Having produced information on government borrowings and repayments over a seventy year period, and in the process shown that curtailing the analysis after 62 years would not change the outcome, I have been challenged to produce further variations.
One, oddly demanded only by those of a right wing persuasion it seems, wanted the first eight years of data lopped off to match my ignoring the last eight. Those making the request seemed to think that the economic environment of the immediate postwar period might have given a result biased to Labour. I have to say I think that absurd: the contention is that Labour was as unable to manage this post-war environment in a way that it is suggested (by implication) that George Osborne has been unable to manage the last few. When the Attlee government transformed the economic environment forever in this short period the hollowness of that suggestion will be noted.
So, dismissing this idea as nonsense, let me instead do another variation instead, which is for the period from 1979 to date, which we can truly call the UK's neoliberal era. For this period the data is as follows:
(NB: table amended 14.50 on 14-3-16: the original said the Conservatives repaid in 3 years and they did not: they only repaid in 2. No other data impacted)
The result changes slightly from that given by the 70 year data. Now the number of years in which tax repayments took place were the same, but Labour repaid much more. And it is true that in originally priced pre Global Financial Crisis data that Labour did, just about, borrow more on average than the Conservatives, but as soon as inflation is taken into account this was very obviously not the case.
So the result is that Labour were still more prudent in their borrowing and also repaid more debt than the Conservatives when only the period since 1979 is considered.
I really do think the hypothesis that Labour are more prudent and more likely to repay debt than the Conservatives can be considered proven.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Unfortunately the conservatives seem to be much better at propaganda. The report that the new statesman has that lead to Harriet Harman’s disastrous decision to abstain on the welfare bill highlights the fact that Labour has lost the argument even with a wealth of facts on our side. The post truth politics is truly a depressing state to be in, how far down the road to disaster do we have to get before people stop believing the lies?
In the “Two Tribes” form of politics that we have here and in the US, do not expect anything more than lies and propaganda from both parties. I am sure they are both just as bad as each other on that front in their quest for power.
I no longer understand who in this country the Tories or Labour politicians think they actually represent, apart from their own very narrow interest groups that support them financially. Voters are just the medium of exchange to them, like money is to bankers. They only want and respect them for what they bring to them – power.
Meanwhile in the real world our society is not divided into two tribes: the us and them, the reds and blues, the capitalists and socialists, even men and women are no longer distinct categories anymore. We are a wonderful mix of different people who make up an enormously rich and varied tapestry of life on a finite planet. Our politics and economics must one day be changed to reflect this reality.
But that is not what underpins our current political system, one that was designed centuries ago to ensure that no viable alternative to the vested interests of concentrated wealth and power could ever threaten the hereditary establishment. Traditions die hard, power and wealth are rarely if ever relinquished willingly or easily.
Do not expect anything significant to change without fundamental constitutional and electoral reform, except for little tweaks here and there at the very margins in order to slowly adapt to a rapidly changing world without upsetting the dominant social and financial order.
Us and them? Definitely ‘them’ are the people sleeping in our winter shelter on Sunday night, and the people being supported by the Trussell Food bank and the people with disabilities having their benefit payments slashed. The ‘us’ are people who don’t have those problems. Unfortunately that puts me in the same group as you. If you can’t see the fundamental difference between capitalism and socialism or defence and offence or men and women (who earn less for the same job) then I would rather be with ‘them’ than you.
You may have misunderstood my comments Paul Thomas, I was not endorsing simplistic divisions in the definition of our social challenges but instead emphasising we are not in a world of simple polar opposites.
Real life is much more of a linear scale and people can and do move along it in both directions as a result of many factors including life events and personal circumstances.
As for your comment about us and them – by your definition I am actually one of “them” myself now as a result of falling on hard times due to a combination of the financial crisis, business failure and ill health. So I’m not sure what your comments inferred but you are welcome to join me in the “them” crowd if you like – but I wouldn’t recommend it!
Harriet Harman’s decision to abstain on the Welfare Bill was far from disastrous in one crucial way: it opened the door to the election of Jeremy Corbyn who (with John McDonnell) is developing the most effective alternative policy Labour has had in 2 generations or maybe more. So in that sense I say, well done Harriet!
I believe that efforts were made to get Ed to stay on while we elected a new leader. At least we wouldn’t have lost ground again as we did when Brown left. However, I agree that the election of Jeremy was a welcome outcome – just give him time.
There was a very good piece by David Graeber flagged up by Steve Keen in my twitter feed today, I hope Richard doesn’t mind me linking to it:
http://thebaffler.com/salvos/despair-fatigue-david-graeber
There is a lesson in here about the obsession with “paying down debt”.
The proceeds of the 3G mobile data auction in 2000 were totally and utterly wasted on repaying debt when it could have gone into decent infrastructure.
http://news.bbc.co.uk/1/hi/business/727831.stm
The £22bn Brown “repaid” was soon swallowed up by the effects of the financial crisis.
Your observation is spot on Ben.
