Conservative/Liberal Democrat Government lies about the National Debt

[John Simkin]

I am the first to condemn some of the short-comings of the last Labour government. Tony Blair and Gordon Brown were definitely under the control of big business and the city. This resulted in a regime that allowed the wealthy to pay low-rates of taxation. The large corporations were allowed (encouraged) to exploit tax loopholes and the lack of regulation was clearly partly responsible for the financial crisis.

However, I am appalled that government ministers continually justify the ideological cuts in public spending to the policies of the Labour government. Although Brown clearly made serious mistakes as chancellor he was no way responsible for the world’s banking crisis. In fact, by arguing for the major countries to increase public spending helped to stop a world depression that would have been as bad as the 1930s. The main problem stems from the deregulation that took place in the United States.

Bailing out the banks was a very expensive business but in the long-term this money will come back and this will considerably reduce the national debt. The government continually argues that the public spending cuts are necessary because of the high-level of national debt. What they don’t tell you that our level of debt is lower than almost OECD countries. When cabinet ministers go on about how much they are having to pay off in interest (less than 3% of GDP), they don’t explain that it was higher under Tory administrations: Margaret Thatcher (5.15%) and John Major (3.8%).

Labour borrowed less and repaid more debt than previous administrations (borrowing was roughly 50% less under Blair/Brown than it was under Major; more than twice Thatcher’s debt repayments were made).

A major cause of the national debt is the low overall tax-take (36% compared with the EU average of 40%). The previous Labour government was partly responsible for this by continuing with the policy of Thatcher/Major of low-rates of taxation on high-earners.