The Labour Party will still not admit that it was to blame for the massive deficit when it lost power in May 2010.  It was a World Recession, it was the Banking Crises, it was a massive fall in Tax Revenues, but it wasn’t us!

Let’s looks at the figures for the period 2005 to 2010.  They are clearly broken down into government departments and actual figures for expenditure from a number of sources, most of which lead back to the Office of National Statistics.

During the period 1997 to 2007 under the guidance of Gordon Brown as Chancellor he never once matched income to expenditure and ran a typical annual overspend of £36 Bn!

He took over as Prime minister in June 2007 and the effects of his last budget continued the typical overspend to April 2008.

As a result of the first budget by Alastair Darling expenses increased significantly and tax revenues actually fell by £43 Bn in two years. He should have reigned back on expenditure but he did not.  This resulted in a deficit of £97.5 Bn to April 2009, then £158.9 Bn to April 2010.  

ITEM

2005

2006

2007

2008

2009

2010

Pensions

86.4

89.9

93.9

98.8

108.5

116.4

Healthcare

82.9

89.6

94.7

102.3

108.7

116.9

Welfare

78.0

81.6

83.5

90.4

99.5

111.7

Education

65.1

69.7

74.0

78.7

83.0

88.5

Defence/Military

33.4

35.2

36.6

38.3

41.0

42.6

Protection

28.5

29.3

30.3

31.5

33.9

34.1

Transport

16.0

17.0

19.9

20.5

21.0

23.0

General Admin

14.2

16.3

16.8

16.9

16.0

15.9

EU Contribution

?

11.8

12.2

13.7

13.2

13.7

Miscellaneous

62.9

56.9

60.4

60.5

77.7

78.8

Interest on loans

24.3

26.2

28.1

30.7

32.3

30.7

TOTAL EXPENSES

491.8

523.5

549.4

582.2

633.8

672.3

Tax revenue

371.0

397.9

423.7

451.1

439.1

408.5

Other Income

79.7

87.7

92.6

94.4

97.2

104.9

TOTAL INCOME

450.7

485.6

516.3

545.5

536.3

513.4

Deficit

41.1

37.9

33.1

36.7

97.5

158.9

TOTAL DEBT

477.7

515.6

548.7

585.4

682.9

841.8

GDP

1277

1350

1406

1434

1394

1459

DEBT/GDP %

37.4

38.2

39.0

40.8

49.0

57.7

In simple terms, Gordon Brown under the leadership of Tony Blair set out a ‘golden rule’ that government expenditure should not exceed 40% of GDP.  He actually did rather well at achieving this BUT the Gross domestic product (GDP) never grew sufficiently to keep his borrowing down.

From 2005 to 2008 the total expenditure had increased by £90 Bn and total income by £95 Bn, though expenses still exceeded income.  The total debt to the IMF increased during that period by £108 Bn to a staggering £585 Bn.

Then in just two years, 2009 and 2010, the expenditure leapt by a further £90 Bn during which income dropped by £32 Bn.  This actually increased overspend in 2009 to £97.5 Bn and to £158 Bn in 2010!   These two years alone added £255.5 Bn to the total debt with the IMF.

Just look at the figures again and you will see that the only effect of the Banking Crises and World Recession was a fall in Tax revenues of £12 Bn 2008-2009 and a further £21 Bn 2009-2010.  All the rest was Labours spending.

Tax-Deficit smaller

They got it wrong and they can’t admit it because they don’t actually believe it.  The Shadow Chancellor and Leader of the Opposition are still trying to tell the British public that borrowing more money from the IMF would have reduced the deficit quicker and is still Labours plan if it ever gets re-elected!

You cannot borrow your way out of debt unless you invest the money in a scheme that earns a great deal more than capital repayments and interest on the loan.  If they have an idea of such a government run scheme to do this they should have implemented it years ago.  Furthermore, in the interests of the nation they should put this brilliant scheme into the public domain to get us out of the mess they created.

Data Sources

Expenditure figures are derived from www.ukpublicspending.co.uk

Tax Revenue figures come from HMRC Revenue & Customs Receipts.

Deficit figures come from www.theguardian.com Datablog, which come from the ONS.

GDP figures are taken from www.ukpublicspending.co.uk

Other income is calculated from Total Income minus Tax Revenue.

Total Income is calculated from Expenses minus the Deficit.

Total Debt per annum is calculated back from the 2013 debt minus yearly deficits.

Print Friendly, PDF & Email