Tribune column: don’t let the Tories re-write history – ours or their own

The economy will be the most important issue of the next general election. The central question will be: who has the best plans for jobs and the future of our country, and who can be trusted to deliver them.

But while the future always matters most, the past matters too. For the Tories and Liberal Democrats what’s happened in this parliament to the economy, public services and the fairness of our communities will determine whether they can be trusted again. And for Labour what we got right and wrong in government will also count.

That is why the Tories and Lib Dems have been busily re-writing history – not just ours but also their own. They like to claim that every decision they take, every cut they make, are all Labour’s fault.

David Cameron and George Osborne want people to believe it was too much spending on schools, hospitals and police which caused the recession and the deficit, because they want an excuse to cut spending on those services now. But they conveniently forget we’ve just been through the biggest global financial crisis and world recession since the 1930s – it was a global crisis and not a recession made in Britain.

We should be clear that the international financial crisis which plunged the world into recession was caused by the irresponsible actions of banks around the globe. And while every major country faced that recession and so ended up with big deficits, it was also the fault of governments and central banks – including Britain’s – who didn’t see the financial crisis coming and should have been tougher regulating the banks.

When the City and the Conservatives called for lighter regulation we should have ignored them and been tougher still. Every government in the world got that wrong – and I’ve said sorry for the part I and the last Labour government played in that.

So we should be honest about what we got right and what we got wrong. But when the Tories urge us to say now there was a “decade of over-spending” we should remind them that before the crash they were matching our spending. David Cameron even told the CBI our plans were “tight”.

No government can say every penny was spent wisely, but before the crisis hit Britain had a lower deficit and national debt than we inherited from the Tories. Our national debt was lower than America, Japan, France and Germany.

In Budgets before the crash we took decisions to ensure we were meeting our fiscal rules to keep national debt below 40 per cent of GDP and balance over the economic cycle the ‘current budget’ – day to day spending excluding capital investment. We had low borrowing to finance capital investment in things like schools, hospitals, roads and housing, not for day-to-day expenditure as the Tories now claim. And we raised some taxes so that this current budget balanced over the economic cycle and to ensure there was no structural deficit.

Of course after the global financial crisis hit everything changed. As tax revenues from the City collapsed and we invested to keep people in work and stop recession turning into depression – actions the Tories opposed – we built up a big deficit. And figures in Budget red books were revised to take into account how the economy turned out.

A year ago, after that global crisis, we were turning the corner: the economy was growing, unemployment was falling and because more people were in work paying taxes borrowing ended up £21 billion lower last year than forecast.

We have to get the deficit down, but since George Osborne decided to cut it further and faster than any other major economy we’ve seen the economy grind to a halt, rising inflation and unemployment at a 17 year high. Cutting too deep and too fast is a vicious circle because lower growth and higher unemployment means the government will have to borrow £46 billion more than planned.

It’s this Tory-led government which is responsible for the lost jobs and slow growth Britain is facing now. We must not let George Osborne off the hook.

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Posted April 1st, 2011 by Ed

4 Responses to “Tribune column: don’t let the Tories re-write history – ours or their own”

  1. Matt Moran says:

    Frankly if you listen to Stiglitz & Krugman, there wasn’t enough stimulus spending, and we don’t need to reduce the deficit yet – we should be holding off until we’ve recovered & the public are spending enough to keep the economy going without stimulus. As it is, Labour risk sounding like a kind of diet Tory party, a watered down version of more of the same. We need to show a radically different alternative – how would we invest in infrastructure, training & regeneration to get people working again?

  2. chhazeau says:

    I’m no expert, but I wouldn’t mind some explanation as to where Osborne’s policy leaves us now. This article’s pushing my mindset towards a categorical “Torys did bad” overall argument. The Labour concessions to policy mistakes are definitely much appreciated by the way.

    Good maneouvring to keep the Lib-Dems off the hook too, harbouring hopes for a “progressive alliance”?

  3. Anon says:

    Talking about rewriting history, it’s funny how the Tories forget about this:

    George Osborne, September 2007: “I can confirm for the first time that a Conservative Government will adopt [the Government's] spending totals. Total government spending will rise by 2 per cent a year in real terms, from £615 billion next year to £674 billion in the year 2010-11. Like Labour, we will review the final year’s total in a spending review in 2009. The result of adopting these spending totals is that under a Conservative Government there will be real increases in spending on public services, year after year.”

    So much for ‘fixing the roof whilst the sun was shining’!

  4. Mary nash says:

    Thank you Ed Balls for explaining the facts so loud and clear. It is urgent that anyone reading this excellent article, ie Labour, Lib Dem, and compassionate Tories alike spread these hard facts and the whole truth around, repeating these facts again and again . Only with endless repetitions will the public get to understand the whole truth. George Osborne must not be allowed to hoodwink us.

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