At the 1996 Labour Conference Blair announced a deal that the incoming Labour Government would invest in a UK broadband fibre optic superhighway using the former public sector telecommunications utility BT. A part of this investment would come from BT in return the scrapping Thatcher’s asymmetry rule which stopped BT from providing entertainment services through the former public network which was part of a vainglorious ideological attempt to create artificial competition.
Unfortunately the investment required, some £25 billion, was pissed away by Chancellor Brown because Blair decided that instead of an incoming Labour Government we were going to have an incoming New Labour Government or to be more accurate the Continuity Conservatives.
The first thing Brown did, on behalf of the neo liberal begger thy neighbour and thyself project, was to purloin money from the utilities, which would have gone towards that infrastructure investment, by introducing the one off utilities tax. This was followed by the 3G auction which sucked some £30 billion from potential investment in proper broadband infrastructure.
All in a context in which the holders of the flame continued the voodoo faith based economic doctrines and spending plans of the balloon heads in the Conservative Party, as exemplifield by their little tennybopper groupie below who thinks having a doctorate means that you actually know how reality actually works.
These decisions, based on Conservative neo liberal ideology, effectively put the UK economy back at least two decades. We were left with a situation in which the legacy copper network was patched up using ADSL technology to squeeze some bandwidth into the network whilst the 80/20 equation kicked in (80% of telecom revenue comes from 20% of the customers) and large parts of the UK outside of the major conurbations are still having to adopt a DIY approach as the country and its economy plays catch up fromantic the’s disasterous Conservative based decisions.
It was ever thus with this failed philistine doctrine, regardless of which wing of the neo liberal gang was nominally in power. It was a so called Labour Government, under Callaghan, who allowed Lucus to close it’s aerospace defence plants and rejected the shop stewards alternative corporate plans which saw many of the products successfully adopted by other countries,denying the UK the financial benefits.
At root, this doctrine has nothing to do with sound economics because it is about control rather than profit. The one consistent behaviour of this feudal hierarchical mindset is that when it comes to a decision between profit and control, control will win every time.
Excellent analysis again Richard.
I’ve forwarded it to Norman Smith at the BBC who this morning repeatedly referred to Osbourne’s proposed £4bn of extra cuts as ‘savings’.
It’s such a desperate shame that no one in the Labour Party thought of doing this, but then until recently, much of their ‘research’ and ‘advice’ seems to have come courtesy of secondments from the Big Four. I do hope that situation has changed.
At the risk of repeating myself: Conservative record
1970s Credit creation and competition act which caused a great expansion in lending and inflation.
1980s monetarism experiment which failed after destroying much of British industry
1990s ERM fiasco
00s backing (along with Labour) the lack of effective regulation of the financial sector
2010-date austerity and a forecast of eliminating deficit by 2015 which was wrong
I really do think the hypothesis that Labour are more prudent and more likely to repay debt than the Conservatives when they follow Conservative defined spending plans can be considered proven.
Very droll. Now please go back to ConservativeHome will you and stay there.
BTW – before you go – leaving Labour to pay off Tory Debt means less money to invest in the country we all profess to love and also means that if we have to invest we use crap schemes like PFI that hand back fat profits to the 1%.
Mind you – why do I bother – this is completely normal to someone like you isn’t it?
Back off, man. I’m a scientist.
Respectfully, so?
Many scientists visit good Professor Murphy’s lively site, I too am a scientist and find RM’s analysis a breath of fresh air.
As Bertrand Russell said “ask yourself only what are the facts and what is the truth that the facts bear out”. Now let’s argue on the facts.
I hope you didn’t pay good money for that then. On that showing you really should be asking for a refund.
I’m amazed that a scientist presented with hard data could possibly arrive at your conclusion. I suspect you mean “believe” because belief is the only possible explanation; it’s definately not knowledge.
But surely Dr Venkman is correct. Labour at that time made a big point of following Tory plans. Hopefully now with Richard having some weight we can never go back to those dark days of allowing the Tory media to set the agenda. When we allow their facts to dictate our needs we are lost.
You guys need to google who Dr Peter Venkman is before you dismiss his opinions. This man is an expert in his field.
I fnd such use of pseudonyms so tedious
You wonder why I delete people?
Oh Peter – I liked you so much better in Ghostbusters!
Egon Spengler was also in Ghostbusters.
The use of sock puppets in an attempt to turn an intelligent debate into something farcical shows you and Peter to be the crass Tory fools that you are.
And I am deleting the Star Wars presence
Seems the tory youth club has nothing better to do these days now their allegedly illegally funded roadtrip is under investigation!
It is great to see you come back on this issue with your detractors Richard.
Labour paying down debt seems so typical of the working class people it has traditionally represented. As Michael Hudson has noted – real working class people always honour their debts.
Really interesting analysis, thank you Richard! I am very surprised the figures tell such an unequivocal story – and that Labour hasn’t picked up on this before.
To check the (somewhat disingenuous) argument that your analysis is skewed by the Conservatives having to borrow because of deficits inherited from Labour and Labour free-riding on hard-won Conservative surpluses – could you give a statistic of how often each party has inherited surpluses or deficits, and what they add up to?
