Three weeks ago the Tories got themselves re-elected, this time as a majority Government, in large part based on a misrepresentation of a very dodgy economic record. In 2010 George Osborne promised to eliminate the structural deficit by 2015, and to protect the UK’s triple A credit rating. He failed on both counts, yet somehow the Tories got elected on the basis of a record for economic competence.
That says an awful lot about the team Labour were offering: Ed Miliband and Ed Balls were Gordon Brown’s advisors in the Treasury when key decisions were taken, and the Tories ruthlessly exploited that. Labour should remember that when considering making Andy Burnham, who was in charge of public spending control in the run up to the world financial crash, their next leader.
One of the big problems the Tories seem to have is in confusing debt and deficit. The Prime Minister has done it a number of times. They had to be rebuked by the National Statistics office. Yet yesterday they were at it again.
You would, however, rather hope that Her Majesty’s Treasury would understand the difference between debt and deficit. Yet yesterday the Treasury Press Office issued a press release claiming that the Chancellor’s statement in the House of Commons had “announced £4½ billion of new measures which will bring down public debt this year.”
Yet it won’t. The public debt this year will grow. By more than £70 billion. Yes, the sale of the Government’s remaining stake in Royal Mail will raise cash which the Government can use to pay off some public sector debt. Other asset sales will also reduce debt. But the majority of the £4½ billion will come from savings cuts this year – some £3 billion. That merely reduces the deficit, which will have a negligible effect on the debt (a lower deficit does mean that the debt goes up more slowly).
On Wednesday the Prime Minister patronised a newly elected Labour MP who asked the question Labour should have been asking for the last five years – when will the UK regain its triple A credit rating? Cat Smith MP (Lancaster & Fleetwood) didn’t get an answer to her question – the PM said: “I welcome the hon. Lady to her place and congratulate her on her election success. The first question she asks is about fiscal responsibility and sustainability. I take that as a sign of progress. I would say to her: there is a leadership election on, throw your hat in the ring. In that one question she has made more sense than all the rest of them put together—go for it!”
Cameron has been accused of patronising her as part of his “women problem” but the real reason he chose to patronise her was part of his “economic problem”. He has no idea when – or if – the UK will ever get that credit rating back, and he only has a rough idea when the deficit will be “eliminated”.