues put before them - and the government does on occasion lose these votes. Similarly, the opposition do not oppose every single motion put forward by the government for the purpose of petty point scoring. Instead MPs vote they way they (or their party, depending upon the use of whips) wish. Therefore we can judge MPs and political parties both in and out of power, and the records show the Tories acting exactly the same.

I think actually your argument is completely arse-about-face; it is a refusal to hold a party to account for their views (whether in government or opposition) that reflects prejudice. Our elected politician should always be held to account by us, the people that voted for him/her.

I can see you don't, in your view essentially all the MPs are in charge even when they are not all in charge. They all have responsibility even when they are not holding official responsibility.

The prime minister and the cabinet are not effectively the prime minister and the cabinet, they are one single amorphous collective seamlessly combined with their own party MPs and non party MPs.

It's not the party at fault it's the individuals.

That's cleared that up then.............