It might be difficult to quantify how long the lag between a government’s policies being implemented and their effect being measurable might be. Are the numbers altered if instead of counting each election year towards the party that held government for most of it, you always count it towards the incumbent? What if you count the first year of a new government towards the stats of the previous one? Of course if you consider too long a lag period, the analysis will become meaningless, as policies may take different amounts of time to take effect, but if most of the Conservatives’ borrowing or Labour’s saving occured in their latter years in government, that would really strengthen your case.
I would love to see if there is any support for the idea of the Conservatives having to clear up Labour’s mess when you also consider government changes other than 2010.
No time to do those changes….sorry
Hi Richard
Interesting, I think it would be stronger and perhaps more interesting if there were data included from the sales of things like Royal Mail and 3G. Who sold off most things, who got most money from these one off sales, did they pay off more debt?
It might be interesting to link it to something like this:
https://www.measuringworth.com
rather than using the value of 2014 GBP across all years.
Especially as with anything like this there are always people looking to focus on detail to distract from the overall message.
GOOD WORK!
Damian
May update for sales this afternoon
In the tradition of Keynes, Kalechi and Abba Lerner, the deficit is not the problem.
Unemployment, well being and the environment are the important things. We should ask, during the periods of deficit/surplus, was the economy healthy, and was unemployment reducing? If borrowing was higher but people had a job and a working health service and stable inflation, then that is ok.
Often the Conservatives deficit has been tax cuts for the rich and increasing trade deficits, and sell offs of public assets, and corporate welfare.
Labours surpluses or low deficits were built on rising private debt and PFI. Inequality kept growing under Blair. http://www.dannydorling.org/wp-content/files/dannydorling_publication_id1286.pdf
It is not the borrowing per se, it is how it is distributed that counts. Balancing the books can be a disaster on the back of private debt, as the GFC showed.
That is why I am depressed about John McDonells fiscal rule. With the trade deficit and the 1.5 trillion private debt, only government spending can cure the problem.
I would recommend very strongly this blog today – so relevant and true at this moment in time.http://bilbo.economicoutlook.net/blog/
I accept: I am addressing a narrative issue here
I think Richard is just using the neo-lib language framing in order that they can choke on there own bullshit.
As I remember, the first Blair administration was committed to following the spending plans of Ken Clarke, who had started paying down the debt. So the surely Dr Venkman has a point.
But only a very minor one, at best
Hi all,
I’m guessing some of you haven’t seen Ghostbusters in a while and perhaps our friend Peter isn’t quite so scientifically minded as he first appears.
https://en.m.wikipedia.org/wiki/Peter_Venkman
Oh, I see you beat me to it Richard. Nice shooting Tex!
Looks like you have attracted the attention of CCHQ Richard: Star Wars, Ghostbusters and now the epitome of the intellectually challenged interns fawning at the feet of fearmonger in chief Lynton Crosby – adopting the moniker of a porn “star”.
I suppose you should be flattered by the attention but their pointless astroturfing serves only to distract attention and lower the standard of debate to their own extremely low level
I am just not aware of who porn stars are
And I can live with that
I see two problems:
1. There is no control for external factors, such as global economic recessions. These will impact budget deficits independent of current policies. Maybe there have been more global recessions during conservative than labour governments? No idea. You need to control for it.
2. There is no control for lag. If a new policy takes a while to have an impact, then it is entirely possible that the policies of one government will primarily manifest themselves in the budget deficit for the following government. What sort of lag is likely? Again I have no idea. You need to try modelling it and see if there is evidence for or against a lag.
It’s interesting as a preliminary analysis, but I wouldn’t draw any conclusion from it at this stage.
I do not agree. Over 70 years I think we can assume externalities happen
And people expect politicians to manage it
What is more people would think a lag a ruse
You have missed the whole point of what I have done: this is rebutting a common myth based on prima faciue data which makes your approach invalid in this context
I think Dr Venkman expects that he can force us to believe in the spectre of fiscal responsibility of Tory chancellors past ?
No, he’s just Ghost Busting (Look him up)
RM only you know if P Venkman reveals his identity to you (Mail), and is trying to make a point – whatever direction. I also Googled the GhostBuster alias earlier, which is tiresome. I for one just abbreviate my name. Maybe you’re getting under someone’s skin.
The mail looked real: but there is nothing to stop someone registering an email for a pseudonym
I wonder why people want to waste their lives doing such things
Who were previous Labour administrations aping then?
Or is it going to be claimed that all the paying down of debt by Labour administrations was carried out between 1997 – 2010?
Jesse Eisenburg would know what to do with this zombie level thinking.
That was supposed to be a response to Rocco at 14:10.
Don’t know why it ended up there. Perhaps there really is a ghost in the machine?
Spooky
I’m sure you will have seen this Richard but I came across an excellent article on Prime Economics making exactly the same point as you but in much more detail:
http://www.primeeconomics.org/articles/taq30tk04ljnvpyfos059pp0w7gnpe
The Prime team and I know each other well