Smokescreen over our levels of debt

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From: Geoff Smith

Secretary, Sheffield Hallam CLP

Councillor Scriven (letters, January 6, Honesty needed over budget cuts) undermines his expression of willingness to work with other local political parties by indulging in the all too familiar Tory government propaganda about the origins of the current level of public debt.

Mr Scriven is an intelligent man and must know that it is nonsense but continues to peddle the same preposterous arguments anyway.

It is as if all Conservative and Liberal Democrat politicians have been told that if they repeat the allegations often enough they will retrospectively come true or, at least, the electorate will accept them as being the truth.

The smokescreen comes in two versions. First that Labour spent too much throughout its time in office with little benefit and second that in the run up to the general election it spent recklessly in order to win the election. This time Mr Scriven opted mainly for the latter. I quote, ‘The fact is that none of this (the cuts to Sheffield’s budget) would have been necessary if Labour hadn’t racked up the national debt in a shameless attempt to cling on to power. Labour wrote cheques that they knew would bounce...’. I am surprised that he chose this tack because it requires me to mention Forgemasters again. It was this sort of insult that was used by Nick Clegg to support the decision to deny Forgemasters the important £80m loan and was completely discredited by the House of Commons Business, Innovation and Skills Committee which concluded that, ‘It is clear that the loan was subject to the normal procedures within the Department, and approved by the then Permanent Secretary and HM Treasury. Therefore, we are convinced that former Ministers signed off the loan in the full knowledge that it could be funded.’

The truth about the public deficit is clear. Before the financial crisis in 2008 the Britain had low inflation, low interest rates, low unemployment and the lowest net debt of any large G7 country. The financial crisis was caused by the reckless and greedy activities of the banks. The subsequent rapid rise in public debt had two causes. First the need for the Labour government to bail out the banks in order to save the economy from collapsing, and to take measures to prevent the recession becoming a full-scale depression and to limit job losses and house repossessions. This was combined with the decrease in tax receipts and some increase in unemployment payments because of the world recession which did take place. George Osborne’s alternative of doing nothing would have been catastrophic with a banking collapse, a major depression and wholesale unemployment.

Increased spending by the Labour government in the period between 2001 and 2008 was needed to make up for the years of chronic neglect of public services by the previous Tory governments. It is not a coincidence that most recent British Social Attitude Survey shows that when Labour entered office in 1997, only a third of people (34%) were satisfied with the NHS, the lowest levels since the survey series began in 1983. By 2009, satisfaction stood at 64%, the highest level since the survey began. The proportion who thought secondary schools performed well on three measures increased under the Labour government - up 17 points (teach basic skills well), up 12 points (preparing young people for work) and up 18 points (bringing out pupils’ natural abilities).

Mr Scriven also drags in a reference to the Iraq war with little relevance to his main argument. However, I will forgive him as my personal view, shared by the new leader of the Labour Party, is that the war was a mistake. But, as the Liberal Democrats are now discovering for the first time, opposing something when in opposition is one thing; taking a principled stand when in government is much more challenging. I wonder if the Liberal Democrats will ditch their foreign policy principles in government as quickly and dramatically as they have abandoned their much advertised pledge on tuition fees.