The New Statesman today publishes a splendid centenary edition, to celebrate its 100 years — a collectors’ item. It also carries some vintage blame-dodging by Tony Blair who pretends 13 years of Labour rule was not responsible for the mess we’re still in. Overspending is not to blame for the debt crisis, he says. It’s nonsense on first reading, of course: what else creates a debt crisis, rather than overspending? Bad weather? A bad debt fairy? Blair claims that Labour need to be ‘very robust in knocking down the notion that it “created” the crisis’. Here are his words, some of them flatly untrue:
‘Labour should be very robust in knocking down the notion that it “created” the crisis. In 2007/2008 the cyclically adjusted current Budget balance was under 1 per cent of GDP. Public debt was significantly below 1997.’
The following graphs give the lie to this nonsense. The first is what he doesn’t mention. The IMF has recently confirmed that the prosperity that Labour prided itself on was in fact a debt-fuelled illusion. But crucially, it has also confirmed that 2007 was the worst year for economic overheating since at least the 1970s. Blair knows the toxicity of this claim: he accused the Tories of ‘boom and bust’. The IMF data is now clear: he was the master of boom and bust. Never was there more egregious overheating, or a bigger dive, than under Labour’s disastrous economic stewardship:
Next, the debt. Blair’s claim is false. By 2007-08, the public debt was significantly above, not below, the levels he inherited in 1997:
Now, Blair may be referring to something else: the debt-to-GDP ratio. This is an infamous New Labour verbal magic trick: saying ‘debt fell’ when you mean ‘debt grew, but at a slower rate than the economy’. Debt is one thing, a ratio is another. What’s the ordinary voter, who must repay this debt, to think? Ed Balls does this too, and we have called him out on it. Orwell would appreciate this: language that converts a rise into a fall.
From Sweden to Australia, sensible governments paid down debt in the boom years. Labour didn’t. Blair offers his own definition: a ‘cyclically-adjusted current Budget balance’. Yes, you really need to play with words to hide the basic fact that Blair and Brown were borrowing like there’s no tomorrow. Here’s a chart showing the gap between what Labour spent, and what it received in tax. After April 2001, Labour simply gave up on balanced budgets.
All this time, the price of debt was kept artificially low so households borrowed too. It was a mountain of debt, built upon debt. A bubble, waiting to burst. Either Blair and Brown were doing this at the behest of Martian occupiers beaming instructions into their brains, or they really do bear responsibility for the longest recession in Britain’s history. And the pain needed to recover from it.
The Tories haven’t been very good at making these specific points, perhaps because George Osborne wasn’t exactly pointing all this out at the time. Blair’s comments suggest that he thinks, perhaps as a result, he may get away with trashing the British economy. He really doesn’t deserve to.